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"Phthalates" refers to a group of chemical compounds that are heavily produced and widely used to make the plastics found in thousands of consumer products. The most common use of phthalates is to increase the flexibility of polyvinyl chloride (PVC) and polyvinylidene chloride (PVDC) polymers. Phthalates are released from those products over time, and are dispersed to the air, water, soil, and living things. Some (but not all) of these phthalates are known to cause reproductive damage in rodents. Recent interest by governmental bodies, including Congress, in the potential adverse human health effects that might be related to phthalate exposure has focused on six phthalates that are produced and used in very large quantities. The six phthalates are di-(2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP), benzyl butyl phthalate (BBP), diisononyl phthalate (DINP), diisodecyl phthalate (DIDP), and di-n-octyl phthalate (DnOP). Newly enacted P.L. 110 - 314 , the Consumer Product Safety Improvement Act of 2008 (CPSIA), prohibits the sale of children's toys and child care articles that contain more than 0.1% of DEHP, DBP, or BBP. A similar ban applies for DINP, DIDP, and DnOP, until the Consumer Product Safety Commission issues a rule either establishing or eliminating the ban on a permanent basis. Compared to some other chemicals in commerce, phthalates are not extremely toxic. That is, they do not cause acute illness after a short period of low-level exposure. However, controlled experiments with rodents have demonstrated that some phthalates at high doses damage reproduction and development. Moreover, if administered at sufficient levels and at the appropriate time to pregnant females, some phthalates can cause malformations of the reproductive organs of offspring, especially males. In rats, exposure during gestation to some phthalates can cause testicular cancer in mature offspring. The higher the phthalate exposure, the more frequent and severe are the effects on the reproductive system. Rat fetuses are most susceptible, but older rats can also be affected at somewhat higher levels of exposure. Disruption of hormonal functions in humans is known to result in abnormal reproductive development. Many scientists believe that the phthalates toxic to rats and mice might be able to cause similar malformations in humans, because the male hormones affected by phthalates are important to the normal development of the male reproductive tract in all species of mammals. However, human health effects of phthalate exposure have not been conclusively demonstrated. Very few studies have looked at possible effects in humans, but their results have been consistent with the results of rodent experiments. A study published in 2005 provided the first evidence of subtle developmental effects, similar to those seen in animal studies, in human male infants exposed prenatally to breakdown products of phthalates. More research would be needed to determine with certainty the effects of phthalates in humans. Additional information about health effects is provided below in the section "The Six Phthalates." Results of the National Health and Nutrition Examination Survey (NHANES) indicated almost universal American exposure to low levels of the most common phthalates, usually multiple phthalates. Women tend to have greater exposure than men, but children appear to be the group most exposed to DEHP, DBP, and BBP. Children also are more exposed to DnOP, but these exposures appear to be lower than those for DEHP, di-n-butyl phthalate, and BBP. Levels of a breakdown product of DINP were not detectable in children surveyed (but see section below on DINP) and DIDP was not measured in 2001-2002. Studies of amniotic fluid have also documented exposure to multiple phthalates for human fetuses. More generally, babies may be the most heavily exposed group. Phthalates are dispersed throughout the air, water, soil, and living things in the developed world. According to the Department of Health and Human Services (DHHS), food probably is the major source of exposure to some phthalates for the general population. However, air also appears to be important. For the human fetus, maternal exposure leads to prenatal exposure through the placenta. Personal care items, including baby lotion and powder, may be significant sources of exposure for infants. For some individuals, certain medications also may be important sources. Finally, medical devices may dominate exposure sources for critically ill patients. Individuals, such as newborns in intensive care, may be exposed to levels of DEHP much closer to, but still less than 1% of, levels that cause reproductive harm in rats. Phthalates do not bioaccumulate in the body or the environment; rather they break down rapidly. However, exposure to phthalates is continuous and substantial in the modern world. The new law requires regulation of six phthalates, following the example of the European Union and the state of California. These phthalates differ from one another in structure, uses, and toxicities. The extent to which they have been studied varies widely. Compared to the other commercially produced phthalates, these six, arguably, are more studied, more toxic, or more prevalent in consumer products and the environment. All six have been evaluated by the National Toxicology Program (NTP), an interagency program administered through the National Institute of Environmental Health Sciences/National Institutes of Health (NIEHS/NIH). DEHP is the most abundantly produced and the most studied phthalate. It is used primarily to improve the flexibility of "vinyl" (that is, polyvinyl chloride (PVC) plastic). DEHP is found in medical devices, such as plastic tubing used for catheters and intravenous drug and fluid delivery, and many home and garden products. The NTP has expressed "serious concern that certain intensive medical treatments of male infants may result in DEHP exposure levels that adversely affect development of the male reproductive tract." In addition, the NTP expressed "concern for effects of DEHP exposure on development of the male reproductive tract for infants less than one year old," "some concern for effects of DEHP exposure on development of the reproductive tract of male children older than one year," and also some concern for developmental effects for the offspring of pregnant women. After this DEHP monograph was issued, several studies began to explore associations between DEHP and other health effects, such as effects on thyroid hormone levels, asthma, and obesity. Additional research is being conducted in these areas, and it is too soon to draw any conclusions regarding the potential role of DEHP in causing such problems. There are two DBPs: di-n-butyl and di-isobutyl phthalate. The former is more studied, especially in Europe. DBPs are used in latex adhesives, nail polish, cosmetics, some inks and dyes, insecticides, and pharmaceutical coatings. The most recent NTP monograph on DBP (di-n-butyl phthalate) found "clear evidence of adverse effects" on the developing male reproductive tract in rodents. Furthermore, the NTP concluded, "Based on recent data ... the NTP believes it is reasonable and prudent to conclude that the results reported in laboratory animals indicate a potential for similar or other adverse effects in humans." As a result, NTP has "some concern for DBP causing adverse effects to human development, particularly development of the male reproductive system." In the seven years since this NTP monograph, numerous studies have bolstered these findings. Of particular note is the study by Lehmann et al. (2004). It established the relationship between exposure to DBP and effects on synthesis of testosterone in fetal male rats. A 2006 study found that di-isobutyl phthalate had testicular and developmental effects similar to di-n-butyl phthalate and DEHP. BBP is used in vinyl flooring, automotive trim, food conveyor belts, and artificial leather. The latest NTP monograph on BBP was released in 2003, but was based on papers published before 2001. NTP determined that the evidence from animal studies was clear that adverse developmental effects could result from exposure to BBP. However, effects were seen only at high levels of BBP exposure and estimated human exposure was much lower, although detailed exposure data were lacking. NTP concluded that it had minimal concern for fetal and infant developmental effects due to estimated BBP exposure. Papers published after 2001 confirm the developmental toxicity of BBP. However, the testimony of Leon Earl Gray, Jr., Senior Reproductive biologist and Toxicologist with the U.S. Environmental Protection Agency, indicated that DEHP, DBP (both forms), and BBP were equivalent in toxicity, based on four studies. This phthalate is used primarily to improve the flexibility of plastics in such products as gloves, drinking straws, garden hoses, and toys. It has been used to replace DEHP in toys and other applications. DINP is the most commonly used phthalate for toys, according to the Phthalate Esters Panel of the American Chemistry Council, a trade group representing chemical manufacturers. The NTP monograph on DINP was published in 2003, but like the other monographs that have not been updated, it primarily considers research published before 2001. The scientific evidence for developmental effects from DINP exposure of rodents is adequate "to conclude that DINP might adversely affect development of the human fetus if the levels of exposure are sufficiently high," according to NTP. But the evidence for effects was not as strong as for DEHP and DBP, and in one study that compared the effects of exposure to various phthalates, DINP was found to be less potent than DEHP or DBP by an order of magnitude. In his recent testimony before a House subcommittee, Dr. Leon Earl Gray rated the relative potency for producing developmental harm of various phthalates. He gave DINP a rating of 0.15 relative to DEHP, DBP (both forms), and BBP which he rated 1.0. A number of studies of the potential effects on rodents of DINP exposure were published after 2001, but they appear consistent with the earlier work with respect to developmental toxicity. In addition, there is some evidence of enhanced allergic responses due to DINP exposure. A review by the European Commission (EC) in 2006 concluded: [i]n light of the divergent scientific views ... and the conclusions of the assessment of the risk for consumers under this Regulation, and taking into account the uncertainties in the evaluation of exposure to DINP from toys and childcare articles, precautionary considerations support the consideration at Community level of proportionate restrictions ... for the use of DINP in toys and childcare articles. Such measures should be reviewed after 3-4 years, in light of further scientific developments. Several studies have been conducted to estimate the level of exposure of children to DINP in toys due to mouthing. One study by the Consumer Product Safety Commission (CPSC) estimated DINP exposure through measurement of the time children spent in mouthing behavior and an analysis of DINP movement out of various toys. NTP used that data to conclude that its concern was "minimal" for developmental effects in children. NTP also had minimal concern for DINP causing adverse effects to human reproduction or fetal development. However, this conclusion was controversial. A Japanese study also looked at DINP release from toys and and time spent mouthing and found considerably higher exposures than the CPSC. As mentioned above, it appeared from the NHANES that exposure to DINP was negligible in children surveyed by the Centers for Disease Control and Prevention (CDC) in 2001-2002. However, this result was based on measurement of the metabolite monoisononyl phthalate (MINP), the traditional measure of exposure to DINP. A recent study of how the human body processes DINP found that MINP is a minor metabolic product, while mono(carboxyisooctyl) phthalate (MCIOP), mono(oxoisononyl) phthalate (MOINP), and mono(hydroxyisononyl) phthalate (MHINP) are the major metabolites in DINP-dosed rats. The authors of this study concluded that estimates of exposure to DINP might be underestimates if based on MINP levels. DIDP is another plasticizer used primarily in electrical cords, leather for car interiors, and PVC flooring. As for the other phthalates addressed by the NTP, the expert panel found "no direct evidence that exposure of people to DIDP adversely affects reproduction or development" [emphasis added], but "studies with rats have shown that exposure to DIDP can cause adverse developmental effects." NTP concluded that exposures to DIDP were probably not high enough to cause concern, and that scientists had minimal concern for developmental effects in fetuses and children. NTP also found that DIDP would not adversely affect human reproduction. Studies published since 2001 have not conflicted with the NTP conclusions. However, several recent studies have found endocrine-disrupting effects following rodent exposure to DIDP. DnOP is used primarily to improve the flexibility of plastics. DnOP is found in mixtures of phthalates that are used to make flooring, tarps, pool liners, bottle cap liners, conveyor belts, and garden hoses. There are few studies on which to evaluate the potential toxicity or exposure to DnOP. NTP found limited evidence that DnOP might cause developmental effects in highly exposed rodents. No evidence of reproductive effects was found in the available studies. NTP concluded that it had negligible concern for effects on adult reproductive systems, but it was unable to form an opinion on an appropriate level of concern with respect to developmental risks, due to the lack of available exposure data and lack of toxicity data for exposure levels that might have relevance for human exposure. An online search by CRS of publications using Medline revealed no new studies after 2001 that might better inform a risk evaluation. Depending on use, phthalates are potentially regulated by various regulatory agencies, including the Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), the Food and Drug Administration (FDA), and the Consumer Product Safety Commission (CPSC). EPA regulates various phthalates released to the environment under most of its statutes. For example, DEHP is regulated as a hazardous air pollutant, a drinking water contaminant, a water pollutant, and a hazardous waste. OSHA regulates worker exposure to phthalates. The current focus of congressional concern, however, is federal regulation of consumer products from which phthalates might be released. Federal agencies have taken several actions, some as early as the mid 1980s, to evaluate and regulate phthalates. For example, EPA has required manufacturers of phthalates to conduct certain tests to better inform federal regulators. These test orders were withdrawn in 1996, when EPA determined that it had received the necessary information (which focused at the time on carcinogenic potential). To date, however, no phthalate-containing consumer product has been banned outright. FDA-regulated products that may contain phthalates include (1) medical devices; (2) food contact substances, such as plastic wrap; and (3) cosmetics. FDA reported in June 2008 that, in tandem with its review of the safety of bisphenol A (BPA) in the products it regulates, it is also conducting a comprehensive inventory of regulated products that contain phthalates. FDA regulates a wide variety of medical devices in commerce. Many of these products are made of, or contain PVC. These include intravenous fluid bags and lines, tubing used for procedures such as cardiac bypass and dialysis, and indwelling medical devices, such as peripherally inserted central catheters, or "PICC lines." According to reports, phthalates in tubing can leach into the fluids they contain and pass into the body, and can leach directly from indwelling devices. In 2001, FDA completed a safety assessment of DEHP, which was the softener most commonly used in PVC-containing medical devices. The assessment underpinned a public health notification in 2002 in which FDA identified a number of medical procedures that posed the highest risk of exposure to DEHP, and recommended the use of alternatives to DEHP-containing medical devices if these procedures were to be performed on high-risk individuals. Depending on the procedure, these individuals include infants, boys, pregnant or nursing women, and, for some procedures, healthy adults. FDA recommended, however, that needed medical procedures not be deferred solely because of concerns about DEHP exposure. Phthalates are not added to foods directly, but are regulated by FDA as food contact substances or indirect food additives , where they are components of packaging that may leach into foods or beverages. FDA permits the use of a variety of phthalates for these purposes. In recent congressional testimony, FDA reported that: [FDA] has recently established a Phthalate Task Group (PTG) to review all available use and toxicology information associated with phthalate exposure from food contact use and to better characterize any potential risk from these uses. The primary focus of the PTG will be to determine the most realistic exposure estimation and risk associated with phthalate use in food packaging. The PTG will review and address past studies on phthalates and any new information available. If our review indicates that existing data no longer supports the continued safe use of these materials in food contact material, FDA will take appropriate regulatory action to remove these materials from the marketplace. Under the authority of the Federal Food, Drug, and Cosmetic Act (FFDCA), FDA regulates the safety of cosmetics and personal care products, such as nail polish, shampoo and lotions, many of which contain phthalates. Cosmetic products and ingredients are not subject to FDA premarket approval, but FDA can prohibit the marketing of a cosmetic product if it is adulterated, meaning, among other things, that it contains "any poisonous or deleterious substance which may render it injurious to users" under labeled or customary conditions of use. According to FDA, the principal phthalates used in cosmetic products are DBP, dimethylphthalate (DMP), and diethylphthalate (DEP). FDA reports that at the present time, it "does not have compelling evidence that phthalates, as used in cosmetics, pose a safety risk. ...," but that it is conducting a survey of phthalate levels in certain cosmetic products to more accurately assess infant exposure. Under the authority of the Fair Packaging and Labeling Act (P.L. 89-755), FDA requires that retail cosmetic products carry ingredient labels, which would include phthalates. However, the listing of individual fragrance ingredients, which may contain phthalates, is not required. The Consumer Product Safety Commission (CPSC) may regulate phthalates in consumer products, including toys and other children's products, under either the Federal Hazardous Substances Act (FHSA, 15 U.S.C. §§1261 et seq.) or the Consumer Product Safety Act (CPSA, 15 U.S.C. §§2051 et seq.), two of the statutes that it administers and enforces. Consumer products as defined in the CPSA do not include food, drugs, medical devices, and cosmetics, which fall under the jurisdiction of the FDA. The FDA has jurisdiction over food containers with regard to substances that may leach into food from the container. CPSC has jurisdiction with regard to other defects, such as shattering or choking hazards. It also has jurisdiction over toys, children's furniture such as cribs and car seats, and other children's consumer products, including pacifiers, teething rings, and apparel. P.L. 110 - 314 , the Consumer Product Safety Improvement Act (CPSIA), signed by the President on August 14, 2008, strengthened regulatory and enforcement authority. The CPSC may regulate phthalates under either the CPSA or the FHSA. The CPSA and the FHSA differ with regard to the rulemaking procedures; the precise nature of the acts prohibited with regard to products or substances that fail to comply with safety standards; and other issues. Therefore, there are advantages and disadvantages to promulgating standards under the CPSA versus the FHSA. One disadvantage of the CPSA rulemaking procedure was eliminated by the CPSIA. The CPSA formerly did not expressly provide injunctive enforcement authority for state attorneys general, unlike the FHSA, which did. CPSIA amends the CPSA to provide state attorneys general authority to enjoin violations of the federal standard. Additionally, the recent reform legislation addressed other concerns. Critics alleged problems with the ability of the CPSC to establish safety standards in a timely fashion. For example, some asserted that the rulemaking procedures under the CPSA and other acts under the CPSC's jurisdiction, such as the FHSA, were unnecessarily onerous, requiring protections beyond those required by the Administrative Procedure Act. The CPSIA streamlined the rulemaking procedures of the CPSA by eliminating the required extra step of an advance notice of proposed rulemaking. The CPSIA did not amend the CPSA provisions that encourage the CPSC to rely heavily on voluntary standards where an adequate standard exists with which the industry widely and substantially complies. The voluntary nature of some safety standards limits the action that can be taken by the CPSC for violations. However, the CPSIA legislated mandatory safety standards or rulemaking for certain children's products, including toys, durable infant or toddler products, and standards for lead content and phthalates in certain children's products. The CPSIA revised and expanded the scope of acts prohibited under the CPSA to include manufacture, sale or importation of products that are the subject of a voluntary recall. Under both the CPSA and the FHSA, the CPSC may order a recall and/or other remedies for products that violate a safety standard under the pertinent act and may inspect factories where products are made. Products violating a safety standard may be denied importation. Although the European Union and some states have enacted safety standards regarding phthalates in children's products, as discussed below, the CPSC had not promulgated such standards prior to the CPSIA. In 1983, the CPSC determined that DEHP in children's products might result in substantial exposure of children to an animal carcinogen. The CPSC is not permitted to initiate rule-making relating to risks of cancer, birth defects or gene mutations unless it first establishes a Chronic Hazard Advisory Panel to study the issue and make recommendations. The panel appointed to study the risks of DEHP concluded that it could put children at risk of cancer from mouthing of products containing DEHP. Accordingly, the CPSC worked with the children's products industry to reach a voluntary agreement banning the use of DEHP from pacifiers, rattles, and teethers. Although other children's products were not included in the agreement between CPSC and the industry, most manufacturers substituted other phthalates for DEHP in other children's products. DINP was the substitute. Despite studies conducted by the industry in the late 1990s linking DINP to liver toxicity and cancer in rodents, the CPSC concluded that the risk to children from mouthing children's products was minimal. However, the CPSC achieved a voluntary agreement with the industry banning DINP and dioctyl phthalate from pacifiers and bottle nipples. The CPSC appointed a Chronic Hazard Advisory Panel on DINP and conducted other studies in response to a petition to initiate rule-making regarding phthalates in children's products. The panel concluded in 2001 that DINP posed a minimal or nonexistent risk of cancer to humans. After further consideration of the panel report and other studies, in 2003 the CPSC denied the petition to establish a safety standard for PVC containing phthalates in children's products intended for children five years of age and younger. The new federal legislation and several state statutes concerning phthalates apparently were modeled on EU laws. Under Council Directive 76/769/EEC, as amended by Council Directive 2005/84/EC, the EU currently prohibits the use (at concentrations greater than 0.1% by mass of the plasticized material) of DEHP, DBP, and BBP in toys and child-care articles and of DINP, DIDP, and DnOP in toys and child-care articles that can be mouthed by children. It also prohibits the sale of toys and child-care articles containing phthalates at a concentration exceeding the permitted level. It defines "childcare article" as meaning "any product intended to facilitate sleep relaxation, hygiene, the feeding of children or sucking on the part of children." Council Directive 2005/84/EC notes the existence of Commission Decision 1999/815/EC that banned phthalates in toys and child-care articles as a renewable emergency measure in response to phthalate studies conducted by various Member States and assessed by the Scientific Committee on Toxicity, Ecotoxicity and the Environment. The language of the Decision differs from that of the Directive in that it limits the ban on the six phthalates to products that can be mouthed by children under three years of age, while the Directive does not contain the age limit. This Decision apparently was last extended in 2004 until September 20, 2005, but Council Directive 2005/84/EC refers to the Decision as being renewed regularly. Regardless of whether the Decision continues to be renewed, EU Member States were required to take necessary measures to comply with the standards described in the Decision; therefore, those measures would continue in effect. It appears that the Decision may not have been renewed in anticipation of Council Directive 2005/84/EC and the Regulation (EC) No. 1907/2006, which was recently enacted and will repeal Council Directive 76/769/EEC effective June 1, 2009, while retaining the same phthalate in children's product standard, effective June 1, 2009. The new Regulation also retains the Directive's requirement that the European Commission re-evaluate this standard by January 16, 2010, in light of new scientific information and amend the standard accordingly, if justified. While the Directive is binding law on the Member States of the EU, requiring them to take necessary measures to bring their respective national laws into compliance with the Directive standards, the new Regulation is directly binding on the Member States. This means they are obligated to comply with the standard and enforce it without any implementing legislation or rule at the national level. One group of phthalates, DEHP, DBP, and BBP, is banned without limitation because they are classified as reproductive toxicants that present an unacceptable risk given the general safety requirements of the European Union. The other group, DINP, DIDP and DnOP, are banned only for products that can be placed in the mouth by children. Despite inconclusive scientific evidence of harm, these phthalates were banned under the precautionary principle of the European Union given the potential risk posed to children. California, Vermont, and Washington have recently enacted legislation establishing safety standards for phthalate content in children's articles. The permanent and interim federal phthalates safety standards of the CPSIA are considered safety standards under the CPSA, and as such they preempt any non-identical standards in these statutes, except as the CPSA otherwise provides for exemptions. Any permanent standard resulting from the consideration of the interim standard for DINP, DIDP, or DnOP would also similarly preempt non-identical state laws. The CPSIA clarifies that neither it nor the CPSA shall be construed as preempting any state requirements concerning phthalate alternatives that are not specifically regulated in a consumer product safety standard under the CPSA. Under the CPSA, upon application by a state or locality, the CPSC may, by rule, exempt from preemption a state or local standard that provides a significantly higher degree of protection from injury than the federal standard, and that does not unduly burden interstate commerce. The three state phthalate standards all appear to have been at least partly modeled on current or earlier versions of the EU regulations. Aside from the age limit specified for the phthalate standard or for subcategories of children's products, if any, the existing state statutes do not define children's products generally in terms of an age ceiling for "child" or "children." In addition to these state standards, Hawaii's Senate has adopted a resolution requesting the Hawaii Department of Health to monitor research being conducted regarding the risks posed by phthalates and bisphenol-A in consumer products and to report recommendations and proposed legislation before the 2009 legislative session. Oregon's legislature has adopted a joint memorial urging Congress to regulate phthalates at the federal level as a substance in cosmetics, personal care products, and children's toys. Additionally, several other states have introduced legislation concerning phthalates. Beginning January 1, 2009, the California statute will prohibit the manufacture, sale, or distribution in commerce of any toy or child-care article that contains DEHP, DBP, or BBP in concentrations exceeding 0.1% and of any toy or child-care article, intended for use by children under three years of age that can be mouthed, that contains DINP, DIDP or DnOP in concentrations exceeding 0.1%. The statute requires manufacturers to use the least toxic alternative when replacing phthalates in such products and also prohibits them from replacing phthalates with certain carcinogens (including substances known, likely to be, or suggestive of being human carcinogens) or reproductive toxicants identified in accordance with federal or California laws. "Toys" are defined as "all products designed or intended by the manufacturer to be used by children when they play" and "child care article" is defined as "all products designed or intended by the manufacturer to facilitate sleep, relaxation, or the feeding of children, or to help children with sucking or teething." This statute appears to be partly modeled on an earlier version of the EU Council Directive 76/769/EEC with regard to the threshold concentration level for the ban and the definition of child-care articles and toys. It does not include the amendment made by EU Directive 2005/84/EC (December 14, 2005) adding "hygiene" to the scope of child-care articles, which effectively included items such as lotion, powder, baby oil, etc. It also includes the three-year-old age limit regarding products that can be placed in the mouth from the EU Commission Decision 1999/815/EC (December 7, 1999). It added "teething" to the scope of child-care articles, for which the EU includes "sucking" but not teething. The Vermont statute appears to be modeled on the California statute, but with some differences. Beginning July 1, 2009, it will prohibit the manufacture, sale, or distribution in commerce of any toy or child-care article intended for use by a child under three years of age that contains DEHP, DBP, or BBP in concentrations exceeding 0.1% and of any toy or child-care article intended for use by a child under three years of age that can be placed in the mouth and that contains DINP, DIDP, or DnOP in concentrations exceeding 0.1%. The Vermont statute provides for an under- three-years-old age limit for the first group of phthalates, unlike the California statute. The Vermont law adopts the California statutory definition of "child care article" and "toy" and additionally defines "phthalate" as "any one of a group of chemicals used as plasticizers to provide flexibility and durability to plastics such as polyvinyl chloride (PVC)." Like the California statute, it requires manufacturers to use the least toxic alternative to phthalates and prohibits them from substituting carcinogens (including substances known, likely to be, or suggestive of being human carcinogens) or reproductive toxicants identified by the EPA under federal law, but not under state laws, apparently because Vermont does not have such environmental laws identifying carcinogens or reproductive toxicants. The Vermont law provides that a violation of the phthalates law shall be deemed a violation of the Vermont Consumer Fraud Act and that the provisions of that act concerning the enforcement authority of the Vermont Attorney General and the rights of private parties shall apply to violations of the phthalates law. It further clarifies that nothing in the phthalates law regulates firearms, ammunition, shooting ranges, or hunting/fishing equipment. The Washington provision banning phthalates in children's products is part of a broader statute concerning chemicals in children's products generally. It covers lead and cadmium content and also provides, among other things, for the identification of chemicals of "high concern" to children and children's products by the Washington Department of Ecology, for notification to the Department by a manufacturer that its children's product contains a chemical of high concern, and for a product safety education campaign to promote awareness of unsafe children's products. With regard to phthalates, beginning July 1, 2009, it prohibits a manufacturer, wholesaler, or retailer from manufacturing, knowingly selling, offering for sale, or distributing for sale or for use in the state a children's product or product component containing phthalates, individually or in combination, at a concentration exceeding 0.1% by weight (a thousand parts per million). It defines phthalates as meaning the six phthalates discussed in this report. It adopts the California definition of "toy," but does not refer to "child-care articles." Instead, it defines "children's product," which includes the California definition of a child-care article, expanding it to include children's clothing, and also includes toys, children's cosmetics (for children under the age of 12), children's jewelry (for children under the age of 12), and car seats (it also includes a list of items not considered "children's products"). On July 28, 2008, the House and Senate conferees for H.R. 4040 , the Consumer Product Safety Improvement Act of 2008, announced that an agreement on a final text had been reached resolving the differences between the Senate and House versions of the bill. The bill was approved in both chambers before the August recess and signed into law by the President on August 14, 2008 ( P.L. 110 - 314 ). Beginning 180 days after enactment, the CPSIA §108 permanently bans the three phthalates whose toxicity is not disputed and temporarily bans three other phthalates pending a review by a Chronic Hazard Advisory Panel (CHAP). It prohibits children's toys or child care articles that contain more than 0.1 percent DEHP, DBP, or BBP. The sale of children's toys that can be placed in the mouth or child care articles containing concentrations of more than 0.1 percent of DINP, DIDP, or DnOP, is prohibited on an interim basis until a review by a CHAP. After the CPSC receives the report from the CHAP, it would determine, by rule, whether to continue the interim ban. The provision does not restrict phthalate alternatives. It defines "children's toy" as "a consumer product designed or intended by the manufacturer for "a child 12 years of age or younger, for use by the child when the child plays." "Child care article" is defined as "a consumer product designed or intended by the manufacturer to facilitate sleep or the feeding of children age 3 and younger or to help such children with sucking or teething." The statute includes guidelines for determining whether a product was intended or designed for use by children of the specified ages and whether a toy can be placed in a child's mouth. As discussed above, this provision also clarified any preemptive effect these standards would have on state laws. Non-identical provisions would be preempted, unless a state applied for and the CPSC granted an exemption for stronger protections under state laws, and the federal law would not preempt restrictions on phthalate alternatives. The CPSIA standard differs somewhat from each of the existing state laws described above. For example, the federal law differs from the state laws with regard to the definition of toys, children's products, or children's articles, and the age group for which these consumer products are intended. It appears that the new federal phthalates safety standard preempts the recent state laws that were enacted in the absence of federal standards, to the extent that they do not provide identical protection for the same risk of injury. The final phthalates provision resolved differences between the Senate and House treatment of a phthalates ban and between proponents and opponents of a permanent ban on all six phthalates named in the legislation, including restrictions on certain alternatives. The final phthalates provision evolved from a Senate-approved amendment to H.R. 4040 . The House-passed version of H.R. 4040 had no phthalate amendment; the House Committee on Energy and Commerce noted in its report that it became aware of the potential dangers posed by phthalates in toys late in the legislative process and intended to take up the issue later. Section 40 of the Senate version of H.R. 4040 , also referred to as the Feinstein-Boxer Amendment for the two California senators who introduced this specific amendment to the bill, was modeled on the California statute, with some changes, but would have placed the provisions in the context of the Federal Hazardous Substances Act (FHSA) framework. It adopted the California statutory definition of "child care article" and did not adopt its definition of "toy," but instead defined "children's product" as "a toy or any other product designed or intended by the manufacturer for use by a child when the child plays," which effectively included the same products as the California statute. The provision would have treated as a banned hazardous substance under the FHSA any children's product or child-care article which (1) contains in any part any combination of DEHP, DBP or BBP in concentrations exceeding 0.1% or (2) is intended for use by a child that can be placed in a child's mouth and either contains any combination of DINP, DIDP or DnOP in concentrations exceeding 0.1% or contains any combination of any of the six phthalates in concentrations exceeding 0.1%. Any prohibitions under FHSA §4 (15 U.S.C. §1263) would have applied to such products, including the introduction, receipt or delivery into interstate commerce of such products; failure to permit inspections of any factory, warehouse, or other establishment where such products are manufactured, processed, packed, or held; etc. Like the California statute, the provision would have prohibited a manufacturer from replacing phthalates with certain carcinogens (including substances known, likely to be, or suggestive of being human carcinogens) or reproductive toxicants identified by the EPA. However, unlike the California statute, the provision would not have required manufacturers to use the least toxic alternative as a substitute for phthalates. Section 40 would have provided that neither it nor FHSA §18(b)(1)(B) (15 U.S.C. §1261 note), concerning preemption of non-identical State or local regulations of banned hazardous substances, would preempt State or local laws applying to a phthalate other than the six described in the bill; applying to a phthalate described in the bill that is not otherwise regulated by the bill; requiring a warning of risk, illness, or injury regarding any phthalate; or prohibiting the use of alternatives to phthalates not prohibited under this bill. As discussed above, generally under the CPSC as amended by the CPSIA, non-identical State or local regulations are preempted unless an exemption is granted by the CPSC upon request by the State or locality. There were two issues of particular concern during development of the final phthalate provisions of the CSPIA. First, what is the scientific basis for health concerns about exposure to these chemicals? Second, would the provision reduce the risks without generating greater risks? These issues are discussed briefly here, based on the scientific and legal information presented above. The scientific basis for concerns about risks to human health appears to be strong in the case of some phthalates, adequate with respect to others, and weak for the remaining chemicals. The strongest evidence with respect to developmental effects has been produced since about the year 2000. Many of these studies were not available to the NTP or to CPSC when they reviewed the phthalate literature in 2000 or 2001. At that time, regulators focused on carcinogenic effects, rather than effects on fetal development. This more recent animal evidence strongly supports a claim that DEHP, DBP, and DBB can harm reproduction and damage fetal and juvenile development in rats. The structure-activity relationship (between the molecular structure of the phthalates and developmental damage) is well understood, such that scientific concern focuses now on DEHP, DBP, and DBB. DINP also is a developmental toxicant, but is only about 15% as potent as the most potent phthalates. To the extent that it is still studied, it is generally studied together with other more potent toxic phthalates to evaluate additivity of effects. Scientific evidence regarding the other phthalates mentioned in the new law is lacking. Limited evidence indicates that DIDP, DINP, and DnOP might have effects on the immune system, but these phthalates appear to be much less toxic to developing rodents. Data indicate that people are exposed to many phthalates, especially DEHP, DBP (di-n-butyl), and DBB. Children appear to be most heavily exposed. Data are insufficient to judge exposure for DINP, DIDP, and DnOP. Individuals such as newborn babies in the intensive care units of hospitals face multiple and continuous phthalate exposures. Scientists are just beginning to explore the additive effects of exposure to multiple phthalates, as well as to phthalates in combination with certain pesticides. To date, studies suggest there may be additive effects of multiple phthalate exposures. The National Academy of Sciences is evaluating the risk of aggregate human exposure to multiple phthalates, and is expected to report before the end of 2008. By restricting the use of six phthalates in child-care items and toys, the new law codifies the voluntary agreements reached by CPSC with product manufacturers (to keep DEHP and DINP out of nipples, pacifiers, and teething toys, and DEHP out of toys that might be mouthed) and should reduce exposure to DINP, the only phthalate currently used in the United States to produce toys. The effect of banning use of the other phthalates is less clear, because their child-related uses are not known. However, because the law prohibits their use as substitutes for DINP in toys, toys should be eliminated as a source of exposure. For each use, different chemicals might be used in lieu of the six phthalates. Acetates might be used in some applications; phthalates other than the six specified might be used in others. The risks of such chemicals may be known or unknown. Given the lack of legal authority to require testing for a chemical proposed for most uses, and the cost of testing, new formulations of products might pose either more or less risk than the current formulations.

Roughly a dozen chemicals known as phthalates are used to make the plastics found in thousands of consumer products, ranging from medical tubing to automotive dashboards to bath toys. These phthalates are not tightly held by the plastics and are released into the environment over time. Congress is concerned about possible human health effects from exposure to six of these chemicals: di-(2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP), benzyl butyl phthalate (BBP), diisononyl phthalate (DINP), diisodecyl phthalate (DIDP), and di-n-octyl phthalate (DnOP). DEHP, DBP, BBP, and (to less extent) DINP are known to be toxic to the reproductive systems of rodents. Recent rodent experiments demonstrate that pre-natal exposure at a sufficient level to these same phthalates disrupts the normal action of hormones and can cause malformations of the reproductive organs of offspring (especially males). Disruption of hormonal functions in humans is known to result in abnormal reproductive development. Many scientists believe that the phthalates toxic to rodents might be able to cause similar malformations in humans. However, human health effects of phthalate exposure have not been conclusively demonstrated. Very few studies have looked at possible effects in humans, but their results appear consistent with the results of rodent experiments. More research would be needed to test this hypothesis. Recent U.S. surveys have found almost universal human exposure to phthalates. Individuals may be exposed to high enough levels of phthalates to cause reproductive abnormalities. Scientists at the National Toxicology Program have expressed "serious concern" about human male infants undergoing intensive medical procedures, and "concern" about development of human males less than a year old who are exposed to DEHP. In light of these concerns, the National Academy of Sciences is evaluating the risk of aggregate human exposure to multiple phthalates. Federal agencies have taken several actions, some as early as the mid 1980s, to evaluate and regulate phthalates, but no consumer product to date has been banned outright. The agency responsible for regulating toys and most other child-care products is the Consumer Product Safety Commission (CPSC). The Consumer Product Safety Improvement Act of 2008 (P.L. 110-314, enacted August 14, 2008) includes a provision intended to ensure protection of children from six phthalates by restricting their use in toys and child-care products. The scientific basis for concerns about human health risks appears to be strong in the case of some phthalates (such as DEHP), adequate with respect to others (perhaps DINP), and weak for the remaining chemicals (for example, DIDP and DnOP). The strongest evidence with respect to developmental effects has been produced since about the year 2000. The new law codifies voluntary agreements previously reached by CPSC with product manufacturers, and should reduce exposure to one particular phthalate. New formulations for toys and child-care products may pose greater or fewer risks than current formulations.

The U.S. monetary system is based on paper money backed by the full faith and credit of the federal government. The currency is neither valued in, backed by, nor officially convertible into gold or silver. Through much of its history, however, the United States was on a metallic standard of one sort of another. On occasion, there are calls for Congress to return to such a system. Such calls are usually accompanied by claims that gold or silver backing has provided considerable economic benefits in the past. This report briefly reviews the history of the gold standard in the United States. It is intended to clarify the dates during which the standard was used, the type of gold standard in operation at the various times, and the statutory changes used to alter the standard and eventually end it. It is not a discussion of the merits of such a system. Money exists to facilitate exchange, functioning as a "medium" or middle part of a transaction. In a modern economy, every time someone purchases something, that person engages in half of an exchange: one thing of inherent value has changed hands, with the buyer getting what he or she wants, but the seller still looking to get something of value in return. Money is a token given the seller signifying that he or she is still owed something of value. A gold standard uses gold—directly or indirectly—as money. In a pure gold standard, gold itself is used in transactions, with all prices in essence expressed in terms of the amount of gold needed for purchase. Because gold may be alloyed with baser metals, and its weight impossible to ascertain without proper scales, it became common to mint it into coins so that its purity and weight were certified by an authority (usually the government). Such coins typically also become a unit of account, so that instead of being specified in the number of grains of gold of a certain purity, prices are expressed in terms of dollars, guineas, doubloons, drachma, etc. A monetary system can also be regarded as a gold standard if representations of gold are used in exchange. For example, paper notes can be part of a gold standard if they represent a claim to gold. However, "claim" can be ambiguous. Typically, people think of paper currency as part of a gold standard if the notes are "backed" by gold, that is, if there is for every note outstanding a certain quantity of gold stored as "cover." Backing, however, may be largely irrelevant. For paper to represent gold, it must be regarded as equivalent to a given quantity and purity of gold. In general, this equivalence is achieved by "convertibility," the commitment to exchange the notes for gold on demand. For the purposes of this report, a paper money system in which notes are convertible on demand by the issuer into gold of a given weight and purity is regarded as a gold standard. Legal tender is something that by law must be accepted in satisfaction of obligations denominated in currency. Should a suit arise over a commercial or public transaction, the law holds that a monetary obligation is satisfied if these notes have been "tendered" in the correct amount. Under such a law, it is still possible to make a contract in something other than the legally designated currency. A vendor, for example, may specify that the payment needed to induce provision of a service will not be accepted in legal tender. But if payment for an obligation not otherwise specified is tendered in the legally designated medium, it must be accepted at face value. If some medium is made legal tender, payment of that medium for a debt cannot be refused on the grounds that the designated currency is not money. Issuing money is something else. It is possible to issue currency without making it legal tender. The government can—and has—paid out various forms of notes that have circulated as currency, but have not been declared legal tender. Full-bodied gold or silver coins may be issued without making them legal tender. At the same time, tender status can be conferred on the coins or notes of another country. Consequently, the monetary standard and legal tender can be different things. Officially, the United States began not with a gold standard, but with a bimetallic standard in which both gold and silver were used to define the monetary unit. The first coinage act, based on the recommendations of Treasury Secretary Alexander Hamilton, defined the dollar as 371.25 grains of pure silver minted with alloy into a coin of 416 grains. Gold coins were also authorized in denominations of $10 ("eagle") and $2.50 ("quarter-eagle"). The ratio of silver to gold in a given denomination was 15 to 1. These coins were declared legal tender. But in addition, a number of foreign gold coins were also declared legal tender. Most significantly at the time, the Spanish milled dollar of silver was designated as legal tender and set equal to the U.S. dollar. A country's monetary system operates in the context of a world market for metals. And the world market price ratio of silver to gold fluctuates. Not long after the first coinage act was passed, the market price ratio of silver to gold moved to around 15½ to 1. As a result, silver being the cheaper metal, gold was used for purchases abroad, and the coins used for domestic purposes became primarily silver. Effectively, the United States found itself on a silver standard for the first 40 years of its existence. In 1834, Congress moved to remedy the problem caused by the 15-to-1 silver-to-gold mint ratio, and therefore restore gold coins to use in domestic commerce. The ratio was changed to 16 to 1 by reducing the gold in gold coins. The pure gold in an eagle was reduced from 247.5 to 232 grains (and the coin itself reduced to 258 grains, almost nine-tenths fine). An additional adjustment was made in 1837 to 232.2 grains of gold to make the fineness exactly nine-tenths. The fineness of silver coins was also changed to nine-tenths. Since the latter was accomplished by reducing the alloy content, the amount of silver in a dollar remained the same (371.25 grains in the newer 412.5 grain dollar coin). The new coins were legal tender for debts incurred before the alteration in the gold content. This meant that debts from before the change could be discharged with effectively less money than was borrowed. Before 1834, a $10 debt could be paid of with 3712.5 grains of pure silver, worth about 236.465 grains of gold on the world market. Afterwards, 232 grains of gold could pay the debt, a reduction of about 2% in the debtor's cost. The change in the mint ratio, however, was too great. The new mint ratio made gold cheaper relative to the world market price ratio. Silver began to be exported, and after a few years, gold became the principal coin of domestic commerce. The latter phenomenon became more pronounced with discoveries of gold in California and Australia. By 1850, silver coins had almost totally disappeared. This created a problem because there were no gold coins representing fractions of a dollar. The shortage of fractional coins was remedied by an act of 1853. This act authorized subsidiary silver coins (i.e., less than $1) with less silver than called for by the official mint ratio, and less than indicated by the world market price. They were made legal tender for amounts less than $5. Throughout the period before the Civil War, there was no legal-tender paper money in the United States. Yet a variety of paper money existed and circulated as readily as coin. These included private bank notes, some Treasury notes, and (in large transactions) financial instruments called bills of exchange. In each case, these paper claims were promises to pay gold or silver. Consequently, they were an integral part of the metallic monetary standard. Various banks conducted much of their business based on the issuance of notes. Taking deposits and making loans, the banks needed only a fraction of their total assets held as coin on hand. The rest could be held in the form of interest-earning loans, and issued as notes promising to pay the bearer on demand an amount of gold or silver on presentation of the notes. The notes were not legal tender, but circulated on the strength of the promise to redeem. Sometimes the notes passed at a discount that represented the possibility that they would be dishonored. And the discount varied with the distance from the bank and its reputation for soundness. The congressionally chartered First and Second Bank[s] of the United States were able to issue such notes on a national scale through branches throughout the country. These notes were not legal tender, but tended to pass at par with no discount (i.e., at face value). By presenting for redemption the notes of state-chartered banks that it received from customers, the Bank of the United States was able to help state bank notes remain at par as well. Banks were not always able to keep their promise to redeem notes, however, even when the banks were solvent. When unusually large numbers of customers presented notes for redemption, the demand for gold and silver exceeded what the banks had on hand. Periodic financial crises led to suspension of convertibility of notes. In such periods, paper money and metallic money diverged in value, and one was no longer a perfect substitute for the other. Starting for the first time during the War of 1812, the Treasury issued Treasury notes that promised to pay gold or silver at a future date. These were in many ways indistinguishable from other forms of Treasury debt, because they typically bore interest. The notes, however, were especially suited to be used in transactions, and therefore were used as money even though they were not legal tender. Notes that circulated usually were of denominations low enough to be useful in commerce, were the same general size as bank notes, and—most important—were receivable for taxes. The receivability feature guaranteed that they were always worth at least their face value. This meant that while the notes were not convertible into gold or silver on demand, they could satisfy obligations that would otherwise be paid with gold and silver, making them virtually equivalent to coin. Treasury notes of this type were issued at various times until the Civil War. In mercantile circles, large commercial transactions were often settled with bills drawn on other merchants. Bills of exchange were directives to a merchant or firm in another place to pay over to someone a certain sum on or after a given date. They were drawn on a merchant who held balances owed to the drawer or who had extended credit to the drawer of the bill. Once paid to one merchant in a transaction, they were often used in payment in turn to another. They could be indorsed like a check and were considered fairly secure because any indorser of the bill could be held responsible for the debt if the bill were not honored. They were particularly important in foreign trade, enabling large transactions to take place without having ship gold or silver back and forth across the ocean. Like bank notes, they economized on the use of gold and silver, permitting debits and credits among many merchants to be canceled out against each other, with only the net balance needing to be transferred in the form of coin. Under the fiscal pressures produced by the Civil War, the U.S. government issued Treasury notes of the type described above, as well as some convertible into gold and silver. But the government soon found it hard to maintain convertibility. Banks also suspended convertibility. In 1862, therefore, the government issued for the first time notes that were not convertible either on demand or at a specific future date, and that were declared legal tender. Known as "greenbacks," these notes were legal tender for everything but customs duties, which had to be paid in gold or silver. The government made no specific promise to convert such notes to gold or silver. Hence, it abandoned the gold standard . Holders of greenbacks could obtain gold or silver in the marketplace, but one dollar in greenbacks could no longer buy 23.22 grains of gold because the government no longer stood ready to maintain the dollar at its mint price. Greenbacks were issued in such large quantities that the United States experienced a substantial inflation during the course of the war. Just as occurred in the decades before, fractional silver currency disappeared because it was worth more in foreign trade than its face value. There were private issues of paper fractional currency, but these were subsequently outlawed. The government issued postage stamps for fractional currency, and subsequently fractional currency of its own. After the war was over, Congress determined to return to the metallic standard at the same parity that existed before the war. To do this, the market exchange rate of greenbacks for gold had to be brought back to its old level. This was accomplished by slowly removing the greenbacks from circulation. This was an off-and-on effort, with notes removed, held steady, and even returned to circulation. In 1875, it was decided to reduce their number to $300 million. In 1878, however, their number was frozen at about $347 million, where it remained for a century. Parity between the greenback and gold dollars was achieved in 1879, returning the United States to a metallic standard. The government stood ready to pay its debts in gold, accept greenbacks for customs, and to redeem greenbacks on demand for gold. Greenbacks were perfect substitutes for gold coins. The government had returned to a gold standard; but two important changes had taken place with respect to paper money: (1) the government now was an issuer of paper money redeemable on demand and (2) the paper money was legal tender. Although much of the monetary debate of the 1870s was about ending the paper money standard and reestablishing gold convertibility, a relatively minor recodification of law in 1873 turned out to have enormous implications for the monetary system. In defining the dollar and the coins of the United States, the legislation omitted the 412.5 grain silver dollar. Consequently, it eliminated silver as anything but fractional currency. What followed was the only period in U.S. history that can strictly be called a gold standard: 1879-1933. At the time the legislation was enacted, silver had not played a significant role in circulation (except for subsidiary coins) for almost four decades, so that the law had no immediate impact. However, within a few years after the law was passed, the market price of silver was falling rapidly, and restoration of a silver dollar at the old mint ratio would have meant that silver, not gold, would again be the circulating currency. Thus, the 1873 legislation prevented the country from shifting to a de facto silver standard. Once aware of the repercussions of the 1873 act, silver producers and advocates of cheaper money agitated in favor of restoring silver to its previous status. In 1878, legislation was enacted that called on the Treasury to purchase and mint a certain quantity of silver into dollars each year. It further permitted persons to deposit with the Treasury quantities of silver coins for which they would receive "silver certificates," which, although not legal tender, were receivable for taxes, and therefore suitable for circulation. In 1890, the provisions under which silver was purchased was changed somewhat. In addition, a new feature was added: silver certificates could be redeemed for gold. Because of the fall in the value of silver, the silver dollars and certificates under this legislation—like the silver subsidiary coins—had a metallic value on the world market much less than their mint value. The difference in the value ("seignorage") was captured by the government as it bought the silver at market value and paid out the coins at the higher face value. Hence, the value of silver money was like that of the remaining greenbacks: held at artificially high levels by government fiat, but coexistent with a gold standard because the issue of silver dollar coins and silver certificates was limited. In addition to issuing full-bodied gold coins, the government during this period also issued gold certificates. Essentially, these were promises to pay gold to the holder of the note on demand. They provided the public with money that was easier to carry and transfer. The law specified the amount of gold that had to be held in reserve for the notes. Treasury notes were re-created by the 1890 legislation. They were issued upon the security of silver in the Treasury, based on its market value at the time of issuance. They were redeemable for silver on demand based on the market value of silver at the time of redemption. They were made legal tender. Their legal tender character, and their non-interest bearing nature, made them unlike the Treasury notes issued earlier in U.S. history. Another significant change had occurred during the Civil War: the creation of the national bank system. The federal government instituted a system of chartering banks. These banks, like the state banks before them and the Bank[s] of the United States, had the power to issue their own notes. However, the notes had to be backed up by government bonds held on deposit with the Comptroller of the Currency. Because the bonds earned interest and the notes did not, banks made profits from the issuance of bank notes. The notes were not legal tender, but passed readily at their face value because they were redeemable in gold or legal tender notes. The quantity issued was limited by the amount of government bonds eligible to be held as collateral. State bank notes were driven out of circulation by means of a punitive tax of 10% imposed on them. The new national bank notes were of uniform design. Thus, soundly backed by safe assets, these notes provided a safe and uniform—but still privately issued—paper currency for the country. The government's continued flirtation with silver after 1873 generated concerns that it might restore the dual gold and silver standard in which dollar debts could be discharged with 371.75 grains of pure silver. With silver approaching half its previous value in gold, the possibility of restoring the bimetallic standard made holding dollar claims risky. International investors watched the U.S. Treasury for any signs that it might pay debt service in silver—even at the market rate. This generated market instability whenever customs duties (the government's main source of revenue and gold) decreased. In 1900, the government reaffirmed its commitment to the gold standard. The gold dollar was declared the standard unit of account, and all forms of money issued by the government were to be maintained at parity with it. For the first time, a gold reserve for government-issued paper notes was formally established. Greenbacks, silver certificates, and silver dollars continued to be legal tender, and were redeemable in gold. Treasury notes were discontinued and recalled. By the end of the 19 th century, another form of money had become increasingly common: checks. Although checks had existed for centuries, state banks—compensating for the loss of their ability to issue notes—innovated them further. Improvements in transportation and communication, and the growth of clearinghouse associations, made it possible to use them in transactions between customers of different banks, and to some extent different regions of the country. Checks functioned much the same as banks notes had: they permitted the public to conduct business with a smaller amount of coin and legal tender than they would have otherwise. Only a fraction of the money placed in checking account deposits had to be kept on hand or on deposit with clearing agents. Most transactions were settled by canceling debits against credits. Checks also suffered from the same defect that bank notes had earlier in the century: banks were prone to periodic runs by customers demanding cash from their checking accounts. Because banks only kept a limited supply of legal tender and bank notes at any given time, these massive conversions of accounts for cash created crunches and sometimes caused banks to fail. The failure (or potential) failure of banks and losses from uninsured deposits created that much more incentive for depositors to withdraw their funds, producing more bank runs. These periodic banking panics were symptomatic of a less dramatic but more regular problem: the seasonal variation in the need for currency for transactions. The system of gold and legal tender notes was not elastic, and it was subject to money "shortages" especially at harvest time. In 1913, this problem was addressed by the creation of the Federal Reserve System (Fed). The Fed was to remedy the situation in a two ways. First, it would provide a means by which banks could borrow in times of stringency to satisfy their customers' demand for cash. Second, it could create a new form of money, Federal Reserve notes, which could be expanded or contracted in quantity to respond to the need for more cash. T he creation of the Federal Reserve had little if any effect on the gold standard . The dollar was still defined in terms of gold. Federal Reserve notes were redeemable in lawful money. The Fed not only operated under the gold standard, but was charged with maintaining it, and kept a percentage of gold cover for its notes. Gold still dictated the value of the dollar. Much of the world was forced off the gold standard during World War I. Under the Fed, the United States remained on the gold standard through the war. It took several more years after the war before other major countries restored their currency to gold convertability. This was largely completed by 1927. In 1933, the gold standard was ended for the United States. Despite the creation of the Fed, a wave of bank runs resulted in massive bank failures over the period 1930-1933. The Fed failed to provide sufficient liquidity to enable the banks to meet their customers' demands for cash. This failure was due in part—and possibly largely—to the gold standard. For the Fed to generate enough cash to meet the public's changed demand for it, it would have had to create much more money and to lower interest rates. Lower interest rates, however, would have sped up the export of gold from the country as investors looked abroad for higher returns. Creating more paper money, moreover, would have created doubts about the ability of the United States to remain on gold. The greater these doubts, the greater the incentive to export gold, reducing gold reserves, and making it harder to maintain the dollar at its legal gold value. Hence, to keep the economy from collapsing, the Fed needed a policy of expansion. To stay on the gold standard, it needed one of contraction. Until 1933, it largely went with the latter. With the inauguration of Franklin Roosevelt, the government's policy changed. In a series of executive orders, legislative actions, and court decisions, the United States was taken off the gold standard. Convertibility into gold was suspended. Private holdings of gold were nationalized. A new parity with gold was established amounting to a devaluation of approximately 40%. This parity was only important for international transactions, however. Because Americans could not hold gold, their dollars were not convertible. The gold value of the dollar was largely meaningless. With no convertibility, the result was a quasi-gold standard. Shortly after taking office, President Roosevelt closed the banks in order to stop the bank runs and the export of gold from the country. His order also prohibited the banks from paying out gold or dealing in foreign exchange. He did this based on the Trading With the Enemy Act of 1917, which gave him broad powers over banking and currency. Although the 1917 act appeared to confer these powers only in wartime, President Roosevelt acted on the basis of a "national emergency" and summoned Congress to a special session to prepare legislation to confer the powers he wanted to deal with the situation. Three days later, Congress passed the Emergency Banking Act, which amended the 1917 act to include national emergencies, retroactively approved the President's actions of the previous three days, and granted him power to regulate or prohibit the payment of gold. President Roosevelt promptly used these powers to continue the prohibition on gold transactions, even for banks that reopened. By executive order, on April 5, 1933, the "hoarding" of gold was forbidden. Gold had to be turned in to the government at the official price of $20.67 per troy ounce. Essentially, the country's gold was nationalized. This action was endorsed by Congress in a joint resolution. The resolution called for a suspension of the gold standard and abrogated gold clauses. The Thomas Amendment to the Agricultural Adjustment Act of 1933 granted authority to the President to alter the gold content of the dollar, with power to reduce it to 50% of its previous value. In addition, the amendment gave the President power to authorize the issuance of up to $3 billion in U.S. notes, and the power to compel the Fed to issue money to finance up to $3 billion in government borrowing. It also set out new conditions for the issuance of more silver certificates. Under the authority of the Thomas Amendment, the market price of gold was allowed to increase to $35 by January 1934. At that time, the Gold Reserve Act was passed, and the President thereby empowered to fix the new value of the dollar at not less than 60% of its previous value. The Gold Reserve Act also gave legislative force to the nationalization of gold. Under its terms, title to all bullion and coin was vested in the U.S. government, gold coin was withdrawn from circulation, and the Treasury Secretary was given control of all trading in gold. Private holdings of gold were outlawed (except for numismatic and various industrial/artistic uses). In June 1934, the Congress passed the Silver Purchase Act. The act called for at least one-fourth of the United States' monetary stocks to be held in silver, so long as the government did not have to pay more for the silver than its official monetary value. The silver could be coined or issued as silver certificates. Silver certificates were exchangeable for silver coin. Because the market value of silver was below its monetary value, this law provided for the issuance of a limited quantity of another form of what amounted to fiat money. The government's abrogation of gold clauses in contracts was upheld by the Supreme Court in February 1935. Thus, the government could discharge all its interest and principal due in paper money. Because the dollar had depreciated due to official policy, it meant that the outlawing of gold clauses effectively reduced the amounts the government paid on its debts relative to what it would have paid in gold. Under the system adopted by the Gold Reserve Act of 1934, the United States continued to define the dollar in terms of gold. Gold transactions, however, were limited to official settlements with other countries' central banks. For an American citizen, the dollar no longer represented a given quantity of gold in any meaningful sense. The gold standard without domestic convertibility was maintained under the Bretton Woods international monetary agreement of 1944. Under this international agreement, the role of gold was severely constrained. Other countries' currencies were defined in terms of the dollar. Countries kept gold reserves and could settle accounts in gold, but were generally expected to settle balances with any other currencies that were freely convertible into foreign exchange. Countries typically used dollars to settle accounts; only limited amounts of gold were transferred across borders, and dollars were rarely converted into gold even in the international arena. The International Monetary Fund was set up to assist in the exchange process and to provide foreign exchange to help nations keep their exchange rates fixed. Under the old international gold standard, a country with an overvalued currency would have lost gold and experienced deflation until the currency was properly valued. Under Bretton Woods, this automatic adjustment was cushioned through credits that permitted a country to avoid deflating. Although virtually all countries defined their currencies in terms of dollars, for a number of years, even major trading partners imposed exchange restrictions as "transitional" measures in order not to exhaust their reserves in an effort to maintain their official exchange rates. So in important respects, many currencies were still effectively inconvertible. It was only in the late 1950s that the major trading countries finally dropped enough of their exchange restrictions that one could fairly say that they were on an international gold standard. Almost immediately, there were problems for countries maintaining the value of their currencies relative to the dollar/gold. With convertibility playing so small a role in the system, there was little of the automatic discipline which under the old gold standard forced countries' underlying currency values in line with official rates. Periodic currency crises were the result. The United States, in particular, because its currency was the key to the whole system, faced even less discipline in its monetary policy. Partly as a consequence, too many dollars were issued to keep prices stable or to keep the price of gold at its official level. A mild inflation developed. Internationally, this meant that the dollar was becoming overvalued in the system: worth more officially than indicated by its relative buying power. Under the classic gold standard, this would have caused an outflow of gold from the United States, a fall in the money supply, and a return of the dollar's buying power to its official gold price. Under the Bretton Woods system, countries coordinated their efforts to maintain currencies at their official levels. Increasingly, other countries built up balances of dollars rather than convert them to gold. Meanwhile, the United States was getting closer to the legal limit on currency that could be outstanding on the gold stock that was held in reserve. Domestically, U.S. inflation raised silver prices enough that the market value of silver in silver certificates and coins was approaching the mint value. The United States was beginning to have difficulty keeping enough coins and silver certificates in circulation. The certificates presented a problem because they were the principal form of small-denomination currency. In 1963, Congress repealed the Silver Purchase Act and granted the Federal Reserve authority to produce Federal Reserve notes in $1 and $2 denominations. The Kennedy Administration quickly made arrangements for the gradual retirement of the silver certificates, thereby freeing up the government's silver holdings for use as coins. As inflation continued, it was apparent that full-bodied silver coins would soon be impossible to keep in circulation. In 1965, Congress authorized the minting of clad coins of copper and nickel to replace the existing silver coins. In 1965, the requirement to hold gold reserves against Federal Reserve deposits was repealed. In 1968, the requirement to hold gold reserves against Federal Reserve notes was repealed. Although there was no private market for gold in the United States, such markets did exist abroad. By the late 1960s, prices in these markets were tending to deviate from official currency prices. The United States and other countries tried to combat this through a series of market interventions in which sizable amounts of the official gold stock were sold. In 1968, these "gold pool" arrangements collapsed. A new policy was adopted in which the private market price of gold would be allowed to deviate from the official settlements price. This made the international monetary arrangement a gold standard in name only. It was also necessary for the United States to avoid large official settlements in gold. Through diplomatic channels it was made clear that other countries could not expect to redeem large quantities of dollars for gold. This "closing of the gold window" was not an official action, so that it did not constitute an official abandonment of gold. Nor was it an absolute prohibition on gold redemption. However, what had previously been routine became a matter of negotiation. In August 1971, the Nixon Administration announced that it would not freely convert dollars at their official exchange rate. The measure was intended to be temporary. The gold price of the dollar and official rate of exchange into other currencies were not changed. The intention was to put pressure on other countries to revalue their currencies (and make other concessions). The country did not officially move to a "floating" rate. With no official conversion or redemption taking place, the dollar floated by default. After a series of negotiations, the "Smithsonian Agreement" was reached in December 1972, by which the dollar would be devalued from $35 per troy ounce of gold to $38 while several other countries revalued their currencies upward. This new value was made official by an act of Congress in March 1972. The new price was the official price of the dollar, and policies were pursued to maintain the dollar's value relative to other currencies. However, there continued to be no convertibility into gold—even for international transactions. The $38 price was the official price at which the United States neither sold nor purchased gold. Within a year, it became impractical to maintain the new exchange rate. To do so would have required the United States to redeem more dollars than it had in gold and foreign currency reserves, or to contract the economy to increase the purchasing power of the dollar. In February 1973, the Treasury agreed to devalue the dollar to $42.22 per troy ounce of gold. Within two weeks of the second devaluation, it again became impractical to hold the rate. At that point, despite efforts to reach a new monetary agreement, the dollar was left to float. The new $42.22 par value was made official in September 1973, long after it had been de facto abandoned. The official rate was never maintained. In October 1976, the government made official what was already true in reality: the definition of the dollar it terms of gold was removed from statute. The monetary system officially became one of pure fiat money. This brief history, although essentially factual in nature, yields a number of observations relevant to claims about the gold standard. U.S. monetary history is not one of steady commitment to gold suddenly abandoned in favor of a fiat standard. Nor were the metallic standards of the 19 th and early 20 th centuries without paper money or other characteristics abhorrent to some advocates of gold. First , a genuine gold standard existed only from 1879 to 1933. Prior to that was a bimetallic standard in which silver was dominant from 1792 to 1834, a bimetallic standard with gold dominant from 1834 to 1862, and a fiat money system from 1862 to 1879. After 1933, it was a quasi-gold standard that gradually became a pure fiat standard over the period 1967-1973. Second , even under the gold standard, the United States had paper money. For most of the time the standard was in operation, this money was issued by banks. Until the Civil War, none of the paper money was legal tender; yet, it circulated. Moreover, the gold reserve behind paper money was never more than a fraction of the total. This is a common characteristic of metallic standards. Third , a metallic standard is no guarantee against currency devaluation. The definition of the unit of account can be changed. This was demonstrated by the currency depreciation of 1834, which occurred without ever leaving the standard. Similarly, under a bimetallic standard, depreciation can occur as a consequence of the changing availability of the two metals. Fourth , even under a metallic standard, the United States issued legal-tender coins that were less than full-bodied. As early as 1853, coins were minted with less silver than called for by the official mint ratio. Fifth , the Federal Reserve system did not replace the gold standard. The Fed operated under the gold standard for nearly 20 years. A central bank and a metallic standard are not mutually exclusive. Indeed, central banks historically were set up to help the gold standard operate. Sixth , the classic gold standard ended in 1933; what followed was only a partial—and not full—gold standard. A definition of a dollar as a given amount of gold does not make a real gold standard. A genuine metallic standard is one in which the public is able to freely shift gold from exchange to other uses, and paper issued by the government freely convertible into gold. Seventh , the final move to a fiat money was not deliberate or purposeful. It occurred by default as links to gold became impossible to maintain. Nor did the final abandonment of gold occur suddenly or cleanly. The United States began to halt its redemptions of dollars into gold for international transactions in 1967 and 1968. The actions of 1971 and 1973 were not the adoption of floating exchange rates and fiat money, but the loss of the ability to redeem dollars at a fixed price. Floating occurred by default.

The U.S. monetary system is based on paper money backed by the full faith and credit of the federal government. The currency is neither valued in, backed by, nor officially convertible into gold or silver. Through much of its history, however, the United States was on a metallic standard of one sort or another. On occasion, there are calls for Congress to return to such a system. Such calls are usually accompanied by claims that gold or silver backing has provided considerable economic benefits in the past. This report briefly reviews the history of the gold standard in the United States. It is intended to clarify the dates during which the standard was used, the type of gold standard in operation at the various times, and the statutory changes used to alter the standard and eventually end it. It is not a discussion of the merits of such a system. The United States began with a bimetallic standard in which the dollar was defined in terms of both gold or silver at weights and fineness such that gold and silver were set in value to each other at a ratio of 15 to 1. Because world markets valued them at a 15½ to 1 ratio, much of the gold left the country and silver was the de facto standard. In 1834, the gold content of the dollar was reduced to make the ratio 16 to 1. As a result, silver left the country and gold became the de facto standard. In addition, gold discoveries drove down the value of gold even more, so that even small silver coins disappeared from circulation. In 1853, the silver content of small coins was reduced below their official face value so that the public could have the coins needed to make change. During the Civil War, the government issued legal tender paper money that was not redeemable in gold or silver, effectively placing the country on a fiat paper system. In 1879, the country was returned to a metallic standard; this time a single one: gold. Throughout the late 19th century, there were efforts to remonetize silver. A quantity of silver money was issued; however, its intrinsic value did not equal the face value of the money, nor was silver freely convertible into money. In 1900, the United States reaffirmed its commitment to the gold standard and relegated silver to small denomination money. Throughout the period under which the United States had a metallic standard, paper money was extensively used. A variety of bank notes circulated, even without being legal tender. Various notes issued by the Treasury also circulated without being legal tender. This use of paper money is entirely consistent with a gold standard. Much of the money used under a gold standard is not gold, but promises to pay gold. To help ensure that the paper notes theretofore issued by banks were honored, the government created the national bank system in 1863. In 1913, it created the Federal Reserve System to help ensure that checks were similarly honored. The creation of the Federal Reserve did not end the gold standard. The gold standard ended in 1933 when the federal government halted convertibility of notes into gold and nationalized the private gold stock. The dollar was devalued in terms of its gold content, and made convertible into gold for official international transactions only. Even this quasi-gold standard became difficult to maintain in the 1960s. Over the period 1967-1973, the United States abandoned its commitment to covert dollars into gold in official transactions and stopped trying to maintain its value relative to foreign exchange. Despite several attempts to retain some link to gold, all official links of the dollar to gold were severed in 1976.

Elderly poverty in the United States has declined dramatically over time, ultimately reaching an all-time low in 2006. In 1959, when the Census Bureau began to measure poverty, more than a third (35%) of the elderly—those age 65 or older—were in poverty. By 2006, less than one-tenth (9%) of the elderly were in poverty. This reduction in elderly poverty was primarily due to two factors: legislative changes that made Social Security benefits (i.e., Old-Age, Survivors, and Disability Insurance, or OASDI) more generous and strong wage growth that led to higher initial benefits. If Social Security benefits did not exist, an estimated 44% of the elderly would be poor today, assuming no behavioral changes such as saving more or working longer. The poverty rate among the elderly is lower than that for children or for the working-age population. In 2006, 9% of the elderly were poor, compared to 17% of children and 11% of working-age adults (i.e., ages 18 to 64). In 1969, the poverty rate among the elderly was more than double the rate among working-age adults. By the early 1990s, the elderly poverty rate had fallen below the rate for working-age adults and has remained lower since. Within each age group, poverty rates vary dramatically depending on race, sex, education levels, and other demographic characteristics. Elderly poverty is projected to continue to decrease over time under Social Security's scheduled benefit formula. Most of the elderly (roughly 90%) receive Social Security benefits. Under current law, initial Social Security benefits will increase at the rate of wages, while the poverty thresholds will rise with prices. Since wage growth is expected to outpace price growth, the rate of poverty should decline among Social Security beneficiaries, all else being equal. The elderly poverty rate is projected to fall to about 5% by 2042 under the scheduled baseline , which assumes no changes in the Social Security benefit formula. Social Security's scheduled benefit formula is unsustainable with current revenues. Lawmakers could restore long-term system solvency by increasing revenue (e.g., raising taxes), cutting benefits, or some combination of the two. According to the Social Security Administration, if no changes are made to Social Security and the trust funds are allowed to become insolvent, scheduled benefits would be reduced and elderly poverty rates could double. Under the payable baseline , which assumes no action until projected trust fund insolvency in 2041, an across-the-board benefit cut to achieve annual balance is projected to result in an 11% elderly poverty rate. This figure is more than twice as high as the rate projected under the scheduled baseline, and higher than the elderly poverty rate today. Many recent proposals to improve system solvency would reduce Social Security benefits in the future. If Social Security benefits were cut across the board, the poverty rate among elderly Americans could be significantly higher than under the current-law benefit formula. Some of the most commonly discussed options to improve solvency could increase the elderly poverty rate to levels almost as high as doing nothing until the trust funds run out. During the 2005 debate over Social Security reform, one frequently mentioned solvency option was the price indexing provision from Model 2 of the 2001 President's Commission to Strengthen Social Security. If such a price indexing provision were implemented in 2008, the Dynasim model estimates that the elderly poverty rate would increase to 10% by 2042, assuming no other changes. This figure is twice the poverty rate projected under the scheduled benefit formula (which would require additional funding to be sustainable). In addition, the 10% elderly poverty rate projected under price indexing in 2042 is almost as high as the 11% rate projected under the payable baseline. Another frequently mentioned option was developed by Robert Pozen, one of the co-chairs of the 2001 commission, and endorsed by President George W. Bush. Dubbed progressive price indexing, this option would implement the price-indexing formula from Commission Model 2 but would protect some low earners from benefit cuts. However, unlike price indexing, progressive price indexing would not restore solvency to the system; it could reduce the solvency gap by about 70%. If progressive price indexing were implemented in 2008, the Dynasim model estimates that elderly poverty rate would be 8% by 2042, assuming no other changes. This is higher than the 5% poverty rate projected under the current law scheduled baseline (which assumes no benefit cuts) but lower than the 11% rate projected under the payable baseline. Workers, and in some cases their families, receive Social Security benefits based on their contributions into the system. The Supplemental Security Income (SSI) program, in contrast, is a means-tested program that does not have work or contribution requirements, but restricts benefits to those who meet strict limitations on assets and income, as well as other criteria. Both programs are administered by the Social Security Administration (SSA). Table 1 outlines some of the differences between Social Security and SSI. About 92% of the elderly currently receive Social Security. More people qualify for Social Security now than in the past because of legislative changes that expanded eligibility and increased workforce participation. Reliance on Social Security benefits is also increasing. In 2006, about one-quarter of the elderly relied on Social Security for all of their income. In contrast to Social Security, only about 5% of the elderly currently receive SSI. Many poor elderly individuals do not receive SSI, either because they do not meet SSI's strict asset and income restrictions, or because they are eligible but have not enrolled in the program. The academic literature estimates that about one-half to two-thirds of qualifying elderly participate in SSI. Substantially fewer people qualify for SSI now than in the past because SSI's income limits rise with inflation, while many potential SSI applicants receive Social Security benefits, which rise with wages. This means that all other things being equal, for each year in which wages rise faster than prices, fewer Social Security beneficiaries qualify for SSI. SSI's resource limits and income disregards are not indexed and thus do not rise at all. As a result, SSI's eligibility criteria become stricter over time. Although Social Security has substantially reduced poverty among the elderly, its primary purpose is to replace earnings lost when a worker of any income level retires, dies, or becomes disabled—not to reduce poverty. The Social Security benefit formula is progressive, so lower earners' benefits represent a greater proportion of their average lifetime earnings than do higher earners' benefits. However, not all of the elderly receive Social Security benefits, and those who do receive benefits do not necessarily receive enough to stay out of poverty. As a result, about 7% of elderly Social Security beneficiaries lived in poverty in 2006, while about 22% of elderly non-beneficiaries were poor. Some long-term low earners receive Social Security benefits that are less than the elderly poverty threshold. For example, a person born in 1943 who earned the minimum wage every year for 40 years and then retired at his or her full retirement age (66) would receive a Social Security benefit that is slightly less than the official poverty threshold for an elderly individual. At age 62 (the age at which most individuals take up retirement benefits), the benefit for such a worker would be about three-quarters of the elderly poverty threshold. Individuals with limited working histories (for example, women who take time out of the labor force) also frequently receive Social Security benefits that are below poverty. One provision of the Social Security benefit formula that was intended to benefit poor individuals is the special minimum primary insurance amount (PIA). The special minimum PIA was enacted in 1972 to increase benefits for long-term low wage earners and their families. To qualify, a worker must have at least 11 years of Social Security-covered earnings above a specified threshold. The amount of the special minimum PIA rises each year with inflation and varies depending on the number of years a person works. In 2008, the amounts range from $34.90 per month for workers with 11 years of qualifying earnings to $721.40 for workers with 30 years. Initial Social Security benefits rise at the rate of wage growth, while the special minimum PIA rises at the generally slower rate of price growth. Thus, the amount of the special minimum PIA has gradually become smaller relative to minimum PIA a person could receive under the ordinary Social Security rules. As a result, the special minimum is paid to a small and rapidly dwindling population. SSA's actuaries project that it will be impossible for anyone who becomes eligible for benefits in 2013 or later to receive the special minimum PIA. The current law special minimum PIA affects very few Social Security beneficiaries and does not necessarily bring these people out of poverty. In 2005, approximately 100,000 Social Security beneficiaries (less than 0.25%) received a special minimum PIA. Among these beneficiaries, the average Social Security benefit amount ($710 per month) was less than the poverty threshold for an elderly individual ($781 per month in 2005). The Supplemental Security Income (SSI) program was designed explicitly to benefit the elderly poor, in addition to the low-income blind and disabled. Its strict income and asset thresholds ensure that SSI benefits go only to the extremely poor. Unlike Social Security, SSI benefits and eligibility are not based on work, so SSI reaches many individuals with limited work histories who do not qualify for Social Security. SSI benefits are typically not high enough to lift recipients out of poverty—about four in ten (39%) of SSI beneficiaries are poor. The maximum federal benefit rates for SSI are less than the poverty thresholds for elderly individuals and couples, and SSI recipients may only receive limited income other than their SSI benefits. Many poor elderly individuals do not receive SSI, either because they do not meet SSI's strict asset and income restrictions, or because they are eligible but have not enrolled in the program. When discussing policy options to address elderly poverty, it is instructive to take a closer look at the poor elderly. Figure 1 provides projected elderly poverty rates under both the scheduled and payable baselines in 2042, the first full year of projected trust fund insolvency. These projections were produced by CRS using the Urban Institute's Dynasim microsimulation model. (For more details on the Dynasim model and its use in this analysis, please see the Appendix .) The projected elderly poverty rate is 11% under the payable baseline and 5% under the scheduled baseline. Under the payable baseline, a few groups stand out as having poverty rates that are substantially above average. For example, racial and ethnic minority groups have higher-than-average projected poverty rates: 19% for black and Hispanic elderly, and 21% for Asian and Native American elderly (labeled as "other" in Figure 1 ). Elderly individuals with low levels of education are projected to have three times the overall poverty rate: 33%. Unmarried elderly individuals are projected to have high rates of poverty: 21% for never married individuals, 17% for divorced individuals, and 13% for widowed elderly individuals. Finally, women are projected to have higher poverty rates than men (13% compared to 9%, respectively). When considering a policy change, it is also useful to consider what kinds of benefits (if any) the poor elderly receive. About 70% of the poor elderly are projected to receive Social Security benefits under the payable baseline in 2042, compared to 97% of the non-poor elderly. The poverty rate among elderly individuals who receive Social Security benefits is projected to be 8% under the payable baseline in 2042, compared to 58% among individuals who do not receive Social Security benefits. Thus, even after accounting for potential across-the-board cuts, Social Security is projected to keep many elderly out of poverty and to provide income to most of those who remain poor. Fewer of the elderly poor receive SSI than Social Security. However, SSI recipients are much more likely to be poor than are Social Security beneficiaries. About 22% of the poor elderly are projected to receive SSI benefits under the payable baseline in 2042, compared to 1% of the non-poor elderly. The poverty rate among elderly individuals who receive SSI is projected to be about 75% under the payable baseline in 2042, compared to about 9% among elderly individuals who do not receive SSI benefits. When discussing changes to public policy, it is important to keep in mind the possible unintended consequences of a potential change. One of the advantages of a microsimulation model such as Dynasim is that it brings unexpected interactions between policy options and existing program rules to light. Social Security is a complex program, and changes to its structure could lead to unexpected results—both within the Social Security program and in the relationship of Social Security to SSI and other means-tested programs. The results presented here show only the interactions that occur within and between Social Security and SSI, as Dynasim does not model other low-income programs. Also, since the official poverty thresholds are based only on money income, policy interactions with in-kind or quasi-cash benefits such as Medicaid or food stamps would not affect people's poverty status. Changes to Social Security could potentially affect eligibility and benefit levels for various government assistance programs. Any change to Social Security benefits could affect SSI eligibility and benefit levels. In turn, any change to SSI eligibility (direct or indirect) could affect eligibility for a number of low-income programs, including Medicaid, food stamps, and the Low-Income Home Energy Assistance Program (LIHEAP). In the most extreme cases, an increase in Social Security benefits could actually make some low-income beneficiaries worse off because they would lose eligibility for other programs as a result. Changes to Social Security could affect SSI, since SSI eligibility and benefit levels are determined in part using applicants' income, which includes Social Security benefits. The SSI rules stipulate that an individual's countable income cannot exceed the federal benefit amount (plus the federally-administered state supplements, if applicable). In addition, the rules stipulate that the first $20 of unearned income (including Social Security benefits) can be excluded from the SSI benefit calculation. After that, each additional dollar of Social Security benefits results in a one dollar reduction in federal SSI benefits. (Once state supplement payments are factored in, an additional dollar of Social Security benefits could result in a reduction of more than one dollar in total SSI benefits.) Thus, an increase in Social Security benefits could cause some people to lose SSI eligibility and cause others to receive less in SSI benefits. Changes to Social Security or SSI could also affect individuals' eligibility for other programs. For example, an increase in Social Security benefits could raise some individuals' income above the qualifying thresholds for SSI, Medicaid, food stamps, and the Low Income Home Energy Assistance Program (LIHEAP). An increase in SSI enrollment (due to direct or indirect changes) could lead to more people qualifying for means-tested programs, because in many cases SSI recipients are considered categorically eligible for assistance. The following programs for low-income individuals could potentially be affected by changes to Social Security and SSI eligibility and benefits. Medicaid. States have three options for determining Medicaid eligibility for SSI recipients. As of 2008, in 32 states and the District of Columbia, individuals who are eligible for SSI are automatically eligible for Medicaid. SSI recipients in seven states and the Northern Mariana Islands are eligible for Medicaid but must complete a separate application. Eleven other states have the option to impose Medicaid eligibility requirements that are more restrictive than SSI criteria. Food Stamps. SSI recipients living alone or in a household where all members receive SSI benefits are automatically eligible for food stamps. LIHEAP. Households with a member receiving SSI are categorically eligible for LIHEAP, so changes to SSI eligibility would also affect LIHEAP eligibility. The interactions between changes to Social Security or SSI and low-income programs affect not just beneficiaries, but the total cost of an option as well. For example, increased SSI enrollment could lead to higher expenses not just for SSI, but also for Medicaid, the food stamp program, and LIHEAP. This is because a greater number of SSI recipients would mean a greater number of people who are categorically eligible for these programs, increasing their cost. Similarly, an increase in Social Security benefits could lead to higher expenses for Social Security, but lower expenses for SSI, Medicaid, the food stamp program, and LIHEAP. This is because higher Social Security benefits would increase the total income of some people enough so that they would lose eligibility for SSI and other means-tested programs. If one wanted to increase Social Security benefits while minimizing effects on SSI eligibility and benefit levels, one option would be raising SSI's $20 unearned income exclusion, which has not changed since 1981. This change would allow a greater proportion of Social Security benefit increases to be passed on to SSI recipients, and allow a greater number of recipients to maintain SSI eligibility. Raising the unearned income exclusion would also allow policymakers to increase Social Security benefits with fewer effects on beneficiaries' eligibility for Medicaid, food stamps, and LIHEAP. It would also be possible to raise Social Security benefits while preserving current-law eligibility for Medicaid, food stamps, and/or LIHEAP for some SSI recipients without increasing SSI's unearned income exclusion. Legislation could deem current SSI recipients eligible for SSI for the purposes of qualifying for Medicaid, food stamps, and/or LIHEAP without actually paying them SSI benefits. This way, SSI recipients who lost SSI eligibility after a change to Social Security would not lose their eligibility to the affected program(s). Such a deeming provision would only affect individuals who were already receiving SSI when the policy was implemented—not necessarily individuals in the future who could have received SSI under the old rules. The following section describes each of the four options CRS modeled. It also provides the projected effects of the options on Social Security and SSI benefit levels and eligibility in 2042, and the interaction between the two programs. These four options were chosen to illustrate different approaches to mitigating poverty in a benefit cut scenario, allowing policymakers to see the potential pros and cons of generic options. The details of each option could be modified or combined with other provisions. This analysis does not cover potential transition issues nor the cost of the options modeled. The first option would create a new minimum Social Security benefit equal to the elderly poverty line. Under this option, any individual who was insured for Social Security (i.e., who had enough credits to qualify for a worker benefit) would be guaranteed a primary insurance amount (PIA) at least equal to the single-person elderly poverty threshold. Some Social Security beneficiaries could receive this minimum and still be poor under the option. Since the PIA would be equal to the poverty threshold under this option, an individual would only get a poverty-level benefit if he or she claimed benefits at the full retirement age (at which unreduced benefits are paid). Most people, especially people with low incomes, claim benefits before their full retirement ages and are thus subject to a permanent reduction in monthly benefits. For example, claiming benefits at Social Security's earliest eligibility age (62) permanently reduces workers' PIAs by 30% if they were born in 1960 or later. Finally, poverty is a family measure, not an individual measure, so if a person receives a poverty-line benefit but other members of his/her family have little or no income, that person could still be considered poor. In addition, some beneficiaries would not receive a minimum benefit under this option because they would not qualify for benefits based on their own work records, but would receive benefits based on others' work (e.g., spouse benefits, in which a person receives 50% of his/her spouse's PIA). These auxiliary beneficiaries do not have their own PIAs, and in some cases their benefits would be less than poverty. The mean change in Social Security benefits among all beneficiaries is projected to be about 2% under this option. Eligibility for Social Security would not change under the option, but the additional income received would disqualify some individuals from SSI. As a result, about 12% of individuals (307,000) who received SSI benefits under the baseline are projected to lose their entire SSI benefit. Among beneficiaries projected to retain eligibility for SSI, about 20% would receive lower benefits. This effect on SSI benefits dilutes the option's poverty reduction effect. The poverty-line Social Security minimum benefit option is projected to reduce the elderly poverty rate by about one percentage point compared to the current law payable baseline, reducing the net number of elderly poor by about 494,000 individuals in 2042. Figure 2 shows the projected effect of this option on the poverty status of elderly individuals living in poor families in 2042, by demographic characteristics. An estimated 7% (561,000) of the elderly poor would be moved out of poverty. The option is projected to have a bigger poverty-reduction effect on some subgroups within the elderly poor than others. For example, the option is projected to bring 23% of married poor elderly individuals out of poverty, but a only 1-2% of each non-married group. This result might seem counterintuitive since married individuals are less likely than non-married individuals to receive higher Social Security benefits under the option, but it reflects the fact that married people can potentially be brought out of poverty by a spouse's benefit increase. About 67,000 individuals are projected to fall into poverty under this option, increasing the number of elderly poor by about 1%. All of these individuals are projected to lose SSI benefits under the option. Some policymakers are interested in minimum benefit options targeted at long-term low earners, as a way of rewarding work and reinforcing Social Security's ties to earnings. One such option is a provision in Senator Lindsay Graham's 2003 comprehensive Social Security reform bill that would create a sliding-scale minimum benefit that would vary depending on number of years of work. Retired worker beneficiaries with at least 35 years of work would be guaranteed a PIA equal to 120% of the single elderly poverty threshold, which would gradually phase out for workers with 10 years of work (the minimum required to be insured for a retired worker benefit). For people with 30 or fewer years of work, the minimum benefit guaranteed under this option would be less than poverty. Even individuals who qualify for a minimum PIA at the poverty line or higher could still be poor under this option, for the same reasons described for the previous option: they could be subject to benefit reductions, or other members of their families might not have enough income for the enhanced benefit to bring the entire unit out of poverty. Overall, there is projected to be no change in the mean amount of Social Security benefits under this option. Eligibility for Social Security would not change, but the additional Social Security benefits some individuals receive would disqualify them for SSI. As a result, about 2% of individuals (60,000) who would have received SSI benefits under the baseline are projected to lose eligibility. The model estimates that the option would disqualify more people for SSI than it would bring out of poverty after accounting for changes in both Social Security and SSI benefits. Among beneficiaries who retained eligibility for SSI, a projected 6% would have lower SSI benefits under the option. The sliding-scale minimum benefit option is not projected to change the projected elderly poverty rate from the current law payable level of 11%. It is projected to have a negligible effect on the net number of elderly poor in 2042. Figure 3 shows the projected effect of this option on the poverty status of elderly individuals living in poor families in 2042, breaking down the results by demographic characteristics. Overall, about 1% (58,000) of the poor elderly are projected to come out of poverty, compared to the payable baseline. The poverty reduction effect of this proposal is not projected to vary dramatically by subgroup—each group shows either no change or 1% coming out of poverty. Almost as many elderly are projected to fall into poverty as a result of this option as are taken out of it (58,000 individuals compared to 53,000 individuals, respectively). Many of those put in poverty are projected to lose SSI benefits under the option. Under this option, SSI's federal benefit rates would be increased to the elderly poverty thresholds for individuals and couples. The asset thresholds and income exclusions for SSI would remain the same as under current law (i.e., would not increase with inflation). Increasing the federal benefit rate would effectively liberalize eligibility for SSI, since SSI's income eligibility thresholds are linked to federal benefit rates. Some SSI beneficiaries could still have benefits that are less than poverty under the option. A person could, for example, receive less than the full federal benefit rate because there is a dollar-for-dollar reduction in federal SSI benefits for unearned income above the thresholds. In addition, since poverty is determined for families and SSI benefits are paid to individuals or couples, a person could receive a poverty-line SSI benefit and still be considered poor if other family members have little or no income. An additional 1% of the elderly (913,000 individuals) who did not receive SSI benefits under the baseline are projected to receive them under this option. This is projected to increase SSI participation by more than a third. Among those who received SSI under the baseline, all are projected to receive higher SSI benefits, which would almost double on average. Changes in SSI receipt or benefit levels do not affect Social Security eligibility or benefit levels, so there would be no change in Social Security receipt or benefits under this option. The poverty-line SSI option is projected to reduce the projected elderly poverty rate by about two percentage points compared to the payable baseline, reducing the number of elderly poor by about 395,000 individuals in 2042. Figure 4 shows projections of the effect of this option on the poverty status of elderly individuals living in poor families in 2042, breaking down the results by demographic characteristics. Overall, the number of elderly in poverty is projected to be reduced by about 5% (395,000) under the option, in comparison with the current law payable baseline. The poverty reduction effect of this option would vary depending on demographic characteristics. For example, it is projected to have a relatively small poverty-reduction effect on individuals with more than a high school education (3%) and married individuals (3%), both of whom are less likely than average to receive SSI benefits. On the other hand, this option would particularly help the oldest old (age 85 or older), 7% of whom are projected to be brought out of poverty. No one is projected to be put into poverty by this option. The final option modeled would build upon the previous option by retaining the poverty-line SSI federal benefit rates and adding on provisions to increase SSI's asset limits and income exclusions and index them to inflation. Under current law, SSI's asset limits and income exclusions are very strict and do not rise with inflation. The current unearned income exclusion ($20/month) and earned income exclusion ($65/month plus half of earnings above this amount) were set in 1981. The current asset exclusions ($2,000/individual and $3,000/couple) were set in 1989. The increased asset limits and income exclusions in this option are based on the SSI Modernization Act, introduced by Representative Benjamin Cardin, most recently in 2005. This bill would have doubled the earned and unearned income exclusions (to $130/month and $40/month, respectively) and increased the asset thresholds by 50% (to $3,000/individual and $4,500/couple). The bill would also have automatically indexed these thresholds to inflation. An additional 3% of the elderly (2.0 million individuals) who did not receive SSI benefits under the baseline are projected to receive them under this option. This would almost double the number of the elderly who are projected to receive SSI. Among beneficiaries who received SSI under the baseline, all are projected to receive higher SSI benefits, which would more than double on average. Changes in SSI receipt or benefit levels do not affect Social Security eligibility or benefit levels, so there would be no change in Social Security receipt or benefits under this option. The option to create a poverty-line SSI benefit and liberalize eligibility is projected to reduce the elderly poverty rate by about three percentage points, compared to the payable baseline, reducing the number of elderly poor by about 1.9 million individuals in 2042. Figure 5 shows the estimated effect of this option on the poverty status of elderly individuals living in poor families in 2042, breaking down the results by demographic characteristics. Overall, the number of elderly poor is projected to be reduced by about 24% (1.9 million) under the option, compared to the current law payable baseline. This option would have a bigger poverty-reduction effect on some subgroups of the elderly poor than others. For example, the Dynasim model estimates that the option would bring 36% of never-married individuals out of poverty, along with 31% of black elderly poor and 29% of the oldest elderly poor (age 85+). All of these groups would be relatively more likely to receive SSI. The option is projected to have a smaller poverty-reduction effect on the elderly poor who are married (10%), Asian or Native American (labeled "other" in the figure, 15%), and college graduates (17%). All of these groups would be relatively less likely to receive SSI. No one is projected to be put into poverty by this option. The following section summarizes the results described above, showing the projected effects of the options on Social Security and SSI eligibility, benefit levels, and poverty rates in 2042, and the interaction between the two programs. In summary, none of the options is projected to change eligibility for Social Security benefits, but Options #1 and #2 would change the benefit formula. Overall, Option #1 is projected to increase the average Social Security benefit by 2%, while Option #2 is not projected to change the average Social Security benefit received. As for SSI, Options #3 and #4 are projected to increase both eligibility and benefit levels. Both of these changes would dramatically affect the SSI program. Under Option #3, the number of SSI beneficiaries is projected to increase by more than a third, while under Option #4 the number of SSI beneficiaries is projected to increase by 80%. The change in benefit levels for those who would receive SSI under current law would also be dramatic. Under both Option #3 and Option #4, SSI benefit payments are projected to roughly double. The overall projected elderly poverty rate under each option is shown in Figure 6 below. Each of the options is modeled with a current law payable baseline, which is shown along with a current law scheduled baseline for comparison. Each option is projected to reduce poverty somewhat compared to the current law payable baseline—ranging from a negligible reduction in the elderly poverty rate for Option #2 (which would create a Social Security minimum benefit for long-term low earners) to a reduction of three percentage points for Option #4 (the poverty-line SSI benefit with liberalized eligibility). It is important to note that the projected elderly poverty rate under all of the options would be higher than under the current law scheduled baseline, which assumes no benefit cuts. Both the number and demographic breakdown of individuals who are projected to come out of poverty under each of these options varies substantially. Overall, the number of elderly poor people brought out of poverty would vary dramatically, from 1% for Option #2 to 24% for Option #4. Option #1 is projected to bring 7% of the elderly poor out of poverty, compared to 5% for Option #3. As far as demographic breakdowns, Option #1 is projected to bring a greater proportion of married individuals out of poverty, which reflects the fact that married people can potentially be brought out of poverty by a spouse's benefit increase. The poverty-reduction effects of Option #2 would not vary much by subgroup, probably because the impact of the option would be small overall. Both of the SSI options (Options #3 and #4) are projected to bring a greater proportion of non-married individuals and the oldest elderly (age 85+) out of poverty, in part because these groups are more likely to receive SSI. One of the most striking differences between the Social Security and SSI options is whether and how they interact with other programs. Both of the Social Security options reduce eligibility and benefit levels for SSI (which in turn can affect eligibility for other benefit programs). For Option #2 in particular, this interaction would offset the poverty reduction effect of the policy. Both of the SSI options are free of similar interaction effects. They each increase SSI benefits without affecting eligibility or benefits for Social Security. However, increased eligibility for SSI could affect participation in the food stamp program and other low-income programs for which SSI recipients are categorically eligible. If one of the objectives of reforming Social Security were to mitigate the effect of possible benefit reductions on the elderly poor, targeting spending would become an important consideration. One way to measure such targeting is to compare the estimated effects of potential policy options on the elderly poor vs. the elderly non-poor. Other ways of analyzing the targeting of an option include measuring the poverty gap and looking at the proportion of people who fall below a given percentage of the poverty threshold (e.g., 150% or 200% of poverty). However, this report focuses on elderly people who are officially considered poor. Figure 7 shows the elderly poor, the target group for the modeled policy options. For each option, it shows the proportion of individuals projected to gain income (labeled "winners"), lose income (labeled "losers"), or stay the same (labeled "no change"). The income measure shows the projected net change in income under each option, including both Social Security and SSI benefits, so these projections reflect the interaction between the two programs. Figure 8 shows the same measures for the non-poor elderly. Under Option #1, which would create a new minimum Social Security benefit at the poverty line, about two-thirds of the poor elderly (68%) are projected to be unaffected. There are several reasons poor individuals may not be affected: because they don't qualify for Social Security benefits, because they receive benefits based on another person's work record, or because they began to receive benefits before the option was implemented. As shown in Figure 7 , a projected 27% of the poor elderly would be winners, but most aren't projected to gain enough income to bring them out of poverty. The remaining 5% of the elderly poor are projected to lose income under the option. In nearly all cases, their increased Social Security benefits are projected to result in reduced SSI benefits or loss of SSI eligibility. Among the non-poor elderly, most (84%) are projected not to be affected, as shown in Figure 8 . However, about 11% are projected gain income under the option and another 5% are projected to lose income, for the same reasons outlined above. Under Option #2, which would create a sliding-scale minimum benefit based on years of work, about nine out of ten of the poor elderly (89%) are projected to be unaffected, for the same reasons mentioned in the previous option. About 8% of the poor elderly are projected to be winners under the option, but most don't gain enough income to bring them out of poverty. The remaining 3% of the elderly poor are projected to lose income under the option. Most of the individuals who lose income under the option would either have reduced SSI benefits or lose SSI eligibility. Among the non-poor elderly, most (91%) are projected not to be affected, as shown in Figure 8 . However, about 5% are projected gain income under the option and another 4% are projected to lose income, for the same reasons outlined above. Under Option #3, which would raise the SSI federal benefit rates to the poverty line, about 63% of the poor elderly are projected to be unaffected, as shown in Figure 7 . This is roughly the same proportion of the poor elderly who live in families where no elderly member receives SSI under the option. The remaining 37% of the poor elderly are projected to be winners under the option. None of the elderly poor is projected to lose income. Among the non-poor elderly, most (96%) are projected not to be affected, as shown in Figure 8 . About 4% are projected gain income under the option. None of the non-poor elderly is projected to lose income. Under Option #4, which would raise SSI federal benefit rates to the poverty line and also liberalize eligibility, about 59% of the poor elderly are projected to be unaffected, as shown in Figure 7 . This is roughly the same proportion of the poor elderly who live in families where no elderly member receives SSI under the option. The remaining 41% of the poor elderly are projected to be winners under the option None of the elderly poor is projected to lose income. Among the non-poor elderly, most (96%) are projected not to be affected, as shown in Figure 8 . About 4% are projected gain income under the option. None of the non-poor elderly is projected to lose income. The SSI options analyzed in this report are better targeted toward the elderly poor than are the Social Security options. Among the elderly poor, the SSI options are projected to create more winners and no losers. This is because SSI recipients, by definition, are mostly poor, so any changes to SSI would affect mostly poor people. Among the non-poor, the SSI options change the incomes of fewer people, and cause no one to lose income. The Social Security options are projected to cause some people to lose income, especially poor people. This is primarily because of the interaction between Social Security and SSI. Each additional dollar of Social Security benefits could reduce SSI recipients' benefits by one dollar (or more, after factoring in state supplements), and could disqualify some recipients for SSI altogether. In addition to considering benefit levels, poverty rates, and targeting, as examined above, policymakers examining the potential effects of Social Security reform on the elderly poor would likely consider other criteria when discussing policy changes to either Social Security or SSI. The following section briefly summarizes some of these other criteria. One important factor not explicitly addressed in this report is the cost of each option, which would vary substantially. The Dynasim model does not produce cost estimates, and current cost estimates for these options are not available from other sources. One possible subject for discussion if policy changes are considered is the original purpose of the programs that could be modified. For example, SSI was originally designed to benefit the poor and its strict income and asset limits restrict benefits to the poorest elderly. As such, expanding SSI eligibility or benefits would effectively target additional spending toward the elderly poor. Social Security, on the other hand, was not primarily intended to reduce poverty, but to replace the lost earnings of contributing workers of all income levels. Changing the Social Security benefit formula to mitigate the effects of changes on the elderly poor arguably would not target additional dollars as efficiently. It also might complicate the balance between adequacy and equity in the Social Security program. Another possible subject for discussion is the potential scope of policy changes—factors such as program participation rates and eligibility restrictions. Social Security participation among the elderly is nearly universal. SSI has strict eligibility criteria and its participation rates are far lower. As a result, changes to SSI would likely affect fewer of the elderly poor than would changes to Social Security. Some individuals prefer not to receive means-tested assistance and would not participate in SSI regardless of changes. Other individuals may not qualify even for a liberalized SSI program because of asset restrictions. This would be a particular problem for people with retirement savings, as defined contribution retirement plans (such as 401(k)s and Individual Retirement Accounts) count toward SSI's asset test. Finally, another potential topic that could be discussed is the prevailing political and fiscal environment. In recent years, major changes to Social Security and SSI have been rare. For example, the last significant amendments to Social Security were in 1983. SSI's income disregards and asset tests have stayed the same since 1981 and 1989, respectively, and are not indexed to inflation. There are also fiscal constraints on additional spending. The federal budget is currently in deficit and is projected to remain so in the future. In addition, Social Security faces long-term solvency problems. Ultimately, future elderly poverty rates depend largely on how policymakers choose to address Social Security's looming solvency problems. Once those decisions are made, the tradeoffs between any options to mitigate the effects of potential benefit cuts would be judged based on their effectiveness, efficiency, cost, and on policymakers' judgments about a myriad of other factors. This paper examines four possible policy options to reduce elderly poverty. The projections in the paper were prepared using the Urban Institute's Dynasim microsimulation model. The Dynasim model projects future Social Security and SSI benefits by using a mix of historical data and projections. When interpreting the results of Dynasim or any other model, it is important to note that projections are inherently imprecise; the further into the future one looks, the wider the range of possible outcomes. Population The analysis focuses on all noninstitutionalized individuals who will be age 65 or older in 2042, including those who do not receive Social Security and/or SSI benefits. Baseline All of the options in this paper are compared to a current law payable baseline, which assumes that current law benefits are cut across the board to balance Social Security's annual income and spending at the point of insolvency, currently projected to occur in 2041. This baseline illustrates how such options could work in a benefit-cut scenario. Some of the most commonly discussed solvency options are projected to result in poverty rates similar to the current law payable baseline in the year of analysis, as discussed above. Using a different baseline or different solvency option would lead to different results. Year of Analysis This report focuses on the effects of policy changes in 2042, the first full year of projected trust fund insolvency. Analyzing this year shows how various poverty-reduction options could mitigate the effects of an across-the-board cut to Social Security benefits at the projected point of insolvency, assuming no action was taken before then. This reduction is assumed to bring annual cash-flow balance to the system, cutting benefits by about 25% in 2042. The figures and accompanying analysis are essentially a snapshot of the projected beneficiary population in this single year. Focusing on a different year would lead to different results. It is also important to recall that initial Social Security benefits rise with wages over time, while SSI benefits and income limits as well as the poverty thresholds rise with prices. Since wages are projected to rise faster than prices over time, this means that in general, the projected prevalence of SSI receipt decreases each year under current law, as does the number of people in poverty. Start Year for Options All of the options in this report are assumed to be implemented in 2008. The year 2008 was chosen so that the analysis could rely as much as possible on near-term projections, which are more reliable than long-term projections. In addition, choosing an earlier start year means that almost all of the elderly beneficiaries in the analysis year, 2042, will be subject to the options. Measure of Income Many of the results presented in this paper focus on changes in income. For the purposes of this paper, income includes Social Security benefits, SSI benefits, pension payments, earnings, and the annuitized value of financial assets. In modeling these options, Social Security benefits were calculated before SSI benefits. This sequence is intended to mimic program rules, in which SSI applicants must apply for all other benefits for which they may qualify before applying for SSI. As a result, the interactions between Social Security and SSI benefits can be seen. Income is calculated on a per capita basis, which means that for married couples the income of both spouses is averaged together. However, in showing poverty status, a measure of family income is used since the official poverty threshold is calculated on a family basis. Poverty Thresholds In the U.S., poverty is officially defined using the Census Bureau's poverty thresholds. These thresholds reflect rough estimates of the amount of money individuals or families need per year to purchase a basket of goods and services deemed "minimally adequate," according to the living standards of the early 1960s, when the poverty thresholds were developed. The thresholds are increased at the rate of inflation. The 2007 annual poverty threshold was $9,944 for an elderly individual and $12,533 for an elderly couple. A family is considered poor if its countable money income is less than the poverty threshold for its family type and size. This report uses the official poverty thresholds appropriate for each individual's family type and size (including the thresholds for elderly individuals and couples). The thresholds are projected using the intermediate assumptions about future inflation from the 2005 Social Security Trustees Report. Behavioral Changes This analysis assumes that no behavioral changes result from the modification of the Social Security or SSI benefit rules. Thus, policy changes will not automatically alter an individual's work patterns or age at benefit take-up. However, it's likely that if policy changes were implemented, individuals' incentives and behavior could also change. The model assumes that roughly two-thirds of individuals who qualify for SSI take up benefits. For policies with liberalized eligibility criteria (such as the SSI options analyzed in this report), the same proportion of qualifying individuals is assumed to take up benefits. However, it is possible that a more generous SSI program would also change the proportion of qualifying individuals taking up benefits, which is not captured in these projections. The analysis also assumes no changes in state policy as a result of policy changes at the federal level. However, it is possible that federal policy changes in SSI could result in adjustments to state supplements, for example.

Social Security has significantly reduced elderly poverty. The elderly poverty rate has fallen from 35% in 1959 to an all-time low of 9% in 2006, in large part because of Social Security. If Social Security benefits did not exist, an estimated 44% of the elderly would be poor today assuming no changes in behavior. The Supplemental Security Income (SSI) program, also provides benefits to the poorest elderly, many of whom do not qualify for Social Security benefits. However, despite these programs, about 3.4 million elderly individuals remained in poverty in 2006. The Social Security system faces a long-term financing problem. The Social Security Trustees project cash-flow deficits beginning in 2017 and trust fund insolvency in 2041. Many recent proposals to improve system solvency would reduce Social Security benefits in the future. Benefit reductions could affect the low-income elderly, many of whom rely on Social Security benefits for almost all of their income. Such potential benefit reductions could lead to higher rates of poverty among the elderly compared to those projected under the current benefit formula. Because the low-income elderly are especially vulnerable to benefit reductions, many recent Social Security reform proposals have included minimum benefits or other provisions that would mitigate the effect of benefit cuts on the elderly poor. This report analyzes the projected effects of four possible approaches to mitigating the effects of Social Security benefit reductions on elderly poverty in 2042, the first full year of projected trust fund insolvency. The options are compared to a payable baseline, which assumes current-law benefits would need to be cut across the board to balance Social Security's annual income and spending at the point of insolvency. The four options examined are (1) a poverty-line Social Security minimum benefit; (2) a sliding-scale Social Security minimum benefit; (3) a poverty-line SSI benefit; and (4) a poverty-line SSI benefit with liberalized eligibility. Major findings include the following: Each of the four options would reduce elderly poverty compared to the payable baseline—ranging from a negligible reduction in the elderly poverty rate for the option to create a sliding-scale Social Security minimum benefit to a reduction of three percentage points for the poverty-line SSI benefit with liberalized eligibility. The elderly poverty rate under all of the options would be higher than under the current law scheduled baseline, which assumes the current benefit formula can be maintained with no reductions. The SSI options examined would target the additional spending more efficiently toward the poor elderly than would the Social Security options. The Social Security options examined would reduce the incomes of some elderly because of interaction effects; the SSI options would not create such interactions.

Wheat is grown in almost every temperate-zone country of North America, Europe, Asia, and South America. The largest wheat-producing countries are China, India, the United States, Russia, Canada, and Australia. U.S. wheat production accounts for about 9%-10% of world production; but the United States is the world's leading wheat exporter with roughly a 25% share of annual world trade. However, the international wheat market is very competitive and foreign sales often hinge on wheat variety and product characteristics as well as price. U.S. wheat is produced as both a winter and a spring crop. The United States produces all six of the world's major wheat classes—hard red winter (HRW), hard red spring (HRS), soft red winter (SRW), hard white, soft white, and durum. Hard wheats generally contain higher protein levels—a desirable trait for bread making, while softer wheats may be preferable for making noodles, crackers, and pastries. Durum wheat is ground into a coarse flour called semolina that is used for making pastas. In local markets, the demand for a particular wheat class (and quality) relative to its nearby supply will determine local prices. Traditional, higher-protein wheats command a premium over lower-protein varieties, often referred to as the "protein premium" ( Figure 1 ). However, linkages to national and global markets bring additional factors—such as transportation costs, competitors' supplies, and foreign demand—into play in determining the price of a particular wheat type and quality. Wheat is the principal food grain grown in the United States; however, a substantial portion (8%-10%) of the annual U.S. wheat crop is used as a feed grain. As a result, wheat must compete with other cereals for a place at the consumer's dinner table, while also vying with coarse grains and other feedstuffs in livestock feed markets. Almost half of the U.S. wheat crop is exported annually, although the importance of exports varies by class of wheat. White wheat and HRS wheat rely more than other wheat classes on sales into export markets. The larger the share of exports to production, the greater the vulnerability to international market forces. In the U.S. domestic market, flour millers are the major users of wheat, milling about 24% of annual wheat production into flour since 2000. In most cases, a wheat buyer at a flour mill will "source" wheat by general location and primary quality attributes such as protein quantity and quality (i.e., gluten share) and baking performance. Price premiums and/or discounts reflecting quality differences often develop and can also influence buyer preferences. Other major wheat processors include breakfast food, pet food, and feed manufacturers. Wheat may be used directly in feed rations when alternate feedstuffs are lacking or when production-related quality damage makes the wheat unmarketable as a food. Wheat milling by-products such as bran, shorts, and middlings are also used by feed manufacturers in the production of animal feeds. Early in 2007, estimates of Australia's wheat production and exports were reduced because of severe drought in 2006. Then, late-spring freeze damage in the United States and heavy rains at harvest in the United States and Western Europe reduced the output and quality of wheat. Next, dry weather hurt crops in Eastern Europe and some countries of the former Soviet Union. Drought in southeastern Europe reduced that area's wheat and corn crops, forcing livestock producers in the European Union (EU) to import wheat and feed grains for feed rations. By midsummer, it became apparent that Canada and the Ukraine would reap smaller wheat crops because of poor weather conditions. The production shortfalls curtailed exports from most traditional wheat exporters. In the spring of 2007, both Ukraine and Argentina initiated export restrictions in efforts to control food price inflation. The Ukraine imposed a ban on wheat exports and Argentina stopped issuing export registrations, which significantly slowed export sales during the rest of the year. Although the EU was able to export wheat without export subsidies, shipments out of the EU slowed sharply by late summer as wheat increasingly replaced corn used for feed. By early fall, only the United States, Russia, and Kazakhstan had large volumes of wheat available for export. Recently Kazakhstan officials have said that they also intend on slowing their country's wheat export pace (via higher custom duties) due to declining supplies. Projected tight U.S. supplies, combined with reduced export competition, caused importers to buy U.S. wheat (in late 2007) at a pace not seen since the 1970s. U.S. wheat export sales were very strong despite higher prices and record-high ocean freight rates. Imports by high-income countries, which are not very price sensitive, followed normal seasonal purchase patterns. However, a number of low- and middle-income countries, generally expected to be more sensitive to price changes, continued to purchase wheat even while prices were rising. Some importers even bought larger amounts at record high prices, apparently out of fear that less wheat would be available in the future, and prices would be even higher. In most years, U.S. wheat export shipments decline seasonally during the winter, spring, and summer months. But in 2007, shipments generally rose during this period, significantly exceeding expectations almost every month. In August and September, U.S. wheat export volume spiked, rising from monthly averages of less than 2.5 million metric tons to more than 4 million tons. This occurred as wheat prices climbed to record highs. Record high outstanding export sales (i.e., wheat that has been purchased, but not yet exported) suggest that many importers have already purchased their future needs far in advance of normal purchasing patterns, and that large monthly U.S. wheat shipments can be expected to continue for some months to come, regardless of future price movements. Global stocks are projected to drop to a 30-year low by July 2008, following seven out of eight years in which global consumption exceeded production ( Figure 2 ). In the United States, the nearly three-decades-long decline in planted area and production, coupled with the surge in export demand, has led to projections for the lowest ending wheat stocks (237 million bushels) since 1947. Because of a shortage of milling-quality wheat, prices for high-protein (13%-15%) spring wheat (HRS)—grown primarily in the Northern Plains—have risen faster than prices for the ordinary-protein (10%-13%) wheats (HRW) of the Southern Plains or the low-protein wheat (SRW) grown in the Delta and Corn Belt states. In addition, in January USDA released an estimate for last fall's plantings of the winter wheat crop that, although up from last year, was significantly below market expectations. This increased the market concern about whether a large U.S. spring wheat crop would be produced. As a result, cash and futures market prices for HRS wheat—traded daily at the Minneapolis Grain Exchange (MGE)—hit almost daily record highs through January and February. On February 25, 2008, the nearby futures contract for HRS wheat closed at a record $24 per bushel. HRS wheat prices can be tracked in the cash market by following daily price quotes for Dark Northern Spring (DNS) wheat out of Minneapolis ( Figure 1 ). Prices for soft white wheat (grown primarily in the Pacific Northwest) have also risen sharply in recent months. White wheat is used to produce a very popular type of noodle eaten throughout eastern Asia. Australia is traditionally the world's largest supplier of white wheat, but last year's drought-reduced harvest drastically limited its export supplies. As a result, China and other Asian countries have been competing for dwindling U.S. and international supplies of white wheat and this has pushed prices sharply higher. U.S. wheat planted area has been steadily declining for the past 40 years as low relative returns have led many farmers to shift to other, more profitable activities. This phenomenon has clearly been evident in the Northern Plains, where the development of short-season corn and soybean varieties has steadily cut into traditional wheat areas. This process has accelerated since late 2005 with the rapid growth of corn-based ethanol production, which has sparked high corn and soybean prices ( Figure 3 ). Wheat prices must rise high enough to compete for planted acres this spring (2008) with the other grains and oilseeds. This area competition is also contributing to the price run-up at the MGE. High commodity prices are expected to encourage farmers to expand plantings this spring. However, since the land base is constant, the question is which crops will get more area and which will lose. For 2008, USDA projects that U.S. planted acreage will expand significantly for both wheat (up 6%) and soybeans (up nearly 12%), while corn plantings will decline slightly (by about 4%). As a result, assuming normal weather and average yields, U.S. wheat production is expected to rise by nearly 13%. In addition, USDA projects that global wheat plantings and output will rise substantially (although no official estimate for 2008 global production is released until May). Larger global wheat supplies are expected to significantly reduce international demand for U.S. wheat in the latter half of 2008. Thus, the combination of higher production and lower exports is expected to allow U.S. domestic wheat stocks to rebuild and wheat prices to decline from their early 2007 peaks (while remaining high relative to past years). Markets are likely to exhibit substantial price variability until global stock levels can be rebuilt. As the global supply rebounds from the shortfalls of 2007, higher projected production is expected to facilitate the rebuilding of stocks and the return of prices to the $4 to $5 per bushel range over the next five- to ten-year period. The rise in agricultural prices, combined with high oil prices, have contributed to higher food inflation in the United States and around the world. U.S. food prices increased by 4% during 2007, the highest one-year rise since 1990. Prices for cereals and bakery products were up by 4.4%. USDA predicts that food price inflation for 2008 will be in the range of 3% to 4%, while bakery goods are expected to rise by 5.5% to 6.5%. Inflation concerns were further heightened when the U.S. Bureau of Labor Statistics announced that food prices had jumped by 1.7% during the month of January 2008—the biggest monthly increase in three years. Despite the sharp increases in commodity prices in 2007, most economists agree that fuel costs have played a larger role in food price inflation than have commodity prices. In general, retail food prices are much less volatile than farm-level prices and tend to rise by a fraction of the change in farm prices. This is because the actual farm product represents only a small share of the eventual retail price, whereas transportation, processing, packaging, advertising, handling, and other costs—all vulnerable to higher fuel prices—comprise the majority of the final sales price. Due to trade linkages, high commodity prices ripple through international markets where impacts vary widely based on grain import dependence and the ability to respond to higher commodity prices. Import-dependent developing country markets are put at greater food security risk due to the higher cost of imported commodities. The overall impact to consumers from higher food prices depends on the proportion of income that is spent on food. Since food costs represent a relatively small share of consumer spending for most U.S. households (about 10%), food price increases (from whatever source) are absorbed relatively easily in the short run. However, low-income consumers spend a much greater proportion of their income on food than do high-income consumers. Their larger share combined with less flexibility to adjust expenditures in other budget areas means that any increase in food prices potentially could cause hardship. In particular, lower-income households in many foreign markets where food imports are an important share of national consumption and where food expenses represent a larger portion of the household budget may be affected by higher food prices. Humanitarian groups have expressed concern for the potential difficulties that higher grain prices imply for developing countries that are net food importers. International food aid is the United States' major response to reducing global hunger. Because most U.S. food aid activities are fixed in value by annual appropriations, the amount of commodities that can be purchased declines with rising food prices. In 2006, the United States provided $2.1 billion of such assistance, which paid for the delivery and distribution of more than 3 million metric tons of U.S. agricultural commodities. The United States provided food aid to 65 countries in 2006, more than half of them in Sub-Saharan Africa.

The U.S. Department of Agriculture (USDA) projects the U.S. season-average farm price (SAFP) received for all wheat in the 2007/08 marketing year (June to May) to be in the $6.45 to $6.85 per bushel range. The range midpoint exceeds the previous U.S. record of $4.55 (in 1995/96) by 46%. During the past 30 years, the all-wheat SAFP has stayed within a range of $2.42 to $4.55, while averaging $3.33 per bushel. USDA projects a replenishment of U.S. and global supplies in 2008 (assuming normal weather conditions) to moderate market prices in the latter half of 2008. However, prices are likely to exhibit substantial variability until global stock levels can be rebuilt. The initial impetus for rising prices over the past year has been a 30-year low in global stocks following seven out of eight years in which global consumption exceeded production. However, in recent months several other factors—including reluctance of traditional exporters to make further supplies available to international markets, strong international demand, the rapid growth in the demand for grains and oilseeds as feedstock for biofuels production, and USDA's announcement that last fall's winter-wheat plantings were less than expected—have contributed to a sharp rise in cash and futures contract prices, particularly for higher-protein wheat varieties. This report will be updated as events warrant.

Until relatively recently, natural gas-rich shale formations throughout the United States were not considered to have significant resource value because no technologies existed to economically recover the gas. Development and deployment of advanced drilling and reservoir stimulation methods have dramatically increased the gas production from these "unconventional gas shales." The Marcellus Shale formation of the Appalachian basin, in the northeastern United States, potentially represents one of the largest unconventional natural gas resources in the United States. Natural gas prices have fallen significantly in the last five years, but particularly since mid-2008 due in large part to the development of shale gas. Prices briefly exceeded $13 per million Btu (MBtu) in 2008, but fell below $4 per MBtu by the summer of 2009. The Energy Information Administration (EIA) expects that the Henry Hub spot price for natural gas will average $3.53 per MBtu in 2012, a drop of $0.47 per MBtu from the 2011 average. However, increased drilling activity in Pennsylvania and West Virginia and industry presence in New York and Maryland reflect strong interest in the Marcellus Shale. As a result, natural gas reserves in the United States may show a significant increase. Low natural gas prices have raised expectations that demand for natural gas will increase. Moreover, unlike the natural gas found in some regions, the gas produced from the eastern portion of the Marcellus formation is of high enough quality that it requires minimal treatment for injection into transmission pipelines. Multiple gas transmission pipelines already serve the northeast United States. The Millennium Pipeline project in southern New York could accommodate increased shale gas production from New York and parts of Pennsylvania to serve the natural gas needs of the region. West Virginia may face obstacles to developing additional pipeline capacity and other infrastructure, as its terrain is more rugged. Gas producers would also have to construct an extensive network of gathering pipelines to bring the gas out of the fields to market. One study by the Interstate Natural Gas Association of America estimated that almost 60,000 miles of gathering pipelines would be needed in the Marcellus area. Directional drilling and "hydraulic fracturing" are essential to exploiting shale gas resources. Although oil and gas developers have applied these technologies in conventional oil and natural gas fields for some time, recent improvements in both technologies have allowed them to be applied effectively to unconventional gas shales on an industrial scale. As a result, gas development has expanded in traditional gas producing areas, and has moved into areas that may have rugged topography, dense vegetation, higher population densities, and where residents may be less familiar with the oil and gas exploration and production industry. Shale gas development in the Marcellus region has been particularly controversial. The potential economic benefits from both the drilling activities and the lease and royalty payments compete with the public's concern for environmentally safe drilling practices and protection of groundwater and surface water resources. Water supply is an important issue because hydraulic fracturing requires large amounts of fresh water, but contamination of water resources is also a major concern to many across the region. As with oil and gas production generally, development of the Marcellus Shale is primarily subject to state law and regulation, and requirements for well construction and operation differ among the states. Additionally, provisions of two federal laws—the Safe Drinking Water Act (SDWA) and the Clean Water Act (CWA)—can apply to some activities, specifically those related to wastewater disposal through underground injection or discharge to surface waters. The SDWA exempts from regulation the underground injection of fluids (except diesel fuel) for hydraulic fracturing. Two bills introduced in the 112 th Congress (as in the last Congress) would remove the exemption and explicitly authorize regulation of hydraulic fracturing under the SDWA. As exploration and production activities have increased, so has concern that development of the Marcellus Shale could harm human health and the environment. One concern is that hydraulic fracturing or faulty well construction might damage groundwater and drinking water wells by introducing chemicals, natural gas, and other contaminants into aquifers. A second issue is the potential contamination of water wells from surface activities related to gas production. Accidental spills, leaky surface impoundments, equipment failure, or careless surface disposal of drilling fluids at the natural gas production site could increase the risk of contaminating a nearby water well or run off to surface water. Managing the wastewater produced from the fracturing process has emerged as a major water resource issue in the Marcellus region. Critics maintain that improper treatment and disposal of the large quantities of water used for, and resulting from, the hydraulic fracturing process may harm local and regional water supplies and that disposing the "flowback" and brine extracted from the shale after fracturing may affect the water quality of lakes, rivers, and streams and potentially damage public wastewater treatment plants and water supplies. Gas producers have pointed out that virtually all oil and natural gas production, including all the historical conventional production in the United States, requires wells that penetrate the local groundwater aquifers. Several shale gas contamination incidents have been attributed to poor well construction or surface activities that would be associated with any oil or gas drilling and production operation, and not just with the unique techniques associated with the hydraulic fracturing process. However, these observations emphasize the importance of good well design and construction for any wells that penetrate local aquifers, regardless of their purpose. (See " Well Construction and Casing ," below.) Incidents of well-water contamination have been reported as Marcellus Shale development has expanded. In one case, Pennsylvania regulators confirmed that methane had migrated from drilling sites to private drinking water wells, and issued notices of violations to a drilling company for, among other things, "failure to prevent gas from entering fresh groundwater." In this case, state regulators attributed the contamination to faulty well construction. In some cases of well-water contamination attributed to gas development in various gas producing areas, the source of contamination remains undetermined. Identifying the cause of contamination can be difficult for various reasons, including the complexity of hydrogeologic processes and investigations, and a lack of baseline testing of nearby water wells prior to drilling and fracturing, as well as the confidential business information status historically given to fracturing compounds across the states. Major oil and gas producing states have asserted that the hydraulic fracturing process has not been linked directly to groundwater contamination. However, contamination incidents attributed to poor well construction have raised concerns regarding the adequacy and/or enforcement of state well construction regulations for managing oil and gas development that increasingly depends on fracturing. This report discusses the Marcellus Shale resource, technical methods used to develop it, and associated groundwater and surface water issues. The report also discusses relevant federal and state regulatory authorities, recent developments at the federal and state levels, and pending federal legislation. Unconventional gas shales are fine-grained, organic-rich, sedimentary rocks. The shales are both the source of and the reservoir for natural gas, unlike conventional petroleum reservoirs. In the shales, gas freely occupies pore spaces, and organic matter adsorbs gas on its surface. The shales' extremely small pore sizes make them relatively impermeable to gas flow, unless natural or artificial fractures occur. Major gas shale basins exist throughout the lower 48 United States. There are at least 21 shale basins in more than 20 states. Based on a recent assessment of natural gas resources, the United States has a resource base of 1,836 trillion cubic-feet (tcf). Shale gas made up an estimated one-third of this resource base, roughly 616 tcf. The U.S. Geological Survey (USGS) estimated in 2011 that the Marcellus Shale holds 84 tcf of undiscovered, technically recoverable natural gas and 3.4 billion barrels of natural gas liquids. Annual U.S. dry natural gas production has improved significantly in the last half decade. The 22.4 tcf produced in 2010 matched the peak production of the early 1970s, due in large part to unconventional resources, particularly gas shales. In 2009, the United States reclaimed the top spot as the world's largest natural gas producer, the first time since 2001. EIA, in its 2011 Annual Energy Outlook reference case, forecast shale gas production to grow from about 25% of total U.S. natural gas production in 2011 to 46% in 2035. The Marcellus Shale is a sedimentary rock formation deposited over 350 million years ago during the middle-Devonian period on the geologic timescale. Geologic strata deposited in the Appalachian basin during this period are more likely to produce gas than oil. Regional oil production is associated with Pennsylvanian age strata (of the later Carboniferous period). The black, organic-rich, Marcellus Shale lies beneath much of West Virginia, western and northeastern Pennsylvania, southern New York, eastern Ohio, and parts of Virginia and Maryland. It is an estimated 95,000 square miles in areal extent and ranges from 4,000 feet to 8,500 feet in depth, running deeper the farther north it goes along the cross section. The shale's thickness varies from 50 feet to 250 feet. Some reports indicate that the shale may be as much as 900 feet thick in places, however. (See Figure 1 .) Typically, thicker shales with greater organic material yield more gas, and thus are more economically desirable to produce. Shale in northeast Pennsylvania and southeast New York has these characteristics and produces dry pipeline quality natural gas. Shale in western New York and western Pennsylvania produces a wetter gas that contains natural gas liquids that must be removed from the gas before it can be piped and used. Natural gas liquids (NGL), such as ethane, butane and propane, add to gas shale profitability and increase the incentive to produce the shale when natural gas prices are low. (See Figure 2 .) The Utica Shale is an organic-rich black shale source rock that underlies the Marcellus Shale. It contains both conventional oil and gas resources and unconventional gas resources. The majority of the oil and natural gas discovered in this petroleum system is located on the east-dipping, western flank of the Appalachian basin in central and eastern Ohio, northwestern Pennsylvania, and western New York. Generally, the oil and (or) gas fields produce from a variety of lower Paleozoic reservoirs at depths of less than 6,000 feet. The total Utica–Lower Paleozoic petroleum system is estimated to represent an estimated 1.8 billion to 2.4 billion barrels of oil equivalent (BBOE). USGS has identified three principal hydrogeological (groundwater) environments overlying the Marcellus Shale: (1) glacial sand and gravel aquifers in New York, northern Pennsylvania, and northeastern Ohio, (2) valley-and-ridge carbonate rock and other aquifers in Pennsylvania and eastern West Virginia, and (3) Mississippian sandstone aquifers in northern Pennsylvania and northeastern Ohio. These aquifer systems are important supplies of fresh water for communities and landowners, especially in rural areas, although most residents of these states generally obtain their drinking water from surface water sources. Typically, these aquifers are much closer to the ground surface than the Marcellus Shale, which can be thousands of feet deep; the groundwater wells in these states may reach only several hundred feet in depth. The layers of rocks separating most fresh water aquifers from the Marcellus Shale are typically siltstones and shales layered with minor sandstones and limestone. Siltstones and shales generally act as barriers to fluid flow. These intervening layers of rocks can be several thousand feet thick in the eastern and northern portions of the area where the Marcellus Shale is deepest. On the western and southern portions of the area, the Marcellus Shale is shallower, and separated from the potentially usable groundwater above by a thinner package of siltstones and shales. An overarching concern for developing the Marcellus Shale is the potential for affecting the overlying aquifers. The Marcellus Shale's resource potential has been the subject of various interpretations. A 2005 USGS estimate placed the shale's mean undiscovered conventional natural gas resource potential at nearly 2 tcf, and possibly as high as 12 tcf, considering the total extent of Devonian/Ohio basin shales (which include the Marcellus formation), with the qualification that not all of the gas may be economically recoverable. At the time of the 2005 estimate, hydraulic fracturing was not yet being used to recover gas from shale, and that USGS estimate include no unconventional resources. A 2008 estimate by two geoscience professors raised the resource potential to 516 tcf, based on limited production data from companies using horizontal drilling and hydraulic fracturing to recover the shale gas. In July 2011, EIA released a contractor report reviewing various shale gas plays throughout the United States. The report estimated that ultimate recovery from the current area under lease (10,622 square miles) could reach 177.9 tcf, and the undeveloped areas (84,271 square miles) could reach 232.4 tcf (for a combined total of 410.3 tcf). EIA also estimated that a Marcellus well may ultimately produce 2.3 billion cubic feet (bcf) of natural gas, on average. Assuming $4 per 1,000 cubic feet of gas at the well head (comparable to current prices), producers might realize $9 million per well. In August 2011, USGS revised its assessment to include more detailed geologic studies of the Marcellus Shale using recent shale gas production data to estimate both conventional and unconventional volumes of undiscovered, technically recoverable shale gas. The new USGS assessment increased the mean undiscovered estimate to slightly more than 84 tcf. Although considerably higher than its 2008 estimate, it is substantially lower than EIA's 2011 estimate (and thus the recent controversy about conflicting government estimates of shale gas in the Marcellus Shale). Both EIA and USGS have significantly revised their technically recoverable resource (TRR) estimates for the Marcellus Shale based on newly available information. Using data though 2010, USGS increased its TRR estimate to 84 tcf from its 2002 estimate of 2 tcf. (USGS assigned a 90% confidence level that the TRR ranges from 43 to 144 tcf.) EIA decreased its estimate for the Marcellus Shale from 410 tcf to 141 tcf. EIA used more recent drilling and production data available through 2011 and excluded production experience from the pre-shale era (before 2008). The various estimates of the Marcellus resource potential appear to hinge on assumptions made regarding the success in applying advanced drilling and well stimulation technology. However, reconciling these estimates exceeds this report's scope. In 2009, the northeast region consumed roughly 4 tcf of natural gas. New York led the region in consumption, with over 1.14 tcf. The United States as a whole consumed nearly 23 tcf. The northeast region produced roughly 580 bcf of natural gas from more than 121,000 operating gas wells. Pennsylvania and West Virginia combined made up nearly 89% of the production, with New York and Virginia making up the balance. In summary, the region consumes about seven times as much natural gas as it currently produces. The 410.3 tcf of gas, estimated by EIA as technically recoverable from the Marcellus Shale, would be sufficient to supply the region through the century at the current rate of consumption. The USGS estimate of 84 tcf would supply the region's entire natural gas demand for more than 21 years at current rates of consumption. Pipelines are needed to collect and distribute natural gas, and the major pipeline infrastructure in the northeast/mid-Atlantic region is in place to take advantage of Marcellus production. Twenty interstate natural gas transmission pipelines serve the northeast region of the United States. (See Figure 3 .) This pipeline system delivers natural gas to several intrastate natural gas pipelines and at least 50 local distribution companies in the region. In addition to the natural gas produced in the region, several long-distance natural gas transmission pipelines supply the region from the Southeast into Virginia and West Virginia, and from the Midwest into West Virginia and Pennsylvania. Canadian imports come into the region principally through New York, Maine, and New Hampshire. Liquefied natural gas (LNG) supplies also enter the region through import terminals in Massachusetts, Maryland, and New Brunswick, Canada. Although the gas-transmission pipeline network needed to supply the northeast United States is in place, gas producers would need to construct an extensive network of gathering pipelines and supporting infrastructure to move the gas from the well fields to the transmission pipelines. A lack of this infrastructure may constrain development in some parts of the Marcellus region. Well drilling technology has progressed markedly over the last 50 years. An important recent advance in drilling is the ability to direct the drill bit horizontally beyond the region immediately beneath the drill rig. It is this directional drilling, in combination with hydraulic fracturing, that has made it feasible to develop the Marcellus Shale and other unconventional gas and oil formations. Directional drilling offers a significant advantage over vertical well drilling in developing gas shales. In the case of thin or inclined shale formations, a long horizontal well increases the length of the well bore in the gas-bearing formation and therefore increases the surface area for gas to flow into the well. Directional drilling technology also enables drilling a number of wells from a single well pad, thus cutting costs and reducing environmental disturbance. (See Figure 4 .) However, this drilling technique alone is often insufficient to significantly improve gas production without some means of artificially stimulating flow. In tight formations like shale, inducing fractures can increase flow by orders of magnitude. However, before stimulation can take place, the well must be cased, cemented, and completed (the well casing perforated). In the late 1940s, drilling companies began inducing hydraulic pressure in wells to fracture the producing formation. This fracturing process stimulated further production by effectively increasing the area from which a single well could produce gas. Combining hydraulic fracturing with directional drilling has opened up production of tighter (less permeable) petroleum and natural gas reservoirs, and in particular, unconventional gas shales like the Marcellus. Wells, whether commercial gas and oil or municipal water-supply, use a series of telescoping steel well casings to prevent well-bore collapse and water infiltration while drilling. The casing also conducts the produced reservoir fluids (gas or oil) to the surface. A properly designed and cemented casing also prevents reservoir fluids from infiltrating the overlying aquifers. During the first phase of drilling, termed "spudding-in," shallow casing is installed underneath the drilling platform to reinforce the ground surface. Drilling continues to the bottom of the water table (or the potable aquifer), at which point the drill string is removed to lower a second casing string, which is cemented-in and plugged at the bottom. Drillers use special oil-well cement that expands when it sets to fill the void between the steel casing and the rock wellbore. When properly constructed, surface casing and the casing extending to the bottom of the water table should prevent water from flooding the well while also protecting the groundwater from contamination by drilling fluids and reservoir fluids. (The initial drilling stages may use compressed air in place of drilling fluids to avoid contaminating the potable aquifer.) Drilling and casing then continue to the "pay zone"—the formation that produces gas or oil. The number and length of the casings will depend on the depth and the properties of the geologic strata. (See Figure 5 .) After completing the well to the target depth and cementing-in the final casing, the drilling operator may hire an oil-well service company to run a "cement evaluation log." An electric probe, lowered into the well, measures the cement thickness to detect anomalies that may correlate with voids in the cement. A cement evaluation log provides the critical confirmation that the cement will function as designed—preventing well fluids from bypassing outside the casing and infiltrating overlying formations. Absent any cement voids, the well is ready for completion. A perforating tool that uses explosive shape charges punctures the casing sidewall at the pay zone. The well may then start producing under its natural reservoir pressure or, as in the case of gas shales, may need stimulation (i.e., hydraulic fracturing). Good well construction is key to protecting ground water during gas production, and complaints that well stimulation treatments (discussed below) affect drinking-water wells may have links to poor well construction practices. Despite the Marcellus Shale formation's abundant content of natural gas, the gas does not flow freely from the shale because of its low permeability. Economic production depends on some means of artificially stimulating the shale to liberate gas. Hydraulic fracture stimulation treatments have been adapted to unconventional shale formations, such as the Barnett Shale (TX) and Haynesville Shale (AR, LA, and TX), and more recently the Marcellus Shale. Hydraulic fracturing involves injecting large volumes of water containing sand or other proppant into production wells. Specialized chemicals are also included in the fracture fluid as surfactants or for other purposes, and the fluid is injected under enough pressure to fracture low-permeability geologic formations containing oil and/or natural gas. The sand or other proppant holds the new fractures open to allow the oil or gas to flow freely out of the formation and into a production well. Typical "frac" treatments or frac jobs (as they are commonly known) are massive operations. The oilfield service company contracted for the work may take a week to stage the job and a convoy of trucks to deliver the equipment and large volumes of water and materials required. One company involved in developing gas shale offered the following description of a frac job: Shale gas wells are not hard to drill, but they are difficult to complete. In almost every case, the rock [pay zone] around the wellbore must be hydraulically fractured before the well can produce significant amounts of gas. Fracturing involves isolating sections of the well in the producing zone, then pumping fluids and proppant (grains of sand or other material used to hold the cracks open) down the wellbore through perforations in the casing and out into the shale. The pumped fluid, under pressures up to 8,000 psi, is enough to crack shale as much as 3,000 ft in each direction from the wellbore. In the deeper high-pressure shales, operators pump slickwater (a low-viscosity waterbased fluid) and proppant. Nitrogen-foamed fracturing fluids are commonly pumped on shallower shales and shales with low reservoir pressures. Ideally, hydraulic fractures propagate outward from the section of the well casing where it has been perforated (completed prior to the frac job). In vertical wells, the fracture height approximates the length of the perforated casing section, which is confined to the thickness of the formation to maximize production. In horizontally drilled wells, the height and depth of the fracture depend on the thickness of shale formation (in the case of the Marcellus) and the physical properties of the overlying rock formations to confine the fracture. Frac treatments attempted at too shallow a depth may result in horizontally oriented fractures (which is undesirable), and some state regulations identify minimum fracture depths. As noted, the depth of the Marcellus where production is occurring generally places it far below any potential groundwater aquifers, and the possibility of creating a fracture that reaches the near surface is remote. However, geology is never 100% predictable or certain. (See discussion under " Potential Risks to Groundwater ," below.) Fracturing fluid functions in two ways: opening the fracture and transporting the "propping" agent (or proppant) the length of the fracture. As the term propping implies, the agent functions to prop or hold the fracture open to create conductive paths for the natural gas to reach the wellbore so it can be produced. Silica sands and ceramic beads are the most commonly used proppants. Water-based fluids consist of 99% water, with the remainder made up of additives. Acid-based fluids also use hydrochloric acid to dissolve the mineral matrix of carbonate formations (limestone and dolomite) and thus improve porosity; the reaction produces calcium chloride salt and carbon dioxide gas. Gelling agents, based on water-soluble polymers such as vegetable-derived guar gum, adjust frac fluid viscosity. The most widely used additives for breaking down fluid viscosity after fracturing are oxidizers such as ammonium (NH +4 ), potassium, and sodium salt of peroxydisulfate (S 2 O 8 -2 ); enzyme breakers may be based on hemicellulase (actually a mixture of enzymes which can hydrolyze the indigestible components of plant fibers). Silica flour serves as good fluid-loss additive. Biocides added to polymer-containing fluids prevent degradation of the polymers by bacteria (as the polysaccharides (sugar polymer) used to thicken water are an excellent food source for bacteria). Methanol (an alcohol) and sodium thiosulfate (Na 2 S 2 O 3 — an antidote to cyanide poisoning) are commonly used stabilizers added to prevent polysaccharide gels degrading above temperatures of 200°F. Notably, the service companies adjust the proportion of these and many other frac fluid additives to the unique conditions of each well. In addition to the water-based frac fluids, oil-based fluids are used in hydrocarbon bearing formations susceptible to water damage, but they are expensive and difficult to use. They have been used primarily in coal-bed methane frac jobs. At the federal level, the Occupational Safety and Health Administration (OSHA) requires that material safety data sheets (MSDS) accompany each chemical used on the drill site, but the proportion of each chemical additive may be kept proprietary. A number of states recently have adopted new or expanded disclosure rules for chemicals used to stimulate wells. It is in the operating company's interest to control the fractures and keep them within the formation to maximize production. Fracture treatments are planned, monitored, and adjusted operations that proceed in stages. Before beginning a treatment, the service company performs a series of tests on the well to determine if it is competent to hold up to the hydraulic pressures generated by the fracture pumps. In the initial stage, a hydrochloric acid (HCl) solution pumped down the well cleans up residue left from cementing the well casing. The portion of the well that lies within the shale is separated into zones, and each zone is isolated from the rest of the well (with a cement barrier or mechanical device) and fractured separately by the application of very high pressures to the shale via the fracking fluid containing proppants and chemical additives. Each successive "frac" stage pumps fluid (slickwater) and proppant down the well into each isolated zone to open and propagate the fracture further into the formation. The treatment may last upwards of an hour or more, with the final stage designed to flush the well. Marcellus wells are likely to receive multiple treatments to produce multiple fractures within each zone along the horizontal wells. A fracture treatment for a single zone may consume more than 500,000 gallons of water. Wells subject to multiple treatments consume 3 million to 5 million gallons or more. For comparison, an Olympic-size swimming pool holds over 660,000 gallons of water, and the average daily per capita consumption of fresh water (roughly 1,430 gallons per day) works out to 522,000 gallons over one year. The high injection pressure not only opens and propagates the fracture but also drives fluid into the shale's pore spaces. A high volume of fluid remains in the fracture and impedes gas flow to the well if not pumped out. The subsequent "flowback" treatment attempts to recover as much of the remaining fluid as possible without removing the proppants. The "flowback" water pumped out of the well along with brine from the shale formation may be high in dissolved salts and frac chemicals, however, making it unsuitable for continued use, and thus requiring disposal through deep well injection or treatment before reuse or disposal to surface water. After the well begins producing gas, it may produce more flowback water. Flowback disposal presents environmental issues, as discussed in the " Surface Water Quality Protection " section below. The geologic environment that led to the deposition of the Marcellus Shale, and the overlying layers of siltstone, shale, sandstone, and limestone has kept gas from the Marcellus Shale confined at depth, and prevented it from naturally migrating upward into fresh water aquifers. The process of developing a shale gas well—drilling through an overlying aquifer, stimulating the well via hydraulic fracturing, completing the well, and producing the gas—is an issue of concern for increasing the risk of groundwater contamination. Typically, well drilling and completion practices, as described above, require that the well be sealed by casing throughout the aquifer interval. A properly cased well would allow the gas to be produced up the well to the surface, while preventing drilling fluids, hydraulic fracturing fluids, or natural gas from leaking into the permeable aquifer and contaminating groundwater. Similarly, groundwater in the aquifer would be prevented from leaking down the well where it could interfere with the gas production process. The challenge of sealing off the groundwater and isolating it from possible contamination is not unique to development of the Marcellus Shale; thousands of oil and gas wells in New York, Pennsylvania, West Virginia, and eastern Ohio also require similar well drilling and proper casing procedures to protect groundwater resources. The inset to Figure 4 shows how a well could be designed to protect against leakage into a drinking water aquifer by a succession of casing types down the well from the surface through the aquifer. To protect against contamination, the well must be properly designed and properly constructed. Problems could arise even for a properly designed well—for example, if the casing is not properly cemented, and gaps or pockets in the cement provide a pathway for fluids to migrate outside the casing. Improperly cemented wells might also allow gas or brine to leak into the well from gas-bearing shale formations thousands of feet above the Marcellus. The gas and brine could migrate up the well outside of the casing into an overlying drinking water aquifer. As with the development of other gas-bearing formations, sound well construction and operating practices are essential to reducing the risk of groundwater contamination in the Marcellus Shale region. Another concern is the possibility of introducing contaminants into aquifers from the hydraulic fracturing process itself, described above. Hydraulic fracturing is intended to induce new fractures into the Marcellus Shale and/or lengthen existing fractures. Concerns have been raised that this process would create or extend fractures linking the Marcellus Shale to an overlying aquifer and provide a pathway for gas or fracturing fluids to migrate. The chances of this occurring are likely remote, because the vertical distance separating the Marcellus Shale from most aquifers is usually much greater than the length of the fractures induced during hydraulic fracturing. Also, thousands of feet of rock layers typically overlie the Marcellus Shale and serve as barrier to flow. It should be noted, however, that if the shallow portions of the Marcellus Shale are developed, then the thickness of the overlying rocks would be less and the distance from the Marcellus to drinking water aquifers would be shorter, posing more of a risk to groundwater. Engineers designing and carrying out the hydraulic fracturing procedure have an incentive to keep the fractures contained within the gas producing shale. Extending the fractures into a surrounding formation might allow saline fluids or brines to enter the induced fracture and flow into the gas producing portion of the shale, which could significantly hamper gas production. Even if hydraulically induced fractures extend into overlying formations, the possibility for fluids to leak upward into an aquifer is remote, unless those fractures are also connected to some other pathway, such as leaky wells and casings. In the Marcellus Shale region, a single well may need multiple hydraulic fracture treatments, which could require injecting 3 million to 5 million gallons or more. After the formation is hydraulically fractured, a portion of these fluids is typically recovered and pumped back out of the well to the surface. In the Marcellus region, typically less than 35% of injected fluids are recovered at the surface. Historically, produced waters from oil and gas wells have been disposed of by injecting them into deep wells or treating them before disposal into surface waters. Underground injection is not always a practical or economic option in the Marcellus Shale region. (See " Underground Injection of Shale Gas Wastewater .") If these recovered fluids are improperly disposed of at the surface and allowed to infiltrate from the ground surface downward, they could present a risk for contaminating shallow groundwater. Improper surface disposal could pose a particular risk for shallow aquifer systems in northern Pennsylvania and southern New York that are composed of very permeable unconsolidated sand and gravel deposits. Many of these surficial sand and gravel aquifers form valley-fill deposits, in low-lying areas or stream valleys, and are recharged by precipitation that runs off surrounding, less permeable uplands. As such, they would be particularly susceptible to leaky surface impoundments or careless surface disposal because of the relatively short distance and travel time from the land surface to the top of the water table. New York, for example, has deemed these unconsolidated sand and gravel aquifers "primary" or "principal" aquifers, which are highly productive and presently are used as a significant source of water, or are a potentially abundant water supply. Leaks resulting from improper disposal of fluids at the surface could be exacerbated by poorly constructed drinking water wells in the vicinity. Generally, drinking water wells are shallower than natural gas wells, may not be cased for the entire depth, and may not be subject to the same level of oversight and scrutiny as natural gas wells. A water well that is not cased from the surface, or is not constructed and cased properly, might allow contaminated water to flow from the ground surface and enter the water well, possibly compromising the quality of drinking water in the well and even contaminating the aquifer itself. In such instances, and particularly where natural gas drilling and stimulation activities are nearby, leaky surface impoundments or careless surface disposal of drilling fluids at the natural gas operation could increase the risk of contaminating the nearby water well. A further confounding factor in regions where drinking water wells and natural gas wells are in close proximity is the possibility of water well contamination from surface waters unrelated to drilling activities. For example, a leaky septic system, or improper disposal of domestic refuse such as car batteries or used oil, can leak from the surface into the water well. If this is the case, a dispute could ensue as to who may be responsible for contaminating the water well. Resolving the dispute could involve a hydrogeological investigation, possibly combined with chemical analysis or isotopic analysis, to prove or disprove any linkage between natural gas development activities and water well contamination, often at considerable expense and with an uncertain outcome, given the complexity of groundwater flow at most sites. Development of natural gas resources in the Marcellus Shale is subject to regulation under several state and federal environmental laws. In particular, the large volumes of water needed to drill and hydraulically fracture the shale, and the disposal of this water and other wastewater associated with gas extraction, may pose significant water quality and quantity challenges that trigger regulatory attention. USGS noted in a 2009 publication that "concerns about the availability of water supplies needed for gas production, and questions about wastewater disposal have been raised by water-resource agencies and citizens through the Marcellus Shale gas development region." Essentially all permitting, inspection, and enforcement activities related to gas development are conducted by state agencies. In the cases where federal laws may apply, these regulatory requirements also are typically administered by the states. The following sections review key provisions of two relevant federal laws—the Safe Drinking Water Act (SDWA) and the Clean Water Act (CWA)—and related state requirements. As previously described, hydraulic fracturing involves injecting water, proppants, and chemicals into the shale layer at extremely high pressures, which creates fractures that allow natural gas to flow from the shale. It is a water-intensive practice. Typical Marcellus Shale projects may use 3 million to 5 million gallons of water, although pumped fluid volumes of 7 million to 8 million gallons are not unusual; 0.5 million pounds of sand or other proppant; and smaller amounts of chemicals for each well. Furthermore, production sites may have multiple wells. Regarding the Marcellus Shale region, USGS observed "many regional and local water management agencies are concerned about where such large volumes of water will be obtained, and what the possible consequences might be for local water supplies." Some of the injected fluids remain trapped underground, but a portion of the injected water—in the Marcellus Shale region, roughly 9% to 35%—returns to the surface as "flowback" after the frac treatment. It typically contains proppant (sand) and chemical residues as well as metals and trace amounts of naturally occurring radioactive elements that may be present in the water produced from the geologic formations. USGS notes that because the quantity of fluid used is so large, the additives in a 3 million-gallon frac job would yield about 15,000 gallons of chemicals in the waste. Frac fluid flowback returns to the surface in the first few weeks, although flowback can continue for several months after gas production has begun but slows over time. Normally, flowback fluid is stored on-site until it can be disposed of or reused. That is, the well service company may temporarily retain the flowback in tanks or open-air, lined retention ponds before reusing it, if possible. Flowback waters from natural gas well drilling activities can generally be recycled until they reach certain very high concentrations of total dissolved solids (TDS), at which point the wastewater must be disposed. In the Marcellus Shale region, wastewater management is particularly of interest in the states where natural gas drilling and production that uses hydraulic fracturing already occurs—Pennsylvania, West Virginia, and eastern Ohio—or is expected to begin soon—New York. Many natural gas operations in the Marcellus Shale region have begun employing on-site treatment processes to facilitate reuse of the flowback fluids, especially in light of technical and regulatory constraints to offsite options, discussed below. Several companies have introduced mobile and fixed treatment units using processes such as evaporation, distillation, oxidation, and membrane filtration for recycling and reuse. On-site treatment technologies may be capable of returning 70%-80% of the initial water to potable water standards, thus making the water immediately available for reuse. The remaining 20%-30% is very brackish and considered brine water. A portion may be further recoverable as process water, but not to achieve potable water standards. The economics of any such options are critical, and site factors such as available power and final water quality are often the determinant in treatment selection. Ultimately, flowback water and production brine that are not reused require proper disposal, either through underground injection or treatment and surface discharge. As described below ("Underground Injection of Shale Gas Wastewater"), produced water from natural gas extraction may be disposed of through underground injection. Although this disposal method is commonly used in other shale plays, in some areas across the Marcellus Shale region (such as northeastern Pennsylvania), the local geology can limit the disposal of wastewater through underground injection wells. Where underground injection is not feasible, the well service company may discharge the flowback and other produced water to surface waters if the discharge does not violate a stream or lake's water quality standards. Standards established by states under Section 303 of the Clean Water Act (CWA) protect designated beneficial uses of surface waters, such as recreation or public water supply. But direct discharge of untreated flowback and formation brine water is rarely possible in the Marcellus Shale region, because of the chemical additives, naturally occurring contaminants, and salinity found in the wastewater. Because contaminants present in the flowback broadly prevent discharge to surface water without further treatment, it is likely that the service company will transfer the wastewater off-site to an industrial treatment facility or a municipal sewage treatment plant for processing the wastewater. In this case, the operator of the publicly owned treatment works (POTW) or private centralized waste treatment (CWT) facility would assume responsibility for treating the waste before discharging it into nearby receiving water in compliance with effluent limits contained in the facility's discharge permit. The chemical frac additives returned in flowback and the produced brine could cause operational problems for POTWs. First, chemical contaminants in industrial process wastewaters can kill the biota essential to a POTW's operation. Second, if TDS or other contaminants pass through the POTW without adequate treatment, the discharge could violate water quality standards. TDS is an indicator of salinity, which can be toxic to aquatic organisms. If wastewater is discharged from a POTW or CWT without adequately removing contaminants, the discharges also may contribute to impaired drinking water quality for downstream users. In that regard, there is particular concern for bromides and other salts that comprise TDS, as these chemicals can combine with chlorine in drinking water treatment processes to potentially form carcinogenic disinfection byproducts (DBPs). The potential scale of natural gas drilling and extraction in the Marcellus Shale region has enormous wastewater management implications, as described by Pennsylvania regulators. The Marcellus Shale play has resulted in thousands, and will result in tens of thousands, of new sources of natural gas drilling wastewaters. Although the industry has shown some recent success with reduction in volumes of wastewater needing treatment through the recycling and reuse of flowback and production waters, it is clear that the future wastewater return flows and treatment needs will be substantial.... This play, estimated to contain as much as 500 trillion cubic feet of recoverable natural gas, could result in the development of up to 50,000 new, producing gas wells over the next 20 years.... These wells are anticipated to produce very highly concentrated TDS wastes (over 300,000 mg/L) continuously over the course of 20 to 30 years. For example, if these wells produce an average of ten barrels per week of produced water over their useful lives, a single average well could produce about 27 tons of salt per year (at 300,000 mg/L). Multiply this amount by tens of thousands of Marcellus gas wells, and the potential pollutional effects from these loadings are tremendous. Finally, not enough is known at this point about whether Marcellus wells may need to be "re-fracked" one or more times in the future, thus providing additional uncertainty regarding treatment and disposal needs for the wastewater. Conventional POTW technology is largely ineffective at treating flowback and brine from gas extraction operations in the Marcellus Shale region. POTWs may remove heavy metals, but the processes employed generally do not actually treat for the very high-TDS concentrations, sulfates, chlorides, or radionuclides in natural gas drilling wastewater. In particular, the very high concentrations of TDS will necessitate treatment by evaporation/distillation technology, which is not typically standard at municipal sewage treatment plants. Under the Clean Water Act (CWA), regulatory authorities must ensure that permits issued to a POTW or CWT adequately account for and limit discharges of contaminants that could harm aquatic life in streams and rivers. If wastewater is transported to a CWT for treatment, subsequent discharges are subject to EPA-established limitations and standards that are reflected in the facility's permit. If wastewater is transported to a POTW, the facility's permit must include conditions requiring characterization of effluent introduced to the plant, to ensure that incompatible wastes are not allowed. Throughout the Marcellus Shale region, states are authorized to implement these provisions of the CWA and to oversee facilities' compliance with CWA permits. EPA also has a continuing oversight role regarding state CWA programs. In Pennsylvania, the federal agency has accelerated efforts, working with state regulators, to require POTWs and CWTs that receive fracking wastewater to conduct sampling for radionuclides and to issue CWA information requests to POTWs and CWTs for compliance determinations and evaluation of the adequacy of CWA discharge permits. Also, Pennsylvania regulators are working with treatment facilities and community water systems to monitor for radionuclides, TDS, bromide, chloride, and other substances of concern. In the fall of 2008, water samples from the mid-Monongahela River valley of Pennsylvania showed high levels of TDS. Although the TDS was determined to pose little threat to health or safety, it can have a profound environmental impact, particularly by killing microorganisms and insect larvae essential to healthy ecosystems, such as trout streams. It can also degrade soil if used for irrigation. Preliminary analysis suggested that the principal source likely was large truck deliveries of wastewater from gas well drilling sites in the Marcellus Shale to POTWs discharging, directly or indirectly, into the Monongahela River. At that time, state officials ordered nine sewage treatment plants to reduce their volumes of gas well drilling water, which contains high concentrations of TDS. Subsequent analysis concluded that discharge from abandoned mines was more responsible for the high TDS than drilling wastewater discharges from municipal wastewater treatment plants. However, as indicated by the above quotation, state officials remain concerned about the projected need for treatment of wastewater (both initial flowback water from hydraulic fracturing and longer-term production brines) from gas well development—estimated to be as much as 20 million gallons per day in 2011—and the capacity of the state's surface waters to assimilate associated wastewaters. In 2010, the Pennsylvania Department of Environmental Protection issued new standards for facilities that accept oil and gas wastewater for treatment. The standards apply to new or increased discharges from treatment facilities, and set strict discharge limits for TDS, chlorides, barium, and strontium. The new standards are intended to protect aquatic life by promoting reuse of water. The goal is to prohibit new and expanding sources of high-TDS wastewater discharge from the natural gas industry. However, 27 Pennsylvania POTWs, which had historically accepted drilling wastewater, are not bound by the 2010 standards unless they increase the amount of drilling wastewater that they accept. During 2010 and early 2011, 11 of these municipal plants voluntarily stopped taking shale gas extraction waste. Both Pennsylvania and federal regulators took steps in 2011 to end the practice of natural gas companies sending fracking wastewater to POTWs because of concerns that the facilities are inadequately equipped to handle waste from fracking operations. In April, state environmental regulators asked drilling operators to stop sending Marcellus Shale wastewater to the 16 remaining POTWs, citing evidence linking the wastewater to elevated levels of bromides in western Pennsylvania rivers. Subsequently, EPA sent information request letters to six natural gas drillers directing them to disclose how and where they dispose of or recycle wastewater generated by their Marcellus Shale natural gas exploration, extraction, and production activities. In response, all six companies indicated their intention to employ reuse, disposal through underground injection, and/or treatment rather than conventional treatment by any of Pennsylvania's POTWs. The companies indicated intention to recycle 90% or more of produced water (including flowback) in Pennsylvania, where injection wells are limited. Marcellus Shale operators have stopped sending wastewater to the state's POTWs. West Virginia, too, recognizes that wastewater disposal is "perhaps the greatest challenge regarding these operations." State officials say that underground injection (see discussion below) may be the best option for wastewater disposal, but the state has only two permitted commercial injection wells available. The state has one industrial wastewater treatment facility in Wheeling, and state officials are cautious about the capability of the municipal POTWs to handle the flow and quality of waste that they might receive. In 2009 the West Virginia Department of Environmental Protection proposed changes to the state's oil and gas drilling rules (which required approval of the state legislature) and to an industry guidance document to assist operators in planning for the water issues associated with drilling and operating these wells. However, local groups criticized the proposed rules and draft non-binding guidance for failing to address disposal of wastewater, disclosure of chemicals used in hydraulic fracturing, and where the additional quantities of water required for drilling will come from. Subsequently, the state's legislature considered a number of bills to implement the proposed rules, and also to make other changes such as increasing permit fees. In December 2011, the state legislature passed, and the governor signed, the Horizontal Well Act, which requires drillers to provide water management plans and to disclose all chemicals used in hydraulic fracturing fluids, among numerous other provisions intended to protect water supplies. For several years, New York State regulators have been evaluating the potential environmental impacts of high-volume hydraulic fracturing in the state. During this time, New York has imposed a moratorium on processing permits to drill Marcellus Shale wells under the existing Generic Environmental Impact Statement (SGEIS). (Traditional oil and gas wells still may be permitted using the SGEIS). In September 2011, the state's Department of Environmental Conservation released a Revised Draft Supplemental Generic Environmental Impact Statement (RDSGEIS) with recommendations that, when finalized, are intended to allow natural gas development consistent with environmental protection requirements while banning drilling in specified sensitive areas, including the New York City and Ithaca watersheds. Regarding wastewater management, the revised draft SGEIS would allow POTWs to accept flowback water if the municipal plant has a state-approved pretreatment program for accepting industrial waste and the plant's discharge permit assures that surface water quality standards for TDS and other contaminants are not violated. Underground injection, discussed below, also may be authorized. To help POTWs manage produced water, in October 2011, EPA initiated a rulemaking to develop technology-based standards that shale gas wastewaters must meet before going to a POTW. EPA expects to issue a proposed rule for shale gas wastewater standards in 2014. Another potential source of water pollution from oil and gas drilling sites is runoff that occurs after a rainstorm. Storm water runoff can transport sediment to nearby surface water bodies. Provisions of the CWA generally regulate storm water discharges from industrial and municipal facilities by requiring implementation of pollution prevention plans and, in some cases, remediation or treatment of runoff. Industries that manufacture, process, or store raw materials and that collect or convey storm water associated with those activities are subject to the act's requirements. Furthermore, fracking fluid chemicals and wastewater can leak or spill from injection wells, flow lines, trucks, tanks, or holding pits, and thus may contaminate soil, air, and water resources. The federal Clean Water Act (CWA) specifically exempts the oil and gas industry from these storm water management regulatory provisions. CWA Section 402(l)(2) exempts mining operations or oil and gas exploration, production, processing, or treatment operations or transmission facilities from federal storm water regulations, and Section 502(24) extends the exemption to construction activities, as well. Thus, federal law contains no requirements to minimize uncontaminated sediment pollution from the construction or operation of oil and gas operations. However, the federal exemption does not hinder states from requiring erosion and sedimentation controls at well sites, under authority of non-federal law. Pennsylvania, for example, requires well drill operators to obtain a permit for implementation of erosion and sedimentation controls, including storm water management, if the site disturbance area is more than 5 acres in size. If the site is less than 5 acres, a plan for erosion and sediment control is required. Storm water requirements are part of this permit. New York has similar requirements for erosion and sedimentation controls at well sites, regardless of site area. West Virginia requires erosion and sediment control plans for proposed well sites that would disturb 3 or more acres of land. The Delaware River Basin Commission, which has jurisdiction over water quality in a portion of the area underlain by the Marcellus Shale (see section on " State Water Quality Laws ") has similar requirements, regardless of site area. A controversial water quality issue associated with development of the Marcellus Shale regards the potential for hydraulic fracturing operations to contaminate groundwater and drinking water wells (as discussed under " Potential Risks to Groundwater "). Responding to widespread public concern, the 111 th Congress urged EPA to study the impact that fracturing may have on potable aquifers and drinking water supplies. However, EPA is not authorized to regulate the underground injection of fluids for hydraulic fracturing purposes, except where diesel fuel is used. The agency expects to publish initial research results in 2012, and a final report in 2014. As part of the research, EPA has identified three Marcellus Shale case studies in Pennsylvania: two retrospective case studies to investigate drinking water contamination incidents, and one prospective study where shale gas development is planned. A question that has arisen is whether state oil and gas laws and regulations are adequate to protect groundwater and drinking water wells, given the increasingly extensive development of unconventional gas and oil resources that rely on hydraulic fracturing in combination with deep vertical and horizontal drilling. The deep horizontal wells used in unconventional oil and gas development can be subjected to greater pressures than conventional wells and may be at greater risk of failure if not properly constructed and operated. In 2009, the Ground Water Protection Council (GWPC) reviewed state oil and gas regulations designed to protect water resources for the major producing states. The GWPC concluded that, in general, state oil and gas regulations are adequately designed to protect water resources. State regulations generally include permitting, well drilling and construction, well closure and abandonment, and waste fluid management. Until recently, few states explicitly mentioned hydraulic fracturing in their oil and gas regulations; however, drilling, construction (e.g., casing and cementing), pressure testing, completion, blowout prevention, reporting, and other requirements are intended to protect fresh water aquifers (and hydrocarbon resources) during oil and gas production. Although major oil and gas producing states have extensive programs to manage oil and gas development activities, the GWPC noted that related state groundwater protection rules and practices can be uneven. Among other actions, the Council recommended the development of best management practices (BMPs) for hydraulic fracturing, which state agencies could use either to develop state-specific BMPs or develop new state regulations. GWPC advised states to review rules to determine whether "they meet an appropriate level of specificity (e.g. use of standard cements, plugging materials, pit liners, siting criteria, and tank construction standards, etc.)" to protect water resources. In a groundwater contamination case in Pennsylvania, Department of Environmental Protection officials attributed the migration of methane gas into 18 residential water wells in Dimock, PA, to "defective casing and cementing" of shale gas wells. The state since has updated oil and gas rules. The regulators explained the need for the revised regulations. Many of the regulations governing well construction and water supply replacement were promulgated in July 1989 and remained largely unchanged until this final-form rulemaking. Since that time, recent advances in drilling technology have attracted interest in producing natural gas from the Marcellus Shale, a rock formation that underlies approximately 2/3 of this Commonwealth. New well drilling and completion practices now employed to extract natural gas from the Marcellus Shale and other similar shale formations in this Commonwealth, as well as several recent incidents of contaminated drinking water caused by traditional and Marcellus Shale wells resulted in the Department's decision to reevaluate the existing well construction requirements. It was determined that the existing regulations were not specific enough in detailing the Department's expectations of a properly cased and cemented well, especially in light of the new techniques used by Marcellus Shale operators. The Department also determined that the existing regulations did not address the need for an immediate response by operators to a gas migration complaint and did not require routine inspection of existing wells by the operator. The final-form rulemaking contains revised design, construction, operational, monitoring, plugging, water supply replacement and hydraulic fracturing reporting requirements. The final-form rulemaking also provides material specifications and performance testing to ensure the proper casing, cementing and operation of a well. Additionally, the final-form rulemaking contains new provisions that require routine inspection of wells and outline the actions an operator and the Department will take in the event of a gas migration incident. Other states in the region also have amended or are revising regulations to address challenges related to unconventional oil and gas development, including hydraulic fracturing. In 2010, Ohio legislators made major revisions to the state oil and gas law, adding requirements for companies to submit hydraulic fracturing records, and to report the type and volume of materials used, pumping pressures, and return volumes. The law also expanded well construction, casing, and cementing requirements to protect underground sources of drinking water. And, as discussed, New York State has undergone a comprehensive review of the issues associated with shale-gas development, and is developing a new regulatory regime for horizontal drilling and high-volume hydraulic fracturing. In December 2011, West Virginia enacted the Horizontal Well Act, which makes numerous changes to existing law. The act imposes new conditions on horizontal well permits to protect groundwater, surface water, and water resource supplies. (See section below, " State Regulation of Water Resources .") The act requires well operators to provide state regulators with well-casing plans, details on the rock formation, and drilling-depth plans. Additionally, the law increases permit fees to support more state inspectors. Among other provisions, the law specifies minimum distances horizontal wells must be from water wells, public water supplies, streams, wetlands, etc. As noted, managing the large volumes of wastewater produced during natural gas production (including flowback from hydraulic fracturing and brine produced from the rock formation) has emerged as a major water quality issue related to Marcellus Shale development. In some areas across the Marcellus Shale region (such as northeastern Pennsylvania), the local geology can limit the disposal of wastewater through underground injection wells. However, underground injection remains the most common—and traditionally preferred—produced water disposal practice in the oil and gas production industry, and is increasing in this region as gas development expands. The increased use of underground injection for wastewater disposal, combined with proposals to authorize EPA to regulate hydraulic fracturing as underground injection, has drawn new attention to the federal underground injection control program. This program's statutory and regulatory framework is reviewed briefly below. The disposal of flowback and other water produced from gas wells through deep well injection is regulated through EPA's Underground Injection Control (UIC) program authorized by the federal Safe Drinking Water Act (SDWA). This act established the national program for protecting "underground sources of drinking water" by limiting, through regulation, underground injection that could contaminate usable aquifers. Although the SDWA excludes from regulation the underground injection of fluids used in hydraulic fracturing (unless diesel fuel is used), the injection of wastewater produced during oil and gas development is subject to this law. Section 1421 of SWDA directs the EPA administrator to issue regulations for state UIC programs, and mandates that the EPA rules "contain minimum requirements for programs to prevent underground injection that endangers drinking water sources." To implement the UIC program, EPA has established six classes of underground injection wells based on categories of materials that are injected into the ground for each class. The wells within a class are required to meet a set of performance criteria for protecting underground sources of drinking water (USDW), and the rules broadly prohibit the injection of waste fluids into USDWs. The UIC regulations for each class include the following broad elements: site characterization, area of review, well construction, well operation, site monitoring, well plugging and post-injection site care, public participation, and financial responsibility. Class II injection wells are used to dispose of brines (salt water) and other fluids associated with oil and gas production or storage, to store natural gas, or to inject fluids for enhanced oil and gas recovery. The SDWA authorizes EPA to delegate primary enforcement authority (primacy) for UIC programs to the states, provided that the state program meets EPA regulations developed under Section 1421 and prohibits underground injection that is not authorized by a state permit or rule. If a state's UIC program plan is not approved, or the state has chosen not to assume program primacy, then EPA must implement the UIC program in that state. However, in lieu of meeting the specific requirements of EPA's regulations for the injection of brine or other fluids brought to the surface in connection with oil or gas production (Class II injection wells), Section 1425 allows states to demonstrate that their Class II UIC programs are effective in preventing endangerment of underground sources of drinking water. This gives states flexibility to implement their own program requirements, rather than meet the specific EPA regulations. Where a state has primacy, EPA is still required to take enforcement actions for regulatory violations if the state fails to do so. Additionally, the SDWA grants the EPA administrator emergency powers to issue orders and commence civil actions to protect public water systems or underground sources of drinking water. In the Marcellus region, Maryland, Ohio, and West Virginia have assumed primacy and have lead implementation and enforcement authority for their UIC programs. As with most oil and gas producing states, Ohio and West Virginia have received primacy for Class II wells under Section 1425, which enables these states to administer their own equivalent program, rather than adopt EPA regulations. Maryland has adopted EPA regulations, but has no Class II injection wells for the disposal of wastewater from oil and gas production. In New York, Pennsylvania, and Virginia, EPA directly implements the entire UIC program. Permits are required both by EPA and the state environmental agency in New York and Pennsylvania, if the disposal method for shale gas wastewater is by deep well injection. Most of the fluid injected into Class II wells is brine brought to the surface in producing oil and gas. This brine, a naturally occurring formation fluid, is often very saline and may contain toxic metals and naturally occurring radioactive substances. To prevent contamination of land, surface water, and groundwater, Class II wells provide a means for disposing of brines by re-injecting them back into their source formation or into similar formations at significant depths. As states have adopted rules to limit or prohibit the disposal of saline water to surface water and land, and treatment remains challenging and costly, injection remains the preferred way to dispose of this waste fluid, where the local geology permits. The amount of water produced by shale gas wells, separate from the flowback of water injected for hydraulic fracturing purposes, is likely to vary across the Marcellus Shale region. Given the limited experience with development of the shale, it is uncertain how much produced water might be generated. Generally speaking, shale gas formations are relatively impermeable and typically produce much less water than traditional oil and gas fields or coalfields. However, because large amounts of water must be used to fracture the shale, the disposal of this water and produced brine presents a challenge. Moreover, the impermeability of the shale indicates that reinjection of wastewater from fracturing into the shale formation may not be feasible in many locations, unless other suitable formations are locally available. Wastewater injection into the permeable Cambrian sandstones that lay beneath the Marcellus Shale appears feasible. The Cambrian Mt. Simon Sandstone, considered an ideal geologic unit in Ohio for disposal and long-term storage of liquid wastes, is relatively deep, and underlain and overlain by impervious confining layers that prevent migration of injected fluids. In contrast, the geology in Northeastern Pennsylvania is not favorable for injection. Capacity for deep well injection of wastewater varies across the Marcellus region. In Ohio, oil and gas permits generally prohibit the discharge of brine directly into state waters, and roughly 98% of all brine is disposed of by deep well injection. The Ohio Department of Natural Resources has permitted 184 Class II brine disposal wells, and permit requests for additional wells are pending. Since Marcellus Shale gas development began in West Virginia, the number of permitted commercial Class II disposal wells there has increased from two to 13. New York has six active Class II disposal wells; however, before New York stopped processing permits for horizontal drilling and high-volume hydraulic fracturing in 2008, operators from one company had submitted more than 60 permit applications for such wells. In Pennsylvania, six Class II disposal wells are operating, and EPA (which implements the UIC program for the state) has approved two more wells, but these permits are under appeal. However, since the state has limited surface water discharges, interest in deep well injection within the commonwealth is increasing. In addition to federal laws, state laws addressing the quality of surface water and groundwater also apply to Marcellus Shale development. For example, in New York, various aspects of unconventional gas development would require a permit under the state's State Pollutant Discharge Elimination System (SPDES). SPDES is an "approved," rather than delegated, version of the federal National Pollutant Discharge Elimination System (NPDES) permit program under the Clean Water Act, which means that the state program differs from the federal rules in various ways, but that EPA has determined that the state program is at least as protective as federal rules. One significant difference in the state program is that, while the federal NPDES covers only discharges to surface water, SPDES covers discharges to groundwater also. The SPDES permit requirement could apply to hydraulic fracturing, unless four conditions are met. Most importantly, the state must determine that injection will not degrade groundwater. A wastewater treatment plant would likely dispose of fluids produced from the well, in which case the plant's SPDES permit would apply. SPDES permits would also cover treatment facilities built specially for disposing of flowback water, if there would be discharges into a water body. Applicable state water quality standards would control the permit's discharge limits, in part. The New York State Environmental Quality Review Act (SEQRA) is also relevant. As with its federal counterpart, the National Environmental Policy Act, a requirement that an environmental impact statement be prepared in certain circumstances lies at the heart of the statute. New York has been evaluating the potential environmental impacts associated with directional drilling and hydraulic fracturing activities for more than 15 years. As noted above, in September 2011, the state's New York Department of Environmental Conservation (DEC) released for public comment the Revised Draft Supplemental Generic Environmental Impact Statement (RDSGEIS) under SEQRA on high-volume hydraulic fracturing natural gas development in the Marcellus Shale region of the state with recommendations to comprehensively revise the state's procedures for regulating operations using High Volume Hydraulic Fracturing (HVHF). Until New York completes a final SGEIS consistent with SEQRA, regulators will not process permit applications for gas wells involving horizontal drilling and high-volume hydraulic fracturing. The DEC received more than 32,000 comments on the revised draft and is now reviewing them. The RDSGEIS would not apply to specified areas, including within the New York City and Syracuse watersheds, on primary aquifers, on certain state lands, in floodplains, within 2,000 feet of public drinking water supplies, and within 500 feet of private water wells (unless agreed to by the landowner). Nor would the RDSGEIS apply to HVHF operations in shallow portions of shale formations, specifically in locations where the top of the target fracture zone would be shallower than 2,000 feet below the surface, or less than 1,000 feet below the base of a known fresh water supply. In these locations, site-specific environmental assessments and SEQRA determinations of significance would be required for HVHF permit applications. ( Figure 6 indicates specific geographic areas where drilling permits would not be granted under the RDSGEIS and, in effect, prohibited.) The DEC also has proposed regulations that revise existing oil and gas regulations, establish new regulations for HVHF, and update the SPDES regulations. Maryland, too, currently is not processing permit applications for drilling and hydraulic fracturing in the state's portion of the Marcellus Shale (although several permits are pending). Officials plan to study "best practice" standards for drilling and fracking before permitting a small number of exploratory wells to evaluate the environmental viability of gas production. In Pennsylvania, oil and gas exploration and development are regulated under a number of state laws, including the Clean Streams Law, the Solid Waste Management Act, and the Water Resources Planning Act. For example, pursuant to the Clean Streams Law, Pennsylvania regulates waste discharges from municipal and industrial sources and regulates the impact of mining on water quality, supply, and quantity. It also is the basis for state permit requirements to manage stormwater runoff from oil and gas operations through erosion and sediment control plans. (See " Other Surface Water Quality Issues .") As another example, West Virginia's NPDES permit program would apply to wastewater treatment plants to which flowback from Marcellus Shale production sites was taken and to treatment facilities built specially for the frac water that discharges into a water body. Applicable state water-quality standards would control the permit's discharge limits, in part. However, this program applies to surface water only, not groundwater, and the state's Groundwater Protection Act exempts "groundwater within geologic formations which are site specific to ... the production ... of ... natural gas...." The state's underground injection control program regulates the injection of flowback and produced water for disposal. In addition to state water-quality laws, the interstate Delaware River Basin Commission (36% of whose jurisdictional land area in Pennsylvania and New York overlies the Marcellus Shale formation) would also impose water quality requirements. The Commission's water quality (and other) requirements are legally separate from those of the affected states—that is, obtaining state approval does not excuse an applicant from seeking Commission approval—although in some cases the two requirements may be substantively identical. Another interstate-compact-created commission within the Marcellus Shale region, the Susquehanna River Basin Commission, regulates only water quantity, not water quality. These commissions are discussed further below. Thousands of wells are being drilled in the Marcellus Shale region, and large volumes of water are needed to develop each well. Roughly 1 million gallons typically may be needed for every 1,000 feet fractured in the horizontal portion of a well, for perhaps 3 million to 8 million gallons per well, and wells may need to be hydraulically fractured several times during their productive lifespan. Availability of adequate supplies of fresh water required for drilling and hydraulic fracturing can be a constraint for gas producers who must arrange to procure water in advance of their drilling and development activity. Extensive development of the Marcellus Shale could place short-term, but potentially significant, demands on local water resources. This is especially true if water needed for gas development is taken from smaller headwater streams or limited groundwater supplies. In these cases, large water withdrawals have the potential to impair water quality through diminished stream flows that could affect aquatic life, fishing and recreational activities, or private wells and water supplies. Concerns have arisen specifically regarding the ability to maintain baseline stream flows to avoid cumulative and seasonal impacts. Management of water use for Marcellus Shale operations is largely a matter of geography—in some areas, it is the responsibility of interstate commissions, and in other areas, it is the responsibility of state agencies. The laws and regulations governing the availability of fresh water lie with each state, and water rights and water supply regulations generally differ among the states. Depending on individual state resources and historic development, states may use one of two water rights doctrines, riparian or prior appropriation, or a hybrid of the two. Under the riparian doctrine, a person who owns land that borders a watercourse has the right to make reasonable use of the water on that land. Traditionally, the only limit to users under the riparian system is the requirement of reasonableness in comparison to other users. Under the prior appropriation doctrine, a person who diverts water from a watercourse (regardless of his location relative thereto) and makes reasonable and beneficial use of the water may acquire a right to use of the water. States east of the Mississippi River generally follow a riparian doctrine of water rights, while western states typically follow the prior appropriation doctrine. The system of water rights allocation in a particular state with shale gas resources may affect the development process, particularly in times when shortages in water supply affect the area of shale gas development. In areas where the Marcellus Shale is located, which are generally riparian states, water rights may not be as much of a concern as in other areas of the country with shale gas development, such as the Barnett Shale in Texas. That is, even in times of shortage, shale gas development may be able to continue in the Marcellus Shale region because riparian users reduce water usage proportionally and may still receive enough for supply requirements of the development process. However, whether the amount of water required for hydraulic fracturing processes would be considered "reasonable" remains unclear. As shale gas development continues to draw on water resources in riparian states, this question may become a significant factor in the public debate over hydraulic fracturing. Because of the general recognition of the riparian doctrine in the region, the states in the area of shale development apply surface and groundwater regulations similarly. Some states have specific regulatory programs in place, however, and gas producers using fresh water for drilling and development must comply with state and local administration of water rights (as well as any relevant interstate water compacts). Examples of water supply regulations in the Marcellus Shale states are discussed below, but a comprehensive analysis of state water regulation schemes is beyond the scope of this report. Some states have implemented permit programs that require certain water users who wish to withdraw large amounts of water resources to register with the appropriate state agency. For example, New York requires users of water for public water supply, irrigation, and specific projects designated by law (unrelated to shale development) to acquire a permit. However, under that program, water users pursuing shale development appear to remain unregulated. Other states have adopted permit programs that require water users who withdraw in excess of a set threshold (e.g., 10,000 gallons per day) to obtain approval from the state. Other states have undertaken various planning and reporting programs to monitor water use in the state, but do not generally require a permit. For example, by statute, West Virginia requires certain users of water resources whose withdrawals exceed 750,000 gallons in any month to register with the Department of Environmental Protection. Water users must provide information about the sources of withdrawals, anticipated volumes, and the time of year of withdrawals. The goal is to ensure that water withdrawal from ground or surface waters does not exceed sustainable volumes. State officials have introduced measures that would impose a lower threshold for registration on the use of water in gas development projects. In 2011, West Virginia enacted the Natural Gas Horizontal Wells Control Act, which mandates that certain horizontal well applications used for fracturing include a water management plan. The water management plan is required for applications for a well work permit if the fracturing of the well requires more than 210,000 gallons of water during any 30-day period. The plan must identify information about the use of water, including the type of water source, and the anticipated volume and time of withdrawal. States may implement a variety of these programs concurrently. For example, Pennsylvania implements both a permit program and a planning and reporting program, in addition to specific requirements imposed on drillers to include water use management plans with applications for drilling permits. Under the permit program, public water supply agencies must receive approval from the state's Department of Environmental Protection. Other users do not appear to be covered by a permit program outside of the Susquehanna and Delaware River Basins. Under the reporting program, users must report withdrawals that on average exceed 10,000 gallons per day in a 30-day period. Users are required to report information including source of water supply, location, and the amount of withdrawals. Additionally, Marcellus Shale drillers must develop and submit a water use management plan, which, once approved, becomes a condition of a shale well permit. The Marcellus Shale region includes parts of Kentucky, Maryland, New York, Ohio, Pennsylvania, Virginia, and West Virginia. Several of these states include watersheds that are subject to specific regulations, usually resulting from the adoption of an interstate compact. Three interstate compacts may have a direct impact on potential water resources for the development process: the Delaware River Basin Compact, the Susquehanna River Basin Compact, and the Great Lakes-St. Lawrence River Basin Water Resources Compact. The Delaware River Basin Commission (DRBC) governs water resource issues in the Delaware River Basin, which includes parts of Delaware, New Jersey, New York, and Pennsylvania. The Susquehanna River Basin Commission (SRBC) governs water resource issues in the Susquehanna River Basin, which includes parts of Maryland, New York, and Pennsylvania. (See Figure 7 .) Both the DRBC and the SRBC regulate water use through requirements imposed on any entity—public or private—whose use would affect the respective basins. The Great Lakes-St. Lawrence River Basin Water Resources Compact governs management of the Great Lakes and St. Lawrence River Basin, which includes parts of Illinois, Indiana, Michigan, Minnesota, New York, Ohio, Pennsylvania, and Wisconsin. This basin overlies a small portion of the Marcellus Shale, but includes other shale formations, including the Utica Shale. The Great Lakes-St. Lawrence compact imposes requirements on the states (as parties to the compact) to adopt standards of regulation for water use within the basin. Rules governing these compacts have increasingly included requirements to regulate the water use of hydraulic fracturing projects. The DRBC imposes limits on projects that have "a substantial effect on the water resources of the basin" and requires that any person or entity seeking to undertake such a project obtain prior approval. The DRBC is directed to approve projects if it finds the project "would not substantially impair or conflict with the comprehensive plan" for managing the basin. Certain projects are exempt from the requirement for prior approval, including water withdrawals and diversions that do not exceed an average of 100,000 gallons per day. Specific regulatory requirements apply to applications for withdrawals in excess of 1 million gallons on average per day, including monitoring requirements, contingency plans for emergency conservation, and reporting requirements. The DRBC has issued draft regulations to protect the basin's resources relating to the development of natural gas projects. Under the proposed regulations, DRBC approval is required before water sources in the basin may be used for the purpose of natural gas development projects. A similar regulatory scheme was established in the Susquehanna River basin. The SRBC also imposes approval requirements for certain projects affecting the water resources of the basin. Among the projects generally requiring prior approval from the SRBC are new and increased consumptive use projects using an average of 20,000 gallons per day or more; new and increased withdrawals of an average of 100,000 gallons per day or more; and diversions into or out of the basin of an average of 20,000 gallons per day or more. In addition to these general requirements, the SRBC has adopted regulations specific to the Marcellus Shale, which require approval for "any natural gas well development project in the basin targeting the Marcellus or Utica shale formations, or any other formation …, for exploration or production of natural gas involving a withdrawal, diversion or consumptive use, regardless of the quantity." Lying along the northwestern perimeter of the Marcellus Shale region is the Great Lakes-St. Lawrence River Basin. Approved by Congress in 2008, the Great Lakes-St. Lawrence River Basin Water Resources Compact includes monitoring, registration, and reporting requirements to protect the use of water resources within this basin. Within five years of the compact taking effect, any withdrawal of an average of 100,000 gallons per day or more and any diversion must be registered with the proper administering authority. Each party must be notified of and given the opportunity to comment on any proposal for a consumptive use of 5 million gallons per day or more. Under the compact, diversions of water resources out of the basin are generally prohibited with few exceptions. Each state is required to adopt a regulatory program for withdrawals and consumptive uses within five years of the effective date of the compact, which sets a threshold level of regulation at an average of 100,000 gallons per day or more. The Marcellus Shale formation represents one of the largest unconventional or conventional natural gas resources in the United States. Current and planned projects to develop Marcellus Shale gas are apparent across the six-state region that overlies the resource. For example, gas producers have reportedly planned over 2,000 gas wells just in West Virginia, and the state's Oil and Gas Commission estimates that, based on current information, there could be a well on every 40 acres in the state. Throughout the region, this activity is placing increasing demands on regulatory agencies—especially state agencies—for necessary licensing, permitting, inspections, and enforcement, and also for revising regulations. Because of questions related to water supply and wastewater disposal, some state agencies and DRBC have been cautious about granting permits until these issues are resolved. New York, in particular, is taking a cautious approach and has accepted, but not processed, permits pending completion of a state Supplemental Generic Environmental Impact Statement. At the same time, there is counter-pressure from companies, drillers, and landowners to move forward with developing the gas resource. The success of planned development activities could depend, in part, on the capacity of regulatory agencies to provide the administrative and oversight resources to support such plans. The development of the Marcellus Shale and other unconventional natural gas resources, and the use of hydraulic fracturing in particular, has generated considerable debate in Congress and has been the topic of hearings and legislation. Industry and many state agencies are arguing against broad federal regulation of hydraulic fracturing under the SDWA, and noting a long history of the successful use of this practice in developing oil and gas resources. A typical horizontal well is estimated to cost between $3 million and $5 million, and industry representatives argue that more federal regulation is unnecessary and would likely slow domestic gas development and increase energy prices. At the same time, the amount of natural gas produced from unconventional formations that rely on hydraulic fracturing continues to grow. Moreover, drilling and reservoir stimulation methods have changed significantly over time as they have been applied to more challenging formations, increasing markedly the amount of water and fracturing fluids involved in production operations. It is the rapidly increasing and geographically expanding use of hydraulic fracturing and directional drilling, along with a number of citizen complaints of water contamination and other environmental problems attributed to this practice—and to shale gas development more broadly—that has led to calls for greater state and/or federal environmental oversight of this activity. In March 2011, the Fracturing Responsibility and Awareness of Chemicals Act of 2011 (FRAC Act) was introduced in the House ( H.R. 1084 ) and Senate ( S. 587 ). The bills are substantively similar and would amend the Safe Drinking Water Act to revise the definition of underground injection to include hydraulic fracturing, and to create a new disclosure requirement for the chemicals used in hydraulic fracturing. Under both bills, the definition of "underground injection" that was amended in 2005 to exclude most hydraulic fracturing would be amended again to include "the underground injection of fluids or propping agents pursuant to hydraulic fracturing operations related to oil or gas production activities." The FRAC Act also would require anyone conducting hydraulic fracturing to disclose to the state (or EPA if EPA has primary enforcement responsibility), before starting hydraulic fracturing operations, a list of chemicals intended for use in any underground injection during the operations. The information must include identification of the chemical constituents of mixtures, Chemical Abstracts Service numbers for each chemical and constituent, material safety data sheets when available, and the anticipated volume of each chemical. Additionally, within 30 days after the end of any hydraulic fracturing operations, the operator must provide information on the chemicals and amounts actually used. The bills would also require that the state or EPA make the disclosure of chemical constituents public, including posting the information on a website. The bills specify that the disclosure requirements do not authorize the state or EPA to require the public disclosure of proprietary information. This language attempts to protect proprietary business information, that is, "secret" formulas of the chemical constituents being used in hydraulic fracturing or practices that drilling companies believe they should not be required to disclose to regulators or the public. Increasingly, state oil and gas production laws and rules are requiring disclosure to regulators of the chemical constituents being used in hydraulic fracturing, while extending similar protections for proprietary business information. Furthermore, the FRAC Act would require operators to disclose proprietary chemical information to treating medical professionals in cases of medical emergencies. Although most state oil and gas rules do not require disclosure of proprietary chemical information to medical professionals, such disclosure broadly parallels federal requirements under the Occupational Safety and Health Act (OSHAct). Nonetheless, the OSHAct requirements were not designed for environmental investigation purposes, and the provided information may not be suited for such purposes. Consequently, calls for disclosure of hydraulic fracturing chemicals have increased as homeowners and others express concern about the potential presence of unknown chemicals in tainted well water near oil and gas operations. Other bills in the 112 th Congress also address hydraulic fracturing. H.R. 2133 , the Fulfilling U.S. Energy Leadership (FUEL) Act, recognizes the role of the states in regulating oil and natural gas production and declares a sense of Congress that "the Safe Drinking Water Act (42 U.S.C. 300f et seq.) was not intended to regulate natural gas and oil well construction and stimulation." The bill further notes that industry should be encouraged to voluntarily disclose chemicals used in the hydraulic fracturing process and that the information should be made available to the public. Reported bill H.R. 1425 (Section 514) would amend the Small Business Act to direct federal agencies to give funding preference for research on reducing the environmental (including water quality) impact of the use of hydraulic fracturing during natural gas exploration activities. Natural gas locked in tight, impermeable shale has been uneconomical to produce until recently. Advances in directional well drilling and reservoir stimulation have dramatically increased the production from these unconventional shales. However, the development of the Marcellus and other shales comes with some challenges and controversy. The Marcellus Shale formation represents one of the largest unconventional or conventional natural gas resources in the United States. The natural gas produced from the eastern portion of the formation is pipeline quality, requiring no upgrading. Although the gas transmission pipeline network needed to supply the residential, retail, and commercial customers in the northeast United States is largely in place, gas producers would need to construct an extensive network of gathering pipelines and supporting infrastructure to move the gas from the new well fields to the transmission pipelines, as is the case for developing any new well field. The lack of such infrastructure may limit or delay gas production in some areas of the region. Shale gas development has stirred concerns regarding water consumption and potential groundwater and water well contamination from hydraulic fracturing, and surface water contamination from disposal of the fracturing fluids. The process of developing a shale gas well is an issue of concern for increasing the risk of water contamination, and concerns about contamination of fresh surface water or groundwater must be addressed during three phases of gas well development: (1) drilling through an overlying aquifer, completing and casing the well, (2) stimulating the well via hydraulic fracturing, and (3) flowback of fluids to the surface during development of the well and production of the gas). If contamination of fresh water supplies from shale gas development is suspected, each of these three phases must be carefully examined to ensure that each is conducted without causing undue environmental impacts. 1. Drilling and well construction through an aquifer : A properly cased well allows gas production up through the well to the surface, while preventing drilling fluids, hydraulic fracturing fluids, or natural gas from leaking into the permeable aquifer and contaminating groundwater. Construction of an oil and gas well of any type generally requires penetration of near-surface fresh water aquifers, and the application of rigorous drilling and well completion techniques is vital during this phase of production. These activities are regulated by the states. 2. Hydraulic fracturing : Hydraulic fracturing does induce new fractures into the Marcellus Shale, and may lengthen existing fractures. The chances of creating or extending fractures linking the Marcellus Shale to an overlying aquifer appear remote, however, because the vertical distance separating the Marcellus Shale from most aquifers is typically much greater than the length of the fractures generally induced during hydraulic fracturing. Hydraulically fractured gas production wells are subject to state regulations, but legislation has been introduced to authorize EPA to regulate broadly hydraulic fracturing under SDWA, which likely would affect state requirements. 3. Flowback of fracking fluids and produced waters : The flowback water pumped back to the surface after fracturing poses a significant environmental management challenge in the Marcellus Shale region. The flowback and produced water's high content of salts, minerals, and other contaminants must be disposed of or adequately treated before discharged to surface waters. State laws and the federal Clean Water Act regulate the discharge of this flowback water and other drilling wastewater to surface waters, while the Safe Drinking Water Act regulates deep well injection of such wastewater. Cumulatively, the concerns about the potential water quality and other environmental impacts of unconventional gas exploration and development, including in the Marcellus Shale, have prompted close examination at a number of levels. Congress has directed EPA to "review the risks that hydraulic fracturing poses to drinking water supplies, using the best available science, as well as independent sources of information." EPA expects to report on the interim research results in 2012, and issue a follow-up report in 2014. In March 2011, President Obama announced a broad "Blueprint for a Secure Energy Future." In it, the President asked the DOE Secretary to identify steps that can be taken to improve the safety and environmental performance of shale gas production, and to develop consensus recommendations on practices to ensure the protection of public health and the environment, including water quality. In November, the Secretary of Energy Advisory Board (SEAB) Shale Gas Subcommittee issued a final report, with recommendations for state and federal governments and industry. Water quality recommendations, aimed mainly at the states, include (1) adopting best practices for well construction (casing, cementing, and pressure management), (2) adopting requirements for background water quality measurements, (3) manifesting all water transfers across various locations, and (4) measuring and publicly reporting the composition of water stocks and flow throughout the fracturing and cleanup process. The SEAB also suggested that states review and modernize rules and enforcement practices. In April 2011, the New York State Attorney General stated he would sue the federal government if an environmental review of natural gas drilling in the Delaware River Basin was not conducted under the National Environmental Policy Act (NEPA). Also in April, a coalition of environmental advocates, including the Chesapeake Bay Foundation, petitioned the White House to conduct an environmental impact analysis on the effects that natural gas drilling and production may have within the Marcellus Shale region. In October 2011, EPA initiated a rulemaking to set technology-based pre-treatment standards to regulate discharges of shale gas wastewaters to publicly owned treatment works. Across the region, state oil and gas regulators and environmental regulators have been evaluating and revising regulations to strengthen water quality protections during shale gas exploration and production. Shale gas development using high-volume horizontal drilling and hydraulic fracturing has been done for only about a decade and is increasing rapidly, catching states and communities at various states of preparedness. The industry's growth has created new regulatory, enforcement, and oversight challenges for state officials, and often new concerns for landowners and communities in the Marcellus Shale region. The growing number of gas wells and related infrastructure and land-use changes has drawn attention to the adequacy of regulatory oversight governing this industry. Natural gas production has long been regulated by the states. State oil and gas and environmental protection agencies widely support keeping responsibility for regulating oil and gas production generally, and hydraulic fracturing specifically, with the states. The Interstate Oil and Gas Compact Commission (IOGCC), representing the oil and gas producing states, adopted a resolution urging Congress not to remove the fracturing exemption from provisions of the SDWA, noting that the process is a temporary injection-and-recovery technique and does not fit the UIC program which EPA generally developed to address the permanent disposal of wastes. If Congress were to require EPA to regulate all hydraulic fracturing of oil and gas wells, a key issue would involve EPA's capacity to assume such a role. EPA likely would require substantial new resources and technical staff to oversee major elements of oil and gas production and to directly implement any new rules in non-primacy states. For example, unless Pennsylvania and New York assumed primacy for the UIC program, EPA would have responsibility for permitting and overseeing all hydraulically fractured wells in those states, while the wells remained subject to state permitting requirements and regulations. This scenario has raised concerns from states and industry regarding the potential benefits, costs, and redundancies that may result from such an approach. Nonetheless, given the concern about potential water contamination expressed by citizens and communities, and uneven regulation across the states, some continue to urge greater federal involvement. The American Water Works Association (AWWA, representing drinking water professionals and public water suppliers), various towns, and environmental groups support the FRAC Act. EPA currently is developing new measures to protect water quality during shale gas development. The agency is developing regulations under the Clean Water Act to regulate flowback and produced water discharges to municipal wastewater treatment plants. Also, EPA is writing guidance under the SDWA UIC program to assist states with permitting hydraulic fracturing operations that use diesel fuel. The pending diesel guidance may provide insight into how the agency might regulate hydraulic fracturing broadly, if directed to do so by Congress. Currently, there is little agreement as to the potential risks that shale gas development poses to water resources across the region. Given the level of debate, it appears that the understanding of the risks could benefit from a better scientific foundation. Congress has urged EPA to study the relationship between hydraulic fracturing and drinking water. The results of the EPA study, along with work being done by the states, interstate commissions, industry, and others, should enable a better assessment of the risks that unconventional shale development may pose to water resources, and help inform any potential congressional action. In the meantime, states across the Marcellus Shale region continue to review and revise regulatory programs in response to robust growth in the shale gas industry.

Until relatively recently, natural gas-rich shale formations throughout the United States were not considered to have significant resource value because no technologies existed to economically recover the gas. Development and deployment of advanced drilling and reservoir stimulation methods have dramatically increased the gas production from these "unconventional gas shales." The Marcellus Shale formation potentially represents one of the largest unconventional natural gas resources in the United States, underlying much of West Virginia and Pennsylvania, southern New York, eastern Ohio, western Maryland, and western Virginia. Directional drilling and "hydraulic fracturing" are essential to exploiting these low permeability shale gas resources. Although oil and gas developers have applied these technologies in conventional oil and natural gas fields for some time, recent improvements in both technologies have allowed them to be applied effectively to unconventional gas shales on an industrial scale. While creating significant economic benefits, development of the Marcellus Shale faces infrastructure challenges, such as the need for gathering pipelines. Marcellus development also has generated controversy due to its potential scale and its potential impacts on land and water resources, communities, public infrastructure, and environmental quality. Several water quality issues have arisen, including concerns about the potential for hydraulic fracturing operations to contaminate groundwater and drinking water supplies. The 111th Congress urged the U.S. Environmental Protection Agency (EPA) to study this issue, and the agency expects to publish initial research results in 2012 and a final report in 2014. Notably, EPA does not have the authority to regulate hydraulic fracturing (except where diesel fuel is used). Additionally, managing the large volumes of wastewater produced during natural gas production (including flowback from hydraulic fracturing and water produced from the shale formation) has emerged as a major water quality issue related to Marcellus development. In some areas across the Marcellus Shale region, the geology may limit the use of underground injection wells (the most common produced-water disposal practice in oil and gas fields), and wastewater disposal is posing treatment, quality, and regulatory challenges. Both industry best practices and state regulations continue to evolve. Other concerns associated with shale gas development include the contamination of water from surface spills, migration of methane gas and contaminants into residential water wells from faulty well construction, siltation of streams from drilling and pad construction activities, and potential impacts that large water withdrawals might have on water resources, streams, and aquatic life. The development of the Marcellus Shale on private or state land is subject primarily to state laws and regulations, including requirements for well construction and operation. Provisions of two federal water quality laws—the Safe Drinking Water Act (SDWA) and the Clean Water Act (CWA)—can apply to activities related to wastewater disposal through underground injection and discharge to surface waters. Additionally, several of the states include watersheds that are subject to water resource regulations resulting from the adoption of interstate compacts (primarily the Delaware River Basin Compact and the Susquehanna River Basin Compact). This report reviews the Marcellus Shale resource, development processes, and related surface water and groundwater issues. It also discusses related federal and state regulatory authorities and related developments, and pending federal legislation.

The 108 th Congress established a new recreation fee program for the Bureau of Reclamation (Reclamation) and the four major federal land management agencies—the National Park Service (NPS), Fish and Wildlife Service (FWS), and Bureau of Land Management (BLM) in the Department of the Interior (DOI), and the Forest Service (FS) in the Department of Agriculture (USDA). The Federal Lands Recreation Enhancement Act (FLREA) authorizes the agencies to charge and collect fees at federal recreational lands and waters. The act authorizes different kinds of fees, outlines criteria for establishing fees, and prohibits charging fees for certain activities or services. The agencies can spend the revenue collected without further appropriation, with most of the money retained at the collection site, and the collections can be used for specified purposes. The act also authorizes an interagency pass that can be used at federal recreation sites throughout the nation, as well as regional multi-entity passes. The program is to terminate 10 years after enactment—on December 8, 2014. This new recreation fee program supersedes an earlier one, the Recreational Fee Demonstration Program ("Fee Demo"), which began in 1996 as a three-year trial but was extended several times. That program had allowed the four land management agencies, but not Reclamation, to test the feasibility of charging fees to generate revenues for improvements at recreation sites. While the number of fee sites was limited initially, the agencies ultimately were allowed to establish any number of fee sites, set fee levels, and retain and spend the revenue collected without further appropriation. At least 80% of the revenue had to be retained and used at the site where it was generated, and agencies had wide latitude to spend the funds on purposes specified in law. The extent to which fees should be charged for recreation has been controversial for decades, and the Fee Demo program had both supporters and critics. It was supported in part for generating revenue; providing flexibility in setting fees and using revenues; having the direct beneficiaries of recreation pay more for benefits; deterring criminal activity, such as littering and vandalism; and ameliorating damage where it did occur. However, the Fee Demo program was criticized as doubly taxing the recreating public; resulting in unfair and confusing fees in some areas; promoting commercial development that damaged federal lands; and discriminating against lower-income people, rural residents, and low-impact recreation. Still other criticisms pertained to program implementation, including the high cost of fee collection and a lack of consistency in implementation within and across agencies. The current recreation fee program is expected to continue to provide incentives for agency managers to charge and use fees for onsite improvements. Prior to Fee Demo, the agencies had little incentive to develop, monitor, and evaluate fee collection since most fees went to the General Fund of the Treasury; the agencies could not retain them for resource improvements or management activities. FLREA monies, like Fee Demo collections, are intended to supplement appropriations. In general, recreation fees have represented a small portion of each agency's overall financing, with the bulk of agency monies coming from appropriated funds. The agencies anticipate collecting about $265 million in fees in FY2011, with NPS collections accounting for about two-thirds of the total. While the fees collected are small relative to total agency funding, the agencies have noted their importance in making improvements at federal recreation sites. Congress had considered whether to let the Fee Demo program expire, extend it, or make it permanent, and how to structure any extended or permanent program. Central to the debate was which agencies or types of lands to include in a fee program, and how to determine fee amounts, collect fees, and spend collections. In enacting the FLREA, Congress created a 10-year program, and extended it to Reclamation. Congress sought to eliminate some of the concerns with Fee Demo, in part by simplifying and standardizing the types of fees, authorizing an interagency recreation pass, and providing for public input in establishing fee locations and amounts. The balance of this report first provides an overview of key provisions of the FLREA. They include the types of fees allowed, use of fee receipts, public input in determining fees, and the authority for a national recreation pass. The report next focuses on issues related to the implementation of the FLREA. They involve the use of advisory committees to provide input on fees, the establishment of the national recreation pass, the extent of agency participation in the recreation fee program, and the collection and use of fee receipts. In enacting the FLREA, Congress sought to reduce or eliminate duplication, inconsistency, and confusion over determining and collecting fees. The law seeks to standardize the types of recreation fees across agencies, differentiate among different types of fees, and minimize the situations where multiple fees can be charged. To alleviate concerns that past fees had been charged for non-developed areas, the law outlines areas and circumstances where fees can and cannot be charged, in some cases specifying the level of services needed to charge a fee. Another objective of the law is to enhance public involvement in determining fee sites and setting fees. The FLREA provides guidance on establishing entrance, standard amenity, expanded amenity, and special recreation permit fees. An entrance fee may be charged for units managed by the NPS and FWS only, on the grounds that recreation fees at these agencies have enjoyed widespread support and the lands typically have certain kinds of infrastructure and services. The law explicitly states that the BLM, Reclamation, and FS may not charge entrance fees. Rather, these agencies may charge "standard amenity fees" in areas or circumstances where a certain level of services or facilities is available. Specifically, these agencies may charge standard amenity fees at a National Conservation Area; a National Volcanic Monument; a destination visitor or interpretive center that provides a broad range of interpretive services, programs, and media; an area that provides significant opportunities for outdoor recreation, has substantial federal investments, where fees can be collected efficiently, and that contains all of the following amenities: —designated developed parking, —permanent toilet facility, —permanent trash receptacle, —interpretive sign, exhibit, or kiosk, —picnic tables, and —security services. All five agencies also may charge an "expanded amenity fee," on the grounds that some extra fee for specialized services is fair and equitable. The NPS and FWS may charge such a fee when a visitor uses a specific or specialized facility, equipment, or service. The fee may be in addition to an entrance fee or may be the sole fee. The BLM, Reclamation, and FS may charge an expanded amenity fee only for specified facilities and services, such as use of developed campgrounds or developed swimming sites that provide at least a majority of services identified in the law; use of transportation services; rental of cabins, boats, and historic structures; and participation in special tours. The FLREA prohibits the BLM, Reclamation, and FS from charging standard or expanded amenity fees for certain activities and services, such as for parking or picnicking along roads or trail sides, accessing dispersed areas with low or no investment (unless specifically authorized in the law), passing through areas without using facilities and services, and using scenic overlooks. In addition, the law specifies places where entrance and standard fees may not be charged—for example, at NPS units within the District of Columbia. It also bars fees from being charged to certain persons, such as those under 16 years old, or for certain purposes, including outings for noncommercial educational purposes by schools and academic institutions. Further, the DOI and USDA Secretaries may charge a special recreation permit fee in connection with a special permit issued for specialized recreation at lands and waters of any of the five agencies. Specialized recreation includes group activities, recreation events, and use of motorized recreational vehicles. To promote fair and consistent fees among agencies and locations, the FLREA provides criteria for establishing recreation fees. For instance, they are to be commensurate with the benefits and services provided, and the Secretaries are to consider comparable fees charged elsewhere, such as by nearby private providers of recreation services. To minimize confusion, burden, and overlap of fees, the Secretaries are to consider the aggregate effect of recreation fees on recreation users and providers. They are to establish the minimum number of fees and avoid collecting multiple or layered fees for similar purposes. In establishing new fees and fee sites, the Secretaries are to obtain input from Recreation Resource Advisory Committees (" Recreation RACs "; see below). The law allows each agency to retain and spend the revenue collected without further appropriation. Each agency's collections are to be deposited into a special account in the Treasury. In general, at least 80% of the revenue collected is to be retained and used at the site where it was generated. However, the Secretaries of DOI and USDA can reduce that amount to not less than 60% for a fiscal year, if collections exceed reasonable needs. This provision seeks to provide agencies with flexibility in using their revenues, in part to address high-priority needs at areas that do not collect enough revenue. The remaining collections are to be used agency-wide, at the discretion of the agency. However, the law contains other provisions for the distribution of certain collections, including from the sale of the national recreation pass and regional multi-entity passes. The agencies have broad discretion in using revenues for purposes specified in the FLREA, which aim to benefit visitors directly. They include facility maintenance, repair, and enhancement; interpretation and visitor services; signs; certain habitat restoration; law enforcement; operation of the recreation fee program; and fee management agreements. The Secretaries may not use collections for employee bonuses or biological monitoring under the Endangered Species Act. Further, the Secretaries may not use more than "an average" of 15% of collections for program administration, overhead, and indirect costs. Under the Fee Demo program, agencies reported that a majority of fees were spent on deferred maintenance and various visitor services. The FLREA continues a requirement that the Secretaries enforce the payment of fees. It authorizes penalties for nonpayment, with the fine for the first offense capped at $100. The Secretaries must provide an opportunity for public participation in establishing fees under the FLREA. For instance, they are to publish a notice in the Federal Register regarding a new fee area six months before its establishment. In addition, for each BLM and FS state or region, the Secretaries are to appoint Recreation RACs to make recommendations regarding standard and expanded amenity fees in accordance with specified procedures. The Secretary may establish as many Recreation RACs in a state or region as necessary. If rejecting a fee recommendation, the Secretary is to notify the House Natural Resources and Senate Energy and Natural Resources Committees of the reasons at least 30 days before implementing a decision. Each Recreation RAC is to be composed of 11 members and broadly representative of the recreation community, as specified in the law. Each Recreation RAC is to include five people who represent various types of recreation users, such as summer nonmotorized recreation; three people who represent different types of interest groups, such as motorized outfitters and guides; a state tourism official to represent the state; a representative of affected Indian tribes; and a representative of local governments. The Secretaries may appoint members from nominations by governors and designated county officials, but are not to establish Recreation RACs if there is insufficient interest to ensure a balance of views. Also, in lieu of creating Recreation RACs, the Secretaries may use RACs established under other authorities (e.g., the RACs established under the grazing regulations.) The Secretaries are to post notices of fees in areas where fees are being charged, as well as in publications distributed in the area. To the extent practicable, the Secretaries also are to post notices in areas where work is being performed using collections. Communication on how fees are spent is thought to enhance public acceptance of fees. The law provides for collaboration with other federal and nonfederal entities, with a goal of greater convenience to the public and improved efficiency for the agencies. It authorizes the Secretaries to enter into contracts for various purposes, such as fee collection and processing services and emergency medical services. States or subdivisions of states that enter into such agreements may share in the revenues collected. The law authorizes the establishment of a national pass for recreation at a variety of sites managed by different agencies. One goal is to facilitate recreation by consolidating existing passes and reducing confusion over which passes can be accepted where. Another is to increase the convenience of visiting adjacent sites managed by different agencies. Specifically, the "America the Beautiful – the National Parks and Federal Recreational Lands Pass" is to cover the entrance fee and standard amenity fee at all areas where such fees are charged. The Secretaries are to establish the price of the pass, which generally is to be valid for one year. However, they are to provide free or reduced-cost passes to certain individuals, such as volunteers and senior or disabled visitors, and may provide for a discounted or free day for visitors generally. They are to issue guidelines on administering the pass, including on sharing costs and revenues among the agencies. Further, the Secretaries may enter into cooperative agreements with governmental and nongovernmental entities for developing and implementing the pass program. The law also provides authority to develop site-specific and regional multi-entity passes. A site-specific pass is to cover the entrance or standard amenity fee for a particular site for up to a year. A regional multi-entity pass is to be accepted by one or more of the five agencies or one or more governmental or nongovernmental entities. In establishing multi-entity passes, the Secretary is to enter into an agreement with all participating agencies or entities as to the price of the pass and the sharing of costs and revenues, among other issues. Many assert that the recreation fee program improves recreation and visitor services, and is needed to supplement appropriations. They believe that the program retains the benefits of the former Fee Demo program, such as keeping most fees on-site to provide improvements desired by visitors. They also contend that the current program improves upon the former one, for example, by seeking to establish fair and similar fees among agencies. The criteria in the FLREA for determining fees are intended to ensure that they are charged in appropriate circumstances, namely, where infrastructure and services directly benefit the public. Among other improvements, fee supporters note that the current program provides for more public involvement in determining fee sites and setting fees (e.g., through RACs) and for increased coordination with local communities (e.g., through fee management agreements). They also view the establishment of a single national pass as increasing consistency, convenience, and clarity. However, some concerns with recreation fees continue to be expressed. They include concerns that the program does not go far enough in simplifying fees, that it does not allow for fee experimentation to adapt to change, and that it fails to ensure that most collections will be used for maintenance backlogs of agencies, which many regard as a priority. Other concerns are that federal lands will be overdeveloped to attract fee-paying tourists, and that one national pass is difficult to implement given differences in agency lands and complex issues regarding pricing and sharing revenues. Some charge that the authority to reduce the funds a site retains to 60% could make planning difficult, reduce incentives to collect fees, and weaken visitor support for fees. Other critics continue to oppose recreation fees in general, asserting, among other reasons, that appropriations should cover the costs of operating and maintaining federal lands or that they might be reduced because fees are available. Some counties and states have passed resolutions opposing recreation fees and seeking to repeal the FLREA. A continuing issue is which agencies and types of lands should be in the fee program. A pending Senate bill, S. 868 , would repeal the FLREA and establish entrance and use fees at national park units. It also would reinstate certain recreation fees that were repealed by the FLREA, such as entrance and use fees under the Land and Water Conservation Fund Act and admission permits for certain wildlife refuges. Interagency policy guidance on many aspects of FLREA is contained in a handbook issued in June 2006. The Implementation Handbook establishes common definitions of terms in the FLREA and overarching policy guidelines to implement the law. In addition, DOI and the FS jointly issued guidelines for public involvement in establishing new fee areas and informing the public of how recreation fee revenues are used. Further, each of the agencies has issued its own guidance on the intention, requirements, and implementation of the recreation fee program. The BLM and FS are using both pre-existing and new Recreation RACs to make recommendations on creating, altering, and eliminating recreation fees on both FS and BLM lands. The agencies are collaborating in their use of these advisory bodies by having both agencies use existing BLM Resource Advisory Councils in some areas, one existing FS Advisory Board, and five new FS-chartered Recreation RACs in other areas. Based on the recommendations of three state governors, there are no RACs in Alaska, Nebraska, and Wyoming. Forest Service Recreation RACs have 11 members: five represent recreation users; three represent outfitter-guides and environmental groups; and three represent state tourism, Indian tribes, and local governments. The BLM Recreation RACs have 15 members: five represent commercial land uses (e.g., livestock grazing, timber, oil and gas, and off-highway vehicles); five represent environmental organizations, historic and cultural interests, wildlife, wild horses and burros, and dispersed recreation; and five represent elected officials and governmental agencies, Indian tribes, academia, and the general public. Together, RAC members have provided economic, social, and environmental perspectives on fee issues. Under the FLREA, a RAC may make fee recommendations to the respective Secretary if supported by a majority of each category of members (as specified in the law) and if there is documented public support. Most agency fee initiatives have received positive recommendations after RAC review. However, agencies have reconsidered a number of fee proposals based on RAC input and sought additional public views on fee initiatives based on RAC suggestions. In other cases, RACs have assisted the agencies with preliminary or conceptual fee proposals and influenced how the agencies developed their proposals. The America the Beautiful – the National Parks and Federal Recreational Lands Pass applies to access to, and use of, recreation sites of the five participating agencies. In developing the pass, a key issue was how much to charge, and the agencies contracted with a university for a pricing analysis. The standard version of the pass became available to the general public in January 2007 for a cost of $80. There are three other versions of the pass, for volunteers, seniors, and persons with disabilities. The standard annual pass is the most widely used. The volunteer pass is free to volunteers who work at recreation sites for 500 hours over any time period. Both the standard annual and volunteer passes are valid for a 12-month period, and cover entrance fees and standard amenity fees. The senior pass is a lifetime pass for those aged 62 or older, for a $10 fee. The access pass is a free, lifetime pass for persons with permanent disabilities. Both the senior and access passes cover entrance fees and standard amenity fees, and discounts on some expanded amenity fees. All passes cover admission of the pass holder(s) and other passengers (in a non-commercial vehicle) at sites where fees are charged by the vehicle, and four adults at sites that charge per person fees. The America the Beautiful Pass supersedes a variety of passes issued by agencies previously, such as the National Parks Pass. Legislation has been introduced in the 111 th Congress ( H.R. 1354 ) to make the pass available to veterans for a cost of $10 annually. The NPS administers the interagency pass program on behalf of the participating agencies. The agencies developed standard operating procedures to sell and accept the passes consistently. The procedures cover identification requirements, pass validation, and use of third-party vendors (such as REI) to sell passes, among other issues. In addition to third-party vendors, the passes are available from recreation sites that charge an entrance fee or a standard amenity fee, the U.S. Geological Survey (USGS) online or by phone, and other associations and groups. One issue is how to distribute revenues from the sale of the pass among the agencies over the long term. In the short term, revenues from pass sales at sites remain with the agency that collects them. Revenues collected centrally, for instance through sales of passes on the Internet, are used for administrative costs of the program and repaying the NPS for startup costs of the new pass, with additional revenue split among the five agencies. In the future, the distribution of revenues from centralized sales will take into account use of the pass. How to track use of the pass, particularly at BLM and FS sites that may be remote and unstaffed, continues to be a challenge. The agencies conducted a detailed analysis of the extent to which sites charging recreation fees under the former Fee Demo Program met the criteria and prohibitions of the FLREA for charging entry, standard amenity, and expanded amenity fees. The agencies instructed units to make changes where necessary. The NPS and FWS made little change, as both agencies were authorized under Fee Demo to charge entrance fees and continue to have authority to charge entrance fees under FLREA. Currently, about half of the 392 NPS units charge an entrance fee, while about 35 of the 450 FWS refuges that are open to the public charge an entrance fee. These agencies also charge amenity fees at some sites. For instance, the FWS currently charges entrance or other fees (e.g., for hunting) under FLREA at 112 refuges or other locations. Most BLM areas were in compliance with the requirements of FLREA when it was enacted, and continue to charge fees as before. However, some adjustments were made. For instance, some sites added amenities, such as picnic tables, to be in compliance with FLREA provisions. BLM currently manages about 3,600 recreation sites, of which approximately 300 charge amenity fees. The FS made the most changes as a result of the FLREA. The agency initially dropped fees at 437 sites, including numerous trailheads and picnic areas, because they did not have the amenities required by the law. The FS currently manages about 17,500 developed recreation sites, of which 4,185 collect fees under the FLREA. Most of these sites are campgrounds. Taken together, a majority of these four agencies' sites are not charging a recreation fee. In determining entrance fees, the NPS is using a standardized fee structure nationwide. This structure groups national park units into four categories based on type of designation (e.g., national park, national battlefield, national seashore) and other factors. The same entrance fee is charged at each park unit in a category. For instance, for category 2 units, namely, national seashores, recreation areas, monuments, lakeshores, and historic parks, the entrance fee is $7 per person, $10 per motorcycle, $15 per vehicle, and $30 per annual pass. The FWS typically charges daily entrance fees of $5 per vehicle and $15 for a refuge-specific annual pass. For particular activities, such as hunts, fees are based on a market analysis. FWS seeks consistency of fees within regions, based on related state and private fees. BLM sets fees based on the amenities available at recreation sites, using low, moderate, and high categories. The FS bases fees on local market rates and a variety of factors including amenities available, site condition, and operation and maintenance costs. The average fees at FS sites are approximately $6 for day use and $9 for overnight use. FS use of high-impact recreation area (HIRA) designations for charging fees has been controversial. While the FLREA does not mention HIRAs, the agencies have agreed to define an HIRA as an area of concentrated recreational use that includes a variety of developed sites providing a similar recreation opportunity. Further, it is a contiguous area composed of places, activities, or special, natural, or cultural features that is the focal point of recreation and that has clear access points and boundaries. The FS views it as more convenient for users to pay fees for use of these areas rather than to pay separate fees at each of their sites. The agency notes that collections are used for upkeep of facilities in the areas. Some of the HIRAs have been criticized by recreationists as broad designations for large tracts of land lacking in the amenities required by the FLREA. The FS examined the use of fees at its HIRAs in 2007-2008, and expects to present its findings to the RACs. The FS currently is considering fee changes in some HIRAs and is developing new directives on these areas, which will be made available for public comment. The agency anticipates that some fee changes could result. While the FLREA also applies to Reclamation, the agency is charging a fee under FLREA at only one site. The majority of Reclamation's 289 developed recreation sites are managed by partner organizations, and the agency concluded that these non-federally managed sites will not participate in the FLREA program. Other Reclamation recreation areas are managed by other federal agencies, and these agencies determine whether the areas charge fees under the FLREA. Of Reclamation's 289 developed recreation sites, 33 are managed exclusively by the agency. Reclamation determined that only six of these sites it manages directly would meet the criteria to charge amenity fees. In reviewing whether and to what extent these areas should participate, Reclamation examined whether the costs of implementing and participating in the program would exceed expected revenues. Reclamation also assessed its authority to charge recreation fees under another authority that was not repealed by the FLREA—the Federal Water Project Recreation Act. The agency concluded that it would not be cost effective for the other five qualifying sites to participate in the FLREA. In FY2009, the five agencies collected a total of $258.4 million in recreation receipts under the FLREA. The NPS takes in the most revenue, and the NPS and FS together collected more than 90% of the FY2009 revenues. Specifically, NPS collections were $171.0 million, or 66% of the five-agency total, while the FS collected $64.7 million, which was 25% of the total. The other agency collections were BLM, $17.5 million (7%); FWS, $4.8 million (2%), and Reclamation, $0.5 million (<1%). Table 1 below identifies the receipts for the agencies over the past three fiscal years. The average cost to the four agencies of collecting recreation fees declined from 21% of gross fees in FY2002 to 15% in FY2009. The decline is attributed to technological improvements, increased revenue, and definitional changes, among other factors. The cost to each agency varied considerably during FY2009. Specifically, the cost to the BLM was 2%; to the FS, 9%; to the FWS, 15%; and to the NPS, 19%. The BLM cost is significantly lower because of the reliance on technology, rather than personnel, to collect fees. The NPS cost remains the highest in part because of the higher collection costs of many smaller park units. They tend to collect relatively little revenue or have more complex logistics (e.g., staffed entrance fee stations). The agencies have different procedures for selecting projects to be funded with FLREA revenues. For BLM, FWS, and FS, most projects are approved at the local units, usually within a few weeks of being suggested by unit staff. NPS projects are reviewed by NPS local units, regions, and headquarters, before submission for DOI or congressional approval. This process can take a year or more. While it may help ensure consistency with the FLREA and accountability in use of funds, the process also may delay the implementation of projects and contribute to balances of unobligated revenues. Fees collected during a fiscal year, and carried over from previous years, are available for obligation by the agencies. The agencies have identified total recreation fees available for obligation in FY2009, and the amount that was obligated in FY2009. The agencies report having obligated FY2009 funds for a variety of purposes, including operation, maintenance, and capital improvement projects. The NPS reports that, of $441.0 million available for obligation in FY2009, $222.6 million was obligated. Of those obligations, $119.7 million (54% of total obligations) was for asset repairs and maintenance. This category is comprised of capital improvements, routine/annual maintenance, and deferred maintenance. Deferred maintenance, also called the maintenance backlog, is defined as maintenance that "was not performed when it should have been or was scheduled to be and which, therefore, is put off or delayed for a future period." A focus of Congress and the Administration over the past decade has been on quantifying and reducing agency maintenance backlogs. Another $35.0 million (16%) of the NPS funds obligated went towards interpretation and visitor services, $34.0 million (15%) was for the costs of collecting recreation fees, and the remaining $33.9 million (15%) was for other purposes. The BLM reports that, of $28.6 million available for obligation in FY2009, $16.7 million was obligated. The largest portion of the funds obligated—$5.2 million (31% of total obligations)—was for activities including interpretation and visitor services. For asset repairs and maintenance, BLM obligated $4.4 million (26%). Another $2.8 million (17%) went towards law enforcement and recreation, and the remaining $4.3 million (26%) was directed to other activities. The FWS reports that, of $10.1 million available for obligation in FY2009, $4.3 million was obligated. Of those obligations, the FWS obligated $1.6 million (37% of total obligations) on asset repairs and maintenance. Another $1.2 million (28%) of the obligations was used for visitor services, while the remaining $1.5 million (34%) was for other programs. The FS reports that, of $94.8 million available for obligation in FY2009, there were $61.2 million in total expenditures. The agency reports expenditures of $23.6 million for "Facilities Maintenance," which is 39% of total expenditures. Another $14.1 million (23%) of expenditures was for visitor services, with $11.4 million (19%) for fee management agreement and reservation services and the remaining $12.1 million (20%) for other purposes. Table 2 below identifies recreation fees available for obligation and obligated by the four agencies during FY2009. In the case of the FS, expenditures are noted. The table specifies the amount of obligations for asset repairs and maintenance, including deferred maintenance, because of the congressional and administrative focus on this activity. For the four agencies, a total of $574.4 million in recreation fees was available for obligation in FY2009. Of that amount, $304.8 million was obligated by the agencies. Asset repairs and maintenance collectively comprised $149.3 million (49%) of the obligations. This activity received the largest portion of total agency obligations in FY2009. Obligations for all other purposes were $155.5 million (51%). Information on collection and obligation of recreation fees for other years, similar to that presented here for FY2009, is available in the interagency Triennial Report to Congress on the FLREA program. Specifically, the report has data for FY2006-FY2008 for the participating agencies. Two agencies, the NPS and FWS, have projected how they would spend their recreation fee revenues during the five-year period from FY2009 to FY2013. Priorities for the two agencies include maintenance and visitor services. The BLM, FS, and Reclamation did not similarly publish five-year projections. The NPS expects to dedicate the largest share of its funds to reducing the agency's backlog of deferred maintenance. Specifically, the NPS expects to spend a total of $1.04 billion over five years (from FY2009 to FY2013), with $425.0 million (41%) on deferred maintenance. Agencies report annual estimates of the deferred maintenance of their facilities. DOI estimates deferred maintenance for the NPS for FY2009 at between $8.23 billion and $12.11 billion, with a mid-range figure of $10.17 billion. Fifty-five percent of the total deferred maintenance was for roads, bridges, and trails; 19% was for buildings; and 26% was for other structures. The NPS projects spending other portions of the $1.04 billion as follows: $200.0 million (19%) on visitor services, $185.9 million (18%) on direct costs/costs of collection, $72.5 million (7%) on non-deferred maintenance, $70.0 million (7%) on habitat restoration, and $82.0 million (8%) on other purposes. The FWS anticipates spending $28.4 million over the five-year period. The largest share, $12.1 million (43%), would be used for visitor services. For deferred maintenance, the FWS projects spending $5.4 million (19%) over five years. For FY2009, DOI estimates deferred maintenance for the FWS at between $2.44 billion and $3.59 billion. The FWS anticipates spending other portions of the $28.4 million as follows: $3.5 million (12%) for direct costs/costs of collection; $2.8 million (10%) for non-deferred maintenance; $1.7 million (6%) for administrative, overhead, and indirect costs; and $3.0 million (11%) for other purposes. The recreation fee program historically has had a large balance of unobligated funds. These revenues accumulated under the former Fee Demo program as well as the current program under FLREA. Typically, all of the fees collected during a year are not spent during that year. Questions have arisen as to why the agencies have not used available monies more quickly. Reasons include a need to carry over funds for the next year's operations and for large projects; insufficient staff at some units to administer and implement projects; and the time needed for environmental analysis, design, and engineering. FY2009 marked the first year in which more than half of available recreation revenues were obligated by the four agencies. Annual obligations have increased from 20% of total funds available in FY1997, the outset of the former fee program, to 53% in FY2009. Also during this period, revenues and obligations have increased considerably in absolute terms. In FY1997, total funds available for obligation were $55.3 million, of which $11.0 million were obligated. In FY2009, $574.4 million were available for obligation, of which $304.8 million were obligated. That left a combined unobligated balance of recreation fees totaling $269.6 million in FY2009—47% of all available revenue. Figure 1 depicts the total recreation revenues available for obligation and the total obligated since the inception of the former Fee Demo in FY1997. For each fiscal year, the first bar shows the total funding available for obligation, comprised of the recreation fees collected during the fiscal year (the bottom part of the bar) and the unobligated balance of recreation fees carried over from the previous fiscal year (top part of the bar). The second bar shows the funding that was obligated in each fiscal year. The percent of recreation funds obligated by the four agencies increased from 46% in FY2008 to 53% in FY2009, primarily due to enhanced NPS efforts to reduce its large balance of unobligated funds. For instance, the agency implemented a Recreation Fee Comprehensive Plan covering all fee projects over five years. Park units provide annual updates to include a timeline for project completion. For the first time in FY2009, NPS obligated more than half of the monies available for obligation (50.5%). An NPS goal is to reduce its unobligated balance further, from $218.4 million in FY2009, to approximately $150 million by September 30, 2010, and $80 million by January 1, 2011. To achieve this goal, the agency is limiting the percent of revenue that park units can carry over from year to year. Parks that do not achieve the carryover standard will be penalized. For instance, as of January 1, 2011, park units will lose their carryover funds if the unobligated carryover balance exceeds 35% of annual recreation revenues. The NPS also is taking actions to speed up the use of the 20% of recreation revenues available to be used agency-wide. For example, funds are to be allocated to projects by December 31 each year. If the funds are not fully obligated by December 31 of the following year, they will be reallocated to other projects. The FWS is the only one of the four agencies that obligated less than half of the funds (42%) available during FY2009. The agency has issued guidance for sites to increase the rate of obligations to at least 50%, and has projected obligations for FY2010 and FY2011 at between 62% and 63%. BLM obligated 58% of available FY2009 funds, while the FS had the highest rate of obligation at 65%.

The Federal Lands Recreation Enhancement Act (FLREA in P.L. 108-447) established a new recreation fee program for five federal agencies—the Bureau of Reclamation (Reclamation), National Park Service (NPS), Fish and Wildlife Service (FWS), and Bureau of Land Management (BLM) in the Department of the Interior (DOI) and the Forest Service (FS) in the Department of Agriculture (USDA). The law authorizes these agencies to charge fees at recreation sites through December 8, 2014. It provides for different kinds of fees, criteria for charging fees, public participation in determining fees, and the establishment of a national recreation pass. The agencies can use the collections without further appropriation. Most of the money is for improvements at the collecting site, such as operation, maintenance, and capital improvement projects. This program supersedes, and seeks to improve upon, the Recreational Fee Demonstration Program. The extent of participation in the current fee program varies considerably among the agencies, ranging from fee collection at only one Reclamation site to 4,185 FS sites. The agencies conducted analyses of the extent to which sites charging fees under the former fee program meet the criteria and prohibitions of the FLREA for charging entry, standard amenity, and expanded amenity fees. The NPS and FWS made little change in fees and fee sites as a result of the new law. The BLM made some adjustments, while the FS made the most changes, initially dropping fees at 437 sites. The agencies are determining fee sites and setting fees with public input, with the BLM and the FS using Recreation Resource Advisory Committees for this purpose. A new national recreation pass became available in January 2007. There are different versions of the pass for seniors, disabled persons, volunteers at recreation sites, and the general public. In FY2009, the agencies collected a total of $258.4 million in recreation receipts under the FLREA, with the NPS collecting about two-thirds of the revenue. Together with fees carried over from previous years, $574.4 million was available for obligation in FY2009. For the first time since the collection of recreation fees under the former fee program, more than 50% of available funding was obligated in FY2009. Recreation fees have been controversial for decades, and there continues to be a difference of opinion as to the need for recreation fees and how fee programs should operate. The current program has supporters and critics. Many assert that the program improves recreation and visitor services, keeping most fees on-site for improvements that visitors desire. Supporters contend that the current program improves upon the former one, in allowing fees to be charged only in appropriate circumstances, setting fair and similar fees among agencies, providing for public involvement in setting fees, and establishing a single national pass. Some critics continue to oppose recreation fees in general, or believe that they are appropriate for fewer agencies or types of lands. Others find fault with the current program, for instance, for not simplifying fees enough, ensuring that most fees are used to reduce the maintenance backlogs of agencies, or obligating funds more quickly. Still others contend that it is difficult to implement one national pass, given differences in agency lands and issues regarding pricing and sharing of revenues. Congress continues to oversee agency efforts to establish, collect, and spend recreation fees under the FLREA. Issues regarding the structure of the program—whether to let the program expire in 2014, or whether to extend it or make it permanent—will likely be addressed in congressional deliberations.

Human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS), tuberculosis (TB), and malaria are three of the world's leading causes of morbidity and mortality. Along with the direct health effects, HIV/AIDS, TB, and malaria have far-reaching socioeconomic consequences, posing what many analysts believe are threats to international development and security. Because of this, the United States has considered the fights against these three diseases to be important foreign policy priorities. In FY2012, of the $8.8 billion the United States spent on global health programs under the Global Health Initiative (GHI)—the Obama Administration's effort to coordinate and improve U.S. global health programming—approximately 84% was on bilateral and multilateral HIV/AIDS, TB, and malaria combined, with bilateral HIV/AIDS programs accounting for 58% of all funding. The United States is currently the single largest donor for global HIV/AIDS and has played a key role in generating a robust international response to TB and malaria. Despite growing international support for global health programs over the last decade and progress made in controlling HIV/AIDS, TB, and malaria in much of the world, significant obstacles remain in fighting the three diseases. In many countries, HIV infection rates are outpacing access to treatment, rates of drug resistance are increasing for TB and malaria, and health systems in resource-poor settings are under growing pressure to address these diseases while struggling to provide basic health care. Over the last few years, Congress has debated the U.S. strategy to confronting these diseases, including how to best support a long-term approach to these diseases that generates positive outcomes for global health in general. In response, implementing agencies have begun to make programmatic changes, and the Obama Administration has called for a revised U.S. approach to HIV/AIDS, TB, and malaria programs in the hopes of making related efforts more effective and efficient. This process has led to a broader discussion on how best to allocate global health funding, both within and between programs. The financial crisis and economic recession, and consequent calls to reduce the U.S. budget deficit, have led to decreased funding for these diseases in recent years, and have heightened the urgency of reevaluating U.S. global health investments. This report highlights some of the current challenges posed by HIV/AIDS, TB, and malaria, as well as several cross-cutting policy issues that the 112 th Congress may consider as it determines U.S. global health funding for these three diseases, including health systems strengthening, country ownership, research and development, monitoring and evaluation, and engagement with multilateral organizations. In May 2011, results from a study demonstrated that early HIV treatment in couples with one infected partner reduced the risk of transmission by 96%. This finding indicated the preventative benefits of HIV treatment and has been hailed by many as a "game-changer" in the fight against global HIV/AIDS. In November 2011, the Board of the Global Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund) announced that due to the current fiscal environment and resulting inadequate funding, it would cancel its 11 th round of funding. While it has put a "transitional funding mechanism" in place to avoid disruption of existing services, it will not be offering any new funding until 2014. On December 23, 2011, the President signed into law the Consolidated Appropriations Act, 2012 ( P.L. 112-74 ). Congress appropriated $7.4 billion for HIV/AIDS, TB, and malaria programs in FY2012, including slightly decreased or level funding for HIV/AIDS, and slightly increased funding for malaria and TB programs. On February 13, 2012, the President released the FY2013 budget request. The request included approximately $7.2 billion for HIV/AIDS, TB, and malaria programs, which included further decreases in funding for bilateral HIV/AIDS, TB, and malaria programs. At the same time, the request included a considerable increase in funding for the Global Fund. Despite the proposed decrease in bilateral HIV/AIDS funding, the budget request affirmed the Administration's commitment to treating 6 million HIV-positive people by the end of 2013, a target announced on World AIDS Day in December 2011. U.S. efforts to address HIV/AIDS, TB, and malaria have grown significantly over the last few decades, as successive Administrations and Congresses have increasingly recognized the severity and impact of these diseases. An expansive U.S. government response to HIV/AIDS began under President Bill Clinton. In 1999, President Clinton launched the Leadership and Investment in Fighting an Epidemic (LIFE) Initiative to address HIV/AIDS in 14 African countries and India, marking the first interagency response to the epidemic. The following year, President Clinton signed into law the Global AIDS and Tuberculosis Relief Act of 2000 ( P.L. 106-264 ), boosting funding for both HIV/AIDS and TB activities. The George W. Bush Administration greatly elevated the fight against HIV/AIDS, TB, and malaria in the U.S. foreign policy agenda. In 2001, President Bush contributed the "founding pledge" to the Global Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund), a public-private financing mechanism for the global response to HIV/AIDS, TB, and malaria. Shortly thereafter, in 2002, President Bush launched the International Mother and Child HIV Prevention Initiative, supporting prevention of mother-to-child transmission (PMTCT) activities in 12 African and 2 Caribbean countries. In 2003, the Bush Administration announced the establishment of the President's Emergency Plan for AIDS Relief (PEPFAR), pledging $15 billion over the course of five years to combat HIV/AIDS, TB, and malaria. This pledge represented the largest commitment ever by a single nation toward an international health issue, and established a new and central role for donor governments in the fight against HIV/AIDS. Of the $15 billion, the President proposed spending $9 billion on HIV/AIDS prevention, treatment, and care services in 15 focus countries. The President also proposed spending $5 billion of the funds on existing bilateral HIV/AIDS, TB, and malaria programs in roughly 100 other countries and $1 billion of the funds for U.S. contribution to the Global Fund. The 108 th Congress authorized the establishment of PEPFAR in May 2003 through the U.S. Leadership Against HIV/AIDS, TB, and Malaria Act of 2003 (Leadership Act, P.L. 108-25 ). The act authorized $15 billion for U.S. efforts to combat global HIV/AIDS, TB, and malaria from FY2004 through FY2008, including $1 billion for the Global Fund in FY2004. The act also authorized the creation of the Office of the Global AIDS Coordinator (OGAC) at the Department of State to oversee all U.S. global HIV/AIDS activities. Beyond increasing the scope of U.S. HIV/AIDS programs, the Leadership Act also shifted the focus of U.S. HIV/AIDS activities. In particular, while past U.S. global HIV/AIDS programs had primarily supported prevention activities, the Leadership Act set targets for extending anti-retroviral therapy (ART) and required that 55% of PEPFAR funds be spent on HIV/AIDS treatment. Building on the success of PEPFAR in harnessing resources to combat a disease, President Bush announced the establishment of the President's Malaria Initiative (PMI) in 2005, which significantly increased U.S. funding for global malaria programs. PMI was announced as a five-year, $1.2 billion commitment to halve the number of malaria-related deaths in 15 sub-Saharan African countries by 2010 through the use of four proven techniques: 1. indoor residual spraying (IRS), 2. insecticide-treated bed nets (ITNs), 3. artemisinin-based combination therapies (ACTs) to treat malaria, and 4. intermittent preventative treatment for pregnant women (IPTp). PMI represented a significant shift from past United States Agency for International Development (USAID) malaria programs. Until then, USAID's malaria programs had provided primarily technical assistance. Under PMI, a minimum of 50% of the budget was devoted to the purchase and distribution of malaria-fighting commodities. The design of PMI also took into account some of the criticism levied against PEPFAR in its first two years, including the need to strengthen the alignment of programs with country priorities and better integrate programs into national health systems. No analogous initiative was established for global TB. However, in 2007, the 110 th Congress enacted the Consolidated Appropriations Act of 2008 ( P.L. 110-161 ), which markedly increased funding for TB control efforts. The act provided unprecedented funding to expand USAID TB programs in high-burden countries. The act also recognized the growing threat of HIV/TB co-infection and directed OGAC to spend at least $150 million of its funds for PEPFAR on joint HIV/TB activities. In July 2008, the 110 th Congress enacted the Tom Lantos and Henry J. Hyde United States Global Leadership Against HIV/AIDS, Tuberculosis, and Malaria Reauthorization Act of 2008 (Lantos-Hyde Act, P.L. 110-293 ), authorizing $48 billion for bilateral and multilateral efforts to fight global HIV/AIDS, TB, and malaria from FY2009 through FY2013. Of the $48 billion, $4 billion was for bilateral TB programs, $5 billion was for bilateral malaria programs, and $2 billion was for U.S. contributions to the Global Fund in FY2009. The act also authorized the establishment of the Global Malaria Coordinator at USAID to oversee and coordinate all U.S. global malaria activities. U.S. HIV/AIDS, TB, and malaria programs under the Bush Administration received strong bipartisan congressional support. At the same time, Congress and the global health community debated several aspects of PEPFAR, including the relationship between HIV/AIDS activities and other global health activities; the effectiveness of abstinence-only education; the integration of family planning into HIV/AIDS activities; the use of branded versus generic drugs; the role of recipient countries in setting assistance priorities; and the balance of funding between prevention, treatment, and care activities. Many critics argued that PEPFAR was overly unilateral, relied too heavily on U.S.-based organizations, and did little to strengthen national health systems or country capacity to cope with the epidemic in the long run. The Lantos-Hyde Act was intended to respond to a number of these criticisms and support the transition of PEPFAR from an emergency plan to a sustainable, country-led program. Partly in response to the above-mentioned debates, on May 5, 2009, President Barack Obama announced the Global Health Initiative (GHI), initially proposed as a six-year, $63 billion effort. The GHI is a comprehensive U.S. global health strategy that brings together a number of existing global health funding streams and programs managed and implemented by the Department of State, USAID, the Centers for Disease Control (CDC), the National Institutes of Health, and the Department of Defense (DOD). The initiative calls for the coordination and integration of established HIV/AIDS, TB, and malaria programs with one another and with other, broader health activities to maximize effectiveness, efficiency, and sustainability of U.S. global health programs. It also encourages increased efforts to strengthen underlying health systems and support country ownership. Finally, the GHI supports woman- and girl-centered approaches to global health, recognizing that women and girls often suffer disproportionately from poor health. HIV/AIDS, TB, and malaria programs are core components of GHI. The Obama Administration proposes spending 81% of all GHI funding on the three diseases from FY2009 through FY2014 ( Figure 1 ). Since 2009, implementing agencies have produced multi-year HIV/AIDS, TB, and malaria strategies, which each articulate goals and strategies to support an integrated, long-term, and country-led approach to global health, in accordance with the GHI principles (see the " HIV/AIDS, TB, and Malaria GHI Goals " section). In a demonstration of his commitment to the fight against global HIV/AIDS, on World AIDS Day in 2011, President Obama announced an increased target of providing treatment to 6 million people infected with HIV by 2013. In the three years since the launch of the GHI, the Administration has released a number of key documents demonstrating how the GHI principles are beginning to be implemented in the field. As of November 2011, 29 "GHI Plus" countries have been chosen to receive additional resources and technical assistance to accelerate implementation of the GHI and to serve as "learning laboratories" for best practices (the GHI will ultimately be implemented in every country receiving health assistance). In March 2011, the Administration released the "United States Government Global Health Initiative Strategy Document" as well as GHI Country Strategies outlining high-level priority areas and targets for country programs. These multi-year strategies also serve as guidelines for new coordination efforts between PEPFAR, USAID, and CDC, as they aim to reduce duplication between programs, integrate services where appropriate, and better align programs with the priorities of partner governments. Several outside studies have documented early signs of progress toward a more cohesive and coordinated approach to global health, including in relation to HIV/AIDS, TB, and malaria programs. Questions remain over how GHI will lend itself to significant innovation, whether early progress in coordination can be brought to scale, and whether efforts to better integrate global health activities can be sustained without significant additional resources. Also, despite the Administration's stated commitment to existing initiatives like PEPFAR and PMI, some experts have expressed concern that a new focus on coordination and integration will lead to decreasing support for touchstone disease-specific programs. Congress provides funds for HIV/AIDS, TB, and malaria assistance through several appropriations vehicles, including State and Foreign Operations; Labor, Health and Human Services, and Education; and the Department of Defense. Funds are appropriated to a number of U.S. agencies including the Department of State, USAID, CDC, and DOD. Congress also provides sufficient resources to the Office of AIDS Research at the National Institutes of Health (NIH) to support international HIV/AIDS research efforts, and to NIH and DOD for malaria research efforts. The agencies use the funds for bilateral HIV/AIDS, TB, and malaria programs and research and for contributions to multilateral organizations that address these diseases, including the Global Fund. Since FY2001, U.S. funding in support of global HIV/AIDS, TB, and malaria programs has significantly increased. Funding for FY2012, as signed into law by the President on December 23, 2011, demonstrates continued congressional commitment to global HIV/AIDS, TB, and malaria programs, although it did not support the increased funding for these programs included in the President's FY2012 budget request. For a snapshot of recent years, Table 1 includes U.S. actual, enacted, and requested funding for global HIV/AIDS, TB, and malaria from FY2008 through FY2013. Appendix C includes all U.S. actual and estimated funding for global HIV/AIDS, TB, and malaria from FY2001 through FY2012, as well as the President's FY2013 budget request. Over the past decade, Congress has demonstrated significant support for U.S. programs targeting global HIV/AIDS, TB, and malaria. In particular, the enactment of the Leadership Act and the Lantos-Hyde Act raised the profile of HIV/AIDS, TB, and malaria and authorized increases in U.S. investments for countering each disease. Congress has also held a number of hearings in recent years to evaluate U.S. HIV/AIDS, TB, and malaria programs and to debate various approaches to fighting the diseases. While congressional action (including legislation and hearings) has tended to group the three diseases together, the response to each has varied widely, with HIV/AIDS receiving considerably more funding and attention than either TB or malaria. Funding for each of the diseases has increased drastically since FY2001. Despite the marked increases in funding, there are significant differences in the percentage of the global health budget that each disease receives. Since the establishment of PEPFAR, HIV/AIDS programs have accounted for close to or over 50% of the global health budget, while TB programs have received between approximately 1.6% and 3.6%, and malaria programs have received between approximately 5.0% and 9.1% of global health funding, depending on the year ( Figure 2 ). U.S. support for fighting global TB has trailed that of HIV/AIDS and malaria and, unlike the other two, global TB has no U.S. presidential initiative or designated U.S. coordinator. Health experts continue to debate the appropriate apportionment of funding for the three diseases, including questions over the relative impact of and costs of treatment for each disease. Although absolute funding for all three diseases has increased since FY2001, specific trends for each disease have differed ( Figure 3 ). Funding for HIV/AIDS increased rapidly from FY2004 through FY2008, during the first phase of PEPFAR, and has largely leveled off since the initiative was reauthorized. Funding for malaria increased significantly following the establishment of PMI in FY2006 and has since seen further increases. Funding for TB increased most rapidly in FY2008 and FY2010, followed by a slight decrease in FY2011 and a slight increase in FY2012. On December 23, 2011, the President signed into law the Consolidated Appropriations Act, 2012 ( P.L. 112-74 ). The act included specific appropriations for State Department, USAID, HHS, and DOD global HIV/AIDS programs; USAID TB and malaria programs; and U.S. contributions to the Global Fund. FY2012 funding for HIV/AIDS, TB, and malaria programs together was slightly lower than in FY2011, and included a decrease in funding for global HIV/AIDS programs, slight increases in funding for global TB and malaria programs, and a larger increase in funding for the U.S. contribution to the Global Fund. Some health experts have expressed concern over the leveling of global health funding, particularly for HIV/AIDS, over the past few years. Specifically, advocates have argued that any reductions in funding undermine recent scientific breakthroughs, which demonstrate that with adequate financial support, available prevention and treatment methods can be harnessed to significantly decrease new HIV infections and AIDS-related deaths. Others argue that given that HIV/AIDS funding tied to continuing lifelong treatment for people with HIV will likely be considered impervious, coupled with the new increased targets for treatment by 2013, the cuts made to HIV/AIDS programs may affect critical prevention and care activities, as well as broader HIV-related efforts in areas like health systems strengthening and country ownership. While the FY2012 Consolidated Appropriations Act relatively small decreases for programs targeting the three diseases, its enactment occurred after prolonged congressional debate over reducing the budget deficit through lower discretionary spending levels, with some Members explicitly proposing cuts to global health programs. Some Members of Congress argued that these cuts could lead to important savings, while others strongly criticized any reduction in funding, arguing that it would undermine essential programs with humanitarian, development, diplomatic, and security implications. Compared to the President's request of $8.7 billion for all global health programs under the GHCS/GHP Account in FY2012, the House Subcommittee on State, Foreign Operations, and Related Programs mark-up of the FY2012 State-Foreign Operations appropriations bill recommended $7.1 billion for global health programs under the GHCS/GHP Account, representing an 18% decrease from the request, and the Senate Appropriations Committee-passed bill recommended $7.9 billion for global health, a 9.2% decrease from the request. The estimated total funding level for these global health programs in FY2012 was higher than both the House and Senate recommendations, representing a 6.9% decrease from the Administration's request. A number of health advocates have applauded the relatively small reductions made in FY2012. On February 13, 2012, President Obama released the FY2013 budget request. When compared to FY2012 estimated funding levels, the budget requests funding decreases for most bilateral HIV/AIDS, TB, and malaria programs, including, most prominently, a 10.8% decrease in funding for bilateral HIV/AIDS programs. At the same time, the budget requested significantly increased funding for the Global Fund, representing a 26.9% increase in funding over FY2012 levels (see Table 1 ). While the proposed increase in support to the Global Fund has been applauded by some health advocates, many express concern over the reduction in funding for bilateral programs, most especially PEPFAR programs. These experts argue that divestment in U.S. global HIV/AIDS and TB programs could imperil lives, reverse recent progress, undermine significant scientific findings, and lead to decreasing levels of support from other donors. Early action and debate within both the House and the Senate on FY2013 appropriations indicate that Congress may not support proposed reductions in funding for many global health programs. Certain program areas, however, will likely be the subject of ongoing congressional debate, including the U.S. contribution to the Global Fund. The Lantos-Hyde Act authorized $48 billion for global HIV/AIDS, TB, and malaria programs from FY2009 through FY2013, including contributions to the Global Fund. Current spending trends suggest that the authorized level may exceed appropriated amounts by over $10 billion. In late 2011, the World Health Organization (WHO) and the Joint United Nations Program on HIV/AIDS (UNAIDS) released new estimates of the scale of the global HIV/AIDS, TB, and malaria epidemics. The separate reports on each disease highlighted significant progress being made in the fight against the diseases, much of which is attributable to the leadership and support of the United States. The reports, characterized below, also identified major obstacles that remain. The 2011 WHO/UNAIDS report on global HIV/AIDS noted advancements in combating the global HIV/AIDS epidemic, including the landmark finding that among couples with one infected partner, early use of antiretroviral therapy can reduce transmission by at least 96%. The report also noted expanded access to several HIV/AIDS interventions, including HIV testing and counseling, anti-retroviral therapy, and drugs to prevent mother-to-child HIV transmission (PMTCT). Partly as a result of these interventions, both HIV-related mortality and incidence rates have declined. In 2010, HIV-related deaths were close to one-fifth lower than in 2004 and the rate of new HIV infections was almost 25% lower than in 1996, the year that the HIV incidence rate is thought to have peaked. At the same time, WHO cited several ongoing challenges. HIV/AIDS is still without a cure or vaccine, and in 2010 alone, an estimated 2.7 million people were newly infected. New infections, combined with expanded access to ART for those already infected, create greater numbers of people requiring indefinite, lifelong treatment. According to the 2011 WHO report on global TB, by 2008, most countries in the world had adopted WHO's Stop TB Strategy (the international guidance for prevention and treatment of TB). The global adoption of WHO prevention and treatment standards has enabled more than 55 million people infected with TB to receive treatment and prevented up to 7 million deaths between 1995 and 2010. Global rates of new TB infection have been declining since 2002, and the absolute number of TB cases has been declining since 2006. The WHO report highlighted some ongoing obstacles to TB control as well. Progress in global TB control is also challenged by HIV/TB co-infection and new forms of drug resistant TB. Outdated tools for diagnosis and treatment, particularly in relation to HIV/TB co-infection and resistant forms of the disease, hamper further progress. The 2011 WHO report on global malaria emphasized the effective scale-up of several malaria control interventions, including greater use of the latest malaria treatments, insecticide-treated bednets, indoor residual spraying, and drugs to reduce the transmission of malaria during pregnancy. Since 2000, 43 countries have experienced more than a 50% reduction in reported number of malaria cases and eight African countries have experienced at least a 50% reduction in either confirmed malaria cases or malaria admissions and deaths. The decreases in each of these African countries are associated with intense malaria control activities. Despite this success, the report also noted obstacles in the fight against malaria. In particular, coverage rates of ITNs and IRS and access to ACTs remain low in many African countries, and increasing drug and insecticide resistance pose new challenges. Finally, while WHO estimated that there were 0.7 million deaths from malaria in 2010, a study published in The Lancet in February 2012 estimated that there were actually 1.1 million malaria deaths in 2010, indicating that the epidemic might have been far more severe than previously thought. HIV/AIDS, TB, and malaria overlap geographically, share risk factors, and can worsen the symptoms of each other in instances of co-infection. Despite these common factors, each disease presents unique challenges, which Congress may consider as it debates the U.S. response to each disease. For more information on the particular characteristics of and U.S. response to each of the diseases, see the following CRS reports by Alexandra Kendall: CRS Report R41645, U.S. Response to the Global Threat of HIV/AIDS: Basic Facts ; CRS Report R41643, U.S. Response to the Global Threat of Tuberculosis: Basic Facts ; and CRS Report R41644, U.S. Response to the Global Threat of Malaria: Basic Facts . Sustaining the successes achieved in fighting HIV/AIDS presents new policy challenges. While AIDS-related mortality and HIV incidence rates have declined, improved access to anti-retroviral therapy (ART) combined with continued new infections has led to growing numbers of people living with HIV/AIDS and requiring lifelong treatment. At the same time, the new and long-term financial costs associated with expanded access to ART have increased concern over the sustainability of U.S. treatment programs, and have increased calls for considerable scale-up of prevention efforts. The expansion of ART to treat HIV/AIDS has significantly reduced AIDS-related mortality. 2011 UNAIDS estimates suggest that 2.5 million deaths in low- and middle-income countries have been averted since the introduction of ART in 1995. Treatment has been a central component of PEPFAR programs. According to a 2010 Government Accountability Office (GAO) report, from FY2006 to FY2009, 46% of PEPFAR funds were used to support treatment efforts, with the rest of the funds divided between prevention and care activities ( Figure 4 ). As of September 2011, PEPFAR was directly supporting ART for over 3.9 million individuals in 30 countries—representing over half of the estimated 6.7 million people on treatment around the world. In 2009, the Administration committed the United States to treating an additional 4 million people infected with HIV/AIDS from FY2009 to FY2014. On World AIDS Day in December 2011, President Obama announced that the United States was committing to a new target of providing treatment to 6 million people by the end of 2013. In spite of the strides made in HIV treatment, the number of individuals newly infected with HIV exceeded the number of individuals placed on treatment by almost a 2 to 1 margin in 2010. At the end of that year, the 6.7 million people receiving treatment represented 47% of those in need. The number of people newly infected with HIV and requiring treatment is projected to grow significantly in coming years. Expanding access to ART for new patients who will require lifelong treatment will increase long-term treatment costs. Compounding this challenge is the potential for increased rates of drug resistance and consequent need for second-line therapies, which cost 5-10 times more than first-line drugs. The logistical and fiscal challenges of scaling up treatment have led some experts to argue that prevention efforts must be rapidly scaled up so that HIV incidence can be reduced. In 2011, the results of an HIV prevention trial indicated that early initiation of ART in discordant couples reduced HIV transmission by 96%, by lowering the viral loads of infected people and therefore reducing the possibility of transmission. These findings have confirmed the preventative implications of HIV treatment and have reduced what was previously seen by some as a dichotomous choice between increasing funds for treatment versus increasing funds for prevention. At the same time, these findings raise new questions related to the appropriate distribution of limited—or decreasing—funding for global HIV/AIDS, including how funds should be divided between ART as treatment, ART as prevention, and other non-treatment-based forms of prevention. Some also argue that the United States must consider how to make more efficient use of available treatment resources, including in relation to earlier versus later initiation of treatment and the distribution of resources between first-line and second-line drugs. The President's FY2013 budget request, which proposed decreased funding for bilateral global HIV/AIDS programs while also reaffirming the Administration's commitment to the new goal of treating 6 million HIV-positive individuals by 2013, demonstrated the importance of evaluating how to best allocate global HIV/AIDS funds. Many HIV/AIDS experts stress that ART, as a tool of both treatment and prevention, must not only be used increasingly, but also in tandem with increased support for other "combination prevention" options, including biomedical, behavioral, and structural interventions (efforts to address the social, political, and economic factors impacting vulnerability to HIV). In 2009, prevention-specific activities accounted for 22% of HIV/AIDS spending in low- and middle-income countries by all sources. According to UNAIDS, several methods of prevention have demonstrated clear success. Prevention of mother-to-child transmission (PMTCT) has led to reductions in children infected with HIV, and male circumcision has led to reduced likelihood of uninfected men acquiring HIV from HIV-infected female partners. At the same time, UNAIDS has argued that global prevention interventions are often not adequately directed at the populations most in need, including people who inject drugs, sex workers and their clients, and men who have sex with men (MSM). A major factor limiting the success of ART-based prevention efforts, including early initiation of ART and PMTCT, is that more than 60% of people living with HIV are unaware of their HIV status. Many experts argue that to improve the effectiveness of HIV prevention, there must also be efforts to expand HIV testing and counseling. In recent years, PEPFAR has placed new emphasis on prevention. For example, it committed to preventing more than 12 million new infections from FY2009 to FY2014. PEPFAR's five-year strategy emphasizes scaling up combined interventions tailored to the key drivers of individual country epidemics, and puts particular emphasis on PMTCT and male circumcision activities. Despite this commitment, many health experts call for increased U.S. support of HIV/AIDS prevention efforts in general, and efforts targeting high-risk groups in particular. Many experts also urge the United States to increase its support for new methods to measure and evaluate infection trends and prevention program impact, in order to effectively tailor prevention programs to specific country epidemics and better assess the efficacy of various prevention programs. While many Members of Congress agree that prevention must be a priority of HIV/AIDS programs, there is less congressional consensus over which prevention activities are most effective and should receive support. In particular, some in Congress express reservation at U.S. support for prevention activities that they feel could be seen as supporting sex work or that may be integrated with family planning and reproductive health services that could be connected to abortion provision. Many health experts argue that in order for prevention efforts to be successful, programs must be driven by data that indicate the needs of specific countries. Tuberculosis is the second-leading cause of infectious disease mortality around the world, following HIV/AIDS, yet it receives less funding than either HIV/AIDS or malaria. Gains in global TB control are challenged by growing occurrences of HIV/TB co-infection and drug-resistance, as both strain already-dated tools used for TB diagnosis, treatment, and surveillance. TB is the leading cause of death for people with HIV. Of the 8.8 million new cases of TB in 2010, an estimated 1.1 million were HIV-positive. Along with HIV testing of TB patients, provision of HIV and TB treatment to those infected with both diseases, and general HIV prevention services for TB patients, WHO recommends three activities, known as the "Three I's," to address HIV/TB co-infection: the provision of a prophylaxis, known as Isoniazid Preventative Therapy (IPT), for HIV-positive people with latent TB; intensified case finding for active TB; and TB infection control for HIV-positive people. Some argue that WHO's "Three I's" have been unevenly applied and that the global response to co-infection has been slow and uncoordinated, leading to limited access to diagnostic, prevention, and treatment services. Compounding the uneven implementation of joint TB/HIV programming, WHO reports that among the 63 high TB/HIV burden countries, less than half reported treatment outcomes disaggregated by HIV status, making it difficult to assess the success of any existing programs. U.S. HIV/TB collaborative activities are coordinated and led by PEPFAR. In FY2008, Congress directed OGAC to provide at least $150 million for joint HIV/TB activities. As a result, PEPFAR has scaled up its HIV/TB activities in recent years, most notably with regards to HIV screening, testing, and counseling for TB patients. Nonetheless, PEPFAR's FY2010 operational plan explains that integrating HIV and TB services remains challenging, in part due to operational differences between HIV and TB programs and programming that developed separately. Advocates of increased attention to HIV/TB co-infection argue that implementation of WHO's "Three I's" should be mandated as a core element of PEPFAR programming in settings with high co-infection rates. Similarly, while PEPFAR sets annual targets for HIV/TB activities for each focus country, some call for the creation of aggregate targets for joint HIV/TB activities. The past two decades have seen the emergence of multi-drug resistant (MDR) TB and extensively drug resistant (XDR) TB. Drug resistance primarily arises from poor treatment adherence or incorrect drug usage. In 2010, there were 650,000 cases of MDR-TB, and 58 countries had confirmed cases of XDR-TB. In January 2012, India reported several cases of TB that seemed to be resistant to all available treatment. Diagnosis and treatment of MDR/XDR-TB in low-resource countries has been limited, due to shortages of sufficiently equipped laboratories and poor surveillance systems. Treatment for drug-resistant TB is more time-intensive and costly than for basic TB and many resource-poor countries are ill-equipped to adhere to WHO guidance that MDR-TB patients be treated in separate facilities from those with HIV. In the absence of a scaled-up response, MDR- and XDR-TB are expected to result in increased TB-related mortality rates. The United States has begun to respond to the problem of mounting drug resistance, but there is not consensus over the extent to which U.S. programs should target these particular threats. Some argue that in the absence of increased investment for drug-resistant TB interventions, MDR- and XDR-TB could become the dominant strains of the disease. Others argue that basic TB control efforts reduce the potential for drug-resistant TB, and that a shift in resources to MDR- and XDR-TB activities could threaten gains made in controlling basic TB. A particular area of concern for TB advocates is a divergence in U.S. targets for TB and MDR-TB control between the Lantos-Hyde Act and the 2010 U.S. TB Strategy. While the Lantos-Hyde Act recommends that by 2013 the United States support treatment of 4.5 million TB cases and at least 90,000 new MDR-TB cases, the 2010 U.S. TB Strategy states that by 2014 the United States will support treatment of 2.6 million TB cases and 57,200 new MDR-TB cases. Advocates have urged Congress to support the fulfillment of the original Lantos-Hyde goals. Recent data suggest significant reductions in global malaria cases and deaths, due in part to anti-malaria efforts. However, new drug-resistant forms of malaria and insecticide-resistant mosquitoes threaten these gains. At the same time, the success in the control of global malaria to date has led policy makers to consider renewing efforts to eliminate and possibly even eradicate malaria, raising questions over the appropriate distribution of malaria funds. Resistance to artemisinin-based malaria drugs—the most effective treatment currently available—has been identified in Asia, most prominently along the Thai-Cambodian and Thai-Myanmar borders. Along with the challenge of drug resistance, 27 African countries and 41 countries worldwide have reported mosquito resistance to the insecticides used in Indoor Residual Spraying (IRS), and increasingly to the insecticide used in insecticide-treated bed nets (ITNs). Factors leading to increased drug and insecticide resistance have included misdiagnosis of malaria, improper use of medications and insecticides, use of counterfeit malaria drugs, and lack of resistance surveillance. Drug and insecticide resistance pose clear threats to U.S. malaria efforts, which support the use of artemisinin-based combination therapies to treat malaria, IRS, and ITNs. The United States has taken a number of steps to respond to drug and insecticide resistance. For example, the United States is working with WHO to monitor insecticide resistance and assist countries with the judicious use of insecticides, promoting a regular rotation of insecticides from different classes to reduce resistance to IRS, and supporting surveillance networks and drug resistance monitoring systems in Southeast Asia and the Americas. Some experts call for an expanded commitment to reducing drug and insecticide resistance, particularly with regard to support for better surveillance systems. Others call for U.S. efforts to preemptively monitor for drug resistance in Africa. In October 2007, the Bill and Melinda Gates Foundation issued a call for a renewed global commitment to the eradication of malaria. Malaria eradication had been widely abandoned as a viable option in 1969, after a WHO-sponsored eradication campaign failed to gain traction in much of sub-Saharan Africa. Since the Gates announcement, key global health actors have compared and debated the merits and practicality of malaria control, elimination, and eradication efforts. The three levels of anti-malaria efforts can be classified as: Malaria control: reduction of the malaria disease burden to a level at which it no longer poses a major public health problem, with adequate surveillance and monitoring to address ongoing and emergent cases. Malaria elimination: interruption of local mosquito-to-human malaria transmission, and reduction to zero of new human cases in defined geographic areas, with continued measures to prevent reestablishment of transmission. Malaria eradication: permanent reduction to zero of worldwide malaria incidence, requiring no further public health action. WHO has categorized countries into the following malaria stages: control, pre-elimination, elimination, prevention of reintroduction, and malaria free ( Figure 5 ). The United States and its WHO partners have endorsed the long-term goal of universal malaria eradication and are increasingly supporting elimination activities in eligible countries. While the majority of PMI activities are focused in countries in the "control" stage, PMI has begun to support pre-elimination activities, such as intensified case detection and surveillance, in several specific areas within Zanzibar, Rwanda, and Senegal. At the same time, PMI embraces the goal of malaria elimination in the Greater Mekong Region and the Amazon Basin by 2020, primarily through support for improved surveillance and monitoring systems. Despite the widespread enthusiasm for eradication as a long-term objective, many health experts contend this goal is not feasible with existing malaria prevention and treatment tools, and will require new medications, prevention strategies, and a vaccine. Many experts argue that malaria elimination presents a more realistic option, although some posit that a shift toward elimination activities may pose new challenges as well. For instance, some argue that over-emphasizing and investing in elimination activities in areas with fewer cases of malaria could divert funds away from basic malaria control in high burden countries. Others argue that mass treatment in support of malaria elimination without the appropriate monitoring and surveillance capacity could lead to drug resistance. Finally, some warn that even if elimination is achieved, governments and donors must ensure that disease surveillance systems are in place to detect a resurgence of the disease. Along with the challenges specific to HIV/AIDS, TB, and malaria, a number of issues extend to all three diseases. This section looks at the following issues as they relate to all three of the diseases: health systems strengthening, including health worker shortages; country ownership; research and development; monitoring and evaluation; and engagement with multilateral organizations. In recent years, weak health systems, including limited availability of health facilities, equipment, laboratories, and personnel, have been a critical obstacle to scaling up HIV/AIDS, TB, and malaria interventions. For example, shortages of ART have been reported in a number of African countries due to inadequate forecasting and information sharing systems. Also, by 2010, only a handful of the 36 high-burden TB and MDR-TB countries had met the WHO recommendation of having at least one laboratory per 5 million people capable of culturing samples, the most definitive method for detecting TB. USAID documents also cite inadequate clinical management and unavailability of drugs as common causes of fatality among hospitalized malaria patients. These concerns have led many in the global health community to assert that health systems strengthening (HSS) must be considered an essential ingredient of a long-term approach to HIV/AIDS, TB, and malaria. HSS is one of the GHI target areas and has been integrated as a key goal in the U.S. HIV/AIDS, TB, and malaria strategies ( Appendix B ). At the same time, there is a lack of clarity over what HSS means and how it can be put into practice. While there is widespread recognition of the need for stronger health systems, no international consensus exists on the operational definition of HSS. The clearest direction comes from WHO, which maintains that six "building blocks" are critical for a health system: service delivery, health workforce, health information systems, access to essential medicines, financing, and leadership/governance. The GHI consultation document cites the following goals in the U.S. approach to HSS: Improve financial strategies that reduce financial barriers to health care (for example, increase government and/or private sector funding for health services); Decrease disparities in health outcomes by providing essential health services, such as skilled birth attendance and voluntary family planning; Increase the number of trained health workers and community workers and ensure their appropriate use throughout the country; and Improve the health management, information, and pharmaceutical systems to reduce stock-outs. Despite identifying these components for HSS, the Administration has not yet identified specific indicators for meeting these goals. The GHI consultation document states that specific HSS targets will vary according to country-specific needs, demographics, epidemiology, and structural conditions (such as the socioeconomic and political environment). GHI agencies including the Department of State, USAID, and CDC are working on producing indicators for HSS; however, as of early 2012 these have not been released. While some applaud the plan to align HSS activities with individual country needs, others argue that in the absence of more precise targets and ways to measure impact, the concept of HSS has the potential to be more rhetoric than reality. PEPFAR, PMI, and USAID TB programs have been integrated into national health systems to varying degrees. Since its establishment, PEPFAR has been progressively integrated into national health systems, but it has also supported the establishment of many stand-alone systems and has funded a number of activities through international nongovernmental organizations (NGOs), rather than local networks (including government, private, faith-based, and NGO groups). For example, PEPFAR has supported country health information systems for some of its programs, but has also set up some of its own information systems to collect data. Similarly, while PEPFAR has used some national distribution systems for AIDS treatment, it has also financed its own supply chain systems to procure antiretrovirals in a number of countries. Given that PMI was established after PEPFAR, it was able to learn a number of lessons from PEPFAR's first few years in operation, including its relationship to the broad functioning of national health systems. As a result, PMI activities have historically been better integrated than PEPFAR into established clinics and laboratories. PMI services have also been frequently combined with other maternal and child health care services. Like PMI, USAID's TB programs have largely been integrated into general health services. USAID's TB programs are often implemented by local groups and USAID works closely with WHO TB initiatives to support the implementation of WHO's strategy for detection and treatment of TB known as "directly observed treatment, short-course for TB" (or DOTS), which emphasizes involvement of national governments in TB control. Over the past several years, debate about the impact of single disease initiatives on health systems has intensified. Some have argued that U.S. single disease initiatives, particularly PEPFAR, have had a detrimental impact on national health systems. For example, some critics argue that such initiatives have led to duplicative planning, operations, and monitoring systems that have often bypassed existing public institutions, doing little to strengthen country capacity. Likewise, some maintain that single disease programs have usurped resources and personnel out of general health services, leading to reduced care in other health areas. On the other hand, some argue that single disease initiatives have had a positive impact on broader systems. Advocates point to the role of HIV/AIDS, TB, and malaria funding in increased training of health care workers and improvements in health supply chain mechanisms, equipment, information systems, and health facilities. Some experts further argue that the implied dichotomy between single disease programs and systems strengthening is a false one, and that support for one should not preclude support for the other. A particular challenge for health systems strengthening (HSS) is the shortage of health care workers in countries confronting HIV/AIDS, TB, and malaria. According to WHO, only 5 out of the 49 low-income countries meet its minimum recommendation of 2.3 doctors, nurses, and midwives per 1,000 people. Sub-Saharan Africa, home to the majority of HIV/AIDS, malaria, and HIV/TB co-infection cases, boasts only 1.3% of the world's health workforce. Shortage of health workers limits the number of HIV/AIDS, TB, and malaria patients that can receive testing, counseling, treatment, and care. Health worker shortages lessen the likelihood of proper diagnosis and supervision once a patient is receiving medication, increasing the potential for poor adherence and eventual drug resistance. The reasons for the limited workforce are myriad, but experts point to factors such as "brain drain"; chronic underinvestment in health workforces, including frozen recruitment and salaries; and work environments with few supplies and limited support. Resource-poor countries with the highest disease burdens also suffer from widespread lack of educational and training opportunities. In light of these challenges, U.S. HIV/AIDS, TB, and malaria programs have supported a range of efforts to build health worker capacity. Between FY2004 and FY2009, PEPFAR supported 5.2 million training and retraining encounters for health care workers. These efforts have largely addressed health worker shortages through HIV/AIDS-specific training for existing health workers and "task-shifting" through which less technical tasks are transferred to others, including community health workers. In FY2009, USAID-funded programs provided training to an estimated 63,000 health care works in DOTS and other TB interventions. These efforts have included pre-service and in-service training on TB to health care professionals and training of community health workers. According to the U.S. TB Strategy, support is provided to health-related academic institutions in partner countries to ensure that TB is a standard component of health worker curriculum. In FY2010, PMI reported the training more than 36,000 health workers in the diagnosis and treatment of malaria with ACTs. PMI programs sponsor malaria-specific trainings for health workers, particularly those working in maternal and child health, and for community health workers. As with the general question of health systems strengthening, there has been debate over the impact of single disease initiatives, particularly PEPFAR, on the health workforce capacity. Critics argue that PEPFAR's role in workforce development has primarily benefited HIV/AIDS programs, with little impact on broader health systems. Moreover, observers maintain that in some countries compensation to health workers through PEPFAR programs has drawn staff away from other public health needs. Several experts also assert that the short-term contractual agreements that PEPFAR programs often used to hire health workers can cause disruptions in treatment and care. Finally, some argue that the use of short-term contacts and "task-shifting" do not address the underlying constraints on creating a stable workforce. In response to concerns about health worker shortages, the Lantos-Hyde Act recommends that PEPFAR support the training and retention of more than 140,000 new health workers by 2013. The act also specifies that these health workers should be trained to deliver primary health care rather than HIV/AIDS-specific skills. The GHI consultation document includes the goal of training 140,000 new workers through HIV/AIDS programs, but extends the time period to 2014. To meet this goal, PEPFAR launched the Medical Education Partnership Initiative (MEPI) and the Nursing Education Partnership Initiative (NEPI), which provides support through grants to foreign institutions in African countries to expand or enhance models of medical education. Advocates applaud the new attention to health workers, although many argue that the United States should adopt a much higher goal for training new health workers if it is to adequately confront shortages. Some also argue that while the Lantos-Hyde goal of training new workers was directed specifically to PEPFAR programs, increased efforts by malaria and TB programs are also necessary, with the ultimate goal to train workers in broad-based primary health care skills. To this end, some experts argue that the United States should employ performance incentives for a variety of health service responsibilities, rather than just disease-specific ones. Some experts also urge the United States to increase steps to reduce the attrition and migration of health workers from resource-poor countries, such as through health workforce strategic planning, health workforce needs analysis, increases in health worker remuneration, and improvement to workplace policies. In recent years, the international community, including the United States, has placed growing emphasis on "country ownership" of HIV/AIDS, TB, and malaria programs. Country ownership refers to strengthening the capacity of recipient governments and local civil society to develop and manage their own health programs, including the ability to develop health plans, forecast monetary and infrastructural needs, and ensure financial support of programs. Congress has demonstrated its support for country ownership through several mechanisms, including the Lantos-Hyde Act, which called on the Administration to better harmonize U.S. HIV/AIDS, TB, and malaria efforts with the national health strategies of recipient countries. The Administration also includes country ownership among its seven GHI goals. Despite this, a number of concerns have been raised over the feasibility of this goal, including whether countries will be willing and able to progressively "own" U.S.-supported HIV/AIDS, TB, and malaria programs. The Lantos-Hyde Act authorized PEPFAR programs to develop strategic agreements with national governments to promote host government commitment to and ownership of HIV/AIDS programs. Since enactment, PEPFAR has implemented "Partnership Frameworks" with a number of countries. Partnership Frameworks are nonbinding five-year joint strategic planning documents that outline the goals, objectives, and commitments of the U.S. and recipient government. Over the five years, the United States is expected to shift increasing portions of aid from direct service provision to technical assistance, with the goal of the recipient government assuming primary responsibility for the management and funding of the programs to the fullest extent possible. As of early 2012, the United States has signed 21 PEPFAR partnership framework agreements. Unlike PEPFAR, PMI and USAID TB programs do not include a formal process of establishing agreements with recipient countries. Nevertheless, U.S. malaria and TB efforts have historically been better aligned with recipient country national plans than PEPFAR. According to PMI documents, malaria needs assessments and planning visits are carried out in conjunction with National Malaria Control Programs (NMCPs). Annual PMI Malaria Operational Plans directly support national malaria control strategies and PMI program targets are typically aligned with those of the host country. Likewise, U.S. TB support is generally provided to fill financing gaps identified in recipient country National Tuberculosis Plans (NTPs). There is widespread support within the international community for countries assuming greater control over efforts to fight the three diseases. At the same time, a number of questions about the realization of this goal remain, particularly in relationship to HIV/AIDS. Some experts question whether recipient countries are in fact ready and willing to assume greater responsibility when few African countries spend 15% of their national budgets on health care, as they committed to do at the 2001 Abuja Summit. Alternatively, some analysts doubt Congress will prefer to have recipient countries manage the substantial resources aimed at addressing these diseases, given the possibility that funds may not be spent as efficiently or effectively as possible, along with the potential for misuse of funds by government officials. The legally nonbinding nature of Partnership Frameworks has also led some to question how effective they are in practice. A September 2010 Institute of Medicine (IOM) report focused on PEPFAR's country ownership efforts and found that activities were generally aligned with national HIV/AIDS strategies and helped to achieve national goals; however, the study raised a number of operational challenges to effective in-country management and control of global health programs." Challenges included weak in-country capacity, including in technical expertise; significant U.S. funding for HIV/AIDS, TB, and malaria programs for international contractors and private organizations rather than recipient governments; indicators used by the United States to evaluate HIV/AIDS, TB, and malaria program performance often differed from those used by host countries; and limitations in PEPFAR's willingness to share information about its programs and funding with recipient governments. Research and development (R&D) of diagnostic, preventative, and treatment tools is a key component of any long-term response to HIV/AIDS, TB, and malaria. Currently, these diseases are the top three targets of funding for global health R&D and, together, account for close to three-quarters of all investments in global health R&D. In 2008, of all global funds spent on global health R&D, 34.9% went to HIV/AIDS, 15.1% to TB, and 18.3% to malaria ( Table 2 ). The United States is the largest funder of global health R&D in the world, contributing approximately 45% of total global investment and 70% of all government investment each year. Of the U.S. R&D global health funding over the past decade, 57% has done toward HIV/AIDS, 12% toward TB, and 10% toward malaria. Five U.S. agencies conduct global health R&D: NIH accounts for the vast majority of U.S. global health R&D efforts and leads a range of basic and clinical research activities on global HIV/AIDS, TB, and malaria; USAID, DOD, and CDC each conduct field research related to these diseases; and the FDA supports product development by facilitating the regulatory process. As the United States reforms its HIV/AIDS, TB, and malaria programs to better support sustainable approaches to health, spending levels for R&D and the areas of R&D priority are up for debate. Existing R&D investments in HIV/AIDS, TB, and malaria have led to some progress in the tools available to combat the three diseases, such as the development of simpler HIV/AIDS drug regimens and long-lasting insecticide-treated bed nets (LLINs) for malaria control. There have also been several important recent R&D accomplishments. In 2011, results from an HIV prevention study found that early use of ART in discordant couples led to a 96% reduction in HIV transmission. A 2010 trial also demonstrated that HIV treatment used as prophylaxis reduced the risk of HIV infection by 44% in men who have sex with men. Results from another 2010 study in South Africa, funded in part by the United States, showed that a microbicide gel was 39% effective in reducing a woman's risk of contracting HIV during sex. In December 2010, WHO endorsed the rollout of a new rapid diagnostic test for TB and MDR-TB, funded in part by NIH. The test provides a diagnosis within 100 minutes, while existing tests can take as much as three months to produce results. Finally, while no vaccine for malaria exists, research has been promising. There are currently over a dozen vaccine candidates in clinical development and one, produced by GlaxoSmithKline, is in clinical trial. If these are successful, the vaccine could be available as early as 2014. In many cases, however, the impact of these advances have been compromised by outdated or inadequate technologies. Despite progress made in AIDS treatment, even the most recent forms of ART include potentially severe side effects and many of the newer drugs, particularly second- and third-line therapies, are prohibitively expensive for many developing countries. Likewise, available HIV/AIDS treatment requires increased nutritional intake, which is often challenging for poor individuals and families. Many of the current TB diagnosis and treatment tools were developed decades ago and have had uneven success. The most common method of TB diagnosis, sputum smear microscopy, is labor intensive and does not consistently detect TB. Also, current treatment regimens require people with active TB to take medicines for a period lasting 6 to 12 months and to be monitored during their entire treatment cycle. The emergence of drug-resistant forms of TB and malaria highlight the need for even more advanced diagnostic and treatment tools, appropriate for resource-poor environments. Treatment of MDR- and XDR-TB is considerably more expensive than basic TB treatment and can take up to two years, including significant time spent in a hospital with special facilities. Growing malaria drug and insecticide resistance threaten the success of the most effective available methods to control the disease. Many health experts believe that U.S. funding for HIV/AIDS, TB, and malaria research and development lags behind what is needed. In particular, experts point to the need for increased R&D related to basic TB diagnostics and treatment, new drugs to tackle TB and malaria drug resistance, and an AIDS vaccine. Some argue that the long-term nature of R&D complicates efforts to raise financial support for the work, and the low incomes in the most affected countries provide little incentive for private companies to invest in expensive research. In recent years, the international community has taken some innovative steps to address this challenge. For example, in the absence of viable commercial markets for some health technologies for developing countries, a number of new nonprofit ventures, known as Product Development Partnerships (PDPs), have begun to support research and the development of drugs, vaccines, microbicides, and diagnostics. PDPs working on HIV/AIDS, TB, and malaria includes groups like the International AIDS Vaccine Initiative, the TB Alliance, and the Medicines for Malaria Venture. Similarly, in 2008, WHO supported the establishment of the African Network for Drugs and Diagnostics Innovation (ANDI), an initiative that aims to build Africa-based research capacity to respond to diseases on the continent. The United States is one of the largest public financiers for these efforts, but many experts advocate increased support of innovative approaches to R&D. Many also argue that the United States should significantly increase its support for what is known as operations, or implementation, research. Operations research is the study of how technology is used in the field, and aims to identify factors that affect service delivery and impact implementation or scale-up of interventions. Advocates applaud the support for operational research in the GHI consultation document and argue that it should be seen as necessary for improving prevention and treatment outcomes and for addressing strategies in support of more sustainable HIV/AIDS, TB, and malaria programs. The recent evidence in support of early use of ART as a prevention method has increased calls for innovative approaches to testing the impact, feasibility, and acceptability of this approach in the field. In recent years calls have increased within the global health community for more monitoring and evaluation (M&E) to track health activities, determine progress in meeting targets, and evaluate the activities' impact on health outcomes. M&E is a key component of the GHI and is emphasized in the United States' HIV, TB, and malaria strategies ( Appendix B ). The United States has recognized the need to make its HIV/AIDS, TB, and malaria programs increasingly results-based, yet these efforts remain nascent and experts have expressed a number of concerns over how to meet these goals for each of the diseases. While a systematic, quantitative evaluation of PEPFAR's impact has not yet been published, the Lantos-Hyde Act mandated a comprehensive assessment of U.S. HIV/AIDS programs and their impact on health, to be submitted to Congress in 2012. In 2010, IOM released a consensus report outlining its strategic approach for conducting this evaluation. Congress has also required several targeted evaluations from GAO and IOM. In 2007, IOM conducted a short-term evaluation of PEPFAR, focusing largely on its ability to meet its outlined targets for delivery of prevention, treatment, and care services in its focus countries. GAO has released reports in July 2011, analyzing PEPFAR's program planning and reporting processes, and in September 2010, analyzing efforts to align PEPFAR programs with partner countries' HIV/AIDS strategies. Neither the IOM nor the GAO evaluation included assessments of PEPFAR programs in relation to long-term health-related outcomes such as HIV incidence, prevalence, or mortality. On February 21, 2012, USAID released the final report by an external evaluation team of the first five years (FY2006-FY2010) of PMI, originally commissioned in May 2011. The evaluation concluded that PMI was a largely successful program that had made substantive progress toward meeting its goals. The report also offered 10 recommendations, including, among others, that PMI expand its geographic reach, that it better apply the country ownership principle, that it expand its operations research component, and that it accelerate impact evaluation activities. The U.S. malaria strategy indicates that another large external evaluation will be conducted and published in 2015 that assesses progress on all U.S. malaria activities undertaken through 2014. Congress has not mandated a systematic review of USAID TB programs beyond annual reports that include progress on meeting predetermined targets. The United States is taking steps to strengthen its ability to effectively monitor and evaluate its HIV/AIDS, TB, and malaria programs. In support of better M&E, PEPFAR has expanded its tracking of outcomes and impacts of its programs in the short and long term. In 2009, PEPFAR released its "Next Generation Indicators" (NGI), providing new indicators to track the impact of PEPFAR activities. Through this effort, PEPFAR has attempted to better align its indicators with those already used by many host nations and other international donors and to minimize PEPFAR-specific reporting, allowing country teams more flexibility to design M&E plans in line with national governments. NGI also includes new indicators related to program and population coverage as well as program quality. This marks a shift from past practices, in which M&E focused largely on program outputs, such as number of individuals on treatment. Documents from the President's Malaria Initiative state that it is working closely with the Roll Back Malaria Monitoring and the Evaluation Reference Group to standardize data collection and use internationally accepted indicators of progress, and will assist recipient governments in conducting nationwide household surveys to measure changes in child mortality and malaria prevalence. Likewise, in support of TB-related M&E, USAID works with the WHO Global TB Monitoring and Surveillance project, the WHO body charged with leading TB M&E activities, to standardize TB control indicators. USAID TB programs also include efforts to bolster national M&E systems to track TB infection and mortality rates as a key component of DOTS. Despite these steps to strengthen U.S. capacity for M&E activities, a number of challenges remain. M&E requires collection of a variety of data from multiple sources, including household surveys, birth and death registration, census, and national surveillance systems. Resource-poor countries often have limited ability to produce data that is timely, standardized, and of a high enough quality to use for routine tracking and assessment of health programs. Malaria M&E efforts are particularly challenged because many resource-poor countries have weak health information systems necessary to track childhood health and many people infected with malaria, especially children, do not seek treatment in official health facilities. Similarly, gaps in TB coverage, treatment, and case detection impede effective and comprehensive M&E. Drug-resistant forms of TB pose new challenges to M&E efforts, as many resource-poor countries do not have the capacity to test for second-line drug resistance. Efforts to monitor and evaluate HIV/TB co-infection rates and activities are also precluded by limited information sharing between distinct TB and HIV programs. U.S. M&E efforts are also challenged by the interaction in the field between U.S. global health programs and those of other donors, including the Global Fund and a range of private and NGO actors, which make it difficult to evaluate the outcomes of any one program. Finally, given the number of factors that influence the functioning and capacity of health systems and national governments, effective ways to measure the progress and impact of activities related to issues such as health systems strengthening and country ownership remain contentious. Indeed, PEPFAR has yet to develop specific indicators for measuring the effectiveness of activities related to HSS, country ownership, and HIV prevention. Many have called for the United States to mandate regular and comprehensive M&E of its HIV/AIDS, TB, and malaria programs and increase support for in-country capacity to collect and assess health data. Some have also called on the United States to improve its data transparency and its dissemination of results to international and local partners. Experts have encouraged the alignment of health indicators used by the United States (through programs like PEPFAR and PMI) and those used by multilateral organizations and national governments. Some also urge the United States to support the use of national information systems for M&E as a way to strengthen these systems and increase country ownership of M&E. At the same time, other observers caution that additional measurement and reporting requirements have the potential to overburden already strained countries and programs and may reduce the time and money available for programs. The United States supports global HIV/AIDS, TB, and malaria efforts through bilateral programs as well as partnerships with and contributions to multilateral organizations. Over the last decade, Members of Congress have debated the appropriate balance between funding bilateral and multilateral global health efforts. This debate frequently focuses on the extent to which the United States should support the Global Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund), a multilateral public-private partnership established in 2002 to provide financial support for global responses to the three diseases. The Global Fund estimates that in 2009 it provided approximately 21% of all funding for global HIV/AIDS, 65% of all funding for global TB, and 65% of all funding for global malaria. Donors to the Global Fund include a number of governments as well as private and multilateral organizations. The United States is the single largest donor to the Global Fund, though U.S. bilateral spending on HIV/AIDS, TB, and malaria far outweighs contributions to the Global Fund and other multilateral groups ( Figure 6 ). The Obama Administration has indicated support for increased engagement with multilateral organizations, including the Global Fund. In October 2010, the President pledged $4 billion to the Global Fund over the course of three fiscal years—the first multi-year pledge to the Global Fund from the United States. While requesting decreased funding amounts for all bilateral HIV/AIDS, TB, and malaria programs, the FY2013 budget request includes a 27% increase in funding for the Global Fund over estimated FY2012 levels, fulfilling the President's multi-year pledge. The Administration has also emphasized nonfinancial ways in which the United States can support multilateral organizations, including better coordination in-country with multilateral organizations, increased technical assistance to multilaterally funded field programs, and demonstrated leadership in shaping the policies of multilateral organizations (for instance, as a member of the Global Fund Board). Despite this support, in November 2011, the Global Fund announced that due to limited resources available from donor countries, it would cancel its 11 th round of funding. In order to prevent any gaps in services, the Global Fund has instituted a "Transitional Funding Mechanism" (TFM), which will secure funding for programs facing disruptions in services currently supported by the Global Fund between 2012 and 2014. Documents released by the Global Fund have made clear that in this same time period, it will be unable to support any new interventions, nor will it support the scale-up of services, including provision of ART. A number of experts contend that the Global Fund's decision demonstrates the critical need for increased multilateral funding from donors like the United States. Some argue that a reduction—or leveling—of funding to the Global Fund could imperil lives and cause significant losses in the progress made against the three diseases. Some experts argue that the U.S. fight against the three diseases would be better waged through increased support to multilateral organizations rather than to bilateral programming. Specifically, advocates argue that multilaterals cede greater control of the programs to recipient countries, which supports the goal of country ownership. Some also argue that multilateral programs have more flexibility than bilateral programs, allowing them to better respond to locally defined needs. Likewise, some assert that funds are more effectively spent through multilateral mechanisms because donors can pool their resources and achieve economy of scale. Also, multilateral groups are capable of extending multi-year support. Some argue that this is particularly useful when addressing diseases that require long-term funding, like HIV/AIDS. Finally, some contend that U.S. engagement in multilateral organizations offers the United States opportunities to demonstrate its leadership in global health and encourage other countries to share in the global fight against the three diseases. As a result, some of these advocates applaud the President's decision to request significantly increased funding for the Global Fund in the FY2013 budget. Advocates of limited support for multilateral organizations argue that bilateral assistance increases the United States' ability to target health assistance to specific countries and determine funding priorities. In addition, others assert that bilateral assistance allows for better oversight of the use of funds by recipient governments and organizations. Some experts also contend that bilateral assistance is easier to track and measure than multilateral assistance, allowing for more effective monitoring and evaluation. Ongoing concerns about the capacity of multilateral groups like the Global Fund to detect and respond to corrupt practices propel this debate. The second session of the 112 th Congress will likely exercise oversight of and debate the appropriate funding amounts for global HIV/AIDS, TB, and malaria programs and priority areas within these programs. Discussions may focus on a number of critical disease-specific and cross-cutting issues, measurement of the effectiveness of the U.S. response, and tradeoffs the United States might consider as it sets priorities. As Congress reflects on these challenges, several overarching issues may also be considered: Ways to assess impact and efficiency of global HIV/AIDS, TB, and malaria programs: As Congress debates funding the fight against these three diseases, it will likely consider which methods to use in determining the distribution of finite global health and overall foreign assistance resources. The United States might face decisions over whether it should invest in the lowest-cost interventions, such as anti-malaria bednets, versus the higher-cost interventions that high-burden countries may be unable to afford, such as antiretroviral therapy. Similarly, the United States might consider whether it should support programs tackling the high-mortality issues, such as drug-resistant TB, or the more widespread and commonplace issues, such as malaria infection. The United States may also consider how it should balance its funding between high-impact activities, such as ART programs, with dramatic results and areas like health systems strengthening, which may yield few immediate results but which could result in significant long-term progress. More broadly, policymakers may weigh support for these programs against other foreign policy priorities. Role of the United States in the global fight against HIV/AIDS, TB, and malaria: The United States is a central leader in combating HIV/AIDS, TB, and malaria. Some Members of Congress have targeted global health funding for cuts as a way to reduce the U.S. deficit. Many supporters of these cuts have argued that the United States has played an overly generous role in combating issues like global HIV/AIDS, TB, and malaria, especially since these investments do not necessarily have direct implications for the wellbeing of U.S. citizens. Alternatively, many supporters argue that U.S. leadership in the fight against these diseases remains critical, particularly as new tools for treatment and prevention become available. Many of these advocates assert that given the prominence of the United States, any U.S. divestment could have significant negative consequences for some of the most vulnerable people in resource-poor countries. Some also point out that while the United States has been a key donor for HIV/AIDS, TB, and malaria, several European countries give more for these diseases as a share of their country's GDP. Finally, advocates assert that U.S. leadership is vital for sustaining the activities of the Global Fund, a key financial player in the fight against these diseases. Many advocates and critics of expanding U.S. global health assistance call for other countries, including a number of European countries, as well as emerging economies like China, India, Brazil, and Saudi Arabia, to begin playing a larger role in combating global HIV/AIDS, TB, and malaria. Advocates argue that increased efforts among other donors could help achieve the United Nations (U.N.) Millennium Development (MDG) goal "to combat HIV/AIDS, malaria, and other diseases," a goal which to which all U.N. member states have committed. At the same time, there is disagreement over the ways in which U.S. leadership can and should motivate this kind of engagement. HIV/AIDS, TB, and malaria assistance, economic development, and security: Congressional consideration of U.S. HIV/AIDS, TB, and malaria programs may be affected by debate over their role in the broader U.S. foreign policy agenda. HIV/AIDS, TB, and malaria have undeniable humanitarian consequences. At the same time, many argue that these diseases also have important implications for economic development and security. Development experts argue that disease can threaten political and economic stability in fragile areas of the world, undermining U.S. interests abroad. Health experts believe that U.S. citizens are threatened by the spread of infectious diseases across borders. Furthermore, foreign policy experts contend that global health efforts like PEPFAR have become critical diplomatic tools (often referred to as medical diplomacy) and have bolstered the image of the United States abroad, especially in sub-Saharan Africa. Alternatively, others caution against overly emphasizing the security and diplomatic implications of HIV/AIDS, TB, and malaria, and warn that doing so could lead to allocation of funding according to U.S. interests rather than human need. Appendix A. Acronyms and Abbreviations Appendix B. HIV/AIDS, TB, and Malaria GHI Goals PEPFAR Strategy Targets GHI set a number of goals to be reached from FY2010 through FY2014. GHI goals and projected targets for PEPFAR are: provide direct support for more than 4 million people on treatment; support the prevention of more than 12 million new HIV infections; ensure that every partner country with a generalized HIV epidemic has both 80% coverage of testing for pregnant women at the national level, and 85% coverage of antiretroviral drug prophylaxis and treatment as indicated, of women found to be HIV-infected; double the number of at-risk babies born HIV-free, from a baseline of 240,000 babies of HIV-positive mothers born HIV-negative during the first five years of PEPFAR; provide direct support for care for more than 12 million people, including 5 million orphans and vulnerable children; support training and retention of more than 140,000 new health care workers to strengthen health systems; and ensure that in each country with major PEPFAR investment, the partner government leads efforts to evaluate and define needs and roles in the national response. U.S. TB Strategy Targets GHI goals and projected targets for U.S. TB programs are: to contribute to a 50% reduction in TB deaths and disease burden from the 1990 baseline; to sustain or exceed the detection of at least 70% of sputum smear-positive cases of TB and successfully treat at least 85% of cases detected in countries with established USG tuberculosis programs; to successfully treat 2.6 million new sputum smear-positive TB patients under DOTS programs by 2014, primarily through support for need services, commodities, health workers, and training, and additional treatment through coordinated multilateral efforts; and to diagnose and initiate treatment of at least 57,2000 new MDR-TB cases by 2014 and providing additional treatment through coordinated multilateral efforts. U.S. Malaria Strategy Targets GHI goals and projected targets for U.S. malaria programs are: to achieve Africa-wide impact, by halving the burden of malaria (morbidity and mortality) in 70% of at-risk populations in sub-Saharan Africa (approximately 450 million people), thereby removing malaria as a major public health problem and promoting economic growth and development throughout the region; to limit the spread of anti-malaria multi-drug resistance in Southeast Asia and the Americas; to increase emphasis on strategic integration of malaria prevention and treatment activities with maternal and child health, HIV/AIDS, neglected tropical diseases, and tuberculosis programs, and on multilateral collaboration to achieve internationally accepted goals; to intensify present efforts to strengthen health systems and strengthen the capacity of host-country workforces to ensure sustainability; to assist host countries to revise and update their National Malaria Control Strategies and Plans to reflect the declining burden of malaria, and link programming of U.S. malaria control resources to those host country strategies; and to ensure a woman-centered approach for malaria prevention and treatment activities at both the community and health facility levels, since women are the primary caretakers of young children in most families and are in the best position to help promote health behaviors related to malaria. Appendix C. HIV/AIDS, TB, and Malaria Funding Table C -1 presents an overview of U.S. funding for global HIV/AIDS, TB, and malaria efforts. The table does not include global health spending that does not correlate to specific congressional appropriations. For instance, CDC does not receive appropriations for global TB programs specifically, but spends a portion of its overall TB budget on international programs. Appendix D. HIV/AIDS, Tuberculosis, and Malaria Program Maps Two maps are shown for each disease. The first displays U.S. bilateral funding levels across countries. The second highlights U.S. countries receiving assistance in relation to global prevalence estimates for each disease. HIV/AIDS Figure D -1 shows U.S. bilateral HIV/AIDS funding levels across countries in FY2011. Figure D -2 highlights U.S. countries receiving assistance in relation to global HIV prevalence estimates in 2009. Tuberculosis Figure D -3 shows U.S. bilateral TB funding levels across countries in FY2011. Figure D -4 highlights U.S. countries receiving assistance in relation to global TB prevalence estimates in 2010. Malaria Figure D -5 shows U.S. bilateral malaria funding levels across countries in FY2011. Figure D -6 highlights U.S. countries receiving assistance in relation to global malaria prevalence estimates in 2010.

The spread of human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS), tuberculosis (TB), and malaria across the world poses a major global health challenge. The international community has progressively recognized the humanitarian impact of these diseases, along with the threat they represent to economic development and international security. The United States has historically been a leader in the fight against HIV/AIDS, TB, and malaria; it is currently the largest single donor for global HIV/AIDS and has been central to the global response to TB and malaria. In its second session, the 112th Congress will likely consider HIV/AIDS, TB, and malaria programs during debate on and review of U.S.-supported global health programs, U.S. foreign assistance spending levels, and foreign relations authorization bills. Over the past decade, Congress has demonstrated bipartisan support for addressing HIV/AIDS, TB, and malaria worldwide, authorizing approximately $54 billion for U.S. global efforts to combat the diseases from FY2001 through FY2012. During this time, Congress supported initiatives proposed by President George W. Bush, including the President's Emergency Plan for AIDS Relief (PEPFAR) and the President's Malaria Initiative (PMI), both of which have demonstrated robust U.S. engagement in global health. Through the Global Health Initiative (GHI), President Barack Obama has led efforts to coordinate U.S. global HIV/AIDS, TB, and malaria programs and create an efficient, long-term, and sustainable approach to combating these diseases. Despite ongoing progress in fighting HIV/AIDS, TB, and malaria, these diseases remain leading global causes of morbidity and mortality. Many health experts urge Congress to capitalize on recent gains and bolster U.S. leadership and funding to combat these diseases. In contrast, some Members of Congress have proposed cuts to these programs as part of deficit reduction efforts. This report reviews the U.S. response to HIV/AIDS, TB, and malaria and discusses several issues Congress may consider as it debates spending levels and priority areas for related programs. The report includes analysis of: Funding Trends: Combined funding for the three diseases has increased significantly over the past decade, from approximately $911 million in FY2001 to $7.4 billion in FY2012. The bulk of the increase over time has been targeted toward HIV/AIDS, although in recent years funding for global HIV/AIDS has begun to level off. When compared to FY2011, funding in FY2012 included decreases for global HIV/AIDS, and slight increases for global TB and malaria programs. Some health experts applaud what they see as a shift toward less expensive efforts that maximize health impact. Other experts warn that divestment from HIV/AIDS could significantly endanger the lives of those reliant on U.S. assistance and could reverse fragile gains made against the epidemic and other diseases. Disease-Specific Issues: HIV/AIDS, TB, and malaria each present unique challenges. Rising numbers of people in need of life-long HIV/AIDS treatment combined with reduced global HIV/AIDS funding have heightened concerns over the sustainability of treatment programs and incited debate over the appropriate balance of funding between antiretroviral treatment (ART) and other HIV/AIDS interventions. Growing rates of HIV/TB co-infection and drug-resistant TB strains have increased calls for escalating TB control efforts. Finally, growing resistance to anti-malaria drugs and insecticides threatens malaria control efforts, leading to calls for more attention to reducing resistance and developing new anti-malaria commodities. Cross-Cutting Issues: Several cross-cutting issues are currently being debated, particularly in relation to increased efficiency and sustainability of HIV/AIDS, TB, and malaria programs under the GHI. These include Health Systems Strengthening, Country Ownership in Recipient Countries, Research and Development, Monitoring and Evaluation, and Engagement with Multilateral Organizations. For details on particular characteristics of the HIV/AIDS, TB, and malaria epidemics and the U.S. response, see the following CRS reports, by [author name scrubbed]. CRS Report R41645, U.S. Response to the Global Threat of HIV/AIDS: Basic Facts CRS Report R41643, U.S. Response to the Global Threat of Tuberculosis: Basic Facts CRS Report R41644, U.S. Response to the Global Threat of Malaria: Basic Facts

The potential harm to public health and the environment from a large release of hazardous chemicals has long concerned the U.S. Congress. The sudden, accidental release in December 1984 of methyl isocyanate in an industrial incident at the Union Carbide plant in Bhopal, India, and the attendant loss of thousands of lives and widespread injuries spurred legislative proposals to reduce the risk of chemical accidents in the United States. For example, federal environmental laws were enacted in 1986 and 1990 to mitigate and reduce the risk of accidental releases of hazardous chemicals from manufacturing facilities, processing plants, and storage tanks. (These laws are discussed below.) The Hazardous Materials Transportation Act of 1975 was passed to protect the public and environment in the event of an accident during transportation of chemicals. Other federal laws coordinate preparedness planning and response to significant chemical spills (e.g., the Comprehensive Environmental Response, Compensation, and Liability Act). The threat of terrorism manifested on September 11, 2001, prompted renewed congressional attention to the potential risks to public health and the environment posed by facilities handling large quantities of hazardous chemicals. Congress addressed chemical facility security when it enacted legislation establishing the Department of Homeland Security (DHS; P.L. 107-296 ). The law requires analysis of vulnerabilities and suggestions for security enhancements for "critical infrastructure." The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 ( P.L. 107-188 ) and the Maritime Transportation Security Act (MTSA, P.L. 107-295 ) require vulnerability assessments, security plans, and incident response plans for some chemical facilities which supply drinking water or are located in ports. Many other chemical facilities remain unregulated with respect to terrorism. Thus, the 109 th Congress continued to discuss the risks and consequences of potential terrorist attacks on chemical facilities and possible actions the federal government might take to prevent or reduce them. This report provides background information and summarizes issues relevant to existing and proposed requirements aimed at reducing risks to the general public of exposure to hazardous chemicals as a result of terrorist acts at U.S. facilities where chemicals are produced, processed, stored, or used. It considers the likelihood and severity of harm that might result from terrorist attacks on chemical facilities, as well as from illicit use of such facilities to gain access to hazardous chemicals (or to precursor chemicals that can be used to produce hazardous chemicals). Federal requirements for contingency planning and responding to chemical emergencies after they occur are not the focus of this report. In addition, it does not consider hazardous materials transport (or storage incidental to transport). The report first describes the range of terrorist acts that might threaten chemical facilities and summarizes publicly available information relevant to risks: recent trends in terrorist activity, including chemical use by terrorists; expert estimates of the harm that might be inflicted through chemical terrorism; and assessments of the vulnerability of chemical facilities. The next section of the report discusses existing federal mandates and incentives for reducing risks of accidental releases from chemical facilities. The remainder of the report summarizes recent Administration and private sector initiatives to improve chemical site security; analyzes policy options and key issues; and describes legislation in the 109 th Congress. Potential terrorist acts against chemical facilities might be classified roughly into two categories: direct attacks on facilities or chemicals on site, or efforts to use business contacts, facilities, and materials (e.g., letterhead, telephones, computers, etc.) to gain access to potentially harmful materials. In either case, terrorists may be employees (saboteurs) or outsiders, acting alone or in collaboration with others. In the case of a direct attack, traditional or nontraditional weapons may be employed, including explosives, incendiary devices, firearms, airplanes, or computer programs. In obtaining chemicals, a terrorist's intent may be to use them as weapons or to make weapons, including explosives, incendiaries, poisons, and caustics. Access to chemicals might be gained by physically entering a facility and stealing supplies, or by using legitimate or fraudulent credentials (e.g., company stationary, order forms, computers, telephones or other resources) to order, receive, or distribute chemicals. According to February 2003 testimony by the Director of the Federal Bureau of Investigation (FBI) to the U.S. Senate, there were 353 known or suspected acts of terrorism (including terrorist acts by Americans) perpetrated within the United States between 1980 and 2001. Only a few incidents involved chemical facilities. Attacks during the 1990s claimed 182 lives and injured over 1,932 individuals. In comparison, during the 1980s, although there were many more terrorist or suspected terrorist incidents, only 23 people were killed and 105 were injured. Thus, although the total number of terrorist acts in the United States declined toward the end of the 20 th century, the casualties due to terrorism increased. The same trends have been evident internationally, although there is considerable variation from year to year. The year 2003 had 208 international terrorist attacks on noncombatants, a few more than 2002, but 42% fewer than in 2001. There were 725 persons killed in 2002 and 625 persons (35 U.S. citizens) in 2003. In terms of U.S. casualties due to international terrorism, 2001 is the most costly year on record, with 2,689 people killed. As noted by the FBI Executive Assistant Director for Counterterrorism and Counterintelligence, the attack of September 11, 2001, "marked a dramatic escalation in a trend toward more destructive terrorist attacks which began in the 1980s." The September 11 attack also reflected a trend toward more indiscriminate targeting among international terrorists. The vast majority of the ... victims of the attack were civilians. In addition, the attack represented the first known case of suicide attacks carried out by international terrorists in the United States. The September 11 attack also marked the first successful act of international terrorism in the United States since the vehicle bombing of the World Trade Center in February 1993. Other potentially important trends identified by intelligence agencies include: an increase in activity by loosely affiliated extremists, both domestically and internationally; and the propensity of such groups to focus on producing mass casualties. With respect to chemical and biological terrorism, hoaxes and unsuccessful attempts by terrorists to use chemicals increased throughout the 1990s. Loosely affiliated terrorist groups, in particular, have demonstrated a growing interest in chemical weapons and other weapons of mass destruction, but explosives are still the most frequently employed weapons. During the 1990s, both international and domestic terrorists attempted to use explosives to release chemicals from manufacturing and storage facilities. Most of these attempts were abroad in war zones such as Croatia, including attacks on a plant producing fertilizer, carbon black, and light fraction petroleum products; other plants producing pesticides; and a pharmaceutical factory using ammonia, chlorine, and other hazardous chemicals. All of these facilities were close to population centers. In the United States, there were at least two instances during the late 1990s when criminals attempted to cause releases of chemicals from facilities. One involved a large propane storage facility, and the other a gas refinery. Evidence that U.S. chemical facilities may be used by terrorists to gain access to chemicals also exists. For example, one of the 1993 World Trade Center bombers, Nidal Ayyad, became a naturalized U.S. citizen, graduated from Rutgers University, and worked as a chemical engineer at Allied Signal, from which he used company stationery to order chemical ingredients to make the bomb. According to a U.S. Prosecutor in the case against the bombers, though "some suppliers balked when the order came from outside official channels, when the delivery address was a storage park, or when [a co-conspirator] tried to pay for the chemicals in cash," others did not. Moreover, testimony at the trial of the bombers indicated that they had successfully stolen cyanide from a chemical facility and were training to introduce it into the ventilation systems of office buildings. More recently, chemical trade publications reportedly were found in al Qaeda hideaways. The validity of any risk assessment depends on how much is known about the hazard, risks (probabilities), adverse effects, events and conditions that lead to or modify adverse effects or risks, and populations or environments that influence or experience adverse effects. The most accurate, and therefore the most useful, risk assessments generally are for familiar, frequently occurring hazards and events with impacts that are experienced with some regularity, such as severe storms or floods. In contrast, the risk of terrorist activity is unfamiliar (at least in the United States), rarely experienced, and likely to vary significantly over time, depending on rather unpredictable social and political phenomena. The risk of terrorism targeting chemical facilities is particularly difficult to assess for at least three reasons: There are few prior examples of terrorists targeting chemical facilities; Numerous factors theoretically may increase or decrease risks; and Interactions among factors influencing risks are dynamic and changing. In part, these difficulties stem from the nature of terrorism and the terrorists' deliberate efforts to do what is least expected—that is, to defy prediction. For these reasons, most experts have not tried to quantify risks; existing analyses of chemical terrorism risks in the open literature are speculative and qualitative. Until the mid to late 1990s, reports focused on the acquisition and use of chemical weapons, such as sarin or mustard gas. One of the most comprehensive of these reports was a 1995 review of the open literature on terrorism that was prepared for the Canadian Security Intelligence Service. According to this review of the literature, "[t]hose authors who have speculated about the future terrorist use of chemical agents in particular have generally rated its likelihood as quite high." According to some, the risk also appears to be increasing. Many experts today believe that factors that might have inhibited proliferation and use of chemicals as weapons in the past are eroding. For example, some experts hypothesized several years ago that the combination of chemical and strategic skills necessary to create and deploy chemical weapons would prevent the lone terrorist from using them. Security experts now believe that lack of personal expertise no longer limits chemical weapon use, because there is a tendency for terrorists with similar extreme views to affiliate loosely with others with complementary skills and abilities. Moreover, the rising level of education worldwide means that more people have the requisite training in chemical engineering, and the Internet has simplified communications, training, and cooperation within geographically dispersed terrorist groups. Others have argued that chemical attacks would be unlikely, due to the difficulties of producing and effectively delivering chemical agents in sufficient amounts to produce mass casualties. However, while this may be true with regard to military use on a large scale, where weapons are delivered by advanced systems, it is not necessarily relevant to terrorists who may have more limited ambitions. A 1999 report by the U.S. General Accounting Office (GAO, now the Government Accountability Office) summarized the situation— ... many conflicting statements have been made in public testimony before Congress ... concerning the ease or difficulty with which terrorists could effectively disseminate a chemical or biological agent on U.S. soil and cause mass casualties. GAO studied the threat and concluded that the ease or difficulty for terrorists to cause more than 1,000 casualties depends on the chemical or biological agent selected. The report stated— Experts from the scientific, intelligence, and law enforcement communities told us that terrorists do not need sophisticated knowledge or dissemination methods to use toxic industrial chemicals such as chlorine. In contrast, terrorists would need a relatively high degree of sophistication to successfully cause mass casualties with some other chemical and most biological agents. On the other hand, "[t]errorists with less sophistication could make a chemical or biological weapon and disseminate agents, but these would be less likely to cause mass casualties." Other factors that might have inhibited chemical use by some terrorists in the past might not apply to loosely affiliated terrorist groups. For example, some experts argue that terrorists supported by nation-states have been reluctant to use chemical weapons for fear of offending other nations and neutral parties, particularly if the sponsors were signatories of the Chemical Weapons Convention. Another possible deterrent to chemical use, fear of retaliation, probably is of little concern to attackers with no identifiable homeland or headquarters. Lack of a homeland might also lessen concern about environmental damage that may be associated with chemical production. Finally, one must presume that occupational safety would be of limited concern to terrorists who are not accountable to a government, and who are willing to sacrifice their own lives for a religious, political, or social cause. However, many experts believe that the relative risk of terrorism involving chemical weapons remains small. This point was stressed by John V. Parachini, a senior associate at the Center for Nonproliferation Studies, Monterey Institute of International Studies at a 1999 hearing before the U.S. House of Representatives, Committee on Government Reform, Subcommittee on National Security, Veterans Affairs, and International Relations. Referring to the risk of any use of chemical or biological weapons he stated: ... attacks with chemical and biological weapons are strikingly infrequent and the number of fatalities and casualties are far lower than those caused by conventional explosives. According to an analysis of 105 U.S. incidents featured in the Monterey Institute database from 1900 to 1998, only one fatality resulted from a [chemical or biological weapon] attack. This incident involved a 1973 assassination of an Oakland, California school superintendent by the Symbionese Liberation Army. It is generally agreed that chemical agents are likely to be the least lethal of the three "weapons of mass destruction." In part, this judgment reflects the difficulty of producing and delivering large quantities of a lethal chemical to the target area prior to release. On the other hand, industrial chemicals and pesticides are readily available for purchase, and are stored in large quantities in thousands of locations throughout the United States, often near population centers. A key question for chemical facilities then is "How much damage could terrorists do using existing stationary chemical manufacturing, processing, distribution, and storage facilities?" There are two key sources of information for answering this question: accident reports and hazard assessments conducted by facility personnel or outside experts. There is no comprehensive database for either kind of information, but various groups have used publicly available data to estimate hazard potential, usually limited to accidental releases of chemicals from chemical facilities. A 1998 report by the U.S. Public Interest Research Group (US PIRG) and the National Environmental Law Center, Too Close to Home: Chemical Accident Risks in the United States , addressed the distribution of chemical facilities in the United States relative to population distribution. It stated that "more than 41 million Americans live within range of a toxic cloud that could result from a chemical accident at a facility located in their home zip code." Those 41 million Americans live in zip codes that contain manufacturing companies with "vulnerable zones" extending more than three miles from the facility, the report states. A "vulnerable zone" is the geographic area that could be affected by the worst possible accident at a facility. According to the report, the estimate of 41 million Americans at risk may underestimate the hazard, because it was based on "assumptions about facility and atmospheric conditions that would lead to small vulnerability zones." To produce the estimate, the study author stated that he used standard methodology used by the U.S. Environmental Protection Agency (EPA) and data on chemical storage from EPA's 1995 Toxics Release Inventory, a database of routine releases of industrial chemicals from manufacturing facilities. Hazard estimates by James C. Belke, an EPA employee in the Chemical Emergency Preparedness and Prevention Office, are more detailed. Based on a preliminary analysis of approximately 15,000 facility risk management plans for chemical facilities that were filed under the Clean Air Act, Section 112(r) before September 25, 2000, Belke concluded that the median distance from a facility to the outer edge of its vulnerable zone is 1.6 miles in the case of toxic worst case scenarios, and 0.4 miles for flammable worst case scenarios. However, many facilities reported vulnerable zones potentially extending 14 miles from the facility (primarily for releases in urban areas of chlorine stored in 90-ton rail tank cars) and 25 miles (for releases in rural terrain of chlorine stored in 90-ton rail tank cars). Other chemicals for which reported vulnerable zones equaled or exceeded 25 miles include anhydrous ammonia, hydrogen fluoride, sulfur dioxide, chlorine dioxide, oleum (fuming sulfuric acid), sulfur trioxide, hydrogen chloride, hydrocyanic acid, phosgene, propionitrile, bromine, and acrylonitrile.) Belke found the median population "affected" in a worst case accident was 15 people, for a flammable substance, while the median for toxic substances was 1,500 people. ("Affected" means potentially exposed. It is highly unlikely that all people within the vulnerable zone would be exposed due to a single release. However, anyone within the zone could be in the path of the chemical released, given certain environmental conditions.) Further EPA analysis of risk management plans submitted by facilities handling chemicals covered by the CAA Section 112 revealed that at least 123 plants reported a worst-case scenario with a vulnerability zone containing more than a million people. The analysis also found that more than 700 plants could threaten 100,000 people, and at least 3,000 facilities could threaten 10,000 people in the vicinity. The Department of Justice (DOJ) analyzed EPA data and concluded that among facilities submitting risk management plans to EPA, more than 7,000 facilities projected worst case scenarios for toxic substances that could potentially affect more than 1,000 people. Almost 1,700 facilities reported the possibility that a less extreme accident might potentially affect more than 1,000 people. Histories of actual accidents (as opposed to hypothetical worst-case scenarios) for facilities submitting risk management plans to EPA prior to October 21, 1999, were summarized in a working paper prepared by the Center for Risk Management and Decision Processes at the Wharton School, University of Pennsylvania. Of 14,500 reporting facilities, 1,145 reported 1,913 accidents between June 21, 1994 and June 20, 1999. Of the 1,145 facilities reporting accidents, 346 facilities had multiple accidents. Half of the chemicals for which risk management planning is required under the CAA Section 112(r) were involved in accidents. Half of the accidents resulted in reported injuries to workers. Accidents caused a reported 1,897 injuries and 33 deaths to employees, 141 injuries and no deaths to non-employees. No deaths were reported off-site. However, over 200,000 community residents were involved in evacuations and shelter-in-place incidents. Further analysis by the Wharton group revealed that the risk of accidental chemical releases and of worker injuries or property damage increased with the size of the facility (from 10 to 1,000 full-time equivalent employees or FTEs). Note that this refers to accidents of any kind, not to worst-case events. In addition, facilities reporting that they handled large amounts and many types of chemicals had much higher accident rates than facilities handling smaller amounts and fewer types of chemicals. The probability that a facility had experienced a chemical accident of any size approached 100% for the very largest chemical manufacturers. Toxic chemicals were more strongly associated with worker injuries, while flammable chemicals were more strongly associated with property damage. No regional trends in accident rates were discovered (i.e., facilities in various geographical regions had similar accident rates). Risk management plans submitted to the EPA report the worst-case potentially affected population for a release from a single process. As such, these populations may under-represent the population potentially affected as a consequence of a terrorist attack. Approximately 70% of RMP facilities possess reportable quantities of chemicals in amounts greater than a single process. For roughly 10% of RMP facilities, the quantity of chemical on-site is more than 10 times the quantity in the single process used to calculate the worst-case scenario. Some 250 facilities report having 100 times as much chemical on-site as is found in the single process. Thus, the EPA methodology for calculating the potentially affected population in the worst case, which was developed for accidental releases, may understate the potential worst-case consequences of a terrorist attack. In contrast to the above figures, which all were based on hypothetical or actual accidents described in risk management plans, the Washington Post reported March 12, 2002, that a classified study conducted by the U.S. Army Surgeon General dated October 29, 2001, found that a terrorist attack resulting in a chemical release in a densely populated area could injure or kill as many as 2.4 million people. According to the news article, the study found "even middle-range casualty estimates from a chemical weapons attack or explosion of a toxic chemical manufacturing plant are as high as 903,400 people." The worst-case estimate of 2.4 million casualties from a chemical release was roughly half the surgeon general's estimate for casualties due to widespread use of biological weapons, according to the report. The Army Surgeon General recently explained that the estimate of 2.4 million casualties is of "the number of people who might request medical treatment during a total release of a large industrial chemical manufacturing plant, in a densely populated area, and under ideal weather conditions for maximum exposure." As in most studies of this kind, some question the magnitude and likelihood of the casualty estimates. In 2004, the Department of Homeland Security used EPA data to estimate the number of potential fatalities that might result if all the various chemicals at a facility were released suddenly. The purpose of the exercise was to allow DHS to prioritize chemical facility sites for inspections. Assuming that released chemicals would move in the direction of the prevailing winds, DHS determined possible fatalities within a wedge-shaped zone. It identified two facilities that threaten at least one million people downwind. DHS selected 360 facilities for its attention in the near term based on these estimates. In July 2004, the Homeland Security Council issued 15 national planning scenarios to guide federal, state, and local homeland security preparedness activities. Included in these scenarios are two that refer to industrial chemical releases. One describes a terrorist assault on a petroleum refinery while the other treats the release of a large volume of chlorine from an industrial facility. The planning figures cited for the hypothetical refinery attack include 350 fatalities and an additional 1,000 casualties. For the chlorine release, 17,500 fatalities, 10,000 severe injuries, and 100,000 additional casualties are postulated. More recent calculations by DHS, based on more sophisticated models, have reduced hazard estimates. In our best estimate, based on an incredible amount of modeling that we've done, the highest-risk facility in the United States would produce under 10,000 potential fatalities and less than 40,000 people that would demonstrate some effects in terms of anywhere from a near-death experience from exposure to inhalation of the toxic chemical to a minor skin blemish caused by irritation through contact with the chemical. CRS identified two publicly available reports that assess site security at U.S. chemical plants. In addition, investigative reports published in newspapers or documented with video recordings indicate that reporters have been able to visit various facilities without being supervised. The studies and selected newspaper accounts are summarized below. Prior to September 11, an assessment of chemical plant site security by the Agency for Toxic Substances and Disease Registry (ATSDR) was considered by many to be the most comprehensive analysis that was publicly available. ATSDR researchers reviewed national statistics on domestic terrorism compiled by the FBI in 1995, and interviewed security staff from facilities and potential targets in one community with numerous chemical plants. ATSDR researchers concluded: "security at chemical plants ranged from fair to very poor;" chemical plant security managers "were very pessimistic about their ability to deter sabotage by employees, yet none of them had implemented simple background checks for key employees such as chemical process operators"; and "none of the corporate security staff had been trained to identify combinations of common chemicals at their facilities that could be used as improvised explosives and incendiaries." The full ATSDR report was never made public, but a DOJ report noted that ... among the 'soft targets' that the ATSDR identified as potential terrorist sites were chemical manufacturing plants (chlorine, peroxides, other industrial gases, plastics, and pesticides); compressed gases in tanks, pipelines, and pumping stations; and pesticide manufacturing and supply distributors. The DOJ released a study April 18, 2000, describing the risk of terrorism aimed at chemical plants. It concluded that "the risk of terrorists attempting in the foreseeable future to cause an industrial chemical release is both real and credible." The study also noted that security at many industrial facilities generally is "not as substantial as the security at other comparable potential terrorist targets." In April and May, 2002, six to seven months after September 11, 2001, the Pittsburgh Tribune-Review published a series of articles describing an investigation of plant security conducted by the paper's reporters. On April 7, 2002, the newspaper stated that "anyone has unfettered access to more than two dozen potentially dangerous plants in the region" (referring to western Pennsylvania). The author of the report continued: The security was so lax at 30 sites that in broad daylight a Trib reporter—wearing a press pass and carrying a camera—could walk or drive right up to tanks, pipes and control rooms considered key targets for terrorists. The report was based on reporters' trips to 30 plants in western Pennsylvania which have filed risk management plans under the Clean Air Act, Section 112. Two of the plants were among the 123 plants nationwide that projected potential risks to more than 1,000,000 residents in the event of a worst-case accident or attack. The 30 companies constituted more than half of the 61 sites in the region required to file risk management plans. Fifteen of the sites to which reporters gained unchallenged access were water treatment facilities in Pennsylvania and Maryland. In May, another Tribune-Review article described a similar investigation of 30 additional plants in Houston, Baltimore, and Chicago. The report concluded that security was lax at some of "the potentially deadliest plants" in all three cities; access was easy to some sites owned by corporations with large security budgets; employees, customers, neighbors, and contractors "not only let a stranger walk through warehouses, factories, tank houses and rail depots, but also gave directions to the most sensitive valves and control rooms"; and access to 19 sites was allowed due to "unguarded rail lines and drainage ditches, dilapidated or nonexistent fences, open doors, poorly angled cameras and unmanned train gates." Chemical manufacturers and users contacted by reporters said that they had bolstered security recently. Several site managers reported that they made immediate changes in procedures or construction plans in response to security breaches by the reporters. But security cannot be ensured "overnight," according to the president of the Pennsylvania Chemical Industry Council, and it can be expensive. For example, the newspaper reported that U.S. Steel spends more than $1 million each year to equip, train, and hire its own hazardous chemicals response team, firefighters, paramedics, and gate guards at its coke factory. The American Chemistry Council, which represents large chemical manufacturers, has reported that since September 11, 2001, its members have spent over $2 billion at about 2,000 facilities (about $1,000,000, on average, per facility). Television crews again entered and photographed chemical storage areas in November 2003. Robert Full, Chief of the Allegheny County Department of Emergency Services in Pennsylvania testified February 23, 2004, before the Subcommittee on National Security, Emerging Threats, and International Relations, House Committee on Government Reform, that there continued to be facilities in his county "that one could walk straight in under the guise of darkness and cause significant damage and public danger." He stated, "Some of the facilities have no more security than maybe perhaps a padlock or a chain." In mid-2004, surveys were distributed to 189 U.S. chemical facilities where workers were represented by the Paper, Allied-Industrial, Chemical and Energy Workers International Union (PACE). Of the 133 surveys returned, 125 were from facilities where workers agreed that there were quantities of hazardous materials on site large enough to cause a catastrophic event if they were released. Responses to the survey indicated that surveyed workers believed nearly three-quarters of the plants had improved systems to guard toxic chemicals and had conducted drills to respond to an intrusion by terrorists. On the other hand, according to employees who responded to questionnaires, fewer than half had improved communications, emergency response training, warning signals, or protective equipment, or contacted local first responders about the hazards on their sites. Nearly two-thirds of the plants had not discussed terrorist concerns with neighbors, according to surveyed workers. Whether recent trends in domestic and international terrorism will continue into the future, and whether they will be reflected in risks to U.S. chemical facilities, is unknown. Historically, there have been very few terrorist attacks on chemical facilities in the United States. Therefore, the estimated risk of death and injury from such attacks in the immediate future is low relative to the likelihood of other hazardous events, such as industrial accidents or terrorist attacks on other targets using conventional weapons. For any individual chemical plant, the risk of attack is extremely small. However, the overall risks to chemical facilities may be increasing. In contrast to the low probability of chemical terrorism, possible consequences for human health and the environment from such an event could be severe. Moreover, limited evidence suggests that chemical facilities may be "soft targets," lacking in adequate safeguards against criminal and terrorist attacks. Two key federal laws require or encourage certain chemical facility operators to reduce risks to the general public associated with releases of hazardous chemicals: the Emergency Response and Community Right-to-Know Act (EPCRA) and the Clean Air Act (CAA). Both focus on accidental releases of hazardous chemicals. In 1986, two years after the Bhopal accident, Congress enacted EPCRA (codified at 42 U.S.C. 11001-11050) as Title III of the Superfund Amendments and Reauthorization Act ( P.L. 99-499 ). EPCRA mandated the establishment of State Emergency Response Commissions (SERCs) and Local Emergency Response Committees (LEPCs) to coordinate planning and response to potentially large releases of specified "extremely hazardous substances." The act requires facility operators, LEPCs, and SERCs to prepare contingency plans for such releases. Facility managers are required to provide information to LEPCs and local emergency responders (fire fighters, police officers, etc.) about chemicals present at facilities and to notify those officials in the event of a sudden release. EPCRA requires local officials to provide information about emergency plans and chemical hazards to the general public. EPCRA's reporting and disclosure requirements are meant to facilitate planning, but sometimes they also promote risk reduction. For example, facility managers concerned about community relations sometimes reduce use of particularly toxic or otherwise hazardous materials, sometimes to the point that they no longer have to report, because they no longer handle reportable quantities of EPCRA chemicals. In other cases, the public disclosure requirement may encourage them to change chemical processes and handling in order to reduce the risk of reportable spills. Although EPCRA requires facility reporting and cooperation in local emergency response planning, and it may encourage risk reduction, it stops short of requiring facilities to assess or reduce risks of chemical releases. Instead, the act directed the EPA to study the problem and to identify any gaps in federal regulation. In 1990, data accumulated by EPA on chemical accidents in the United States prompted Congress again to address the threat of catastrophic releases of chemicals that might cause immediate deaths or injuries in communities. It amended the Clean Air Act (CAA) to mandate EPA oversight of risk management planning at facilities that handle more than specified threshold quantities of hazardous substances. The act defined "hazardous substances" to include chlorine, anhydrous ammonia, methyl chloride, ethylene oxide, vinyl chloride, methyl isocyanate, hydrogen cyanide, ammonia, hydrogen sulfide, toluene diisocyanate, phosgene, bromine, anhydrous sulfur dioxide, sulfur trioxide, and at least 100 other chemicals to be designated by EPA. EPA was directed to designate chemicals posing the greatest risks to human health or to the environment, based on three criteria: severity of potential acute adverse health effects, the likelihood of accidental releases, and the potential magnitude of human exposure. EPA promulgated a list of 77 acutely toxic substances, 63 flammable gases and volatile flammable liquids, and "high explosive substances" (59 Federal Register 4478, January 31, 1994). Fourteen chemicals met EPA criteria for listing as both toxic and flammable substances. The list was amended several times, notably on January 6, 1998 (63 Federal Register 640-645) to exclude explosive substances, and on March 13, 2000 (65 Federal Register 13243-13250) to exclude flammable substances when used as a fuel, or held for sale as a fuel at a retail facility. Selected categories of industries with large numbers of reporting facilities are identified in Table 1 . The CAA Section 112(r) imposes "a general duty" on owners and operators of facilities producing, processing, handling or storing any "extremely hazardous substance" to detect and prevent or minimize accidental releases and to provide prompt emergency response to a release in order to protect human health and the environment. The act requires owners and operators of covered facilities to prepare Risk Management Plans (RMPs) that summarize the potential threat of sudden, large releases of certain chemicals, including the results of off-site consequence analysis (OCA) for a worst-case chemical accident, and facilities' plans to prevent releases and mitigate any damage. Plans were to be submitted to EPA and made "available to the public" by June 21, 1999. EPA is required to review RMPs regularly, and if necessary, require revisions. EPA has delegated this responsibility to some states and localities. (All states have authority to review RMPs at facilities that are major sources of air pollution, which are required to obtain permits under Title V of the Clean Air Act.) Plans must be revised and resubmitted to EPA every five years. Many facilities were required to submit updates by the end of June 2004. In October 1996, the Accident Prevention Subcommittee of the Clean Air Act Advisory Committee to EPA created the Electronic Submission Workgroup to consider the technical and practical issues associated with an electronic database of risk management plans. In spring 1997, the workgroup unanimously agreed that EPA should provide full, unrestricted access via the Internet to most RMP information. However, advisors did not reach consensus regarding access to OCA data. There were concerns that in facilitating electronic access to the general U.S. public through the Internet, EPA also would be facilitating access to these data internationally, which might permit misuse by terrorists. Several members of the Accident Prevention Subcommittee recommended EPA undertake a security study to determine how much risk might increase as a result of putting OCA data on the Internet. Aegis Research Corporation, ICF Incorporated, and Science Applications International Corporation conducted the security study for EPA. The Agency concluded from the study that— ... the risk (although still very small) was slightly more than two times higher with unrestricted availability of the RMP with OCA data on the Internet. This increase reflects several factors, including the nature of the OCA data elements and the enhanced accessibility of data on the Internet to an international audience. Taken together, the primary utility of the unrestricted RMP and OCA data to a terrorist emerges from the capability to scan across the entire country for the "best" targets. In December 1997, EPA began discussions with the FBI and other federal agencies about the electronic RMP distribution plan. National security concerns centered on the OCA data and their potential utility to terrorists. An interagency agreement was reached in late October 1998 that OCA data would not be included in RMP information placed on the Internet. Instead, EPA would make "appropriate" OCA data available in some form on request, but access would be restricted and not anonymous. The possibility that OCA data could have been distributed via the Internet remained, however, because it could have been obtained and distributed by any citizen under the Freedom of Information Act (FOIA), according to the EPA Legal Counsel. To address the security concerns raised by the Section 112(r) requirements, the Clinton Administration submitted draft legislation to Congress May 7, 1999. Congress enacted an amended version of the legislation as an amendment to S. 880 , the Chemical Safety Information, Site Security and Fuels Regulatory Relief Act ( P.L. 106-40 ). The new law amended Section 112 of the CAA to exempt OCA data from disclosure under FOIA, and limited public availability until EPA and DOJ issued regulations in August, 2000. The final RMP regulation on data access was published August 4, 2000. It allows public access to paper copies of sensitive OCA information through federal reading rooms, approximately one per state, and provides Internet access to the OCA data elements that pose the least serious criminal risk. State and local agencies are encouraged to provide the public with read-only access to OCA information on local facilities. At the federal reading rooms, members of the public may read OCA information for up to 10 facilities per calendar month and for all facilities with potential effects in the jurisdiction of the local emergency planning committee. State and local officials and other members of the public may share OCA information as long as the data are not conveyed in the format of sensitive portions of the RMP or any electronic database developed by EPA from those sections. A Clinton Administration proposal to implement the final rule (66 Federal Register 4021, January 17, 2001) would have allowed people to view plans of facilities outside their local area and enhanced access for "qualified researchers." The draft plan was rescinded by the Bush Administration (66 Federal Register 15254, March 16, 2001). The 1999 Act also directed GAO to report to Congress within three years (i.e., before August 2002) on "the adequacy of chemical information required to be submitted to local emergency response personnel to help them respond to chemical incidents, the adequacy of the delivery of that information, and the level of compliance with the requirement to submit the information." That report was released July 31, 2002. GAO concluded that EPA officials believe industries generally are complying with reporting requirements. GAO's conclusions about the adequacy of information and its delivery were tentative and could not be generalized to the universe of LEPCs. DOJ also was directed to report to Congress within three years on the extent to which RMP regulations led to actions "that are effective in detecting, preventing, and minimizing the consequences of releases of regulated substances that may be caused by criminal activity," the vulnerability of facilities to criminal and terrorist activity, "current industry practices regarding site security," and security of transportation of substances listed under CAA Section 112(r)." The law directed DOJ to consult with state, local and federal agencies, affected industry, and the public in preparing the report, and to submit any recommendations to Congress. An interim report was due within one year of enactment (i.e., by August 2000), and a final report within three years of enactment (i.e., by August 2002). DOJ missed both deadlines. The Natural Resources Defense Council (NRDC) filed a lawsuit against DOJ March 11, 2002, asserting that DOJ unlawfully withheld or unreasonably delayed the report's submission to Congress. The interim report was released to Congress May 30, 2002, but withheld from the public. On June 3, 2002, DOJ filed a motion to dismiss the NRDC lawsuit. The NRDC moved to dismiss its lawsuit on July 1, 2002. A GAO study released October 10, 2002, concluded that DOJ failed to complete the mandated study, and that the Department had the funds to do so, although it had no specific appropriation. "Generally, when Congress imposes a new requirement on an agency but does not appropriate funds specifically to implement it, the agency must use existing appropriations to fund the requirement." The events of September 11, 2001, bolstered the view that access to information about facilities should be restricted if it might make them more vulnerable to terrorist attacks. This led EPA to limit Internet access on its website to "sensitive" data. Early in October 2001, EPA removed from its website facility-specific information of a general nature that had been compiled from the executive summaries of risk management plans—for example, about the physical state and concentrations of chemicals at facilities and the duration of a possible chemical release—which previously had been considered acceptable for Internet posting. That information remained available on the Internet through OMB Watch's Right-to-Know Network (RTK NET), but EPA refused repeated requests (including a formal FOIA request) to provide updated information about facility plans. EPA released that information only after OMB Watch filed a complaint in the U.S. District Court for the District of Columbia. In July 2005, EPA provided the electronic database to OMB Watch, which promptly made it accessible on its website. In March 2002, EPA restricted access to Envirofacts, a link to several EPA databases that allowed the user to access facility-specific information about chemical releases, compliance with environmental laws, and other issues. The next week, the White House sent a memorandum to all federal agencies, ordering them to further review and protect information that might be used to threaten national security or public safety. On May 6, 2002, President Bush signed an administrative order granting the EPA Administrator the authority to classify as "secret" information that might pose a national security risk. On the other hand, the attacks of September 11 led to increased communication among government officials at all levels, as well as facility owners and operators. For example, EPA advised pesticide companies and applicators to be especially vigilant about physical security of chemicals and equipment. The Agency issued a "chemical safety alert" tailored to the security needs of the pesticide industry, based on an earlier paper on site security of chemical plants that first was issued in February 2000. In September 2002, EPA also sent about 9,400 drinking water utilities advice about securing facilities from terrorists. (About 2,000 drinking water utilities submit risk management plans that include worst-case scenarios under the CAA Section 112(r).) In February 2003, the White House released The National Strategy for the Physical Protection of Critical Infrastructures and Key Assets. It outlines goals, principles, "a unifying structure," roles and responsibilities, and the major cross-sector and sector-specific initiatives of national efforts to secure infrastructures and "assets vital to our public health and safety, national security, governance, economy, and public confidence." Chemical facilities are addressed in connection with three critical infrastructure sectors: the chemical industry and hazardous materials, water, and energy. EPA was the designated lead federal agency for the chemical industry and water, while the Department of Energy (DOE) was the designated lead agency for energy. With respect to the chemical industry and hazardous materials, the Strategy acknowledged both the potential economic consequences of a successful attack on the sector and the potential threat to public health and safety. It aimed to assure supply to downstream users of chemical products, to protect and assure the quality of chemical stockpiles, and to reduce the risk of malicious use of inherently hazardous chemicals. The Strategy noted that "there is currently no clear, unambiguous legal or regulatory authority at the federal level to help ensure comprehensive, uniform security standards for chemical facilities." In particular, the Strategy observed that federal laws might be out-of-date and no longer effective for monitoring and controlling access to dangerous substances. The President proposed that DHS, in concert with EPA, should "work with Congress to enact legislation to require certain chemical facilities, particularly those that maintain large quantities of hazardous chemicals in close proximity to population centers, to undertake vulnerability assessments and take reasonable steps to reduce the vulnerabilities identified." The Strategy also proposed that EPA, in concert with DHS, should review current laws and regulations pertaining to "the distribution and sale of highly toxic pesticides and industrial chemicals." Finally, the Strategy suggested that DHS and EPA should encourage participation in the chemical sector's Information Sharing Analysis Center. The fact that security can be expensive also was noted. The Strategy described the importance of water from a public health and an economic standpoint and noted that security of the water sector against terrorism had been greatly enhanced since September 11, 2001. Challenges facing the water sector, according to the Strategy, included the need to protect against intentional release of toxic chemicals so as to protect the safety of people who reside or work near water facilities. The Strategy proposed that EPA and DHS identify better ways to secure key points of storage and distribution; improve monitoring and analysis, information exchange, and contingency planning; and manage risks due to interdependencies with other critical infrastructures. The energy sector was divided into two sections: electricity and the oil/natural gas industries. Overall, energy was described as "essential to our economy, national defense, and quality of life." The Strategy proposed that DHS and DOE work with state and local governments and industry to identify "appropriate levels of redundancy" and requirements for "designing and enhancing reliability." In addition, DHS and DOE were to work with oil and natural gas industry representatives to "define consistent criteria for criticality, standard approaches for vulnerability and risk assessments," and "physical security training for industry personnel." An advisory task force was to be convened by DHS and DOE to identify appropriate planning requirements and approaches. Finally, the Strategy proposed that DHS and DOE work with industry "to develop regional and national programs for identifying spare parts, requirements, notifying parties of their availability, and distributing them in an emergency." There is no mention in this section of the hazardous chemicals present in some facilities in the energy sector. However, it may be the Administration's intention that certain facilities, such as oil refineries, electric/gas utilities, and bulk storage facilities, would be included in, and targeted by initiatives in, multiple critical infrastructure sectors. As the war began in Iraq, the President launched Operation Liberty Shield, a surveillance program to provide additional security for potentially threatened facilities in the critical infrastructure. Chemical plants were among the potential focal points of the initiative. On December 17, 2003, the President issued Homeland Security Presidential Directive (HSPD) 7, transferring to DHS all EPA authority for overseeing the security of chemical facilities, with the single exception of drinking water and water treatment plants. In addition, the directive revised the Administration's strategy for protecting critical infrastructure by designating DHS the lead agency for the chemical sector. The directive requires that DHS "identify, prioritize, and coordinate the protection of critical infrastructure and key resources with an emphasis on critical infrastructure and key resources that could be exploited to cause catastrophic health effects or mass casualties comparable to those from the use of a weapon of mass destruction" (HSPD 7, paragraph 12). In addition, DHS must conduct or facilitate vulnerability assessments of the chemical sector and "encourage risk management strategies to protect against and mitigate the effects of attacks." Finally, all departments and agencies are directed "to work with sectors relevant to their responsibilities to reduce the consequences of catastrophic failures not caused by terrorism" and to cooperate with the DHS Secretary. Although trade associations for the chemical industries have been engaged in emergency planning for many years, and began developing guidelines for site security at least a year before September 11, 2001, the events of that date infused on-going efforts with commitment and energy that previously were not evident. The American Chemistry Council (ACC, formerly the Chemical Manufacturers Association), the Chlorine Institute, Inc., and the Synthetic Organic Chemical Manufacturers Association issued Site Security Guidelines for the U.S. Chemical Industry on October 23, 2001. The guidelines build on "Management Practice 15: Site Security" in the Responsible Care® Employee Health and Safety Code. Responsible Care® is the ACC's response to general public concerns about the manufacture and use of chemicals. Members of the ACC are required to commit to the principles of Responsible Care® and "to support a continuing effort to improve the industry's responsible management of chemicals" by continually improving their health, safety and environmental performance; listening and responding to public concerns; assisting other companies to achieve optimum performance; and reporting their goals and progress to the public." There are today about 130 corporate ACC members operating approximately 2,000 chemical facilities, representing almost 90% of U.S. chemical productive capacity. About half of the ACC facilities are covered by the CAA Section 112(r) requirements for risk management planning. The ACC guidelines for site security are general, and must be adapted by chemical companies to meet site requirements. During April 2002, ACC circulated a draft of a Security Code of Management Practices— ... to help companies achieve continuous improvement in security performance using a risk-based approach to identify, assess and address vulnerabilities, prevent or mitigate incidents, enhance training and response capabilities, and maintain and improve relationships with key stakeholders. On June 5, 2002, the ACC Board of Directors approved the code and voted to make it mandatory for ACC members. Under the Security Code, ACC members are required to evaluate site security using vulnerability assessment methodology equivalent to that developed by the Department of Energy's Sandia Laboratories for the Department of Justice or by the Center for Chemical Process Safety (an industry-funded research center). They are then required to implement security enhancements commensurate with the risks identified by the assessments. Other key requirements of the code include training and drills for employees, contractors, customers, and suppliers; consideration of process changes, material substitutions, and other inherently safer approaches to chemical production; evaluation, response, and reporting of security threats; and internal audits. ACC members began by assessing security, including computer security, at high-risk facilities, as well as from supplier to manufacturer, to wholesaler, to retailer, and finally to customer. On March 7, 2003, ACC announced that all of its member companies had completed site vulnerability assessments for their 120 highest priority facilities, prior to the end of 2002, a deadline established by the industry's security code. In early 2005, ACC announced that members had completed implementation of security measures at all 2,040 of their facilities. However, the security code does not require specific expenditures for risk reduction; rather, it recommends decisions should be based on an evaluation of risks and costs. According to ACC, facilities have spent more than $2 billion since September 11 to improve security. In addition to developing guidelines and a management code on site security, ACC and other chemical trade organizations have been communicating extensively with one another and with government officials about how to reduce the risks of chemical terrorism. For example, ACC and the Association of American Railroads formed a task force to develop strategies to ensure the safety of communities near chemical and rail facilities. In addition, as mentioned above, the Center for Chemical Process Safety has developed a risk-based methodology for assessing the vulnerability of chemical facilities to terrorist attacks. The Synthetic Organic Chemical Manufacturers Association (SOCMA) has developed a vulnerability assessment methodology for smaller chemical producers. In addition, SOCMA has adopted the ACC security code as a condition of membership. According to Tom Hall, director of stewardship for CropLife America (a pesticide industry trade association), pesticide and fertilizer distributors represented by CropLife America, the Fertilizer Institute, and the Agricultural Retailers Association formed a working group to tailor a vulnerability assessment methodology for rural facilities, where theft is a greater threat than a direct attack on a facility. A document, Guidelines to Help Ensure a Secure Agribusiness , was released October 24, 2002. Finally, the American Petroleum Institute has published security guidelines developed in consultation with the Department of Energy. GAO examined the voluntary initiatives underway in a report released in March 2003, Homeland Security: Voluntary Initiatives Are Under Way at Chemical Facilities but the Extent of Security Preparedness Is Unknown . GAO concluded that many initiatives are admirable, but "the extent of security preparedness at U.S. chemical facilities is unknown ... [because] no federal requirements are in place to require chemical facilities to assess their vulnerabilities and take steps to reduce them ... [and] no federal oversight or third-party verification ensures that voluntary industry assessments are adequate and that necessary corrective actions are taken." The 107 th Congress passed the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 ( P.L. 107-188 ), which requires many community water systems to perform vulnerability assessments and to prepare emergency preparedness and response plans. Some of these facilities handle significant quantities of hazardous chemicals. Funding is authorized to assist communities in complying with the act. It also directs EPA to review methods to prevent, detect, and respond to threats to water safety and infrastructure security. P.L. 107-117 provided EPA with roughly $90 million to enhance the security of drinking water treatment facilities. The 107 th Congress also enacted the Maritime Transportation Security Act (MTSA, P.L. 107-295 ), which requires the DHS Secretary to identify port facilities "that pose a high risk of being involved in a transportation security incident," and to conduct a vulnerability assessment of such facilities. Facility owners or operators are required to develop and submit to DHS both security plans and incident response plans that deter "to the maximum extent practicable a transportation security incident or a substantial threat of such a security incident"; are consistent with national and area security plans; and conform to requirements specified by the U.S. Coast Guard. DHS must review and approve each plan. The act also authorized a grant program that finances security upgrades. For more information about the MTSA and related issues, see CRS Report RL31733, Port and Maritime Security: Background and Issues for Congress , by [author name scrubbed]. P.L. 107-296 , establishing DHS, does not address chemical plant security directly. However, the law does require DHS to analyze vulnerabilities and recommend methods of enhancing site security at facilities that are part of the "critical infrastructure." As noted above, the Administration has identified chemical facilities as part of the critical infrastructure in the National Strategy for the Physical Protection of Critical Infrastructures and Key Assets. Chemical facilities are included in several sectors: water utilities, the energy sector, and the chemical and hazardous materials sector. The law exempts from public disclosure requirements (i.e., FOIA) any information about physical and cyber security if it is submitted voluntarily to DHS by such facilities for use by that agency related to "the security of critical infrastructure and protected systems." Disclosure under the authority of state or local laws also is prohibited. Unauthorized disclosure of "critical infrastructure information" by government employees is punishable by imprisonment, fines, and removal from office. The 108 th Congress amended the MTSA in the Coast Guard and Maritime Transportation Act of 2004, P.L. 108-293 , on August 9, 2004. Title VIII of that act requires the DHS to submit a plan for a maritime security grant program, including recommendations on how funds should be allocated. The 109 th Congress enacted security provisions attached to the DHS appropriations bill for 2007, H.R. 5441 . The law, P.L. 109-295 , provides authority to DHS for three years to issue regulations for high-risk chemical facilities, other than drinking water and wastewater treatment facilities and facilities in ports. DHS is directed to establish risk-based security performance standards for such facilities, and designated chemical facilities are required to prepare vulnerability assessments and facility security plans. DHS has authority to inspect facilities and to order compliance. Failure to comply with an order may be punished with a civil penalty of $25,000. There are no criminal penalties for noncompliance, although criminal penalties are authorized for unauthorized disclosure of "protected information." In the event of repeated compliance failures, DHS may order a facility to cease operations. The law is silent on numerous issues debated during markup of other bills reported in the House and the Senate, including the criteria for weighing risks of various facilities, federal preemption of state and local right-to-know laws, how to facilitate congressional oversight, and the role of IST. September 11, 2001 prompted policy makers to reconsider federal policy options regarding potential terrorist threats to chemical facilities. A range of possible strategies is summarized below. Additional information on this topic is provided by CRS Report RL33043, Legislative Approaches to Chemical Facility Security , by [author name scrubbed]. Congress could rely on existing mechanisms in the public and private sectors to continuously evaluate and improve site security. Federal statutes already mandate facility assessments of chemical hazards and planning to prevent, mitigate, and respond to accidental releases of hazardous chemicals. And the events of September 11, 2001, undoubtedly have reinvigorated implementation efforts by federal, state, and local government officials, as well as facility operators. Some state and local governments have instituted additional security requirements. For example, Baltimore, Maryland, requires chemical facilities to implement security measures described by police and fire officials. Moreover, trade associations have developed vulnerability assessment methodologies to facilitate planning for diverse types of facilities. The ACC requires that its members assess vulnerability and devise plans to improve security. The establishment of DHS and Homeland Security Presidential Directive 7 on the protection of critical infrastructure, as well as the newly enacted P.L. 109-295 , ensure a federal role in chemical facility security planning. DHS must identify and prioritize facilities needing protection from terrorists, require vulnerability assessment and security planning, and oversee compliance with security plans at high-risk facilities. However, the DHS authority is limited to three years, which may not be adequate. Another option would be to delay addressing chemical facility security until additional information is gathered on which to base proposals. The final DOJ assessment of chemical site security and the impact of the current risk management planning program might provide needed insights. For a broader view of the issue, including analysis of policy options, Congress might establish a Blue Ribbon Panel or request a study by the National Academy of Sciences. Studies could provide information about the risks of terrorism, the risks of accidents, the views of public interest groups, and the effectiveness of public disclosure to reduce risks. Such information might assist Congress in evaluating alternative approaches to reducing risks. However, the benefits gained from delaying federal decisions pending development of better risk information should be weighed against the possibility that terrorists might strike this kind of facility before Congress acts. Congress also might provide additional resources for, or exercise increased oversight over, implementation of existing statutes. Although neither EPCRA nor the CAA explicitly addresses chemical releases due to criminal or terrorist acts, EPA arguably has sufficient authority under the acts to more strongly encourage facilities to reduce their vulnerability to terrorists. Additional resources could facilitate EPA review of facility risk management plans. Through September 2001, EPA had reviewed only 15% of submitted plans, according to a GAO report. As previously mentioned, EPA already has provided guidance to facilities on this subject, but many public interest groups would like EPA to go farther in interpreting the risk management planning requirements of the CAA Section 112(r). For example, US PIRG argued in a 1998 report: EPA missed opportunities to require companies to identify inherently safer technologies, and ignored comments made by a coalition of environmental and labor organizations calling for a requirement that companies undertake Technology Options analyses to identify inherently safer technologies. In lieu of regulations, EPA could be urged to provide technical assistance or demonstration programs, or to develop incentives to encourage risk reduction. EPA has considered revisions to either the risk management planning rule or EPA guidance under the CAA Section 112(r)(7) to require or encourage chemical facility owners to assess their vulnerability to terrorists and correct any significant weaknesses. Some EPA officials expected new principles for risk management planning to address both site and computer security; building access; background checks; inventory controls; storage safety; and other physical security measures, as well as changes that improve "inherent safety." However, EPA has stated that its authority to regulate chemical site security is unclear, and authority under the Clean Air Act has been questioned by the House Committee on Energy and Commerce. In October 2002, Administrator Whitman announced that EPA would not pursue chemical security regulations under the CAA. President Bush has made it clear that he does not envision a large role for EPA with respect to security from terrorism. Congress might ultimately elect to clarify EPA authority through legislation, expanding or narrowing current interpretations, or examine the adequacy of EPA's implementation of the risk management planning rule in congressional hearings. A potential disadvantage of relying on existing environmental law is that it may not apply to all facilities of interest. For example, the CAA, Section 112 applies to chemicals that were selected based on severity of potential acute adverse health effects, the likelihood of accidental releases, and the potential magnitude of human exposure. It excludes explosives, as well as flammable substances when used as a fuel, or held for sale as a fuel at a retail facility. Congressional oversight and guidance for DHS implementation of the newly enacted provisions of P.L. 109-295 also is an option. GAO has recommended that DHS and EPA, in consultation with the Office of Homeland Security, jointly develop a comprehensive national chemical security strategy, which should include a legislative proposal "to require chemical facilities to expeditiously assess their vulnerability to terrorist attacks and, where necessary, require these facilities to take corrective action." DHS and EPA agree. The National Strategy for the Physical Protection of Critical Infrastructures and Key Assets asks DHS to work with Congress to enact such legislation. If Congress decides that legislation is required to reduce the risks of terrorism targeting chemical plants, proposals might focus on preventing terrorism in general or on reducing risks of terrorism specifically targeting chemical plants. A broad focus on reducing terrorism would involve numerous issues that are beyond the scope of this report. Interested readers are referred to CRS Report RL33600, International Terrorism: Threat, Policy, and Response , by [author name scrubbed]. A narrower focus on chemical plants might provide incentives for voluntary private sector initiatives or new regulatory authorities to reduce risks. Economists Robert Litan and Peter Orszag have suggested that a blended approach involving performance-based regulation and a requirement for insurance coverage against terrorist acts might be the most cost-effective approach. Stakeholder views regarding the relative merits of voluntary versus mandatory approaches are discussed in the next major section of this report, " Key Issues ," in the subsection on " Responsibility and Accountability ." Bills considered and enacted during the 109 th Congress are described in the last major section of this report, Legislation in the 109 th Congress. The remainder of the present discussion analyzes selected strategies and tactics for reducing risks that may be incorporated into legislation. Perhaps the most common approach to improving site security is to "harden" defenses so that sites would be less vulnerable to terrorists. According to the recently released DOJ vulnerability assessment methodology, an effective protection system serves three functions: detection (discovery or sensing of adversary action), delay (impediment to adversary progress), and response by security personnel to ensure that a threat is neutralized. Examples of hardening tactics include increasing security patrols, strengthening fences, installing better locks on doors, relocating sensitive chemical processes within the facility, installing intruder detection systems and alarms, and performing background checks on employees. Congress has adopted such tactics in other contexts. For example, the USA Patriot Act ( P.L. 107-56 ) requires background checks as a condition for obtaining a license to operate a motor vehicle transporting a hazardous material in commerce. A key advantage of hardening tactics is their variety and adaptability to a range of security needs. Other advantages include the ability to deepen defenses by adding layers of protection and, in many cases, relatively low costs. A potential weakness of this strategy is that even the most effective security measures might be disabled or overwhelmed by a determined, skilled terrorist organization. For example, guards might be bribed or killed, passwords discovered, alarms short-circuited, or computers hacked. The World Trade Center and Pentagon attacks demonstrate the vulnerability of any site to a novel and vigorous attack. An alternative strategy for reducing risk is advocated by environmental groups. It would reduce the hazardous characteristics of the facility, for example, by reducing production, processing, storage, and use of dangerous chemicals, or changing the characteristics of chemicals to make them less dangerous (e.g., by reducing volatility). Such tactics aim to improve the "inherent safety" of a site, and are preferred by advocates to target-hardening tactics, which they often refer to as "add-on safety systems." According to this view, "'Inherent Safety' activities reduce or eliminate the possibility of an accident occurring through the fundamental redesign of production systems or products, reductions in chemical inventories, or substitution for hazardous chemicals at the facility." Currently, there is no federal U.S. law that explicitly promotes use of inherently safer technologies (IST) by the chemical industry. Two potential advantages of this approach are that consequences of terrorism may be reduced even if a terrorist succeeds in his mission, and that risks associated with accidental releases of chemicals also are likely to be reduced. In addition, efforts to promote inherent safety of production could fill gaps in current laws, which address risks associated with specified chemicals and industries. According to the U.S. Chemical Safety and Hazard Investigation Board, many reactive chemicals responsible for industrial accidents are not covered by the CAA Section 112. The chemical industry developed the concept of inherent safety, and the ACC Security Code requires members to "consider" it in choosing security measures. Many facility operators have applied this approach in recent years. For example, a utility in Ohio chose to employ a urea-based pollution control system instead of another system which would have required storage of large quantities of ammonia. Shortly after September 11, the Blue Plains wastewater treatment facility in Washington D.C. stopped using chlorine in favor of the less volatile sodium hypochlorite bleach. Other water and wastewater treatment plants are making similar changes in chemical usage. The key disadvantages of this "safer" facility strategy are potentially higher production and research and development costs, delays in achieving security while new processes are put into place, and, at least in some cases, lack of feasibility. However, advocates argue that use of safer technologies may reduce production costs by reducing regulatory burdens, insurance premiums, transportation costs, and waste disposal costs. Another potential disadvantage of the strategy is that some "safer" tactics may simply spread a risk around, shift the risk to other locations or populations, or substitute one risk for another. For example, in replacing an acutely toxic chemical (that produces relatively severe health effects after a short exposure) with a less acutely toxic chemical, one might increase chronic risks (due to low-level, long-term exposures) or environmental risks (e.g., due to the chemical's persistence). A third approach to reducing risks aims to reduce theft, rather than direct attacks, by making dangerous chemicals in use at a facility less attractive to criminals, for example, by introducing a color or other property that facilitates detection and tracking by authorities (so-called "taggants"), or by creating and storing antidotes to toxic effects. A disadvantage of the use of taggants is that they act as contaminants, and therefore may impede chemical processes. For this reason, taggants typically are useful only in end products, not in intermediate (i.e., process) chemicals. Generally, such deterrents appear to be in the development stage and are not available for immediate application. Restricting terrorists' access to information about vulnerability and location of chemical facilities also might reduce the risk of terrorism. This approach was taken by the 106 th Congress when it enacted amendments to the CAA Section 112(r) to prevent Internet posting of risk management plans and worst-case scenarios for accidents. Internet access to information is a particular concern, because it permits anonymous inquiries about sensitive U.S. facilities from remote locations. P.L. 107-296 , that established DHS, limits access to sensitive information potentially useful to terrorists by exempting information about critical infrastructures submitted voluntarily to DHS from disclosure requirements of the Freedom of Information Act (FOIA). A key advantage of restricting access to sensitive information is that it is an inexpensive method of reducing risk. However, some argue that information restriction is contrary to American values, reduces public oversight of chemical facilities and consequently facility operators' incentives to reduce risk, and is not likely to prevent determined terrorist groups from obtaining needed information. The general issue of public access to facility-specific information is discussed under Key Issues, in the section on Public Disclosure. Policy makers choosing among policy options for reducing terrorist risks associated with chemical plants are faced with at least three fundamentally political issues: the effect of public disclosure; the relative importance of diverse risks (and associated costs and benefits of risk reduction), and who should be responsible (and held accountable) for achieving results. Public disclosure of information about chemical hazards and risk management plans at industrial facilities is controversial. Professional and trade groups representing the chemical industry oppose the release of information regarding the vulnerability of facilities to terrorism and the potential off-site consequences (OCA) to public health and the environment. They argue that terrorists might use the information to target facilities that are most vulnerable or located near large population centers. Congress responded to this view when it enacted amendments to the CAA Section 112(r) in 1999. Environmental and right-to-know advocates often oppose restrictions on public disclosure. They argue that communities have a right to be informed about hazards to which they might be exposed, and that free access to information is important to ensure public accountability of facility managers. Opponents of limiting public information also point out that citizens need information to assess facility compliance with laws, and if necessary, to petition the Administration or the courts for enforcement. Unsafe practices and inadequate risk management plans, in particular, should be publicized, they contend, so that communities may exert political or social pressure on plant managers to improve the inherent safety of their facilities. Moreover, these groups want access to information about similar facilities handling comparable chemicals across the United States, so that plans and accident rates can be compared and analyzed to determine the effectiveness of various safety measures. Informed citizens can work with local plant managers to reduce the risk of accidents, they argue. This view was adopted by Congress in the 1990 amendments to the CAA Section 112(r). Another argument in favor of public disclosure has been advanced by investment groups, who argue, "Investors need to know about potential liabilities of companies in which they invest." Although some have argued that environmental information is inadequately disclosed, due in part to vague disclosure requirements established by the Securities and Exchange Commission (SEC), the GAO reported in 2004 that the situation is not clear. GAO found: (1) "Key stakeholders disagree" about how well SEC has defined the environmental disclosure requirements; (2) "Little is known about the extent to which companies are disclosing" such information in their filings with SEC; and (3) SEC enforcement of environmental disclosure requirements may or may not be adequate. With respect to the possibility that information may be used by terrorists, right-to-know advocates claim that public disclosure of chemical hazards motivates facility operators to reduce chemical hazards, thereby reducing the likelihood and severity of harm from terrorist attacks, as well as the risk of chemical accidents. The net effect on risk to public health and the environment of public disclosure, therefore, appears to depend on the relative risks of releases due to accidents, versus those due to terrorism, and on the extent to which those risks are reduced or enhanced by publication of risk management plans and similar information. However, data are not available to calculate risks, relative risks, or risk reduction/enhancement potential. A related issue is the extent to which federal laws regarding public disclosure should preempt state and local disclosure laws. P.L. 107-296 , establishing DHS, prohibits release under the authority of state and local disclosure laws of "information (including the identity of the submitting person or entity) that is voluntarily submitted to a covered Federal agency for use by that agency regarding the security of critical infrastructure and protected systems." For more on issues related to information disclosure, see CRS Report RL31547, Critical Infrastructure Information Disclosure and Homeland Security , by [author name scrubbed] and [author name scrubbed]. Another important issue involves the diverse and sometimes conflicting goals implicit in discussions of chemical site security enhancement; there is general agreement that risks should be reduced and that "the greatest risks" should be addressed first, but little discussion of which risks are "greatest" and should be targeted and at what cost. For example, should we focus on lowering death rates or rates of sickness and disability? Should we focus on preventive measures or emergency response and recovery services? Should we allocate resources to prevent worst-case scenarios, or everyday risks that add up over time? Are risks due to chemical terrorism worse than risks of equal or greater magnitude due to explosions or firearms? Should we emphasize measures to reduce terrorist risks that also may improve federal efforts to prepare for and respond to other disasters, as the President's National Strategy suggests? To what extent are we willing to sacrifice access to information about facilities in our neighborhoods, privacy, or government accountability for the sake of risk reduction? Are we willing to shift federal resources to DHS and away from other programs? The answers to such questions depend on value judgments and are likely to lead to diverse policy approaches and decisions about particular federal initiatives to reduce the threat of terrorism. For example, on the one hand, it often is argued that federal expenditures are most efficient when they are allocated with respect to relative risks and risk reduction opportunities. According to this view, relatively more federal funding should be provided to programs targeting risks that are greater and more clearly documented (e.g., to prevent smoking or motor vehicle accidents), than for programs targeting small, hypothetical risks (e.g., from exposure to pesticide residues on food). Based on this reasoning, the risks of chemical terrorism in the United States would deserve relatively few resources, because they are hypothetical and very small. This is especially true for individual chemical facilities. Such reasoning might leave some chemical facilities vulnerable to attack. As explained by the President of the Louisiana Chemical Association, "Worst-case scenarios are just that Virtually every safety system in every process would have to fail for a worst-case scenario to actually happen." Will the federal government or some plant operators find such a scenario incredible, and thus, not worth additional security investments? What cost is justified for risk reduction at individual chemical facilities? On the other hand, some have argued that the distribution of risk is more important than the absolute or relative magnitude of risk. Scholars at the Brookings Institution, for example, argue that federal resources to combat terrorism should be devoted primarily to avoiding or mitigating potentially catastrophic terrorist acts. Catastrophic events, in which many people are killed or injured at once often strain local social, political, and economic systems, as well as emergency response resources, as was well illustrated by the attack on the World Trade Center and again during the hurricane season of 2005. Thus, the Brookings report focuses on protecting against nuclear, chemical, or biological terrorism and large-scale attacks at airports, seaports, nuclear and chemical facilities, stadiums, big commercial buildings, monuments, and American icons, as opposed to preventing numerous smaller attacks that might produce an equal number of casualties over a longer period of time. President Bush has directed the DHS Secretary to set priorities for critical infrastructure protection "with an emphasis on critical infrastructure and key resources that could be exploited to cause catastrophic health effects or mass casualties comparable to those from the use of a weapon of mass destruction," but with consideration of numerous other potential effects of terrorist acts. As a result, DHS has been developing a vulnerability-assessment tool, working its way through, "in priority order, first with the nuclear energy sector, and with the chemical sector, and shortly to follow many others across the top tier of consequences, vulnerabilities and threats." Still others object to reliance on any form of cost-benefit accounting with respect to public health and environmental risk management, because quantitative, analytic tools often do not consider risk factors and management options that they consider important. For example, one cannot produce a reliable estimate of benefits that might accrue from basing decisions on the so-called "precautionary principle" or most other preventive management tools, because specific kinds of damages and clean-up costs may never occur, and thus cannot be validated or corrected. Moreover, it can be argued that quantitative analysis is biased against preventive measures, because the hypothetical benefits, as well as the hypothetical risks, accrue (or not) in the future and generally are discounted (reduced in value). Many observers feel this kind of process inevitably estimates that preventive options will have relatively high short-term costs and relatively low and uncertain long-term benefits. Deciding who should be responsible for achieving results (or who should be held accountable) requires consideration of many factors, including statutory authority, resource availability, technical competence, political feasibility, and moral or ethical constraints. Responsibility is multifaceted, involving financial, operational, and managerial duties, and may be layered hierarchically. In addition, responsibility may be shared or distributed among several private and public entities. For example, in the case of chemical plant safety, responsibility probably will be divided in some manner to include owners/operators of facilities, insurers, and some unit of government. It is up to policy makers to decide upon the appropriate distribution of each component. Generally, people agree that the federal government is responsible for protecting citizens and the homeland, and that business owners are responsible for not causing hazards for their employees, neighbors, and assets. However, people have different views about who should be held accountable for the consequences of an act of terrorism, what level of protection from risk is acceptable, whether the private sector is likely to achieve that level of protection without public assistance or oversight, and who should bear the costs of achieving greater safety. These different views largely reflect general political philosophies (e.g., regarding the appropriate role of government and the value of public involvement in risk management decisions), but they also are influenced by specific knowledge of, and attitudes toward, the chemical industry, EPA, and other governmental and non-governmental entities. Some argue that the risks of terrorism for individual chemical facilities are so small that many facility managers are unlikely to invest sufficient resources to adequately ensure site security. Based on this view, some argue that sufficient reductions in terrorist risks for the nation as a whole can be assured only if chemical facilities are required to comply with federal standards for risk management—that is, if they are held accountable by government. Federally mandated standards are likely to ensure a greater level of safety, according to this view, because administrative rule-making procedures provide for public comments, including comments by people potentially at risk if a terrorist attacks, but who do not directly profit from neighboring facilities. Voluntary chemical site security measures advocated by trade associations do not suffice, it is argued, because they do not cover all potentially dangerous facilities and have no standards, no timelines, no hazard reduction policies, no measurable hazard reduction goals, no accountability, and are not enforceable. However, at least some trade associations require independent audits of risk management plans, as discussed below. Recent testimony by Robert Stephan, Assistant Secretary of Infrastructure Protection, indicates that approximately 20% of chemical facilities that are relatively hazardous are not voluntarily signed up to an industry security code and are not covered by MTSA. As a result, DHS does not know whether they are acting to secure themselves from terrorist acts. Some contend that chemical facility operators are willing and prepared to reduce significant risks, for personal, professional, and business reasons. They argue that well-managed businesses routinely assess, prioritize, and manage risks of all kinds, including risks of potential exposure to hazardous chemicals due to criminal or terrorist acts. Business incentives to good chemical risk management include reduced legal liability, reduced insurance costs, enhanced reputation, improved employee relations, and reduced costs for remediation and victim compensation. In the United States, environmental and occupational health and safety laws provide additional incentives to many facility operators to responsibly manage hazardous chemicals. Some are opposed to new legislation, because it might disrupt and delay installation of security enhancements by individual companies. On the other hand, such legislation could benefit businesses by shifting liability to the government and discouraging states from adopting diverse regulatory strategies. Some industry representatives, while acknowledging that some guidance, training, and financial assistance for threat assessment and risk management are needed, especially for addressing risks to small businesses, point out that trade associations and industrial research centers have been working for several years to fill such needs. Such groups advocate a flexible, risk-based approach to securing facilities, arguing that "most plants are not likely terrorist targets." Some business groups argue that most regulations inappropriately force diverse enterprises to adopt a "one-size-fits-all" strategy. To satisfy any public demand for assurance that risk reduction is occurring, some industry representatives have recommended a safety certification process and are willing to submit their facilities to independent audits. In the National Strategy for the Physical Protection of Critical Infrastructures and Key Assets , released in February 2003, the Bush Administration recommended legislation to enhance security measures at chemical facilities, although it had hoped to avoid that approach, according to the Secretary of the Department of Homeland Security, Tom Ridge. He acknowledged that the Administration (as of mid-July 2002) had been leaning toward a voluntary approach. The Administration would assign financial responsibility to chemical facility owners. According to Ridge, "[T]his is a cost [chemical companies] have to absorb." For their part, some pesticide trade groups would welcome increased government assistance in the form of funding for education. Administrative support for legislation again was expressed at a Senate hearing June 15, 2005. Although this was interpreted by many news reports as a change in Administration policy, Robert B. Stephan, Acting Undersecretary of DHS for Information Analysis and Infrastructure Protection, testified that there has been no change in the Administration's position: It has always been willing to work with Congress to produce new regulatory authority to enhance the security of chemical facilities. However, the Undersecretary emphasized that the Administration will only support risk-based regulation of chemical security. Mr. Stephan stated that DHS was not quite ready to propose or approve of any particular legislative provisions, but would be in a position to do so soon. The 109 th Congress ultimately decided that the private sector should be held accountable and enacted legislation ( P.L. 109-295 ) authorizing DHS to oversee facility vulnerability studies and set performance standards for facility risk management. The American Chemistry Council and the Administration support the enacted legislation. Others in the 109 th Congress would have preferred legislation ( H.R. 2237 ) that would have would have required submission of assessments and plans to EPA. Many would have preferred S. 2145 / H.R. 4999 or H.R. 5695 , which were more comprehensive and addressed controversial issues such as federal preemption of state and local laws and whether to require consideration or implementation of inherently safer technology. Although legislation to enhance the security of a broad range of chemical facilities was introduced in previous Congresses (the 107 th and 108 th ), none was enacted. A shift in committee structure in both the House and the Senate may have affected the fate of legislation in the 109 th Congress. The Committee on Homeland Security and Governmental Affairs took the lead in holding hearings and developing legislation in the Senate. However, Senator Inhofe, Chairman of the Senate Committee on Environment and Public Works, which held hearings during the previous Congress, placed a hold on the bill because of concerns about its coverage of drinking water and wastewater treatment facilities (which fall within the purview of his committee). In the House, bills were referred to both the Committee on Energy and Commerce, which held hearings during the 108 th Congress, and to the now permanent Committee on Homeland Security, which reported a bill very similar to the Senate bill. As the 109 th Congress approached the end of the 2 nd session, the Chairman of the Committee on Energy and Commerce supported an amendment to the DHS FY2007 appropriations bill, H.R. 5441 , which was adopted and became law when the bill was enacted on October 4, 2006. On December 5, 2006, the Chairman introduced the same provisions as a stand-alone bill, H.R. 6348 . P.L. 109-295 provides authority to DHS for three years to issue regulations for high-risk chemical facilities, other than drinking water and wastewater treatment facilities and facilities in ports. The enacted provisions combine certain elements of H.R. 5695 , as reported by the House Homeland Security Committee, and S. 2145 , as reported by the Senate Committee on Homeland Security and Governmental Affairs. The various legislative proposals, as well as the enacted provisions, are summarized below. Senator Collins, Chairman of the Homeland Security and Governmental Affairs Committee (HSGAC), introduced S. 2145 , the Chemical Facility Anti-Terrorism Act, in December 2005, after holding four hearings to frame the problem and possible solutions. The bill was co-sponsored by Senator Lieberman, Ranking Member of the HSGAC. Congressmen Shays and Langevin introduced a companion bill, H.R. 4999 , in the House on March 16, 2006. The HSGAC amended and approved S. 2145 on June 15, 2006. The bill was reported on September 11, 2006. S. 2145 would direct the Secretary of DHS to promulgate rules for designating chemical sources for regulation, assigning sources to various risk-based tiers, and establishing performance-based security standards for each tier. Facilities would be considered for listing (i.e., designation) if they produced, used, or stored a substance of concern in a quantity equal to or greater than a threshold quantity. Substances of concern would be those that trigger risk management planning requirements under the Clean Air Act, Section 112(r), as well as ammonium nitrate and any other substance designated by the Secretary, based on the potential extent of death, injury, or serious adverse effects to human health and safety or the environment or the potential impact on national or economic security or critical infrastructure caused by a terrorist incident. Designated facilities would be assigned to risk-based tiers and required to complete and submit to DHS vulnerability assessments, security plans, and emergency response plans for terrorist incidents. DHS would be required to review these submissions. For facilities in the higher risk tiers, S. 2145 would require a written DHS determination to approve, disapprove, or modify facility assessments and plans within 21 months of the date of enactment (within nine months of the date when DHS issues regulations concerning assessments and plans). S. 2145 would establish a duty to report to DHS for facilities handling more than a threshold quantity of a designated substance of concern, and it would require plans to specify "steps taken by the chemical source to coordinate security measures and plans for response to a terrorist incident with Federal, State, and local government officials, including law enforcement and first responders." Plans would have to be "sufficient to deter, to the maximum extent practicable, a terrorist incident or a substantial threat of such an incident," and "include security measures to mitigate the consequences of a terrorist incident." S. 2145 would provide administrative, civil, and criminal penalties for facility owners or operators who failed to submit assessments or plans or to implement plans adequately. DHS would be authorized to issue an order for the chemical source to cease operation if the facility persisted in noncompliance with the requirements established under S. 2145 . Other S. 2145 provisions would require reports from DHS and GAO, establish a process by which any person may submit a report to DHS regarding vulnerabilities of a chemical source, and protect whistle-blowers from retaliation. The bill would mandate coordination with existing security and emergency response planning, including planning under MTSA. To that end, S. 2145 establishes regional security offices and area security committees and plans. State and local laws would not be preempted unless they were in "actual conflict" with the federal law. With respect to information protection, S. 2145 would prohibit DHS and other federal, state, and local agencies from releasing to the public vulnerability assessments, site security plans, security addenda to emergency response plans, area security plans, or materials developed or produced exclusively in preparation for assessments or plans. The introduced bill would have required public disclosure of written certifications of compliance by facility owners/operators, DHS certificates of compliance issued for individual sources, DHS orders issued for noncompliance, and lists of facilities for which DHS has issued an approval or disapproval, unless the Secretary determined that release of a particular record would increase security risk. This provision was modified during markup. As reported, S. 2145 would prohibit disclosure of such documents and would permit disclosure of certifications only if DHS determined that release would not increase security risk. S. 2145 also was modified with respect to judicial review of agency action. As introduced, the bill was silent, so that all final agency actions would have been subject to judicial review under the provisions of the generally applicable Administrative Procedure Act (5 U.S. C. §701 et seq.). However, S. 2145 , as reported, distinguishes between rulemaking and other final agency actions with respect to courts of jurisdiction, as well as parties authorized to act. S. 2145 would allow challenges to final rules only in the U.S. Court of Appeals for the District of Columbia, whereas challenges to any other final actions could be filed in district courts. In addition, S. 2145 , as reported, would authorize any person to file a petition for judicial review of a final regulation, but would authorize only the owner or operator of a chemical source to file a petition for review of a final agency action or order. Only that owner or operator and the Secretary would be authorized to participate in such civil action. Senator Lautenberg introduced the Chemical Security and Safety Act of 2006 ( S. 2486 ) on March 30, 2006. On introduction, the bill was co-sponsored by Senators Biden, Durbin, Kerry, Menendez, and Obama. The bill addresses security and safety at "stationary sources," which are facilities covered by the CAA Section 112(r)(2) and other facilities that the DHS Secretary designates as "high priority" that produce, process, handle, or store any "substance of concern." Substances of concern are defined as substances listed under the CAA Section 112(r)(3) in a threshold quantity or any other substance designated by the Secretary. For all stationary sources, S. 2486 would establish a general duty to— identify hazards that may result from a criminal release of a substance; ensure that the facility is designed, operated, and maintained in a safe manner; and reduce the consequences of a criminal release. Owners or operators would be required to involve employees in ensuring the "design, operation, and maintenance of safe facilities," an obligation that includes "to the maximum extent practicable" use of inherently safer technology (IST). IST is defined as the "use of a technology, product, raw material, or practice that, as compared to the technology, products, raw materials, or practices currently in use," "significantly reduces or eliminates the possibility of the release of a substance of concern, and" "significantly reduces or eliminates the hazards to public health and safety and the environment associated with the release or potential release." This definition includes such actions as "chemical substitution, process redesign, product reformulation, and procedural and technological modification." The DHS Secretary, in consultation with the EPA Administrator, would be directed to designate by rule at least 3,000 facilities handling substances of concern as "high priority categories," based on potential severity of harm; proximity to population centers; threats to national security; threats to critical infrastructure; threshold quantities of substances of concern that pose a serious threat; and other safety or security factors that the DHS Secretary, in consultation with the EPA Administrator, determines to be appropriate. S. 2486 also would require the Secretary to identify the 600 highest priority stationary sources. Each owner or operator of these high-priority facilities would be required to submit to DHS a written report that would include a vulnerability assessment, an assessment of the hazards, and a prevention, preparedness, and response plan that would incorporate the results of the assessments and meet requirements established by DHS. Each plan would have to include discussion of the practicability of implementing each element of "safe" facility design, operation, and maintenance. The bill also requires consultation with employees at the facility in developing the assessments and plan. S. 2486 requires the DHS Secretary to review each report submitted to determine whether it complies with DHS regulations, and to certify approval for compliant facilities. In addition, the bill directs the DHS Secretary to notify any owner or operator who submits a plan that is disapproved. S. 2486 would establish an information clearinghouse to assist facilities in complying with requirements. S. 2486 would provide administrative, civil, and criminal penalties for facility owners or operators who failed to comply with a compliance order or directive issued by the Secretary. If a threat of a terrorist attack is beyond the scope of a submitted prevention, preparedness, and response plan, or if current implementation of the plan is insufficient, DHS would be authorized to issue a compliance order. If a facility persisted in noncompliance, the Secretary would be authorized, after notifying the facility of that fact, to seek judicial relief to abate the threat. Such judicial relief could include an order to cease operation and such other orders as would be necessary to protect public health or welfare. The bill mandates annual employee training at all stationary sources with respect to the Act's requirements. At stationary sources with at least 15 employees, S. 2486 would establish Employees' Safety and Security Committees to identify, discuss, and make recommendations to owners or operators concerning potential hazards and risks relevant to security, safety, health, and the environment. These committees are to participate in developing, reviewing, and revising vulnerability assessments, hazard assessments, and prevention, preparedness, and response plans at their facilities. In addition, the bill would require notification and involvement of employees in facility inspections and investigations. S. 2486 provides extensive and detailed protection for whistle-blowers who might report problems at their facilities to authorities. Penalties for employers who do not comply with worker protections increase with repeated violations. S. 2486 does not require owners or operators of chemical sources to notify DHS when there are changes affecting the source's security. However, the bill does require updates for vulnerability assessments and security plans on a regular basis. S. 2486 mandates coordination of implementation of requirements with the Maritime Transportation Security Act of 2004 (MTSA; P.L. 108-293 ) and requires that the DHS Secretary minimize duplication of the requirements for risk assessment and response plans under other federal law. S. 2486 would protect DHS from public disclosure requirements under the federal Freedom of Information Act for "all documents provided to the DHS Secretary under this Act, and all information that describes a specific vulnerability or stationary source derived from those documents," with a few exceptions, such as compliance certifications by the DHS Secretary. No similar protection is provided for information at other federal agencies, but state and local government agencies are protected from disclosure requirements of all federal, state, and local laws. S. 2486 does not authorize penalties for disclosure of protected information by federal employees. On June 28, 2006, Representative Daniel E. Lungren, Chairman of the House Subcommittee on Economic Security, Infrastructure Protection, and Cybersecurity, Committee on Homeland Security, introduced H.R. 5695 . The Subcommittee held a hearing on the bill June 29, 2006, and approved it, amended, July 11, 2006. On September 29, 2006, the House Homeland Security Committee reported an amended version of the bill, and the House Committee on Energy and Commerce was granted an extension until November 17, 2006, of its referral for consideration of the bill. Similar in many ways to S. 2145 , H.R. 5695 is described as more "streamlined," but it also includes provisions not in S. 2145 . H.R. 5695 , as reported, would amend the Homeland Security Act of 2002 (6 U.S.C. 101 et seq.) by adding at the end a new title. It would authorize the Secretary of Homeland Security to designate chemical substances of concern and threshold quantities for regulation. In designating or exempting substances and setting threshold quantities, the Secretary would be required to consider "the potential extent of death, injury, or serious adverse effects to human health, the environment, critical infrastructure, national security, the national economy, or public welfare that would result from a terrorist release of the chemical substance." The Secretary would be required to keep a list of chemical facilities that have more than the threshold quantity of any substance of concern, as well as other facilities the Secretary may choose to designate "significant." Each selected facility would have to be assigned to one of at least four risk-based tiers. H.R. 5695 would require the Secretary, within a year of enactment, to prescribe regulations to establish standards, protocols, and procedures for vulnerability assessments and facility security plans that might be required for listed facilities. Regulations must be risk-based and performance-based and must take into consideration, among other factors, the cost and technical feasibility of compliance. H.R. 5695 also requires the Secretary to establish security performance requirements for security plans in each tier. The bill requires the owner or operator of a facility assigned to the high-risk tier to conduct a vulnerability assessment and to prepare and implement a facility security plan. Owners or operators or high-risk facilities must submit assessments and plans within six months of the date on which regulations are prescribed. H.R. 5695 would exempt facilities subject to the Public Health Security and Bioterrorism Preparedness and Response Act or the MTSA from additional requirements for submitting vulnerability assessments and security plans to DHS, unless the Secretary finds that the facility requires more stringent security measures. The DHS Secretary, or a designated third-party entity, would be directed to review and approve or disapprove plans and assessments for facilities within 180 days of receiving such documents. The Secretary would be required to disapprove an assessment or plan if it did not comply with regulations or was insufficient to address vulnerabilities identified in the assessment or a threat to the facility. As reported, H.R. 5695 would allow the DHS Secretary to require a high-risk facility to use inherently safer technology (IST), if the Secretary determined that incorporation of IST into the facility would significantly reduce the consequences of terrorist actions, would be feasible, and would not significantly impair the ability of the owner to continue in business. Written notice of disapproval of a security plan must be provided to an owner or operator. The bill explicitly denies any private right of action against an owner or operator to enforce any provision of the Act. A facility owner or operator would have the right to appeal to a chemical security review board a decision of the Secretary with respect to the use of IST. H.R. 5695 would establish a process by which any person might report problems or vulnerabilities at a chemical facility, and for employees, the bill provides protection against retaliation by the employer. Administrative, civil, and criminal penalties for noncompliance with the provisions of this law would be authorized. A chemical facility owner or operator would have the right to a formal hearing to dispute a penalty for a violation. State and local laws would not be preempted by the law, unless they "may frustrate the purposes of this title or any regulations or standards prescribed under this title." As amended, the bill would specify that it did not prevent a state from enacting or enforcing a law or regulation related to environmental protection, health, or safety. The bill directs the Secretary to prevent disclosure of protected information by any federal agency under FOIA or under any state or local law. Protected information would include the criteria and data used to assign facilities to risk-based tiers and the tier assignments for specific facilities, vulnerability assessments, facility security plans, assessments of IST, security performance requirements for a facility, and any other information generated or collected by a government agency or a chemical facility to fulfill requirements of this title if it describes any vulnerability, describes the assignment of a facility to a risk-based tier, describes a security measure for the protection of a chemical facility from terrorism, or if "the disclosure of which the Secretary determines would be detrimental to the security of any chemical facility." H.R. 5695 also establishes a procedure for certifying third-party auditors under the Homeland Security Act, Section 863-864. As reported, the bill includes provisions to reduce the potential for a conflict of interest for auditors. As reported, H.R. 5695 would establish an Office of Chemical Facility Security at DHS. As the 109 th Congress drew to a close, the Senate and House passed the DHS appropriations bill for 2007, H.R. 5441 , which included certain provisions found in H.R. 5695 , as reported by the House Committee on Homeland Security, and S. 2145 , as reported by the Senate Committee on Homeland Security and Governmental Affairs. The law, P.L. 109-295 , provides authority to DHS for three years to issue regulations for high-risk chemical facilities, other than drinking water and wastewater treatment facilities and facilities in ports. DHS is directed to establish risk-based security performance standards for such facilities, and designated chemical facilities are required to prepare vulnerability assessments and facility security plans. DHS has authority to inspect facilities and order compliance. Failure to comply with an order may be punished with a civil penalty of $25,000. There are no criminal penalties for noncompliance, although criminal penalties are authorized for unauthorized disclosure of "protected information." In the event of repeated compliance failures, DHS may order a facility to cease operations. The law is silent on numerous issues, including the criteria for weighing risks of various facilities, federal preemption of state and local right-to-know laws, how to facilitate congressional oversight, and the role of IST. Two other chemical facility security bills in the House were similar to proposals in the 108 th Congress. H.R. 1562 was introduced by Representative Fossella. It offers an approach somewhat similar to that of S. 994 , as reported in the 108 th Congress. H.R. 1562 would make DHS the lead agency overseeing chemical facility security, but it would require consultation between DHS and EPA. The bill would give the DHS Secretary discretionary authority to select facilities that should conduct vulnerability assessments and security planning, but it would require designation of high-priority facilities. H.R. 1562 would exempt from its requirements drinking water treatment facilities required to conduct vulnerability assessment under the Safe Drinking Water Act and facilities subject to the MTSA, unless the owner or operator of such a facility petitioned the Secretary to be subject to the requirements of this act in lieu of the former act. Vulnerability assessments and plans would be focused in H.R. 1562 on security (i.e., hardening) and emergency measures, in order to prevent and respond to releases caused by terrorism, rather than on inherent safety measures that might reduce the consequences of an unauthorized release, regardless of cause. H.R. 1562 also would protect from public disclosure under FOIA and state and local disclosure laws the certification documents submitted by facility managers indicating that they have complied with assessment, planning, and implementation requirements. (This is in addition to a provision that protects from public disclosure information related to vulnerability assessments and security plans.) H.R. 1562 also would withhold such information from civil judicial or administrative proceedings (except with respect to compliance with the chemical facility security legislation), thus shielding facility owners from lawsuits based on those documents. Criminal penalties are provided for unauthorized knowing disclosure of protected information by government officials. H.R. 1562 would authorize DHS to disapprove any assessment or plan and to order revision if it did not comply with regulations, or if the plan or implementation were insufficient to address the results of a vulnerability assessment or a threat of a terrorist release. Civil, but not criminal, penalties would be available if facility owners or operators failed to comply with an administrative order. H.R. 2237 (introduced by Representative Pallone and similar to S. 157 / H.R. 1861 in the 108 th Congress) would build on existing EPA authority to oversee chemical facilities but would require consultation with DHS. It would require EPA to designate "certain combinations of chemical sources and substances of concern" as high priority categories based on the severity of the threat posed by an unauthorized release, proximity to population centers, and other criteria. Owners and operators of facilities within high priority categories would be required to conduct vulnerability assessments, identify hazards, and prepare prevention, preparedness, and response plans to eliminate or significantly lessen the potential consequences of an unauthorized release. Plans would be required to incorporate inherently safer technology, if practicable. Copies of vulnerability assessments and plans would be submitted to EPA and updated periodically. H.R. 2237 would protect vulnerability assessments and plans from public disclosure under FOIA, but H.R. 2237 would allow disclosure of information under state or local laws, if the state or local government received the information independently of DHS. H.R. 2237 would direct EPA to review each assessment and plan, determine compliance, and certify that determination. EPA would be authorized to issue compliance orders 30 days after notifying a chemical source that its assessment or plan was inadequate and offering compliance assistance, if the plan was not revised to comply with EPA requirements. If DHS notified a chemical source that its plan or implementation was insufficient to address a threat of terrorist attack, and the chemical source took inadequate action in response to that notice, DHS would be authorized to secure necessary relief to abate the threat from a district court in the district where the threat existed. In addition to these comprehensive proposals to enhance the security of chemical facilities, bills have been introduced that address a specific category of facility or chemical. For example, S. 2052 / H.R. 713 would provide a tax credit to agricultural businesses for security enhancements. S. 1995 and S. 2781 address the security of wastewater treatment facilities. S. 2781 was reported by the Senate Committee on Environment and Public Works on September 21, 2006. S. 2855 would require community drinking water and wastewater treatment facilities to replace hazardous gaseous chemicals, such as chlorine gas, with IST. H.R. 3197 / S. 1141 and H.R. 1389 aim to secure supplies of ammonium nitrate, an explosive. H.R. 3197 was approved by the House Homeland Security Committee on June 14, 2006. Some of the provisions of H.R. 3197 / S. 1141 were incorporated as an amendment into S. 2145 on June 15, 2006, by the Senate HSGAC. On July 14, 2005, the Senate unanimously agreed to an amendment to H.R. 2360 , the Department of Homeland Security Appropriations Act for 2006, expressing the "Sense of the Senate that Congress should pass legislation establishing enforceable federal standards to protect against a terrorist attack on chemical facilities within the United States." The conference report on H.R. 2360 , which became P.L. 109-90 on October 18, 2005, included the same support for legislation and added a requirement for DHS to submit a report to the Appropriations Committees by February 10, 2006, "on the resources needed to implement mandatory security requirements ... and to create a system for auditing and ensuring compliance with the security standards." The conferees also directed the Secretary to complete vulnerability assessments of the highest risk chemical facilities by December 2006 and to complete a national security strategy for the chemical sector by February 10, 2006. The threat of terrorism in the United States challenges the existing balance maintained in federal laws between the public's right to know about chemical hazards and the chemical industry's right to protect confidential business information. At issue are risks to public health and safety, environmental protection, civil rights and duties, national security, and privacy. Some are advocating a strategy of relative risk analysis and analysis of risk management options to reveal the best course of action. However, information appears to be inadequate for quantitative evaluation of the risks of chemical releases, whether deliberate or accidental, and the nature of terrorism makes prediction difficult. Moreover, there is no universally accepted level of tolerable risk, no obvious basis for a comparison of relative risks and benefits, and no established federal mechanism for ensuring responsible management of the risks of chemical terrorism. A variety of federal policy options are available for enhancing chemical security. In choosing among options, policy makers face three key issues: how to evaluate the risks versus the benefits of public disclosure; how to determine and prioritize the relative importance of diverse risks; and who to hold responsible for achieving results. Section 550 of P.L. 109-295 , the FY2007 DHS appropriation, resolved these issues temporarily by providing three years of regulatory authority for DHS. The law requires vulnerability assessments for high-risk chemical facilities and implementation of security plans to address hazards revealed in such assessments. Other legislative proposals that were considered by the 109 th Congress would have done the same, but also addressed issues such as how to facilitate congressional oversight of DHS implementation, the role of inherently safer technology, the criteria used to designate facilities as more or less "risky," and whether state and local right-to-know laws should be preempted by the federal provisions. It remains to be seen whether Congress will tackle such issues in the future. CRS Report RL31547, Critical Infrastructure Information Disclosure and Homeland Security , by [author name scrubbed] and [author name scrubbed]. CRS Report RL31861, High-Threat Chemical Agents: Characteristics, Effects, and Policy Implications , by [author name scrubbed]. CRS Report RL31542, Homeland Security — Reducing the Vulnerability of Public and Private Information Infrastructures to Terrorism: An Overview , by [author name scrubbed]. CRS Report RL33043, Legislative Approaches to Chemical Facility Security , by [author name scrubbed]. CRS Report RL31294, Safeguarding the Nation ' s Drinking Water: EPA and Congressional Actions , by [author name scrubbed]. CRS Report RL32189, Terrorism and Security Issues Facing the Water Infrastructure Sector , by [author name scrubbed].

Facilities handling large amounts of potentially hazardous chemicals (i.e., chemical facilities) might be of interest to terrorists, either as targets for direct attacks meant to release chemicals into the community or as a source of chemicals for use elsewhere. Because few terrorist attacks have been attempted against chemical facilities in the United States, the risk of death and injury in the near future is estimated to be low, relative to the likelihood of accidents at such facilities or attacks on other targets using conventional weapons. For any individual facility, the risk is very small, but the risks may be increasing—with potentially severe consequences for human health and the environment. Available evidence indicates that many chemical facilities may lack adequate safeguards. After 9/11, Congress enacted legislation that requires the Department of Homeland Security (DHS) to analyze vulnerabilities and suggest security enhancements for "critical infrastructure." The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 ( P.L. 107-188 ) and the Maritime Transportation Security Act (MTSA, P.L. 107-295 ) require vulnerability assessments and emergency response plans for some chemical facilities that supply drinking water or are located in ports, as well as security plans for chemical facilities in ports. Many other chemical facilities, including wastewater treatment facilities, remain unregulated. Congress could choose to rely on existing efforts in the public and private sectors to improve chemical site security over time. Alternatively, Congress could direct DHS to oversee security enhancement at potentially dangerous facilities. Or, Congress might enact legislation to reduce risks, either by "hardening" defenses against terrorists (for example by increasing security patrols) or by requiring industries to consider use of safer chemicals, procedures, or processes. Restricting terrorists' access to information might be a least-cost approach to reducing risks, but it would also limit public access to information about potential risks and reduce accountability of facility owners. For more on this topic, see CRS Report RL33043, Legislative Approaches to Chemical Facility Security , by [author name scrubbed]. The 109 th Congress enacted chemical security legislation as Section 550 of the DHS appropriations legislation, P.L. 109-295 . The law provides authority to DHS for three years to regulate high-risk chemical facilities other than drinking water and wastewater treatment facilities and facilities in ports. The enacted provisions also are found in H.R. 6348 . These provisions combine certain elements of H.R. 5695 , as reported by the House Homeland Security Committee, and S. 2145 , as reported by the Senate Committee on Homeland Security and Governmental Affairs. For example, the enacted law directs DHS to establish risk-based security performance standards for facilities, and requires facility owners or operators to prepare vulnerability assessments and facility security plans. The new law also authorizes DHS to inspect facilities and to close down any that are repeatedly noncompliant. However, the law did not address the most controversial issues: whether state laws are preempted and whether facilities should be required to consider use of inherently safer technology.

R ecent tax reform discussions have included possibly changing the tax treatment of business net operating losses (NOLs). How losses are treated for tax purposes can have important conse quences for business investment, economic efficiency, and tax revenues. This report provides an overview of the current tax treatment of NOLs as well as a brief legislative history. The report also explains how losses can be used to smooth income and tax liabilities. The report concludes by reviewing several policy options and considerations that Congress may find useful as it continues to debate tax reform. A business incurs an NOL when its taxable income is negative. The year in which the NOL is realized is referred to as a "loss year." Businesses have no tax liability in a loss year. In addition, under current law a business can use an NOL to obtain a refund for taxes paid in prior years or to reduce taxes owed in the future. Using an NOL to obtain a refund for past taxes paid is known as carrying back a loss, whereas using an NOL to reduce future taxes owed is known as carrying forward a loss. An NOL can generally be carried back for up to two years and may be carried forward for up to 20 years. Losses may not be used to offset more than 90% of a taxpayer's alternative minimum taxable income (AMTI) in any one year. The Internal Revenue Code (IRC) lists several exceptions to the general two-year carryback and 20-year carryforward treatment. For example, losses resulting from a casualty, theft, or a federally declared disaster are eligible to be carried back three years. Farming losses may be carried back five years. Losses resulting from a specified liability loss may be carried back 10 years. Real estate investment trusts (REITs) are not allowed to carryback an NOL, but are entitled to carry a loss forward for up to 20 years. Current law stipulates that a loss is to be first carried back to the two years preceding the loss year, beginning with the earliest year (subject to the waiver provision discussed below). If the carryback does not fully exhaust the NOL, the remaining portion is then carried forward. To carry back a loss, a taxpayer must file either an amended income tax return, or an application for tentative refund. The taxpayer uses the appropriate form to first recalculate their tax liability for the earliest eligible carryback year. This calculation involves claiming the loss as part of that year's tax deductions. The taxpayer then receives the difference between the actual taxes paid in the previous year and the new tax liability resulting from the NOL carryback as a refund. To carry a loss forward, a taxpayer claims the loss as a deduction against future income on their tax return, thus reducing the tax owed. A taxpayer may irrevocably waive the carryback period. Any losses are then carried forward in a manner similar to the one described above. A taxpayer expecting to be in a considerably higher future tax bracket may find it beneficial to waive the carryback. In general, however, a taxpayer will prefer to carry back an NOL rather than carry it forward. A carryback allows for an immediate benefit whereas a carryforward reduces future taxes. Valuing a future tax reduction requires discounting the tax savings to determine its "present," or economic, value. The need to discount a future tax reduction results in the economic value of a loss that is carried back exceeding the economic value of that same loss being carried forward. A carryback, additionally, provides a certain tax refund whereas a carryforward reduces a tax liability at some potentially uncertain time in the future. The ability to use losses to offset income earned in other years can be traced back to the Revenue Act of 1918, which first allowed for a one-year carryback and one-year carryforward. The carryback and carryforward periods have varied since then, with the longest carryback period, outside of temporary changes or special exceptions previously mentioned, being three years and the longest carryforward period being the current policy of 20 years. The current general NOL regime was instituted in 1997 with the Taxpayer Relief Act of 1997 ( P.L. 105-34 ). The act shortened the carryback period from three years to two and extended the carryforward period from 15 years to 20 years. Since 1997, changes to the carryback period have either involved temporary extensions or targeted provisions. For example, in response to the severe economic downturn associated with the financial crisis, the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) provided business taxpayers with $15 million or less in gross receipts an opportunity to extend the NOL carryback period for up to five years. Later that same year, the Worker, Homeownership, and Business Assistance Act of 2009 ( P.L. 111-92 ) extended the provision to all business taxpayers except those who had received certain federal assistance relating to the financial crisis. The NOL carryback period was also temporarily extended to five years for losses incurred in 2001 and 2002 as part of the Job Creation and Worker Assistance Act of 2002 ( P.L. 107-147 ). The extension was intended to assist businesses through the 2001 recession. In response to the destruction caused by Hurricanes Katrina, Rita, and Wilma, the Gulf Opportunity Zone Act of 2005 ( P.L. 109-135 ) extended the carryback period from two to five years for qualified losses occurring in the Gulf Opportunity Zone (or GO Zone) and suspended the 90% AMT offset limitation. In addition, the act expanded the list of acceptable deductions used for determining NOLs in the GO Zone, effectively increasing the amount of losses a taxpayer could recover. In the 105 th Congress, the Tax and Trade Relief Act of 1998 ( P.L. 105-277 ) included a provision targeted toward farmers. Specifically, the act permanently extended the NOL carryback period for losses relating to farming to five years. An example may help illustrate the basic calculations involved in carrying back an NOL and demonstrate how carrybacks allow for income smoothing. Table 1 provides information about two hypothetical firms. The total business income, costs and deductions, and taxable income of both firms are exactly the same over a two-year period. The firms differ, however, in the timing of their annual income and costs. It is assumed for this example that both firms face a 35% tax rate. Firm A's taxable income in each year is $25 million. Therefore, each year Firm A pays $8.75 million ($25 million × 35%) in corporate income taxes, for a total two-year tax liability of $17.5 million. Firm A has no NOL in either year so its tax liability with and without NOL carrybacks is the same. Firm B has taxable income equal to $75 million in year one, but incurs an NOL equal to $25 million in year two. Firm B must pay $26.25 million ($75 million × 35%) in taxes in year one. If Firm B is not permitted to carryback its year-two NOL, its total two-year tax liability will equal taxes paid in year one—$26.25 million. If, however, Firm B is allowed to carry back its year-two NOL, it will be able to receive a partial refund for taxes paid in year one and reduce its total tax bill. To carry back its year-two loss, Firm B will recalculate its year-one tax liability by subtracting its $25 million loss from its $75 million year-one taxable income and applying the 35% corporate income tax rate. The recalculated year-one tax liability is found to be $17.5 million ($50 million × 35%). Firm B is then entitled to receive as a refund in year two, the difference between taxes actually paid in year one and the new recalculated tax liability. The refund paid to the firm in year two as a result of its NOL is thus $8.75 million ($26.25 million - $17.5 million). And its total tax liability is $17.5 million, or exactly the same as Firm A, which is in-line with both firms having the same total two-year taxable income. Additionally, allowing Firm B the opportunity to carry back its loss allowed it to smooth its income. It was briefly mentioned previously that carrybacks are generally more valuable than carryforwards due to the need to discount future refunds and because of uncertainty over when the taxpayer would have taxable income to offset in the future. This difference in values can be demonstrated by extending the previous example by one year and comparing the value of Firm B's $25 million loss if it were carried forward versus if it were carried back. If Firm B were to carry its loss forward it would use it to reduce its year-three taxes by $8.75 million ($25 million × 35%) instead of receiving a refund of $8.75 million if it carried the loss back to year one. Thus, the nominal value of the refund for paid taxes by carrying back the loss is identical to the reduction in future taxes by carrying it forward, $8.75 million. However, because Firm B must wait one year to take advantage of the NOL, its true economic value is actually less than $8.75 million The economic value of an $8.75 million reduction in taxes one year in the future is determined by its "present value." The formula for calculating the present value (PV) of an amount equal to $X that is to be received N years in the future is where r is the return on investment that could be earned (e.g., an interest rate). In the current example N is equal to one. If we assume for this example that the rate of return is 5%, then the PV of an $8.75 million reduction in taxes that is to be realized in one year due to a carryforward is In contrast, the present value of an $8.75 million refund in taxes from carrying the loss back is simply $8.75 million because it is received immediately and therefore does not need to be discounted. Hence, Firm B would prefer to carry its loss back instead of forward because it has greater value to the company. It may be the case, however, that a loss must be carried forward because a firm has had little or no income in recent years that a loss can be used to offset. This is most likely to happen with start-ups and firms that are financially struggling. In some cases, these firms may never be able to carry their losses forward if they eventually go out of business. The following options and considerations could be helpful to policymakers interested in changing the treatment of NOLs. The intent of allowing loss to be carried back and carried forward is to give taxpayers the ability to smooth out changes in business income, and therefore taxes, over the business cycle. Extending the carryback period would enhance the ability to smooth income by allowing losses to be offset against a longer period of past profits rather than having them carried forward. The extension would, however, increase revenue losses to the federal government. Economic theory suggests that, under certain conditions, extending the carryback period indefinitely would minimize the distorting effects taxation has on investment decisions and, in turn, increase economic efficiency. With loss carrybacks, the government effectively enters into a partnership with businesses making risky investments, sharing both the return to investment (tax revenue gain) and the risk of investment (tax revenue loss). Extending the carryback period indefinitely would reduce the tax burden on these investments and reduce the private risk associated with investing, presumably resulting in greater investment. The reduction in private risk would be shifted to the government. Gains in economic efficiency would be possible if the government is able to spread that risk better than private markets. There may be practical limitations that prevent the indefinite carryback of NOLs. For example, allowing indefinite carrybacks would result in a large negative revenue effect, particularly during an economic downturn. Some have noted that encouraging investors to undertake risky investments is generally highly desirable, except in periods of acute economic boom. It could be argued that in an extremely expansionary period investors are already making sufficiently risky investments and that adding further incentives to take on more risk could be unnecessary and economically inefficient. Although an indefinite carryback period may be practically infeasible, extending the NOL carryback period could increase the ability for businesses to smooth their incomes more effectively and promote investment-related risk reduction over the business cycle. Since World War II the duration of the average business cycle has been approximately six years. Extending the NOL carryback period to at least the length of the typical business cycle would, arguably, allow for more income smoothing and risk reduction. The value of carrying losses forward could be enhanced if losses were permitted to accrue interest. Currently, if a business is unable to fully utilize its losses by offsetting income earned in the past two years, it may carry them forward for up to 20 years. As previously shown, losses carried forward are generally not as valuable as those carried back. To compensate for loss in value, the government could allow losses to earn interest until they are claimed in the future. For practical purposes the government could consider allowing losses to accrue interest at an approximate market rate. While paying interest on losses carried forward would help create parity between the value of loss carrybacks and carryforward and thus benefit some business taxpayers, there could be situations where this modification would have no impact. For example, for a firm to benefit from carrying a loss forward it must have a tax liability at some point in the future. New businesses and those experiencing financial problems may have no income to benefit from carrying back a loss, and also a low probability of generating income in the future for some time. In extreme cases, these firms may not benefit from carrying losses forward, with or without interest, if they go out of business. House Speaker Paul Ryan's "A Better Way" blueprint proposes eliminating the loss carryback period and allowing losses to be carried forward indefinitely while accruing interest. The proposal is part of a more general tax reform framework that includes, among other things, the introduction of a destination-based cash flow tax (DBCFT) with a border adjustment. The restriction on loss carrybacks may have been due to concern that large exporting companies would generate significant tax losses as a result of the adjustment. Not allowing any loss carryback would negatively impact the ability of some firms that have been profitable in the past to smooth their income or address cash-flow problems. The restriction on loss carrybacks could also increase effective tax rates for affected businesses. At the same time, as with the analysis just presented, paying interest on carryforwards would help some business taxpayers. As an alternative to a carryback and carryforward regime, Congress could allow taxpayers to receive a tax refund in the year losses were incurred. That is, instead of requiring taxpayers to use losses to refund past taxes or reduce future taxes, losses could be recouped in the current year via a refund equal to the tax value of the loss in the year it was incurred. For example, at a tax rate of 20% a taxpayer incurring a loss of $10,000 would receive a refund check from the government equal to $2,000 ($10,000 × 20%). Since losses are typically viewed as a type of expense, and most expenses are deductible in the year they are incurred, tax refunds for losses can be argued to align the treatment of losses with how other expenses are treated. Additionally, it has been argued that allowing tax refunds for losses is simply the opposite of taxing profits when they are realized. Allowing losses to be refunded presents tradeoffs. On the one hand, startups, which frequently incur losses in their first several years of operations, and otherwise financially struggling firms would benefit more from loss refunds than from the current carryback/carryforward system. This is because it would provide them with an immediate benefit rather than having to wait until some uncertain point in the future to deduct their losses. On the other hand, refunding losses would likely result in large revenue losses. Moving to a refund system would require determining the rate at which to value tax losses. Because businesses in a loss position do not have a tax liability there is currently not an obvious tax rate at which losses would be refundable. One option would be to apply the current income tax rate schedule in reverse. For most corporations this means losses would be refunded at a flat 35%. For pass-throughs (sole proprietorships, partnerships, and S corporations) the refund structure could be varied since pass-through income is taxed at the individual marginal tax rates of each owner, partner, or shareholder, which increase with a taxpayer's income. Alternatively, the refund rate could be set at a flat rate for all taxpayers. Refunding losses could, however, lead to tax sheltering behavior. Establishing a business (on paper) is relatively easy. Without the proper anti-abuse provisions in place, there may be attempts to generate paper losses solely for the purposes of offsetting income earned elsewhere. Policymakers could implement rules similar to passive activity loss limits that were established as part of the Tax Reform Act of 1986 ( P.L. 99-514 ) to help curtail tax sheltering that was occurring prior to the act.

Tax reform could result in any number of changes to current tax policy. One modification that could occur is the tax treatment of net operating losses (NOLs). An NOL is incurred when a business taxpayer has negative taxable income. A business has no tax liability in the year they incur a loss. Additionally, a loss can be "carried back" for a refund on taxes paid in the past two years or "carried forward" for up to 20 years to reduce future taxes. The intent of the NOL carryback and carryforward regime is to give taxpayers the ability to smooth out changes in business income, and therefore taxes, over the business cycle. Allowing losses to offset past or future income may also reduce the distorting effects of taxation, and promote investment and economic efficiency. This report provides an overview of the current tax treatment of NOLs as well as a brief legislative history. The report also explains the mechanics by which losses can be used to receive a refund for taxes paid in the past, or to reduce taxes owed in the future. The report concludes by reviewing several policy options and considerations that Congress may find useful as they continue to debate tax reform, including extending the carryback period, allowing an immediate tax refund for losses, and allowing interest to accrue on losses that are carried forward. Any of these changes could enhance the ability to smooth income and economic efficiency depending on their design, but would also reduce federal revenue. This report will be updated in the event of legislative changes.

On October 18, 1999, the Conference Committee approved a FY2000 CJS bill totaling $39 billion--$2.8 billion (or 7.7%)above the FY1999 appropriation and $1.3 billion below the President's request. The bill passed the House andSenate,without amendment, on October 20. The President vetoed the bill on October 25, because, among other things, it(1) didnot provide enough money for his community policing program (better known as the COPS program), (2) containednofunding for its lawsuit against the tobacco industry, and (3) did not provide adequate funding for direct payment ofduesand arrears to the United Nations and for other peacekeeping operations abroad. Following negotiations between congressional leaders and the White House, these issues and number of other issues wereapparently resolved. A second CJS bill approved by Conference ( H.Rept. 106-479 ) included in H.R. 3194 ,the Consolidated Appropriations Act for FY 2000, was passed by the House on November 18, 1999. The numberfor theCJS bill is H.R. 3421 , which is in Division B of H.R. 3194 , Section 1000(a). The legislation waspassed by the Senate on November 19, 1999. The bill approves total funding of $39.63 billion which is about $625millionabove the level initially approved by Congress, $3.4 billion (or 9.5%) above the FY1999 appropriation, and $920millionbelow the President's request. The President signed the bill into law on November 29, 1999 ( P.L. 106-113 ; 113 Stat.1501 ). This report tracks legislative action by the first session of the 106th Congress on FY2000 appropriations fortheDepartments of Commerce, Justice, and State, the Judiciary, and other related agencies (often referred to as CJSappropriations). Congress appropriated $36.2 billion for these agencies in FY1999 ( P.L. 105-777 ; H.R. 4328 ). (1) The President's FY2000 budget sent toCongress on February 1, 1999, requested about $40.5 billion for theseagencies, about a $4.3 billion increase or 12.0% above the FY1999 total. (2) Among the major agencies, this request calledfor substantial increases in appropriations for the Departments of Commerce and State, and a moderate increase fortheDepartment of Justice. The Senate, on July 22, 1999, approved a total of $35.4 billion, $5.2 billion below the Administration's request and $813million below the FY1999 appropriation ( S. 1217 , S.Rept. 106-76 ). On August 5, 1999, the House approveda total of $37.7 billion ( H.R. 2670 , H.Rept. 106-283 ), $2.9 billion below the President's request, $2.3 billionabove the level approved by the Senate and $1.5 billion above the FY1999 appropriation. This amount included$4.5billion for the decennial census, designated as emergency spending. The Senate measure did not include thisfunding. (3) OnOctober 18, the Conference Committee approved a CJS bill totaling $39 billion--$2.8 billion above the FY1999appropriation and $1.5 billion below the President's request. The bill was approved in the House and Senate,withoutamendment, on October 20, 1999. (4) The Presidentvetoed the bill on October 25, because, among other things, it (1) didnot provide enough money for his community policing program (better known as the COPS program), (2) containednofunding for its lawsuit against the tobacco industry, and (3) did not provide adequate funding for direct payment ofduesand arrears to the United Nations and for other peacekeeping operations abroad. Following negotiations between congressional leaders and the White House, these issues were apparently resolved. Asecond CJS bill approved by Conference ( H.Rept. 106-479 ) included in H.R. 3194 , the ConsolidatedAppropriations Act for FY 2000, was passed by the House on November 18 by a vote of 296-135, and the SenateonNovember 19, 1999 by a vote of 74-24. (5) The numberfor the CJS bill is H.R. 3421 which is in Division B of H.R. 3194 , Section 1000(a). The President signed the bill into law on November 29, 1999. ( P.L. 106-113 ). (6) The law approves total funding of $39.63 billion which is about $625 million above the level initially approved byCongress, $3.4 billion (or 9.5%) above FY1999 appropriation and $920 million below the President's request. Government-wide rescissions. It is important to note that the ConsolidatedAppropriations Act also includes a provision which mandates a 0.38 percent government-wide recission ofdiscretionarybudget authority for FY2000. The Act further provides in carrying out these rescissions: (1) no program, project or activity of any department, agency, instrumentality or entity may be reduced by more than 15percent (with "programs, projects, and activities" as delineated in the appropriations Act or accompanying reportfor therelevant account, or for accounts and items not included in appropriations Acts, as delineated in the most recentlysubmitted President's budget), (2) no reduction shall be taken from any military personnel account, and (3) the reduction for the Department of Defense and Department of Energy Defense Activities shall be applied proportionately to all Defense accounts. The Act provides further that the Director of the Office of Management and Budget shall include in the President's budgetsubmitted for fiscal year 2001 a report specifying the reductions made to each account pursuant to requirements ofthisprovision this section (Section 301 (a) of H.R. 3425 , included in H.R. 3194 ). (7) On January 10, 2000, the White House released a fact sheet prepared by the Office of Management and Budget (OMB)which provides a general statement of actions taken by the Administration to comply with the government-widerescissionsrequirements of the Section 301 (a) of the act (included in H.R. 3194 ). To achieve the 0.38 cut, theAdministration stated it had achieved total savings of $2.356 billion, including cuts of $478 million inCongressionalearmarks (involving 2,372 projects), $192.5 from salaries and expenses, and $1.7 billion in government programs. The fact sheet did not provide further details on cuts for all federal agencies. These cuts will be reflected in agency totalsfor FY2000 contained in the forthcoming budget request of the President for FY2001. As part of the budget process, the Government Performance and Results Act (GPRA) enacted by Congress in 1993( P.L.103-62 ; 107 Stat 285) requires that agencies develop strategic plans that contain goals, objectives, andperformancemeasures for all major programs. The GPRA requirements apply to nearly all executive branch agencies, includingindependent regulatory commissions, but not the judicial branch. According to the President's FY2000 budgetrequest toCongress, all agencies have sent their strategic plans to Congress and are now in the process of preparing annualperformance goals they plan to meet in 2000. The request goes on to say that: "In 2000. . . agencies will submit tothePresident and Congress annual reports...that compare actual and target performance levels and explain any differencebetween them." (8) Brief descriptions of the strategicplans of the major agencies covered by CJS appropriations arecontained in the discussions of the FY2000 budget requests of individual agencies included in this report. The more contentious issues that were given consideration in the House and Senate debate over FY2000 CJS appropriations included: The conduct of the 2000 decennial census, including whether statistical sampling should be used by the Census Bureau of the Department of Commerce to derive population data for purposes other than reapportioningtheHouse of Representatives. The adequacy of funding the Department of Justice's COPS program to hire new police officers at the community level. Changing the focus and levels of appropriations for DOJ's Office of Juvenile Justice and Delinquency Prevention (OJJDP). Neither the 104th nor the 105th Congress reauthorized the JuvenileJustice and DelinquencyPrevention Act of 1974, as amended. Determining the level of INS detention capacity necessary to comply with the statutory mandate that certain criminal aliens be detained until deported; The payment of arrears to the United Nations. The payment of embassy security measures through an advanced appropriation; How much funding was required to maintain essential services, operations and court security in the lower courts. Other issues that received attention include the following. Department of Justice: Extending the 1994 Crime Act funding authorizations beyond FY2000 under the Violent Crime Reduction Trust Fund (VCRTF). Eliminating most funding under the 1994 Crime Act for Title III crime prevention programs. Increasing funding for drug-related efforts, especially interdiction, among the Department of Justice (DOJ) agencies, now that the 105th Congress has reauthorized the Office of National Drug ControlPolicy. Funding for programs that would reduce violence in schools. Determining the severity of INS budget overruns in FY1999 due to overhiring in FY1998 and other mandatory costs, e.g., rents and telecommunications. Reducing pending case loads in immigration-related claims, particularly naturalization cases. Meeting the statutory mandate that the Border Patrol be increased by 1,000 agents in FY2000. Restructuring INS internally as proposed by the Administration or dismantling the agency by legislation. Department of Commerce: Progress made in the streamlining and downsizing of Department programs and operations. Funding needs of the Bureau of the Census in conducting the forthcoming decennial (Year 2000) census. Extent to which federal funds should be used to support industrial technology development programs at the National Institute of Standards and Technology (NIST), particularly the Advanced TechnologyProgram. Appropriateness of the Administration's proposal to increase funding for public broadcast facilities, planning, and construction at the National Telecommunications and Information Administration(NTIA). The extent to which the National Oceanographic and Atmospheric Administration (NOAA) would implement a number of new ongoing Presidential initiatives to protect the environment and foster research anddevelopment in the 21st century. Department of State: Reorganization issues of foreign policy agencies including State, USIA, and the Arms Control and Disarmament Agency (ACDA). Increased funding for embassy security overseas. The Judiciary: How to contain the growing costs of the Judiciary's Defender Services account. Whether to increase funding to compensate court-appointed defense attorneys in federal criminal cases. Whether the salaries of federal judges should receive a cost-of-living adjustment. How much funding to appropriate for the Supreme Court's building improvement program. Other Agencies: Adequacy of funding for the Legal Services Corporation. Adequacy of funding for the Equal Employment Opportunity Commission, given a rapidly growing workload of civil rights cases. Adequacy of funding for programs of the Small Business Administration (SBA) This report provides background descriptions of the principal functions of the federal agencies covered by CJS appropriations and identifies and more extensively reviews the major legislative and policy issues that emergedduring thedebate on these appropriations. The table below shows the key legislative steps necessary for the enactment of FY2000 CJS appropriationslegislation. OnJune 9, the Senate CJS Subcommittee approved its version of the appropriations bill. This was followed by approvalby theSenate Appropriations Committee on June 10. The report was ordered to be printed on June 14 ( S. 1217 ; S.Rept. 106-76 ). The Senate on July 22, 1999 approved a total of $35.4 billion, $4.9 billion below theAdministration'srequest and $813 million below the FY1999 appropriation. On July 22, 1999 the House CJS Subcommittee approved its version of the FY 2000 bill. The House AppropriationsCommittee approved the bill on August 3, 1999. On August 5, the House approved a total of $37.7 billion( H.R. 2670 , H.Rept. 106-283 ), $2.9 billion below the President's request, $2.3 billion below the levelapproved by the Senate and $1.5 billion above the FY1999 appropriation. This amount included $4.5 billion forthedecennial census, designated as emergency spending. The Senate measure did not include this funding. On October18, theConference Committee approved a CJS bill totaling $39 billion--$2.8 billion above the FY1999 appropriation and$1.3billion below the President's request. The bill was passed by the House by a vote of 215 to 213, without amendment,onOctober 20, 1999. The Senate by unanimous consent also passed the bill, without amendment, on October 20. The President vetoed the bill on October 25, because, among other things, it (1) did not provide enough money for hiscommunity policing program (better known as the COPS program), (2) contained no funding for its lawsuit againstthetobacco industry, and (3) did not provide adequate funding for direct payment of dues and arrears to the UnitedNations andother peacekeeping operations abroad. Final action. Following negotiations between congressional leaders andthe White House, these issues were apparently resolved. A second CJS bill approved by Conference ( H.Rept.106-479 )included in H.R. 3194 , the Consolidated Appropriations Act for FY 2000, was passed by the House onNovember 18, and the Senate on November 19, 1999. The number for the CJS bill is H.R. 3421 which isinDivision B of H.R. 3194 , Section 1000(a). The President signed the bill into law on November 29, 1999 ( P.L.106-113 ; 113 Stat. 1501). The law approves total funding of $39.63 billion which is about $625 million above thelevelinitially approved by Congress, $3.4 billion (or 9.5%) above FY1999 appropriation and $920 million below thePresident'srequest. It is also important to note that the Consolidated Appropriations Act also includes a provision which mandates a 0.38percent government-wide recission of discretionary budget authority for FY2000. For more details see page 3 ofthisReport. Stopgap funding legislation. On September 28, the House and Senateapproved stopgap legislation to continue funding of agencies at FY1999 levels for the first three weeks of FY2000,beginning on October 1. This covered all agencies that had yet to have their FY2000 appropriations approved byCongressor signed into law by the President. The measure (H.J.Res 68, P.L. 106-62 ) was signed by the President onSeptember 30,1999. On October 19, Congress passed a second bill extending FY1999 funding through October 29( H.J.Res. 71 , P.L. 106-75 ). The legislation was signed by the President on October 21. A third bill was passed by CongressonOctober 28, ( H.J.Res. 73 , P.L. 106-85 ) extending such funding through November 5, 1999. The bill wassigned by the President on October 29. Congress passed a fourth continuing resolution on November 4, to continuefunding through November 10, 1999 ( H.J.Res. 75 , P.L. 106-88 ). The President signed the bill on November5.A fifth continuing resolution was approved by Congress on November 10 (H.J.Res 78, P. L. 106-94) and signed intolaw bythe President on the same day to continue funding through November 17, 1999. A sixth bill to continue fundingthroughNovember 18 ( H.J.Res. 80 , P.L. 106-105 ) was passed by Congress on November 17 and was signed by thePresident on November 19. A seventh bill ( H.J.Res. 82 ) was passed on November 18 which further extendedfunding through November 23. An eighth bill ( H.J.Res. 83 , 106-106) was also approved on November 18,which superceded H.J.Res. 82 and extended FY1999 funding through December 2, 1999. This was signedbythe President on November 19. Table 1. Status of CJS Appropriations, FY2000 1 H.R. 2670 vetoed by the President on October 25, 1999. 2 H.R, 3421 is included in Division B of H.R. 3194 , Section 1000(a), H.Rept. 106-479 , pp.69-243 Temporary restrictions on FY1999 appropriations. Congress had placeda time limitation on all funding for agencies covered by CJS appropriations, pursuant to Section 626 of Title VI of the CJSappropriations sections of the Omnibus measure ( H.R. 4328 ). This section provided that all funding wouldcease to be available after June 15, 1999, unless continued by enactment of another appropriations measure by thatdate.(The reason for this limitation was congressional concern about the proposed use of statistical sampling in the 2000decennial census. The Supreme Court Ruled on January 25, 1999, that the census statute, 13 U.S.C., prohibits thisuse toderive population data for House reapportionment, although the ruling left unresolved related issues such as the useofsampling in the census to produce data for within-state redistricting.) Section 626, Title VI, was repealed by H.R. 1141 , FY1999 Emergency Supplemental Appropriations, which became law on May 21, 1999. H.R. 1141 included an additional $44.9 million for the 2000 census in FY1999, provided that Congressreceived, by June 1, 1999, a revised FY2000 budget submission for the census, with detailed justification. Therevisedsubmission requested an extra $1.7 billion for the census in FY2000. The Senate Appropriations Committee,reporting S. 1217 , approved the Administration's original FY2000 request of $2.8 billion for the census, without theadditional amount. The full Senate also approved $2.8 billion. In the House version of the bill, the CJSAppropriationsSubcommittee approved $4.5 billion designated as emergency spending. The full Appropriations Committeeapproved thisamount in its markup of the measure on July 30, 1999, as did the House when it passed H.R. 2670 on August5. It is important to note that during the final days of the 105th Congress, Congress approved a special supplementalappropriation for FY1999 to provide funds for American farmers affected by natural disasters and low commodityprices,embassy security and counter-terrorism as a result of the August embassy bombings, (9) meeting the year 2000 (Y2K)computer requirements, covering the costs of maintaining the U.S. troops in Bosnia, defense readiness,counter-narcoticsinterdiction initiatives, and domestic natural disaster needs. This funding totaling $20.8 billion was included invarioussections of the Omnibus Consolidated and Emergency Supplemental Appropriations Act for FY1999 ( P.L. 105-277 ). The supplemental appropriations relating to agencies covered by the FY1999 CJS appropriations (which are containedin samepublic law) are reflected in the FY1999 agency totals contained in this report. The creation, legislative authority, and principal activities of the major agencies covered by the CJSappropriationslegislation for each fiscal year are described below. Brief descriptions of most of the related agencies covered bythelegislation are also included in this section. Title I of the CJS legislation covers the appropriations for the Department of Justice and related agencies. Established byan Act of 1870 (28 U.S.C. 501) with the Attorney General at its head, the Department of Justice (DOJ) providescounsel forcitizens and protects them through its efforts for effective law enforcement. It conducts all suits in the SupremeCourt inwhich the United States is concerned and represents the government in legal matters generally, providing legaladvice andopinions, upon request, to the President and the executive branch's department heads. The Department contains several divisions: Antitrust, Civil, Civil Rights, Criminal, Environmental and Natural Resources,and Tax. Major agencies within the Department of Justice include: Federal Bureau of Investigation (FBI) investigates violations of federal criminal law, protects theUnited States from hostile intelligence efforts, provides assistance to other federal, state and local law enforcementagencies, and has concurrent jurisdiction with Drug Enforcement Administration (DEA) over federal drugviolations. Drug Enforcement Administration (DEA) is the lead drug law enforcement agency at the federal level,coordinating its efforts with state, local, and other federal officials in drug enforcement activities, developing andmaintaining drug intelligence systems, regulating legitimate controlled substances activities, and undertakingcoordinationand intelligence-gathering activities with foreign government agencies. Immigration and Naturalization Service (INS) is responsible for administering laws relating to theadmission, exclusion, deportation, and naturalization of aliens, including the oversight of the process involving theadmission of aliens into the country and applications to become citizens, the prevention of illegal entry into theUnitedStates, and the investigation, apprehension, and removal of aliens who are in this country in violation of thelaw. Federal Prison System provides for the custody and care of the federal prison population, themaintenance of prison-related facilities, and the boarding of sentenced federal prisoners incarcerated in state andlocalinstitutions. Community Oriented Policing Services (COPS) provides grants to states, units of local government,Indian tribal governments, and other public and private entities to increase police presence, to expand cooperationbetweenlaw enforcement agencies and members of the community, and to enhance public safety. Office of Justice Programs (OJP) carries out policy coordination and general management responsibilities for the Bureau of Justice Assistance, Bureau of Justice Statistics, National Institute of Justice, OfficeofJuvenile Justice and Delinquency Prevention, and the Office of Victims of Crime, including administering programs,awarding grants, and evaluating activities. United States Attorneys prosecute criminal offenses against the United States, represent thegovernment in civil actions in which the United States is concerned, and initiate proceedings for the collection offines,penalties, and forfeitures owed to the United States. United States Marshals Service is primarily responsible for the protection of the federal judiciary,protection of witnesses, execution of warrants and court orders, management of seized assets, and custody andtransportation of unsentenced prisoners. Interagency Law Enforcement consists of 13 regional task forces composed of federal agents workingin cooperation with state and local investigators and prosecutors to target and destroy major narcotic trafficking andmoneylaundering organizations. The total appropriation for the Department of Justice in FY1999 was $18.2 billion. (For more details on the funding ofindividual programs, see Table 1A in the Appendix.) Appropriators also considered funding for criminal justice programs under the Violent Crime Reduction Trust Fund(VCRTF), which was established in the Violent Crime Control and Law Enforcement Act of 1994 ( P.L. 103-322 ). TheVCRTF provides authorization for criminal justice spending over a 6-year period, from FY1995 through FY2000.TrustFund monies were to be derived in part from projected savings to be realized by eliminating over 250,000 federaljobs asrequired by the Federal Workforce Restructuring Act ( P.L. 103-226 ). Spending was provided in the annualappropriationsbills, extending indefinitely authorizations of appropriations not fully appropriated. Across-the-board sequestrationofspending from the VCRTF is required, if outlays exceed the outlay limits set for the Trust Fund. The fund authorizes $30.2 billion in spending from FY1995 through FY2000. The Omnibus Consolidated and EmergencySupplemental Appropriations Act for FY1999 ( P.L. 105-277 ) provided a total of $5.5 billion for DOJ's anti-crimeinitiatives from the VCRTF. Legislation has been offered in the 106th Congress to extend the VCRTFbeyond FY2000. Title II includes the appropriations for the Department of Commerce and related agencies. The Department wasestablished on March 4, 1913 (37 Stat.7365; 15 U.S.C. 1501). The origins of the Department of Commerce dateback to1903 with the establishment of the Department of Commerce and Labor (32 Stat. 825). In 1913, a separate theDepartmentof Commerce was designated (37 Stat. 7365; 15 U.S.C. 1501). Though the responsibilities of the Department arenumerous and quite varied, it has five basic missions: promoting the development of American business andincreasingforeign trade; improving the nation's technological competitiveness; fostering environmental stewardship andassessment;encouraging economic development; and compiling, analyzing, and disseminating statistical information on the U.S.economy. These missions are carried out by the following agencies of the Department: Economic Development Administration (EDA) provides grants for economic development projects ineconomically distressed communities and regions. Minority Business Development Agency (MBDA) seeks to promote private and public sectorinvestment in minority businesses. Bureau of the Census collects, compiles, and publishes a broad range of economic, demographic, andsocial data. Economic and Statistical Analysis Programs provide (1) timely information on the state of theeconomy through preparation, development, and interpretation of economic data; and (2) analytical support toDepartmentofficials in meeting their policy responsibilities. International Trade Administration (ITA) seeks to develop the export potential of U.S. firms and toimprove the trade performance of U.S. industry. Export Administration enforces U.S. export control laws consistent with national security, foreignpolicy, and short-supply objectives. National Oceanic and Atmospheric Administration (NOAA) provides scientific, technical, andmanagement expertise to (1) promote safe and efficient marine and air navigation; (2) assess the health of coastalandmarine resources; (3) monitor and predict the coastal, ocean, and global environments (including weatherforecasting); and(4) protect and manage the nation's coastal resources. Patent and Trademark Office examines and approves applications for patents for claimed inventionsand registration of trademarks. Technology Administration advocates integrated policies that seek to maximize the impact oftechnology on economic growth, conducts technology development and deployment programs, and disseminatestechnological information. National Institute of Standards and Technology (NIST) assists industry in developingtechnology toimprove product quality, modernize manufacturing processes, ensure product reliability, and facilitate rapidcommercialization of products based on new scientific discoveries. National Telecommunications and Information Administration (NTIA) advises the President ondomestic and international communications policy, manages the federal government's use of the radio frequencyspectrum,and performs research in telecommunications sciences. The total appropriation for the Department of Commerce in FY1999 was $5.1 billion. (For more details on the funding ofindividual programs, see Table 1A in the Appendix.) Title III covers appropriations for the Judiciary. By statute (31 U.S.C. 1105 (b)) the judicial branch's budget is accordedprotection from presidential alteration. Thus, when the President transmits a proposed federal budget to Congress,thePresident must forward the judicial branch's proposed budget to Congress unchanged. That process has been inoperationsince 1939. The total appropriation for the Judiciary in FY1999 was $3.65 billion. The Judiciary budget consists of more than 10 separate accounts. Two of these accounts fund the Supreme Court of theUnited States -- one covering the Court's salary and operational expenses and the other covering expenditures forthe careof its building and grounds. Traditionally, in a practice dating back to the 1920s, one or more of the Court's Justicesappearbefore either a House or Senate appropriations subcommittee to address the budget requirements of the SupremeCourt forthe upcoming fiscal year, focusing primarily on the Court's salary and operational expenses. Subsequent to theirtestimony,the Architect of the Capitol appears to request a funding amount for the Court's building and grounds account. (10) Althoughit is at the apex of the federal judicial system, the Supreme Court represents only a very small share of the Judiciary'soverall funding. The FY1999 Omnibus Appropriations Act ( P.L. 105-277 ), for instance, provided a total of $36.5millionfor the Supreme Court's two accounts, which was 1.0% of the Judiciary's overall appropriation of $ 3.65 billion. The rest of the Judiciary's budget provides funding for the "lower" federal courts and for related judicial services. Amongthe lower court accounts, one dwarfs all others -- the Salaries and Expenses account for the U.S. Courts of AppealsandDistrict Courts. The account, however, covers not only the salaries of circuit and district judges (including judgesof theterritorial courts of the United States), but also those of retired justices and judges, judges of the U.S. Court ofFederalClaims, bankruptcy judges, magistrate judges, and all other officers and employees of the federal Judiciary notspecificallyprovided for by other accounts. Other accounts for the lower courts include Defender Services (for compensation and reimbursement of expenses ofattorneys appointed to represent criminal defendants), Fees of Jurors, the U.S. Court of International Trade, theAdministrative Office of the U.S. Courts, the Federal Judicial Center (charged with furthering the development ofimproved judicial administration), and the U.S. Sentencing Commission (an independent commission in the judicialbranch, which establishes sentencing policies and practices for the courts). The annual Judiciary budget request for the courts is presented to the House and Senate appropriations subcommittees afterbeing reviewed and cleared by the Judicial Conference, the federal court system's governing body. Thesepresentations,typically made by the chairman of the Conference's budget committee, are separate from subcommittee appearancesaJustice makes on behalf of the Supreme Court's budget request. The Judiciary budget does not appropriate funds for three "special courts" in the U.S. court system: the U.S. Court ofAppeals for the Armed Forces (funded in the Department of Defense appropriations bill), the U.S. Tax Court(funded in theTreasury, Postal Service appropriations bill), and the U.S. Court of Veterans Appeals (funded in the Departmentof VeteranAffairs and Housing and Urban Development appropriations bill). Construction of federal courthouses is not fundedwithinthe Judiciary's budget. The usual legislative vehicle for funding federal courthouse construction is the Treasury,PostalService appropriations bill. (For more details on individual appropriations for Judiciary functions, see Table 1Ain theAppendix.) The State Department, established July 27, 1789 (1 Stat.28; 22 U.S.C. 2651), has a mission to advance and protect theworldwide interests of the United States and its citizens. Currently, the State Department represents the activitiesof 38U.S. agencies operating at over 250 posts in 163 countries. As covered in Title IV, the State Department fundingcategoriesinclude Administration of Foreign Affairs, International Operations, International Commissions, and RelatedAppropriations. The total FY1999 State Department budget was $5.7 billion (including $1.4 billion for anemergencysupplemental appropriation). Typically, more than half of State's budget (about 70% in FY1999) is forAdministration ofForeign Affairs, which consists of salaries and expenses, diplomatic security, diplomatic and consular programs,andsecurity/maintenance of buildings. The United States Information Agency (USIA) was established as an independent agency on August 1, 1953 (67 Stat. 642;22 U.S.C. 1461), through the transfer of information and educational exchange functions performed at that time bytheState Department. USIA's current mission is to understand, inform, and influence foreign publics as a means ofsupportingU.S. national interests and promoting dialogue between Americans, their institutions, and their counterparts abroad. TheUSIA budget includes Salaries and Expenses, Education and Cultural Exchange Programs, InternationalBroadcasting,Regional Centers, and the National Endowment for Democracy. The FY1999 USIA budget totaled $1.1 billion. The Arms Control and Disarmament Agency (ACDA) was established as a quasi-independent agency on September 26,1961 (75 Stat. 631; 22 U.S.C. 2551). It has close bureaucratic ties to the Department of State. ACDA's missionis tostrengthen U.S. national security by advocating, formulating, negotiating, implementing, and verifying sound armscontrol,nonproliferation, and disarmament policies and agreements. It is the only U.S. government agency dedicated solelyto thismission. ACDA's director, an independent advocate for arms control in the U.S. government, was also designatedtheprincipal adviser on arms control issues to the President, the Secretary of State, and the National Security Council. TheFY1999 budget for ACDA was $41.5 million. (For more details on appropriations for the State Department andrelatedagencies, see Table 1A in the Appendix.) The Foreign Relations Authorization within P.L. 105-277 provides for the consolidation of the foreign policy agencies. Bythe end of FY1999, ACDA and USIA will be abolished with their budgets and functions merged into theDepartment ofState. Title V covers several related agencies. FY1999 appropriations for these agencies are as follows: (11) Maritime Administration administers programs to aid in the development, promotion, and operationof the nation's merchant marine: $168.7 million. Small Business Administration provides financial assistance to small business and to victims ofphysical disasters: $820 million. (12) Legal Services Corporation provides financial assistance to local, state, and national non-profitorganizations that provide free legal assistance to persons living in poverty: $300 million. Equal Employment Opportunity Commission (EEOC) enforces laws relating to race, sex, religion,national origin, age, or handicapped status: $279 million. Commission on Civil Rights collects and studies information on discrimination or denials of equalprotection of the laws because of race, color, religion, sex, age, handicap, and national origin: $8.9million. Federal Communications Commission (FCC) regulates interstate and foreign communications byradio, television, wire, satellite, and cable: $19.5 million. (13) Federal Maritime Commission (FMC) regulates the domestic offshore and international waterbornecommerce of the United States: $14.1 million. Federal Trade Commission (FTC) administers laws to prevent the free enterprise system from beingfettered by monopolies or restraints on trade and to protect consumers from unfair and deceptive trade practices: $10.2million. (14) Securities and Exchange Commission (SEC) administers laws providing protection for investors andensuring that securities markets are fair and honest: $23.0 million. (15) State Justice Institute is a private, non-profit corporation that makes grants and undertakes otheractivities designed to improve the administration of justice in the United States: $6.8 million. Office of the United States Trade Representative (USTR) is located in the Executive Office of thePresident and is responsible for developing and coordinating U.S. international trade and direct investment policies. TheUSTR is also the chief trade negotiator for the United States: $25.5 million. U.S. International Trade Commission is an independent, quasi-judicial agency that advises thePresident and the Congress on the impact of U.S. foreign economic policies on U.S. industries and is charged withimplementing various U.S. trade remedy laws. Its six commissioners are appointed by the President for 9-yearterms: $44.5 million. The CJS appropriations also cover funding for several relatively small governmental functions, including several specialgovernment commissions. (For additional information on the funding of other related agencies covered by thismeasure,see : U.S. Congress, House of Representatives. Making appropriations for the Government of theDistrict of Columbia andother activities chargeable in whole or in part against revenues of said District for the Fiscal Year ending September30,2000, and for other purposes. Conference Report to accompany HR. 3194, November 18, 1999, H.Rept.106-479 , pp.228-237.) The 106th Congress addressed a number of issues during the CJS appropriations process for FY2000. Majorissuesincluded: extending the 1994 Crime Act funding beyond FY2000 under the Violent Crime Reduction Fund,eliminatingmost funding for Title III crime prevention programs, funding for programs that would reduce violence in schoolsand thatwould address missing children under the Safe Schools Initiatives, the adequacy of Immigration and NaturalizationServicefunding and the possible need for reorganizing the federal immigration system; the downsizing of CommerceDepartmentprograms, funding and sampling needs for the decennial census, the use of federal funds to support industrialtechnology,and implementing the modernization of the National Weather Service; the funding controversy regarding U.S.contributionsto international organizations (particularly the payment of arrears to the United Nations) and U.S. peacekeepingoperations, the reorganization of foreign policy agencies and a $3 billion advance appropriations request from theAdministration forembassy security in FY2001-2005; the adequacy of funding to maintain essential services and security in the lowercourts;the merits of a pay increase for federal judges; how to contain the growing costs of the Judiciary's Defender Servicesaccount; and whether to increase funding to compensate court-appointed defense attorneys in federal criminal cases. Traditionally, state and local governments have primary responsibility for crime control. Especially within the last decade,a greater federal role has developed. Congress has enacted five major omnibus crime control bills since 1984,establishingnew penalties for crimes and providing increased federal assistance for law enforcement efforts by state and localgovernments. Federal justice-related expenditure is one of the few areas of discretionary spending that has increaseditsshare of total federal spending over the last two decades. A major issue that was considered by Congress concerned funding for crime and drug programs. The Violent CrimeControl and Law Enforcement Act of 1994 ( P.L. 103-322 ) provides that authorizations of appropriations not fullyappropriated be extended indefinitely into succeeding fiscal years covered by the act, FY1995 through FY2000. ForFY1995 through FY1999, Congress has appropriated monies for the Violent Crime Reduction Trust Fund (VCRTF)belowauthorization levels for each year, resulting in total unappropriated authorizations of $1.084 billion. The totalremainingauthorization for VCRTF, including $6.5 billion authorized for FY2000, is $7.6 billion. The President's budgetrequestasked for and Congress appropriated $4.5 billion for VCRTF in FY2000. Congress did not extend the fund beyondFY2000.levels. (16) Some Members of Congress believed the Clinton Administration needed to request more funding in order to address drugsupply-reduction goals, particularly in the area of interdiction of drugs at our borders. On the other hand, thePresidentmaintained that his budget provides for an increase in funding for drug control. He requested $17.8 billion for thenationaldrug control budget for FY2000. FY1999 regular appropriations were $17.0 billion, with an additional $844 millionappropriated by Congress for emergency purposes under FY1999 emergency supplemental legislation. A recent increase in violence in schools, especially gun violence, attracted the attention of Congress. The Safe SchoolsInitiative (SSI) is a new congressional initiative to deal with the problem. The 105th Congress,2nd session, (OmnibusConsolidated and Emergency Supplemental Appropriations Act for FY1999; H.R. 4328 ) approved fundingof$210 million for SSI for prevention and technology purposes at schools nationwide. Congress continued fundingfor SSI inFY2000. The FY2000 budget request of the Clinton Administration asked for a total appropriation of $18.5 billion for theDepartment of Justice, including $4.15 billion from the Violent Crime Reduction Trust Fund. (17) The FY1999appropriation was $18.2 billion. DOJ funding for FY2000, is intended to continue the battle against crime and youthviolence, to fight cyber-terrorism, to fund construction and repair of prisons to house felons, to check drug abuse,toimprove the department's information resources, to improve enforcement of civil rights laws, to improve publicsafetyprograms in Indian Country, and to improve the border management of INS. On October 20, Congress approved ( H.R. 2670 ) a total DOJ appropriation of $18.5 billion compared to thePresident's request of $18.5 billion and FY1999 appropriations of $18.2 billion. On October 25, the Presidentvetoed H.R. 2670 , according to media accounts "because it fails to fund the additional 50,000 community police weneed to keep crime going down in our communities. . . ." Under the conference report ( H.Rept. 106-398 ) for H.R. 2670 , the Community Oriented Policing (COPS) program received an appropriation of $325 million,almost a billion dollars less than the President requested ($1.3 billion) in his FY2000 budget. After the veto,Congressapproved FY2000 funding for DOJ at $18.6 billion. The President also cited the lack of funding to DOJ for tobaccolitigation in H.R. 2670 as another reason for his veto. Although the Consolidated Appropriations Act forFY2000 did not provide the $20 million in funding that the President requested for DOJ for tobacco litigation, thePresident, on signing the legislation November 29, 1999, stated that it did not "preclude the expenditure of fundsfor thispurpose" and planned to "identify existing resources to pursue this important case." On June 14, the Senate Appropriations Committee reported ( S.Rept. 106-76 ) the CJS Appropriations bill ( S. 1217 ). The committee provided a total DOJ appropriation for FY2000 of $17.1 billion, a decrease of $1.2 billionunder the$18.2 billion appropriated for the agency in FY1999 and $1.5 billion less than the President's request. The Senatepassed S. 1217 on July 22, appropriating $17.1 billion for DOJ for FY2000. On August 2, the House Appropriations Committee reported ( H.Rept. 106-283 ) the CJS Appropriations bill ( H.R. 2670 ). The House Committee approved a total DOJ appropriation for FY2000 of $18.2 billion,comparable to the agency's $18.2 billion appropriation in FY1999 but below the Administration's budget requestof $18.5billion. August 5, the House passed H.R. 2670 , providing a billion dollars more than the Senate-passed billfor an appropriation of $18.1 billion for DOJ for FY2000. With emphasis on community-based prevention plans, for FY2000 the Administration requested funding for a variety ofprograms to combat crime and youth violence . FY1999 was the last scheduled year for theCommunity Oriented Policing(COPS) program. For a 21st Century Policing Initiative (a proposal that evolved from the COPSprogram), the President forFY2000 proposed $1.3 billion to help communities enhance their community policing efforts, of which $600 millionwouldbe to hire and redeploy from 30 to 50 thousand additional law enforcement officers over the next 5 years; $200million toaid local communities in hiring more community-based prosecutors and to develop community-based prosecutionprograms; and $125 million for local crime prevention efforts, such as adopting community-wide plans to preventschoolviolence. For FY2000, Congress initially approved funding of $325 million ($280 million in direct appropriations and $45 millionfrom the Violent Crime Trust Fund) for the Community Oriented Policing (COPS) program. The Presidentrequested $1.3billion in funding for COPS for FY2000 ($100 million in direct appropriations and $1.2 billion from the crime trustfund). FY1999 funding for COPS was $1.4 billion, all from the crime trust fund. The Safe Schools Initiative (SSI) received$225million, including funds for technology development, prevention, community planning and school safety officers. Congress approved $30 million of unobligated carryover balances in the COPS program for the Police Corps. Otherfunding includes $25 million for the bullet-proof vests initiative, $40 million for Indian country, $35 million for theCOPSmethamphetamine program, and $100 million for the COPS technology program. After the President's veto of thebill,Congress provided funding of $595 million for the COPS program ($550 million in direct appropriations and $45millionfrom the Violent Crime Trust Fund). For FY2000, the Senate Committee would have transferred funding for COPS to other programs within OJP. TheCommittee directed that available funds be used to close the COPS office by the end of FY2000. By no later thanSeptember 1, 1999, the Committees on Appropriation were to be provided with a report giving details on the closureof theoffice. For FY2000, the Senate-passed CJS appropriations bill ( S. 1217 ) would have restored funding of $325 millionfor the COPS program for FY2000, of which $140 million would have been derived from the Violent CrimeReductionTrust Fund. Funding would have included $180 million for police officers in school systems, $170 million forinnovativecommunity policing programs, of which $90 million would have been used for the Crime Identification TechnologyInitiative, $25 million for the bulletproof vest program and $25 million for the methamphetamine program (fundswouldhave been transferred for this program from the state and local law enforcement account to COPS). The House-passed CJS appropriations bill ( H.R. 2670 ) would have funded the COPS program at the authorized level of $268 million, the same funding level recommended by the House Committee. This fundingwould haveincluded $25 million for the Police Corps program. Since the COPS program has reached its goal of hiring 100,000policeofficers, the Committee directed the COPS office to focus future new police hiring on the Safe School hiringprogram. TheHouse-passed bill would have provided $150 million for the Safe Schools initiative. Unused funds of $140 millionfromFY1999 would have been used for critical law enforcement requirements. The Committee directed the COPSprogram toestablish the following non-hiring grant programs: $70 million for COPS Law Enforcement Technology program($54.5million would have been derived from unobligated balances); $35 million for the methamphetamine/drug hot spotsprogram, and $25 million for the bullet-proof vests initiative. From the Violent Crime Reduction Trust Fund, $17.5millionin funds were to be taken for the COPs program to support programs to prevent violence in schools, gang activityand toprovide education in crime prevention and safety, and $60 million were to be used for the Crime IdentificationTechnologyInitiative. The President requested $3.5 billion in FY2000 for the Office of Justice Programs ; in FY1999, $4.8 billion wasappropriated. This included another DOJ initiative for $124.2 million for public safety programs on Indianland ,including 26 attorneys to investigate and prosecute crimes in Indian Country and $34 million to construct detentionfacilities in Indian Country. Funding provided for FY2000 for the Office of Justice Programs (OJP) by Congress was initially $3.9 billion, $500 millionmore than the President's request and $800 million less than appropriated in FY1999. Funding included $34 millionfor theWeed and Seed program, and $287 million for juvenile justice programs. Congress provided $20 million for theRegionalInformation Sharing System, with an additional $5 million coming from the COPS law enforcement technologyprogram. After the presidential veto, funding for OJP increased to $.1 billion for FY2000, $534 million more than thePresident'srequest and $764 million less than appropriated in FY1999. The Senate Committee recommended $3 billion for FY2000 for the Office of Justice Programs, including $1.5 billion fromthe violent crime reduction trust fund for law enforcement assistance, juvenile justice, research, and statisticsprograms. Funding would have included $218 million for the Safe Schools Act to implement school violence prevention andsafetyprograms, $25 million for Safe Schools Initiative for technology items needed to establish safe schools, $51 millionfor theNational Institute of Justice, and $20 million for the Regional Information Sharing System. Congress approved $2.8 billion for FY2000 for state and local law enforcement assistance compared to the President'srequest of $1.6 billion and FY1999 funding of $2.9 billion. Bryne programs received funding of $552 million fromthecrime trust fund ($500 million for formula grants and $52 million for discretionary grants). Funding includes $523millionfor local law enforcement block grants, $40 million for drug courts, $284 million for Violence Against Women,$250million for juvenile accountability block grants, and $130 million for crime identification technology program. Before theveto, Congress appropriated $585 million for the state criminal alien assistance program; after the veto, this programwasfunded at $420 million for FY2000. For state and local law enforcement assistance for FY2000, the Senate Committee recommended $2 billion, of which $1.6billion would have been provided from the violent crime reduction trust fund to assist state and local governmentsincombating drugs and for other law enforcement efforts. Funding would have included $452 million for the Byrneprograms($52.1 for discretionary grants and $400 million for formula grants), $400 million for local law enforcement blockgrants,$100 million for juvenile accountability incentive block grants, $40 million for drug courts, $25 million to combatmethamphetamine production, distribution, and use and to reimburse DEA for assisting state and local lawenforcement forremoving and disposing of hazardous materials at clandestine methamphetamine labs, $284 million for ViolenceAgainstWomen Act programs, $350 million for the Crime Identification Technology Initiative, and $45 million for theIndianCountry initiative. For the Office of Justice Programs, the Senate-passed bill would have provided $3.1 billion for FY2000. The Senate wouldhave provided $38 million for the Safe Schools Initiative for community planning and crime prevention activities. S. 1217 would have provided $1.9 billion for state and local law enforcement assistance for FY2000, $760million more than the Senate Appropriations Committee recommended. It would have provided funding of $284millionfor Violence Against Women Act programs, as the Senate Committee recommended. Funding for local lawenforcementblock grants, juvenile accountability incentive block grants, drug courts, and Indian Country initiatives would havebeen atthe same levels as approved by the Senate Appropriations Committee. The Senate-passed bill would have provided$260million for the Crime Identification Technology Initiative. The Senate bill would have provided $75 million forViolentOffender Incarceration and Truth in Sentencing Incentive Grants (the Senate Committee did not provide fundingfor thisprogram). S. 1217 would have transferred $25 million to the COPS program from the state and local lawenforcement assistance account to combat methamphetamine production, distribution and use. The House Appropriations Committee recommended $3.7 billion for the Office of Justice Programs for FY2000, including$1.2 billion from the Violent Crime Reduction Trust Fund. The Weed and Seed program would have receivedfunding of$34 million from direct appropriations rather than $35 million from the Violent Crime Reduction Trust Fund, asrequestedin the budget. Under the Justice Assistance account the Regional Information Sharing System would have received$20million ($5 million to come from the law enforcement technology program of the COPS program). For FY2000for thestate and local law enforcement assistance account, the House Committee recommended $2.8 billion. JuvenileJusticeprograms would have received $285 million of which $10 million would have been for the drug prevention program. Under the Violent Crime Reduction Trust Fund Programs, funding would have included $552 million for theEdward Bryneprogram ($47 million for discretionary grants and $505 million for formula grants), $523 million for local lawenforcementblock grants, $250 million for the Juvenile Accountability Incentive Block Grant program, $283 million for theViolenceAgainst Women Act programs, and $40 million for the drug court program. The House Committee did notrecommendfunding for the Indian Tribal Court Initiative, as requested. H.R. 2670 as passed by the House would have provided $3.7 billion for FY2000 for the Office of Justice Programs, a decrease of $1.1 billion below FY1999 appropriations, $109 million above the Administration budgetrequestand $605 million above the Senate funding level. H.R. 2670 would have funded the Weed and Seed programat $34 million, while the Senate-passed bill would have provided $40 million. The President's request of $34million forWeed and Seed would have come from the Crime Trust Fund. The House would have provided $287 million forJuvenileJustice Programs compared to the Senate's $323 million and the President's request of $289 million. For FY2000, H.R. 2670 would have provided the state and local law enforcement assistance account with $2.8billion, $863 million above the Senate funding. H.R. 2670 would have funded a number of programs throughthe Violent Crime Trust Fund, including $250 million for the Juvenile Accountability Incentive block grant program($150million more than the Senate) and $287 million for the Juvenile Justice account ($2 million below the requestedamountand $36 million less than the Senate would provide). The House-passed measure would have provided $552 millionfor theByrne program ($505 million in formula grants and $47 million in discretionary funds) from the Violent Crime TrustFund,while the Senate would have funded the program at the same level through direct appropriations. Both the HouseandSenate bills would have provided the drug court program with $40 million from the Violent Crime Trust Fund. H.R. 2670 would have provided the Violence Against Women Act program with $283 million for FY2000compared to the Senate's $284 million and the President's request of $283 million. The Clinton Administration's FY2000 funding request for the Federal Bureau of Investigation (FBI) was $3.3 billion,compared to FY1999 request of $3.0 billion. To improve the information resources management ofDOJ, the Presidentrequested $93.1 million, of which $38.8 million is for the FBI'S Information Sharing Initiative (ISI). The ISIsupports thedepartment's information technology and Information Collection and Analysis strategy that is critical to the successof theFBI. With the ISI system, agents would get timely, complete information relevant to their cases and would beprovidedwith the analytical tools to use the information effectively. Also, $37 million in funding would have been used bytheLegal Activities Office Automation (which upgrades essential legal and managements tools) to install a newcomputersystem for the department. To fight cybercrime and counterterrorism , President Clinton requested $122.6 million, which would have: enabled the FBIto hire 60 additional agents to identify, investigate, and prevent unlawful entry into government computer networks,civilian computers and the national information infrastructure; added 55 Assistant U.S. Attorneys to develop aglobalresponse to cyberattacks; enabled the Attorney General to reimburse federal departments and agencies for theirefforts incombating domestic and international terrorism ($27 million); helped resolve unique issues regarding new computerandtelecommunications technologies, the litigation of cases, and support to other federal law enforcement personnelas theycombat computer crime; and expanded the Office of Justice Program's (OJP) domestic preparedness efforts ($38.5million). (18) Congress funded the Federal Bureau of Investigation (FBI) at $3 billion for FY2000 compared to the President's requestof $3.3 billion and FY1999 funding of $2.9 billion. Of that total funding, $20 million is available for ISI fromFY2000base funding and $60 million is from unobligated balances from FY1999. For FY2000, Congress approved $213millionfor the Criminal Justice Information Services Division, of which $70 million is for the National Instant CheckSystem and$21 million for the National Infrastructure Protection Center (direct appropriation of $19 million with an additional$2million in carryover funding). After the presidential veto, total funding for the FBI in FY2000 was $3.1 billion. The Administration proposed that $135 million, which was appropriated in the Counterterrorism Fund in 1999 for state anddomestic preparedness assistance, be transferred to the OJP. In addition, it wanted to redirect $31.5 million of theseresources, which, when combined with the $38.5 million requested increase (for a total of $70 million) will helpto fund the Bomb Technician Equipment Program ($45 million). The remaining funds ($25 million) were to support stateandlocal domestic preparedness efforts by providing grants, equipment, and training facilities. The Senate Committee recommendation for FY2000 for the FBI was $3 billion, $310 million below the President'srequest. This funding would have included $280.5 million from the violent crime reduction trust fund and $260million indefense discretionary funding for counterterrorism, counterintelligence, and national security activities. TheCommitteewould have provided $20 million for the Information Sharing Initiative. The President's FY2000 budget requestswouldhave dismantled the Interagency Law Enforcement account. The Senate Committee, fearing the loss of the accountwouldcompromise the efforts of Justice Department agencies to cooperate on complex, long-term important investigations,wouldhave transferred $113 million from the FBI to the Interagency Law Enforcement account to ensure its continuedeffectiveness. The Senate Committee used a broad approach in addressing the terrorism threat. It focused on every aspect of the federalgovernment and provided funding to departments and agencies accordingly. In the General Administration Account,theSenate Committee recommended $27 million for FY2000 for the Counterterrorism Fund, which is identical to thePresident's request. This was $118 million below the 1999 appropriation but reflected a transfer of the firstresponder grantaccount to the Office of Justice Programs. The Committee was concerned that the Attorney General'sCounterterrorismFund had improperly become an extension of the Department's annual budget. As a consequence, it would havemovedfunding for the National Infrastructure Protection Center, the National Domestic Preparedness Office, and theContinuationof Operations/Continuity of Government to the respective agency accounts. For the creation of two counterterrorismlaboratories designed to research new technologies and threat reduction, the Committee proposed $30 million forFY2000. The Senate-passed bill would have provided $2.9 billion for the FBI, the same amount of funding approved by the SenateCommittee and $300 million below the President's request. It would have included $260 million in defensediscretionaryfunding for counterterrorism, counterintelligence and national security activities, the same level of funding approvedby theSenate Committee. S. 1217 would have provided $324 million for the Interagency Law Enforcement account,of which $20 million would have established and implemented the High Intensity Interstate Gang Activity AreasProgram. The House-passed bill ( H.R. 2670 ) would have provided $3.1 billion for the FBI, $19 million below the House Committee recommendation, $108 million more than the Senate-passed bill, and $203 million less than thePresident requested. FBI funding for FY2000 would have included $753 million from the Violent Crime ReductionTrustFund and $20 million that has been recurred in base funding for the Information Sharing Initiative. H.R. 2670 would have funded the Counterterrorism Fund at $10 million for FY2000, (the same level as theHouse Committee recommended), while the Senate-passed appropriations bill would have provided funding of $27million(the same level that both the Senate Committee and the President recommended). The House appropriation reflectedthetransfer of funding for training and equipment programs to the Office of Justice Programs. In addressing the increase in the federal prison population, the Administration proposed funding of $738.2 million for newinitiatives for detention and incarceration programs . Of these funds, $119.6 million would have coveredhousing costsassociated with the increase in the detainee population, especially along the Southwest Border, because of majorincreasesin federal law enforcement personnel in the region, and $86.8 million would have activated five prisons scheduledto beopened in 2000. The Federal Bureau of Prisons would have received $411 million for construction of new prisons(two ofwhich will add capacity for District of Columbia felons), site and planning funding for six prisons, and constructionofinmate work program space. Congress approved $3.7 billion in funding for FY2000 ($23 million is from the Violent Crime Reduction Trust Fund) forthe Federal Prison System , while the President requested $3.7 billion. In FY1999, the FederalPrison System received$3.3 billion of which $26 million was from the crime trust fund. The Senate Committee recommended $3.8 billion for FY2000 for the Federal Prison System, of which $47 million wouldhave been derived from the violent crime reduction trust fund. Also, the Committee assumed that $50 million wouldbeavailable in end-of-year carryover for necessary operating expenses. This FY2000 recommendation was $24 millionlessthan the Administration requested and $453 million more than appropriated in FY1999. Funding would haveprovided forfive new facilities (4,320 beds), housing in contract facilities for 2,000 D.C. Sentenced Felons, 3,000 short-termcriminalaliens, and up to 1,000 short-term criminal aliens. It would also have provided for an increase in the number ofresidentialdrug treatment units in Bureau of Prisons' facilities and community based transitional substance abuse treatmentcenters. To treat prisoners with drug abuse problems, the Committee recommendation included $6.6 million in resourcesfrom theViolent Crime Reduction Trust Fund. S. 1217 as passed by the Senate would have provided funding of $3.7 billion for the Federal Prison System,the same level of funding the President requested. The House-passed bill would have provided $3.6 billion for theFederalPrison System, including funds of $22.5 million from the Violent Crime Reduction Trust Fund, $86.8 million for"527additional positions for the activation of facilities" at five locations throughout the nation and $34 million to house2,000D.C. sentenced felons in contract facilities. Under the legal activities account of DOJ, Congress approved $525 million for the federal prisoner detention account, $25million less than the Administration requested and a $100 million increase over the FY1999 level. Concerned that local jurisdictions that house unsentenced federal prisoners for short periods under the federal prisonerdetention program are using it more for a source of profit rather than for reimbursement of cost, the Senate Committee,under the Legal Activities account, would have provided $500 million for FY2000 for federal prison detention,$50.2million less than the Administration request. Yet to insure that federal prisoner detention was fully funded, theCommitteemade up to $35 million available for transfer to this account from "U.S. Attorneys, Salaries and Expenses" and "FeesandExpenses of Witnesses." The Senate-passed bill approved funding of $500 million for the federal prisoner detentionprogram. As passed in the House, H.R. 2670 would have provided $525 million for FY2000 for the federalprisoner detention program, the same funding amount the House Committee recommended, $25 million below thePresident's request, and $100 million above current funding levels. The President's budget for FY2000 called for $7.9 billion to control the flow of and reduce the demand for illegal drugs, anincrease of 2.5% over FY1999. Drug Enforcement Agency (DEA) would have received fundingof $1.38 billion of thisamount for its law enforcement resources (compared to the FY1999 request of $1.18 billion), including $23 millioninprogram enhancements. The Office of Justice Programs would have received funding of $2.2 billion, of which a$112million increase would have funded a $215 million initiative in 2000 to promote drug testing and treatment for thefollowing programs: $10 million in additional funding (for a total of $50 million ) for the drug courts program; $100million to establish a drug testing and treatment program that would have provided discretionary grants to state andlocalgovernments and Indian tribes; and $2.1 million in additional funding (for a total of $65.1 million) for the residentialsubstance abuse treatment program, which provides formula grants to states for state and local governments todevelop andimplement residential substance abuse treatment programs for prisoners. For FY2000, Congress approved $1.3 billion for the Drug Enforcement Agency ($343 million is from the crime trust fundand $80 million is derived from the Diversion Control Fund for diversion control activities) compared to theAdministration's request of $1.4 billion and FY1999 funding of $1.2 billion. Congress provided $6 million inFY2000 toaugment the Caribbean Initiative, $11 million for domestic counter-drug activities, $80 million for the DrugDiversionControl Fee Account, and $21 million for investigative support requirements of DEA. The Senate Committee recommendation would have provided $1.2 billion for the DEA for FY2000 compared with thePresident's request of $1.4 billion. Funding would have included $22.2 million for the expansion of DEA regionaldrugenforcement teams, $56.7 million to improve the agency's mobile enforcement teams to address drug threats at thestateand local levels, $14.9 million for DEA's heroin enforcement strategy, $27.5 million to address methamphetaminetrafficking, production, and abuse (additional funds for these purposes would also have been provided through theOffice ofJustice Programs and the DEA's asset forfeiture account), and $17.5 million for new DEA agents and supportpositions inSouth and Central America and Mexico. The Committee would have provided $89.3 million for DEA's drugdiversioncontrol program, the full amount requested and expected the level of balances in the Fee Account to fully supporttheprograms in FY2000. No funds were provided DEA for "Salaries and expenses" because the Committee expectedfederalagencies to provide sufficient personnel to operate the program. The House Committee recommended $1.3 billion for DEA for FY2000, of which $344 million would have come from theViolent Crime Reduction Trust Fund. For the Caribbean Initiative, the committee recommended $9 million and 30newagents. Funding would have included $22 million for program enhancements to address infrastructure needs and$80million for DEA'S Drug Diversion Control Fee account. The Senate-passed bill ( S. 1217 ) would have provided $1.2 billion for the DEA, the same funding level asrecommended by the Senate Appropriations Committee and $165 million less than the President requested. ForFY2000,the bill passed by the House ( H.R. 2670 ) would have provided $1.3 billion for the Drug EnforcementAdministration (based on a revised budget submitted by the agency), $104 million below the President's request and$72million above the current funding level. For DOJ's Civil Rights Division under the Legal Activities Account, the Administration requested $82.2 million, anincrease of 19% over the FY1999 enacted level. These funds were to help prosecute hate crime violations, deterthevictimization of migrant workers and other minorities, and combat police misconduct. Increased resources to fighthousingand lending discrimination were provided to the Department of Housing and Urban Development. It was anticipatedthat asa result of this action, additional cases would be referred to DOJ, therefore, the President requested $1.87 millionto handlethem. Congress initially approved $494 million for General Legal Activities for FY2000 ($148 million is from the crime trustfund), while the President requested $577 million. FY1999 funding was $475 million. Of the FY2000 funding forthisaccount, $72 million was for the Civil Rights Division of DOJ. President Clinton requested a funding increase inFY2000for this account to fight hate crimes among other actions. Because the account was not funded at the requested level,thepresident vetoed H.R. 2670 . After the president's veto, Congress increased FY2000 funding for this accountto $504 million, with the Civil Rights Division receiving an increase of $10 million for a total appropriation of $82.2million. The Senate Committee recommended $485 million for FY2000 for general legal activities, of which $185 million comesfrom the violent crime reduction trust fund. This recommendation is $10 million above the FY1999 appropriationand $91million less than the President requested. The Committee directed the Civil Rights Division as well as otherdivisions toredouble efforts in combating hate crimes and domestic terrorism. It did not specifically direct how much moneyshould bespent in this effort. The House Committee recommended $504 million for FY2000 for the general legal activitiesaccount,of which $148 million would have come from the Violent Crime Reduction Trust Fund. The committeerecommended $7million for the Community Relations Service to provide assistance to communities in resolving disagreementsarising formdiscriminatory practices. It did not specifically direct how much money should be spent in the Civil Rights Division. TheSenate-passed bill would have provided $485 million for the general legal activities account compared to theHouse-passedbill provision of $504 million for general legal activities and the President's request of $577 million. The Immigration and Naturalization Service (INS) is the principal federal agency charged with enforcing andadministering the Immigration and Nationality Act (INA). From FY1993 to FY1999, Congress has increased theINSbudget from $1.5 to nearly $3.9 billion. (19) Duringthese years, INS staffing has increased from just over 18,000 to nearly31,000 funded permanent positions. INS now makes up the largest corps of federal civilian employees empoweredto makearrests and carry firearms. Congress approved $4.3 billion in total FY2000 funding for INS. This amount included $3.0 billion in directfunding that is comprised of $1.6 billion from the general fund, $1.3 billion from the Violent Crime Reduction TrustFund,and an additional $100 million from the general fund for construction. The $3.0 billion in direct funding is $26million lessthan the Administration's request, but it is $460 million more than the direct funding appropriated last year byCongress. Inaddition, for FY2000, Congress approved $1.3 billion for INS in off-setting fee receipts. While H.R. 2670 was vetoed largely for reasons unrelated to INS, the President's veto message did address theconcern that this bill did not include any funding to reimburse Guam and other U.S. territories for the costs ofdetainingsmuggled Chinese nationals who were and are being screened by INS for asylum or removal. The conferenceagreement,however, on the FY2000 Consolidated Appropriations Act ( H.R. 3194 ) did not include earmarked fundingforthis purpose. Previously, the House-passed CJS appropriations bill would have provided INS with $4.3 billion in total funding forFY2000. This amount included a direct appropriation of $1.6 billion from the general fund. The House alsoadopted afloor amendment, which cut INS's direct appropriation by $44 million to increase funding for the Legal ServicesCorporation. Other funding for INS included $1.3 billion from the Violent Crime Reduction Trust Fund, $1.3billion infees, and an additional line item appropriation of $90 million for construction. In report language, the Housecommitteeearmarked increases of $100 million to hire an additional 1,000 Border Patrol agents and 140 support staff, and $200million for additional detention space. On the other hand, the Senate-passed CJS appropriations bill would have provided INS with $4.0 billion, the same level offunding approved by the Senate Appropriations Committee. This amount included a direct appropriation from thegeneralfund of $1.7 billion, $873 million from the Violent Crime Reduction Trust Fund, $1.3 billion in fees, and anadditional lineitem appropriation of $139 million for construction. In report language, the Senate committee earmarked increasesof $101million to hire and train an additional 1,000 Border Patrol agents, nearly $23 million for Border Patrol equipment,$10million to continue deploying the Integrated Surveillance Intelligence System (ISIS) to remotely monitor illegalactivities atthe border, $3 million for Law Enforcement Support Centers in Louisiana, Mississippi, and South Carolina, and $1.5million for a SENTRI (20) dedicated commuter laneat San Luis, Arizona. In addition, Senate appropriation language wouldhave capped the number of INS "full-time equivalent work years" at 29,784. Further, during consideration of S. 1217 , the Senate adopted several amendments related to compensation for Border Patrol agents and linkingINS databases with other DOJ law enforcement databases. Greater border control and deterrence of illegal immigration continued to be an ongoing issue for Congress. BetweenFY1993 and FY1999, funding for the Border Patrol increased from $362 million to $917 million. For FY1999, theconference agreement included an earmarked increase of $97 million to hire an additional 1,000 agents, increasingthe totalnumber of funded agent positions to 8,947. For FY2000, the Administration did not request funding to hire another1,000agents as mandated in P.L. 104-208 . Instead, the Administration interpreted this provision to be an authorization. Nevertheless, there was strong congressional support to increase the Border Patrol by 1,000 agents in FY2000: bothHouseand Senate report language included funding earmarks for this purpose. Conference report language included anearmark of$50 million for this purpose. During FY1999, the Administration informed Congress that only 200 to 400 new agents would be hired due to lack ofqualified applicants in a strong labor market and high attrition rates among candidates at the Border Patrol Academy. Atthe end of FY1999, there were 8,225 Border Patrol Agents who were on duty and deployed, as compared to 7,856at thattime last year. To increase the attractiveness of a career as a Border Patrol agent, the Senate adopted twoamendmentsrelated to compensation for Border Patrol agents. The first would have provided that any Border Patrol agent whocompletes a 1-year period of service at a GS-9 grade level, and whose current rating on record is fully successfulor higher,shall be classified as a GS-11. The second would have authorized the Commissioner to provide Border Patrol agentswith alanguage proficiency bonus. Conference report language included a requirement that INS establish an Office ofBorderPatrol Recruitment and Retention. It also included an authorization to increase pay for non-supervisory agents whohaveserved for more than one year at the GS-9 level, if the agency is unable to recruit the required agents by June 1,2000. In addition, the Senate adopted two amendments to require INS to develop a plan to link immigration and law enforcementdatabases , particularly IDENT, with other DOJ criminal-case-tracking databases, like NCIC (National CrimeInformationCenter). IDENT, a fingerprint-based positive identification system, was designed to give the Border Patrol anincreasedcapability to identify repeat offenders and criminal aliens. These amendments were in response to the case of AngelMaturino Resendiz, an illegal alien and Mexican national, who was on the FBI's 10 most wanted list in connectionwith astring of homicides. Resendiz was apprehended while illegally entering the United States by the Border Patrol, yethe wasallowed to return voluntarily to Mexico. The House committee, on the other hand, directed the agency in reportlanguageto suspend further deployment of IDENT until DOJ submits a report outlining the integration of IDENT with theInter-Agency Fingerprint Identification System (IAFIS) that was recently incorporated into NCIC. Conferencereportlanguage included a requirement that the Attorney General submit a plan to integrate the IDENT and IAFIS systems toCongress by November 1, 1999. The Senate bill included a provision to repeal Section 110 of the Illegal Immigration Reform and Immigrant ResponsibilityAct (Division C, P.L. 104-208 ), which originally required the Attorney General to develop an entry/exitcontrol system totrack non-citizen arrivals and departures by September 30, 1998. Last year's omnibus appropriations act ( P.L.105-277 ),however, amended this provision to extend this deadline to March 30, 2001, for land border and sea ports of entry,but leftthe end of FY1998 deadline in place for air ports of entry. The conference agreement, however, included noprovision toamend or repeal Section 110. In recent years, INS has come under intense criticism for failing to deport criminal aliens expeditiously. At the end ofFY1997, the Bureau of Prisons estimated that 27% of approximately 113,000 inmates in federal and federallycontractedcorrectional facilities were non-citizens, many of whom are subject to removal proceedings. Despite increasedfunding,INS officials reported that the agency did not possess the detention capacity to fully comply with statutory mandatesset outby the Antiterrorism and Effective Death Penalty Act ( P.L. 104-132 ) and the Illegal Immigration Reform andImmigrantResponsibility Act ( P.L. 104-208 ). To meet these detention mandates in FY1999, Congress provided INS with an$80million emergency supplemental appropriation for FY1999. (21) Both House and Senate appropriators expressed strongdissatisfaction with INS for failing to request sufficient funding to meet these detention mandates. TheAdministrationsubmitted an amendment to its FY2000 budget submission, which included a proposal to remove eligibilityrestrictionsunder Section 245(i) of the INA in order to increase funding for criminal alien detention through that provision'spenaltyfee. Neither House nor Senate bills, however, included a Section 245(i) provision. Instead, for FY2000, conference reportlanguage earmarked an increase $200 million for detention as was included originally in House report language,rather thanthe $150 million earmarked in Senate report language. In spite of increased funding, INS continued to experience difficulty in processing immigration and naturalizationapplications . At the end of FY1999, INS's total pending caseload was over 4 million, including a pendingnaturalizationcaseload of 1.36 million. For FY2000, Senate report language earmarked an additional $96 million from DOJ'sWorkingCapital Fund for working down large pending caseloads. Senate report language also earmarked a transfer of nearly$50million from the examinations fee account to the Executive Office of Immigration Review (EOIR), which is the DOJagency that hears immigration-related administrative appeals. House report language, on the other hand, includednoincreased funding for the adjudication of immigration-related claims. Rather, House report language noted that overthepast 2 years, INS was provided with $339 million in enhancements for these purposes. As provided in FY1999, theconference agreement included $124 million to fully fund INS's naturalization backlog reduction efforts in FY2000. INS Restructuring. Conference report language stressed that "a lack of resources is no longer an acceptable response toINS's inability to adequately address its mission responsibilities." The conference agreement left in place a split inINS'sdirect funding into two accounts: the Enforcement and Border Affairs account and Citizenship and Benefits,ImmigrationSupport and Program Direction account. This split, according to conference report language, was one step towardsestablishing clearer lines of accountability at INS. Meanwhile, Members of Congress and Administrationofficials were engaged in efforts to restructure INS. On November 4, 1999, the House Judiciary's Immigration and Claims Subcommittee amended and approved a bill( H.R. 2528 ) -- originally introduced by Representative Harold Rogers, Chairman of the HouseAppropriationsCommerce, Justice, State, and the Judiciary Subcommittee -- to dismantle INS by establishing separate service andenforcement bureaus within the Department of Justice. As amended, this bill would have also established an Officeof theAssociate Attorney General for Immigration Affairs to "oversee and supervise" the directors of these two bureausand theExecutive Office for Immigration Review as well. The Subcommittee also defeated an amendment to H.R. 2528 offered by Representative Jackson-Lee, which was similar, but not identical, to her restructuring proposal( S. 2680 ). While the Senate Judiciary's Immigration Subcommittee held a hearing on another INSrestructuring proposal ( S. 1563 ) on September 23, there was no further action on this bill. (For furtheranalysis, see CRS Report RS20279, Immigration and Naturalization Service Reorganization and RelatedLegislativeProposals .). The Government Performance and Results Act (GPRA) requires the Department of Justice, along with other federalagencies, to prepare a 5-year strategic plan which contains a mission statement, a statement of long-range goals ineach ofthe Department's core functions and a description of information to be used to assess program performance. TheDOJsubmitted its Strategic Plan for 1997-2002 to Congress in September 1997. During the FY1999 budget process, theSenateAppropriations Committee commended the Assistant Attorney General for Administration for preparing DOJ'sFY1999performance plan, finding it timely, with objective, measurable performance goals. The committee found thestrength ofthe performance plan in its clear strategies for meeting performance goals. DOJ was urged to follow therecommendationsof the General Accounting Office (GAO) in preparing a plan for fiscal year 2000, because the committee'srecommendations for fiscal year 2000 would be based on the GAO model. The DOJ FY2000 Summary Performance Plan describes what the Department of Justice plans to accomplish in FY2000,consistent with the long-term strategic goals, and complements the Department's budget request. It provides asummarystatement of themes and priorities of DOJ for seven core functional areas (investigation and prosecution of criminaloffenses, assistance to tribal, state, and local governments, legal representation, enforcement of federal laws, anddefense ofU.S. interests; immigration; detention and incarceration; protection of the federal judiciary and improvement of thejusticesystem; and management). It summarizes and synthesizes detailed performance plans of specific Justice componentorganizations such as the Federal Bureau of Investigation, the Drug Enforcement Administration, the United StatesAttorneys, the United States Marshals Service, and others. Some of the goals identified are to: remove violent criminals and gangs off our streets through cooperative enforcementefforts with state and local law enforcement programs; work with tribal authorities to reduce the incidence of violentcrimeon Indian reservations, especially that related to gang activity; improve the nation's capability to prevent terroristactswithin the United States and abroad; respond to cyber-attacks, computer thefts and intrusions affecting computerusers;support Bureau of Prisons' efforts to reduce prison overcrowding and to modernize and repair facilities which areover 50years old; disrupt and dismantle the command and control operations of major drug trafficking criminal enterprisesthat areresponsible for the supply of illicit drugs in this country; reduce the production of illegal drugs in our borders;enforce civilrights laws, including hate crimes and misconduct by law enforcement; and to protect U.S. borders against illegalmigrationand more effectively remove illegal aliens. The Senate Committee requested that by July 1, 1999, DOJ provide it with information about the agency's experiencesresulting from GPRA. In assessing DOJ's performance plan for FY2000, GAO found that the plan furnishes clear relationships between goals andmeasure, provides goals and measures that are quantifiable, and discusses strategies to protect the credibility of itsperformance data. On the other hand, GAO found that the plan does not adequately identify mutually reinforcinggoals andmeasures among various DOJ components and does not establish complimentary performance indicators. In his FY2000 budget request to Congress, the President originally requested total funding for the Department ofCommerce and related agencies (22) of $9.1 billion,about a $3.9 billion increase (or 76%) over the $5.1 billion appropriatedby Congress for FY1999. With regard to FY1999 appropriations, these were to expire after June 15, 1999, unlessnewlegislation were enacted to continue them through the remainder of FY 1999. H.R. 1141 , which became lawon May 21, 1999, repealed this funding cutoff. H.R. 1141 included an additional $44.9 million for the 2000census in FY1999, provided that Congress received, by June 1, 1999, a revised FY2000 budget submission for thecensus,with detailed justification. The revised submission requested an extra $1.7 billion for the census in FY2000. The amount originally requested for the Department was $9 billion, which was about $3.8 billion (or 74.5%) over the $5.1billion appropriated for FY1999. The agency that would have received most of this increased appropriation forFY2000was the Census Bureau -- $3.4 billion. Virtually all of this additional money will go to cover the cost of year 2000decennial census. (As noted above, the revised FY2000 budget submission sought another $1.7 billion for thecensus inFY2000.) Other agencies that would receive noticeable increases include: National Oceanic and AtmosphericAdministration (NOAA) -- $339 million; (23) National Institute of Standards and Technology --$90 million; the NationalTelecommunications and Information Administration -- $22.5 million; the Bureau of Export Administration -- $8.1million and Economic and Statistical Analysis --$6.6 million; and General Administration--$6.6 million. TheAdministration requested modest increases the Economic Development Administration and the Minority BusinessDevelopment Agency. It requested a decrease in direct appropriations for the Technology Administration -- -$.5million.No direct appropriations are requested for the Patent and Trademark Office; its funding will be covered by thecollection ofuser fees. The Senate approved $7.2 billion for the Department ( S. 1217 ), which is about $1.9 billion below the amountrequested by the Administration's request for FY2000. On the House side, the Appropriations Committee recommended$8.0 billion, about $1 billion below the President's request, about $846 million above the total approved by theSenate and$2.9 billion above the total appropriated for FY1999--$5.1 billion. The House-passed bill ( H.R. 2670 ) approved the Committee's recommendation. Congress approved $8.6 million which is $3.5 million above theFY1999appropriation and about $370 million below the Administration's request. The major funding issues were considered during congressional deliberations on the President's request for Commerceappropriations include: the progress made in the streamlining and downsizing the Department's programs and operations; the needs of the Bureau of the Census in conducting the forthcoming decennial (Year 2000) census,including funding needs and sampling plans; and the extent to which federal funds should be used to support industrial technology development programs at the National Institute of Standards and Technology (NIST), particularly the Advanced TechnologyProgram. the extent to which the National Oceanographic and Atmospheric Administration (NOAA) would implement a number of new ongoing Presidential initiatives to protect the environment and foster research anddevelopment in the 21st century. The President's FY2000 budget request for the Department called for $57.5 million for General Administration, whichwas about $6.5 million above the $51.0 million appropriated for FY1999. This total also included the request fortheInspector General's office which amounted to $23.4 million, about $2.4 million above the $21.0 million appropriatedforFY1999. For FY2000, the Senate Appropriations Committee recommended $51.9 million, which included $17.9millionfor the Office of the Inspector General. The Senate bill ( S. 1217 ) approved the same amount. The HouseAppropriations Committee recommended $52 million, including $22 million for the Office of Inspector General,whichwas $4.1 million higher than the level approved by the Senate for the Office. The House-passed bill ( H.R. 2670 ) approved the Committee's recommendation. Congress approved $51.5 million, $500 thousand above theFY1999appropriation and $6 million below the Administration's request. To fund the Department's Economic and Statistical Analysis programs, the President requested $55.1 million, which wasabout $6.6 above the total appropriated for FY1999--$48.5 million. The Senate Appropriations Committeeessentiallyapproved the same level requested by the President. The Senate bill approved the Committee recommendation. The HouseAppropriations Committee recommended a lower level of $48.5 million, the same level appropriated for FY1999. TheHouse approved this amount. Congress approved $49.5 million, $1 million above the FY1999 appropriation and$5.6million less that the President's request. For the Bureau of the Census, the President requested a total of $4.8 billion for FY2000, an amount about $3.4 billionhigher than the $1.4 billion appropriated for FY1999. Most of this large increase was to fund preparations for andimplementation of the upcoming (Year 2000) decennial census. (The Administration's revised FY2000 budgetsubmissionof $4.8 billion for the Census Bureau included an additional $1.7 billion for the decennial census. Neither theSenateAppropriations Committee nor the full Senate approved the additional amount.) The Senate agreed to only theoriginalrequest of $3.1 billion for the Census Bureau, about $1.7 billion below the President's amended request. The HouseAppropriations Committee, the full House, and Congress approved about the same level requested by the President: $4.7billion. During the course of debate on FY1998 CJS Appropriations, Congress addressed the Bureau's plans to incorporate certainnew sample survey results into the 2000 decennial census. (24) Proponents of sampling maintained that it would reduceoverall census costs as well as improve the headcount, resulting in a more accurate, more equitable census.Opponentsraised various questions about sampling in connection with the decennial census, which is the basis forreapportioning theHouse of Representatives and redrawing legislative districts within states. These questions included whether theplan waslegal and constitutional, whether it was operationally feasible, and whether the proposed sampling methods wereflawed. (25) As agreed to in conference, the FY1998 CJS appropriations bill ( H.R. 2267 / S. 1022 , P.L. 105-119 ) granted $390 million for the decennial census. Of this amount, $27 million was for the Census Bureau to"develop a contingency plan in the event sampling is not used in the 2000 decennial census"; $4 million was "formodifications to the [census] dress rehearsal"; and $4 million was "transferred to the Census Monitoring Board." Section 209 of P.L. 105-119 retained the provision of the House-passed H.R. 2267 that "any person aggrievedby the use of any statistical method," in connection with the decennial census to determine the reapportionment andredistricting population, might "in a civil action obtain declaratory, injunctive, and any other appropriate reliefagainst theuse of such method." This section provided for an expedited judicial review of the Bureau's proposed statisticalmethods todetermine whether their use in the census for reapportionment and redistricting "is forbidden by the Constitutionand lawsof the United States." (26) The conference report (Section 210) also established a bipartisan eight-member Census Monitoring Board "to observe andmonitor all aspects of the preparation and implementation" of the 2000 census. The Board, in existence untilSeptember30, 2001, is to submit to Congress periodic reports of its findings. For each of the next four fiscal years, FY1998throughFY2001, a $4 million appropriation is authorized to carry out Section 210. For 2000 census activities in FY1999, the Administration requested $848 million. A small anticipated recovery of FY1998funds raised the FY1999 total to $856 million, which was $466 million above the $390 million appropriated inFY1998. This substantial increase reflected the additional funds needed as the Bureau accelerates its preparations for thecomingdecennial census. As approved by Congress, the Bureau's FY1999 funding for Census 2000 activities was $1.027 billion. This figureexceeded the House-passed amount by $75 million and the Senate-passed amount, as well as the President's request,by$179 million. An additional $4 million was provided for the Census Monitoring Board. Section 626, Title VI, oftheOmnibus legislation funded all CJS agencies only through June 15, 1999. Funding for the remainder of FY1999wascontingent on enactment of another appropriations measure. H.R. 1141 , FY1999 Emergency SupplementalAppropriations, which became law on May 21, 1999, repealed this restriction. The Administration originally requested $2.8 billion for 2000 census activities in FY2000. This amount, however, did notreflect the additional funds that the Bureau was expected to request so that it could conduct the census withoutreliance onsampling to derive the reapportionment population. Congress expressed concern about the Bureau's delay insubmitting arevised FY2000 budget, with detailed justification. Contingent on congressional receipt of this submission by June1,1999, H.R. 1141 provided an additional $44.9 million to the Bureau for census preparations in FY1999. (Therevised FY2000 budget submission sought another $1.7 billion for the census in FY2000. In S. 1217 , theSenate Appropriations Committee, the full Senate, approved the Administration's original FY2000 request of $2.8billionfor the census, without the additional amount. In the House version of the bill, the full Appropriations Committeeapproved the Administration's request of $4.5 billion for the 2000 Census, designated as emergency spending. Congressapproved this amount. In the area of international trade, the Congress approved $311.5 million (direct appropriation of $308.5 million plus $3million from fee collections) for the International Trade Administration(ITA) for FY2000. Also, it assumed an additional$2 million in prior year carryover. The amount approved by Congress was an increase of $22.2 million over theFY1999appropriation of $286.3 million and an increase of $3.1 million over the President's request of $305.4 million. TheSenateAppropriations Committee and the full Senate approved $311.3 million for FY2000. Both the HouseAppropriationsCommittee and the full House approved $298.2 million. Congress approved $54.0 million for the Bureau of Export Administration (BXA) , which was $1.7 million more than theFY1999 level ($52.3 million) but $6.5 million less than the Administration's request ($60.5 million). The Congressassumed an additional $0.7 million will be available in prior year carryover. The Congress provided that "no fundsmay beobligated or expended for processing licenses for the export of satellites of United States origin (includingcommercialsatellites and satellite components) to the People's Republic of China, unless, at least 15 days in advance, theCommitteeson Appropriations of the House of Representatives and the Senate and other appropriate Committees of the Congressarenotified of such proposed action." The Senate Appropriations Committee recommended $55.9 million for FY2000,and theSenate approved the same funding as the Committee. The House Appropriations Committee approved $49.5 millionforFY2000, and the full House approved the same level. The President requested $27.6 million for the Minority Business Development Agency (MBDA), which was about $0.6million above the $27.0 million appropriated for FY1999. The Senate Appropriations Committee recommendeda level of$27.6 million for FY2000, equivalent to the Administration's request. The Senate approved the same amount. TheHouseAppropriations Committee approved $27 million, $.6 million below the amount requested by the President andapprovedby the Senate. House approve the Committee's recommendation. Congress approved $27.3 million, $300 thousandbelowthe President's request and $300 thousand above the FY1999 appropriation. The Economic Development Administration (EDA) has experienced a tumultuous appropriations history over the past fewyears. (27) Its funding level was sharply reduced bythe 104th Congress, then partially restored by the 105th. In the 106thCongress, appropriators placed EDA programs in jeopardy until the last possible moment. In the end, P.L. 106-113 reduced the agency's funding by $4 million compared to its FY1999 level. The President's FY2000 budget proposal requested $393 million for EDA, just about the same funding level under which itoperated in FY1999 ($392 million). (28) Morespecifically, EDA requested $364 million for its Economic DevelopmentAssistance Programs (EDAP) and $29 million for Salaries and Expenses (S&E). The full Senate (following the recommendation of the Appropriations Committee), approved only $203.4 million for EDAPand $24.9 million for S&E -- which would have provided EDA a total FY2000 appropriations of $228.3million. Likewise, the House, following the recommendation of its Appropriations Committee, approved $364.4 millionfor EDAPand $24 million for S&E, for a total FY2000 appropriation of $388.4 million. This amount was only $4million below theFY1999 level. The Consolidated Appropriations Act for FY2000 provides EDA with $362 million for EDAP and $26.5million for S&E, for a total FY2000 appropriation of $388 million. Thus, funding for the agency's EconomicDevelopmentAssistance Programs was reduced by $6.5 million, and funding for its Salaries and Expenses was increased by $2.5million,compared to FY1999 levels. The Patent and Trademark Office (PTO) is fully funded by user fees collected from customers. The OmnibusConsolidated Appropriations Act for FY1999 assumed total funding for the PTO at $785 million although therewere nodirect appropriations from the General Fund. Of this amount, $643 million was to be derived from offsetting feecollections based on the then existing statutory fee schedule; $102 million from a fee increase mandated by P.L.105-358 ,the U.S. Patent and Trademark Office Reauthorization Act; and $40 million from prior year unobligated funds.However, P.L. 105-277 also rescinded $71 million of the accumulated fees and returned that amount to the Treasury for useinbalancing the budget. For FY2000, while there are again no direct appropriations for the PTO, the President requested that the Office be given thebudget authority to spend $922 million. This figure included $966 million that the Administration estimated would becollected in fees (with $20 million to be raised through a proposed fee increase to cover required additions to theEmployees Health Benefits and Life Insurance Fund), plus a carry over of $116 million from FY1999. Of thisamount,$160 million was not to be spent until FY2001. S. 1217 , as passed by the Senate, provided that the Patent and Trademark Office be given budget authority of$902 million in FY2000. This included an estimated $786 million in accumulated fees as well as $116 million incarryover funds from the previous year. H.R. 2670 , as passed by the House, mandated a funding level of $852million for the PTO. Of this amount, $736 million was to be derived from offsetting fees collected in FY2000 plus$116million in funds carried over from fees collected in FY1999. There were no provisions for a fee increase (surcharge)forhealth and life insurance benefits in either bill. The final legislation as approved by the Congress and signed by the President gives the PTO budget authority to spend$871 million for FY2000, including $755 million from current year fees and $116 million in carryover fees. Thisis an 11%increase over FY1999 (when funds were returned to the Treasury to balance the budget) but 6% less than theAdministration's request which included a provision for an extra fee to cover required increases in health and lifeinsurancebenefits. Traditional budget line offices at the National Oceanic and Atmospheric Administration (NOAA) include the NationalOcean Service (NOS); National Marine Fisheries Service (NMFS); Oceanic and Atmospheric Research (OAR);NationalWeather Service (NWS); National Environmental Satellite Data and Information Service (NESDIS); ProgramSupport(PS); Facilities; Fleet Maintenance and Planning (FPM) under ORF. The NOAA budget request also includesProcurement,Acquisition and Construction (PAC); for FY2000, a Pacific Coastal Salmon Recovery Fund (PCSR), a Coastal ZoneManagement Fund (CZMF), and other non-ORF fisheries accounts. NOAA also analyzes its annual budget requestinterms of 7 strategic goals: 1) Advanced Short-Term Warning & Forecast Services; 2) Implement Seasonal toInter-annualClimate Forecasts; 3) Predict & Assess Decadal to Centennial Change; 4) Recover Protected Species; 5)Promote SafeNavigation; 6) Sustain Healthy Coasts; and 7) Build Sustainable Fisheries, all of which are intended to measureNOAA'sperformance and return on taxpayers investment in research, and shape future budget requests, as required by 1994Government Performance and Results Act. For more information on NOAA see CRS Report RL30139(pdf) : TheNationalOceanic and Atmospheric Administration: Budget Activities and Issues for the 106th Congress. On November 18, 1999, Congress passed H.R. 3421 , The Consolidated Appropriations Act, 2000 , Division B,Title II ( H.R. 3194 ), and approved a total of $2.34 billion for NOAA for FY2000 (See H.Rpt. 106-479 ). ThePresident signed the measure into law on November 29, 1999. This amount was about $38 million, or 2%, greaterthanlevels approved in H.R. 2670 , previously vetoed by the President. Of this amount, $1.69 billion was forOperations, Research Facilities (ORF), $596 million was for Procurement, Acquisitions and Construction (PAC)accounts,and also the bill provided $59.5 million for other NOAA accounts (Non-ORF). Bill language prohibited fundingaugmentation for Executive Programs and Administration at NOAA (capped at $31.4 million, and 33 ftes., forFY2000). Also, NOAA must report on new space requirements for employees in the Gulf of Mexico by March 1, 2000. Section 601of this bill contained language concerning funding implementation of the U.N. Kyoto Protocol on Climate Change,andlanguage in the conference report reiterated the intent of Congress with respect to public review of global changeresearchat the Agency. Congress did not approve a $3.4 million recission of FY1999 emergency appropriations for NOAA(proposed in S. 1217 ) under Title VII of this Act. Appropriations were distributed by line offices as follows (and are compared with final H.R. 2670 levels): NOS-$279 million (an $11.5 million increase, or 4%, +$6 million of which is for response and restoration underOceanResources Conservation and +$5.5 for the Marine Sanctuary Program); NMFS-$422 million (+$18 million, or 4%,includes an additional $5 million for the Pacific Salmon Treaty information collection and analysis, +$2 million isfordamage restoration for the Fisheries industry, and +$11 million for an ESA recovery plan); OAR-$301 million,includes+$0.5 million for GLOBE. No changes were incurred for NWS-$604 million, NESDIS-$111 million, PS-$63million,FP&M-$13 million, and FAC-$11 million. However, PAC-$596 million was increased by $7 million, 1.2%greater than H.R. 2670 . H.R. 3194 includes +$4 million for National Estuarine Research Reserve Systemconstruction (NERRS) and +$3 million for National Marine Sanctuaries construction. Other NOAA accountstotaled about$60 million ($8 million greater than H.R. 2670 ), with PCSR accounting for $58 million of that. Also,Congress approved $52 million for NOAA Fleet Replacement. (See H.R. 2670 , below, for additionalinformation regarding funding and congressional directives for NOAA for FY2000.) On October 20, 1999, Congress approved H.R. 2670 , Commerce, State, Justice Appropriations for FY2000. Atotal of $2.30 billion in total funding was approved for NOAA ( H.Rpt. 106-398 ). This amount was 8.4% below thePresident's request (see below) and 5.7% below FY1999 appropriations. The total for ORF would be $1.66 billion,2.9%less than the President's request and 4.7% greater than Congress approved in FY1999. PCSR received $50 million,abouthalf of the funding requested by the Senate and a third of the total requested by the President for treatyimplementation(including PCSR). (29) The President vetoed H.R. 2670 on October 25, 1999. Final funding in H.R. 2670 for NOAA line offices was as follows: NOS-$267.4 million; NMFS-$403.7 million; OAR-$300 million; NWS-603.9 million; NESDIS $ 111.1 million; PS $62.6 million; FPM- $13.2 million;FAC-$11.2 million; PCSR-$50 million. Additional BA for NOAA included some $36 million in previous yeardeobligations. Non-ORF accounts include PAC-$589.1 million; PCSR fund-$50 million; CZMA-$4 million(transfer) and$3.2 million for other fishery funds. Also, the committee approved rescissions of $1.2 million from the fisheriespromotional fund. A $68 million transfer was approved for ORF from the Promote and Develop American Fisheriesaccount (from USDA). The committee did not authorize $34 million in collection of new fees; however, the House,in itsaccounting on H.R. 2670 , assumed this amount would be collected as revenues for FY2000. Of note, conferees approved $445 million for NWS, forecast and warning activities, a 25% increase above FY1999appropriations levels but still below the Administration's request; $16 million was approved for AWIPS build 5.0. Fundingfor systems acquisitions declined overall reflecting completion of deployment of weather modernization systems. Thecommittee did not approve transfer of the Great Lakes Environmental Research Lab (GRERL) from OAR to NOS;Anadditional $5.2 million was approved for NOS for research on pfisteria, hypoxia and harmful algal blooms. Thecommitteeapproved $2.5 million for GLOBE, half of that requested by the Administration. (This is one of the reasons why thePresident vetoed the FY2000 CJS appropriations bill.) The Sea Grant and undersea research programs were fundedathigher levels than that requested by the President. Weather research (OAR) realized a 2% increase over thePresident'srequest. Large increases in funding for NMFS were for information collection and analysis (15%). NESDIS realizedincreases in the PAC account for satellite systems acquisition and related activities. Administration and ServicesunderProgram Support received overall decrease below FY1999 levels. Committee report language( H.Rept. 106-398 ) retained House directives for NOAA to provide details on a new budgetstructure that would more closely reflect administrative expenditures at the agency (by February 2000), includingall lineoffice overhead. It also required an operating plan for expenditure of FY2000 appropriations 60 days after possibleenactment. Appropriations for retired NOAA CORPS officers, formerly under ORF-PS, was scored as mandatoryspending, and not included in ORF totals. Another House provision required all supporting research by NOAA,includingthat under the U.S. Global Change Research Program, to be published in the Federal Register for independentreview byoutside experts. Section 613, of Title II required NOAA develop a modernization plan for its fisheries researchvessels thattakes fully into account opportunities for contracting for fisheries surveys." The House passed H.R. 2670 on August 6, 1999, approving amounts proposed by the House AppropriationsCommittee for NOAA for FY2000 ( H.Rept. 106-283 ). On July 30, 1999, the committee recommended $1.96 billionforNOAA in new budget authority (BA), including transfers and offsets of $280 million. This amount is about $5.9billionless than that requested by the President (including advanced appropriations for PAC through 2018) (30) , about $208 millionless than that appropriated in FY1999, and some 25% below Senate approved levels ( S. 1217 , see below). ORF would receive $1.48 billion (17% below Senate-approved levels) and $67 million transfer from the PromoteandDevelopment of Fisheries Account. Total BA approved for NOAA for FY2000 is about $103 million belowFY1999funding levels, and some $231 million below the Presidents request for FY2000. On June 14, 1999, the Senate Appropriations Committee approved $2.6 billion in funding for NOAA for FY2000( S. 1217 ). ORF would receive $1.78 billion, $66.4 million of that would be transferred from a Promote andDevelop Fisheries Products and Research account. PAC would receive $671 million. The committee approved$100million for a Pacific Coastal Salmon Recovery fund. Other Non-ORF funding for U.S. fisheries would total some$7.1million. Also, the committee reported rescissions for NOAA, including $1.2 million from the FisheriesPromotional Fund,and $3.4 million from ORF provided by the Dire Emergency Supplemental Appropriations Act of 1992 ( P.L.102-368 ). Section 606 of the Senate bill contained language prohibiting repair and maintenance and upgrade of NOAA vesselsinshipyards outside the United States, except in cases of emergency. On July 26, 1999, the Senate passed S. 1217 , with essentially the same funding levels and overall recommendations approved by the Senate AppropriationsCommittee. In February 1999, the President requested $2.5 billion in BA for NOAA for FY2000, which is a 10% increase aboveFY1999 appropriations of $2.23 billion. Of that amount, $1.7 billion was for ORF. Another $631 million was forPAC. Anew NOAA account would earmark $100 million for Pacific NW Coastal Salmon Habitats Restoration. Fundingrequestedfor federal research and development (R&D) for NOAA totaled nearly $600 million. The President's budgetwould fundmany new presidential initiatives for Protection of the Environment and Research and Development advances forthe 21stCentury, including Ocean 2000, Natural Disaster Reduction (begun FY1999), and Climate in the 21stCentury, researchunder the White House Committee on Environment and Natural Resources (CENR), including the U.S. GlobalChangeResearch Program and High Performance Computing, and new for FY2000, an Integrated Sciences for EcosystemsChallenges (ISEC) initiative. Also of note, the Administration requested authority to collect $34 million in newfisheriesand charting fees. The National Institute of Standards and Technology (NIST) received an appropriation of $641.2 million for FY1999, adecrease of 5% from the previous year. This funding included $280.1 million for the Scientific and TechnicalResearch andServices (STRS) account (with $4.9 million for expansion of the Baldrige Quality Program into the health andeducationarenas); $304.3 million for Industrial Technology Services (ITS), including $197.5 million for the AdvancedTechnologyProgram (which reflects a $6 million recission in P.L. 105-277 of "deobligated" funds from projects that wereterminatedearly) and $106.8 million for the Manufacturing Extension Partnership (MEP); and $56.7 million for construction. While continued support for the Advanced Technology Program (ATP) has been a major funding issue, it should be notedthat the amount appropriated for FY1999 was 3% more than the previous year (after the recission). ATP providesseedfinancing, matched by private sector investment, to businesses or consortia (including universities and governmentlaboratories) for development of generic technologies that have broad applications across industries. Opponentsof theprogram cite it as a prime example of "corporate welfare," whereby the federal government invests in appliedresearchactivities that, they maintain, should be conducted by the private sector. The Administration has defended ATP,arguing itassists businesses (and small manufacturers) develop technologies that, while crucial to industrial competitiveness,wouldnot or could not be developed by the private sector alone. For FY2000, the appropriations bill passed by the Senateincluded a 15% increase in funding for ATP. However, H.R. 2670 , as passed by the House, contained noappropriation for ATP arguing that ". . . the program has not produced a body of evidence to overcome thosefundamentalquestions about whether to program should exist in the first place." While the Advanced Technology Program wasultimately funded in the version of the bill that became law, the support provided, $142.6 million, reflects a 28%decreasefrom FY1999. The President's FY2000 budget requested $737 million for NIST. This amount was 15% above the previous year dueprimarily to proposed changes in support for ATP and for construction. Scientific and Technical Research andServiceswould have received $289.6 million and ITS would have been funded at $338.5 million, including $238.7 millionfor theAdvanced Technology Program (21% above FY1999) and $99.8 million for the Manufacturing ExtensionPartnership. Financing for construction at the laboratory would have increased 88% to $106.8 million allowing for improvementsinfacilities that are now 30 to 45 years old. The major portion of funds were to be used to build the AdvancedMeasurementLaboratory. In S. 1217 , the Senate approved FY2000 appropriations of $742 million for NIST, a 16% increase over theprevious year. This funding included $288 million for the STRS account and $336.3 million for ITS, of which$226.5million was for the Advanced Technology Program and $109.8 million for the Manufacturing Extension Partnership. Support for ATP would have been 15% above the FY1999 figure, while financing for MEP would have expanded3%. Funding for construction of research facilities would more than double to $117.5 million. H.R. 2670 , as passed by the House, funded NIST at $436.6 million, a decrease of 32% from its FY1999 budgetand $300 million less than the President requested. The major portion of this decrease was due to the absence ofsupportfor the Advanced Technology Program. The STRS account would have received $280.1 million (the same amountas theprevious fiscal year) and the total $99.8 million appropriated for ITS would have all been applied to theManufacturingExtension Partnership (with no funding for ATP). Construction would be financed at $56.7 million, of which $44.9millionwas for the Advanced Measurement Laboratory. The figure for construction was $50 million less than theAdministration'sbudget request and $60.8 million less than the support provided in S. 1217 . The final version of the bill as enacted into law provides $639 million in FY2000 appropriations for NIST, fundamentallythe same support as the previous year but 13% below the President's request. Of this amount, $283 million is forthe STRSaccount; $247.4 million is for ITS, including $142.6 million for ATP (28% below FY1999 funding) and $104.8million forMEP; and $108.4 million is for construction. The Office of the Undersecretary for Technology and the Office of Technology Policy (OTP) was funded at $9.5 millionby the FY1999 Omnibus Consolidated Appropriations Act, an increase of almost 12% over the FY1998 figure. OTPisresponsible for civilian technology and competitiveness issues, and coordinates the various elements of theAdministration's technology policy. The major portion of the funding increase was for the Experimental ProgramtoStimulate Competitive Technology (EPSCoT), an activity designed to strengthen the technological infrastructurein statesthat are "... traditionally under-represented in federal R&D funding." For FY2000, the President requested $9million forthis Office, a decrease of 5% over the current fiscal year due for the most part to a cessation in funding for theEPSCoTprogram. S. 1217 , as passed by the Senate, and H.R. 2670 , as passed by the House, would haveprovided $8 million for OTP in FY2000, 16% less than the previous year. This is the amount provided in theversion of thebill that ultimately was signed into law. The National Telecommunications and Information Administration (NTIA) provides guidelines and recommendationsfor domestic and global communications policy, manages the use of the electromagnetic spectrum for publicbroadcast, andawards grants to industry-public sector partnerships for research on new telecommunications applications anddevelopmentof information infrastructure. The important budget figures for NTIA include the overall budget for its operationsandadministration, support for the Information Infrastructure Assistance Program (IIAP), continued development andconstruction of public broadcast facilities, and support for NTIA salaries and expenses. For FY2000, the Clinton Administration has requested an overall budget for NTIA of $72.3 million, well above its FY1999funding of $49.9 million (in addition, the Administration also asked for advance appropriations of $299 million forFY2001-2003, which Congress refused to consider). The most significant increase within the NTIA budget comesfrom theAdministration's request for public broadcast facilities, planning, and construction. For FY2000, the ClintonAdministration has requested $35 million for public broadcast facilities, planning, and construction, well above the$21million appropriated for this program in FY1999. The Clinton Administration argues that to successfully convertU.S.broadcast technology from analog to digital, a significant investment in public facilities must be made, starting inthecoming fiscal year. For NTIA salaries and expenses, the Clinton Administration has recommended $17.2 millionforFY2000, a 65% increase over FY1999 ($10.9 million). For the IIAP, the Administration has requested: $20.1million forFY2000, an increase of 11% over FY1999 ($18 million). For FY2000, as passed by both the House and Senate and signed by the President, includes the following: a total of $52.9for the overall NTIA budget ($19.4 million less than the Administration request), $26.5 million for publicbroadcastingfacilities ($8.5 million below the request), $10.9 million for salaries and expenses ($6.3 million below the request), and$15.5million for the IIAP ($4.6 million below the request). The Government Performance and Results Act (GPRA) enacted by Congress in 1993 ( P.L. 103-62 ; 107 Stat 285) requiresthat agencies develop strategic plans that contain goals, objectives, and performance measures for all majorprograms. Thestrategic plan issued by the Department of Commerce enunciates three strategic themes: Theme l. Build for the future and promote U.S. competitiveness in the global marketplace, by strengthening and safeguarding the nation's economic infrastructure. Theme 2. Keep America competitive with cutting edge science and technology and a world class information base. Theme 3. Provide effective management and stewardship of the nation's resources and assets to ensure sustainable economic opportunity. As stated by the Department: The Themes within the Commerce Strategic Plan help identify and capitalize on relationships among bureaus and on partnerships with other agencies and external groups. The Strategic Plansupportsthe concept that strong working relationships will serve to strengthen the effectiveness of the Department as a whole,aswell as demonstrate how individual bureaus logically and critically support the core mission of theDepartment. The Commerce Strategic Plan provides the framework for strengthening existing relationships among bureaus and with external partners. Success for Commerce programs in the changingtechnological world and global economy will depend increasingly on alliances with businesses and industry,universities,State and local governments, and international parties. For more information on the strategic plan's goals, objectives and performance measures see The Department of CommerceBudget in Brief, Fiscal Year 2000 (pp. vii-ix ). Commerce Department Abolition Issue. Since the beginning of the 104th Congress, several legislative proposals havebeen considered that called for the abolition of the Department of Commerce by eliminating certain departmentalfunctionsand allowing others to operate as independent agencies or be transferred to other federal agencies. Those inCongress whohave favored the abolition of the Department argued that it "is an unwieldy conglomeration of marginally relatedprograms,nearly all of which duplicate those performed elsewhere in the federal government." The Clinton Administration,on theother hand, has strongly opposed abolishing the Commerce Department, arguing that "it would result in the needlessshuffling of governmental functions while eliminating successful activities that clearly benefit the Americanpeople,"especially in areas that promote economic growth, increase the international competitiveness of U.S. firms in globalmarkets, and advance U.S. technology. None of these proposals passed 104th Congress. There continued to be some congressional interest in reorganizing or downsizing the Department in the 105th Congress,although interest in abolishing the Department was considerably less than in the 104th Congress. (31) A bill calling for abolition of the Department was introduced by Representatives Royce and Kasich and several other cosponsors( H.R. 2667 ) on October 9, 1997. This bill was referred to the House Committee on Commerce and two otherHouse Committees that have jurisdiction over certain functions of the Department. A very similar version of theproposalwas also introduced in the Senate by Senator Abraham and others on October 24, 1997 ( S. 1316 ). This wasreferred to the Senate Governmental Affairs Committee. No further action was taken on this issue. In the currentCongress, similar legislation was introduced by Representative Royce on July 1, 1999-- H.R. 2452 . The billwas referred to several committees: Commerce, Transportation and Infrastructure, Banking and Financial Services,International Relations, Armed Services, Ways and Means, Government Reform, the Judiciary, Science, andResources. No further action was been taken in the House. No similar legislation was introduced in the Senate. For FY2000 Congress approved $3.96 billion in total budget authority for the Judiciary, an 8.4% increase over $3.65 billionenacted for FY1999--compared with the Judiciary's request of $4.16 billion, a 14.1% increase over FY1999 funding.TheFY2000 amount approved by Congress exceeded by $59 million the total Judiciary funding approved earlier by theHouseand by $145.6 million the total approved by the Senate. The budget total approved by Congress included: an upward adjustment (above that approved earlier by the House and Senate) for lower court operations and services; a slight decrease in the Judiciary's sensitive Defender Services account, accompanied, however, by a small increase in hourly compensation rates to court-appointed defense attorneys in federal criminalcases; a cost-of-living increase in the salaries of federal judges; a significant increase in funding for the Supreme Court's building improvement program;and the authorization of nine new Article III judgeships, the first since 1990. The unusual decision of House-Senate conferees to agree on greater Judiciary funding than approved earlier by eitherchamber followed appeals by the Judiciary for funding increases. Letters from Chief Justice William H. Rehnquistand thechairman of the Judicial Conference's Budget Committee warned Congress of the serious impact both the HouseandSenate versions of the CJS appropriations bill would have on the Judiciary's ability to provide services to the public. The large disparity between the Judiciary's overall budget request for FY2000 and what the House and Senate approved intheir respective CJS appropriations bills was reflected in the largest Judiciary account, Salaries andExpenses for theCourts of Appeals, District Courts and Other Judicial Services . This account funds the salaries andbenefits of judgesand supporting personnel and all operating expenses of the U.S. Courts of Appeals, District Courts, BankruptcyCourts andthe U.S. Court of Federal Claims. The principal issue over this account concerned the funding level needed tomaintainessential court operations and services. For Salaries and Expenses of the lower courts, the Judiciary had requested $3.25 billion, a 14.7% increase over FY1999funding of $2.83 billion. The Senate Appropriations Committee, and then the Senate, approved $2.99 billion, a 4.5%increase. In recommending this amount, the Senate Appropriations Committee noted its understanding that up to$83.9million in "carryover, reimbursables, and fees" would be available to apply to this account. The committeeobserved thatthe Judiciary's request for space and facilities, included in the Salaries and Expenses account, represented 21% oftheJudiciary's FY2000 budget submission. The committee credited the Judiciary for making efforts to control GSAspacerental growth, noting, however, that GSA rental payments continued to consume a greater portion of the total fundsavailable to the courts. "To accommodate this growth," the committee said, its recommendation "adjusts downward the request for court staff." (32) The Judiciary, however, quickly protested these cuts. According to the Judiciary, the Senate provided $211million less intotal funding than required to maintain current services, which, in the Judiciary's view, might necessitate, inFY2000, anearly 11% reduction in court support staff from that authorized in FY1999 (the equivalent of approximately 2,300employees). (33) As a result of these budgetreductions, the Judiciary warned, court operations and services "would beseverely curtailed." (34) The House in turn approved $3.09 billion for Salaries and Expenses -- $116.8 million below the Judiciary's request,$258.9 million above FY1999 funding, and $98.4 million more than approved by the Senate. The House-approvedamount,the House Appropriations Committee noted, was still short of what the Judiciary indicated was required: . . . but the amount is sufficient to avoid any involuntary personnel actions, and to permit hiring to replace attrition. Withrespect to the remaining shortfall, the Judiciary historically has been able, as the course of the year progresses, toidentifyadditional carryover and other resources to enable all critical operations to be funded, and that may serve to alleviateanyproblem. The Judiciary, in its official newsletter, The Third Branch , said that the House's proposed funding level would have a lessnegative impact on the courts than would the Senate's. Under the House bill, it said, furloughs of Judiciaryemployeeswould not be necessary, although a freeze on filling most vacant positions would still be likely. (35) However, in an August9, 1999 letter to Senate Majority Leader Trent Lott, Chief Justice William H. Rehnquist criticized both the SenateandHouse FY2000 appropriations bills. The Chief Justice said that despite its growing workload, the Judiciary under S. 1217 would receive $280 million less than was required to furnish the services it provided in FY1999. Such a budget cut, he said, was "both unjustified and impractical." The House bill, H.R. 1670 , according tothe Chief Justice, while providing a significant increase above the Senate, would provide $180 million less than"requiredto furnish the services the Judiciary provided this year, and it also would have a noticeable adverse impact on courtoperations." (36) Another issue regarding the Salaries and Expenses account for the lower courts concerned funding needed to handleworkload increases caused primarily by a sharp rise in criminal case filings. The Senate Appropriations Committee,in itsreport on S. 1217 , stated that it understood that increases in overall judicial caseloads were largely the resultof immigration proceedings. The committee said it also was aware that "these cases, while numerous, can beresolvedexpediently as compared to other criminal filings." Accordingly, the committee requested that the Judiciary conductastudy of whether the ratio of magistrate judges to U.S. district judges should be changed "to meet this pressingdemand onthe courts." Ultimately, following the House-Senate conference, Congress approved $3.1 billion for Salaries and Expenses--a 10.0%increase over FY1999, $122.4 million over the earlier Senate-approved amount, and $48.0 million over the Housebill. One of the more sensitive parts of the Judiciary's budget in recent years has been Defender Services . This account fundsthe operations of the federal public defender and community defender organizations, and the compensation,reimbursementand expenses of "panel attorneys" appointed to represent persons under the Criminal Justice Act. Duringconsideration ofthe Judiciary's FY1999 budget, congressional appropriators had expressed concerns about rising Defender Servicescosts;subsequently, conferees for the FY1999 Omnibus Appropriations Act directed the Judiciary to review DefenderServicescosts in "capital cases" (federal death penalty and death row appeal cases) and report its findings by to Congress bySeptember 30, 1999. For FY2000 the Judiciary requested $411.4 million for Defender Services (including $36.6 million in Violent CrimeReduction Program trust funds), a 5.0% increase over FY1999 budget authority of $391.8 million. (37) Congress, however,ultimately approved a 1.8% reduction in total FY2000 funding for Defender Services. The totalapproved, $385.1 million(including $26.2 million in violent crime reduction trust funds) was $2.7 million less than passed earlier by theHouse and$31.2 million more than approved by the Senate. (38) The Defender Services amount approved by Congress includes funding, as provided in the House bill, for an increase of $5an hour for in-court and out-of court compensation for Criminal Justice Act panel attorneys. Earlier, the Senatein its CJSbill, as requested by the Judiciary, (39) had providedfor a $10 increase in panel attorney hourly compensation rates--hikingin-court rates to $75 an hour and out-of-court rates to $55 an hour for all judicial districts, beginning April 1, 2000. According to the Judiciary, however, FY2000 funding approved for Defender Services by the Senate would beinsufficientto pay for panel attorneys at this higher rate for the entire fiscal year. Payments for panel attorneys, the Judiciarycontended, would have to be halted in late June 2000, deferring nearly $43 million in payments to these attorneysuntilFY2001. In that event, according to the Judiciary, a significant number of cases might not be able to proceed to trialduringFY2000 without violating the Sixth Amendment rights of persons to an adequate defense, in turn, compelling thecourts to postpone trials or dismiss charges against defendants. As noted above, Congress ultimately approved $31.2 millionmorefor Defender Services than did the Senate in its earlier CJS bill. On another matter involving Defender Services, House-Senate conferees stated in their report that they had adopted byreference language in the House Appropriations Committee report relating to the U.S. Court of Appeals for theNinthCircuit. (40) In response to the Judiciary's request, Congress authorized a 3.4% cost-of-living increase in judges' and justices' salaries for FY2000, appropriating $9.6 million for this purpose. (41) The Judiciary had requested a salary increase for judicialofficers effective January 2000, which it stated was consistent with an expected cost-of-living increase for federalemployees. The requested salary increase was agreed to by the Senate but not by the House in their respective CJSbills; (42) House-Senate conferees then approved the Senate's recommendation, making the upward pay adjustment for judgeseffective January 2000. (43) Congress previously had approved a pay increases for judges in its FY1998 CJS bill; that one-time 2.3% salary adjustmentcorresponded with a cost-of-living increase which Congress allowed for itself effective January 1998. Despite arequest ofthe Judiciary that it again do so the next year, Congress declined to include a pay adjustment for judges in theFY1999Omnibus Appropriations Act. In his 1998 Year-End Report of the Federal Judiciary, Chief Justice William H.Rehnquistfaulted Congress for again denying judges a pay raise (the fifth such denial, he noted, in the past 6 years). Denyingcost-of-living adjustments to top officials, he said, was "a regressive approach to compensation and [was]counter-productive to the common sense goal of encouraging capable individuals to enter the Judiciary." Congress also approved a substantial increase in funding for Care of the Building and Grounds of the SupremeCourt-- $8.0 million for FY2000. This amount was $2.6 million (or 32.5%) above theFY1999 appropriation of $5.4million but $14.7 million below the Judiciary's initial FY2000 request of $22.7 million. House-Senate confereesnoted thatthe $8.0 million finally approved was "the amount the Architect of the Capitol currently estimates is required forfiscal year2000, including building renovations and perimeter security." Earlier, the Senate had approved $9.7 million for this account, including $8.5 million for building improvements andfunding "for all requested perimeter security enhancements, including the replacement of aggregate sidewalks andtherestoration of brick walkways." The Senate Appropriations Committee had rejected $3.5 million requested foroff-sitedesign and construction, instead calling on the Court to provide the appropriations committees with a spaceutilizationstudy of the Court by February 1, 2000. (44) The House, for its part, had approved much less than the Senate for this account--$6.9 million ($15.8 million below theJudiciary's initial request). The House Appropriations Committee noted that in July 1999, relatively late in thebudgetprocess, it had received a letter from the Architect of the Capitol, indicating that the original request was beingmodified,and that in lieu of the $22.7 million in the budget request, the Architect's estimated requirement had been revisedto $8.0million. Congress approved a relatively large proportional increase for Court Security , the account which covers the expenses ofsecurity and protective services for the lower federal courts in courtrooms and adjacent areas. Appropriated for thisaccount for FY2000 was $193.0 million, a 10.6% increase over FY1999 funding of $174.6 million. Earlier, theSenateappropriated $196.0 million for FY2000, a 12.2% increase over FY1999; this proposed amount, the SenateAppropriationsCommittee stated, reflected "a refined estimate by the U.S. Marshals Service of court security requirements andfundscourt security personnel, equipment, and perimeter enhancements." The Judiciary, however, which had requested$206.0million (an 18.0% increase) expressed its unhappiness with the Senate amount; at that level, the Judiciarymaintained,nearly $10 million in planned security enhancements could not be funded, causing increased threats to judicialpersonnel,trial participants, and the general public. (45) Forits part, the House approved $190.0 million--$6 million less thanappropriated by the Senate and $3 million less than ultimately approved by Congress. House-Senate conferees saidthat theamount finally approved for FY2000, $193.0 million, provided for "requested adjustments to base, the requestedprogramincreases to hire additional security officers, and for perimeter security, and the balance for additional securityequipment." Congress approved decreased FY2000 funding for the United States Sentencing Commission. (The purpose of theCommission is to establish, review, and revise sentencing guidelines and policies for the federal criminal justicesystem.) Congress approved $8.5 million for the Commission, as provided in the House bill, which was a 10.4% decreasefromFY1999 funding of $9.5 million. Earlier, the Senate Appropriations Committee recommended $4.7 million for theCommission, a 50.0% decrease from the FY1999 appropriation of $9.5 million. The Judiciary had requested $10.6million,an 11.7% increase over FY1999. Ultimately, the Senate approved $9.7 million for the Commission and the Houseapproved $8.5 million ($1.0 million below FY1999 funding). The Senate committee, in its June 14, 1999 report on S. 1217 , noted that the seven-member Sentencing Commission had been vacant since October 31, 1998, that no commissioners had been nominated or designated bythePresident and that, meanwhile, "the carriage of justice has continued unabated in the absence of commissioners." Thecommittee recommended that the Judiciary reassess the need for the Commission, and it directed that a phase-outplan forthe Commission be provided before November 31, 1999 if no commissioners were appointed by October 1, 1999. Subsequently, on June 24, 1999, the White House announced a full slate of seven nominees to fill the Commission.Atabout the same time, the commission's interim director warned that the budget cuts contained in S. 1217 , ifenacted, would prolong the agency's recovery and result in personnel layoffs. On November 10, 1999, all sevennomineesto the Commission received Senate confirmation. Another point at issue in the Judiciary's budget was the funding needs of the Administrative Office of the U.S. Courts (AO). This office supervises administrative matters of the lower federal courts, including the probation andbankruptcysystems. Congress approved $55.0 million for the AO, $500,000 over the $54.5 million appropriated for FY1999(compared with the Judiciary's request of $58.4 million, the House's funding amount of $54.5 million, and theSenate'sproposal of $56.1 million). In its report, the Senate Appropriations Committee stated that its recommendation, of$56.1million, provided "most of the requested base adjustments for this account and reflected a refinement of anticipatedfunding requirements." The Judiciary, however, asserted that at the funding level approved in S. 1217 , theSenate's CJS bill, the AO would be "unable to pursue economy and efficiency efforts which benefit the entirejudiciary ormaintain base services to the court" and that the funding initially requested by the Judiciary was required for the AOtomaintain current services. Congress approved a provision added by House-Senate conferees (which had been in neither the House nor the Senate CJSbill), authorizing nine new U.S. district judgeships-- three for the District of Arizona,four for the Middle District ofFlorida and two for the District of Nevada. An identical judgeship provision had been approved earlier by both theHouseand Senate as part of their respective juvenile justice bills, H.R. 1501 and S. 254 ; however, withprospects uncertain for the House and Senate resolving their differences in other parts of the juvenile justice bills,thejudgeship provision was then added to Judiciary's FY2000 appropriations legislation, where it was enacted into law.Thenine new Article III judgeships were the first authorized since 1990. (46) As part of the budget process, the Government Performance and Results Act (GPRA) enacted by Congress in 1993 ( P.L.103-62 ; 107 Stat. 285) requires that agencies develop strategic plans that contain goals, objectives, and performancemeasures for all major programs. However, as noted earlier, the Judicial branch is not subject to the requirementsof thisAct. The Administration's FY2000 budget request for the Department of State and international broadcasting totaled $6.3billion, about 15% above the FY1999 enacted level of $5.5 billion, excluding the $1.56 billion emergencysupplementalappropriation for overseas security and Y2K computer compliance. The Senate set a total of $5.54 billion for StateandInternational Broadcasting for FY2000, while the House passed $5.8 billion. Congress and the President ultimatelyagreedto $6.3 billion for the Department of State and international broadcasting FY2000 budget. Reorganization of the foreign policy agencies occurred throughout FY1999, with both the U.S. Information Agency (USIA)and the Arms Control and Disarmament Agency (ACDA) abolished, and their functions fully merged into theDepartmentof State as of October 1, 1999. The FY2000 State Department appropriation includes ACDA and USIA (minusinternational broadcasting) funds. If the agencies would have remained independent, the Administration's FY2000requestwould break out as follows: State Department operations -- $4.7 billion (17% below the FY1999 level), USIA --about$1.1 billion (2.7% above the FY1999 level); and ACDA -- $47.7 million (15% above the FY1999 level). Congressagreedto appropriate $5.5 billion for the Department of State and $421.8 million for international broadcasting, but didnot breakout funding for ACDA and USIA-type functions. In addition to transfers of funds due to reorganization, the Department of State FY2000 request included funds toimplement increased overseas security measures. The August 7, 1998 terrorist attacks on two U.S. embassies inAfrica hadprompted the Administration to reconsider its funding request for diplomatic security at U.S. overseas facilities. OnSeptember 22, 1998, the President had submitted to Congress a request for emergency FY1999 supplementalappropriations amounting to a total of $1.8 billion. Within the omnibus appropriations bill, Congress had included$1.56billion for embassy security-related funding. (47) ForFY2000 the Administration requested $568 million for worldwidesecurity upgrades, as well as an advance appropriation of $3.6 billion for FY2001 - FY2005. The Senate passed$583.5million for overseas security for FY2000; the House passed $254 million for worldwide security within the diplomaticsecurity account and $313.6 million for worldwide security upgrades within the security and maintenance account (a totalof $568 million) for FY2000. The final appropriation passed by Congress and signed by the President set the totalforoverseas security upgrades at the House level of $568 million. The President's FY2000 request for State's administration of foreign affairs of $4,094.8 million was nearly the same asthe FY1999 enacted level if the $1.56 billion supplemental for security upgrades is included. The FY2000 requestincluded: $568 million for worldwide security upgrades , an increase in the inspector general account due to theintegration of the agencies, and a 10% increase in the emergencies in the diplomatic and consularservice account whichpays for embassy evacuations and rewards regarding terrorist arrests. The Senate agreed to $3,714.6 million for administration of foreign affairs , $583.5 million for security and maintenanceof overseas buildings , including security upgrades, and $26.5 million for the inspector general . In contrast, the Houserecommended $3,889.9 million for the administration of foreign affairs account, above the Senate level, but below theAdministration request. The conference as passed by Congress included $4.0 billion for administration of foreign affairs ,including a total of $742 million for security and maintenance and security upgrades accounts. After the President'sveto ofthe original CJS conference, the administration of foreign affairs account was raisedto $4.04 billion which the Presidentsigned. The capital investment fund request for FY2000 was $90 million--$47.9 million below the FY1999 level which included$57.9 million from the FY1999 supplemental for Y2K compliance. The full Senate agreed to reduce the capitalinvestmentfund by $30 million to $50 million in order to reinstate money for the National Endowment for Democracy whichtheSenate Appropriations Committee had recommended zeroing out. Like the Senate full committee, the House passed$80million for the capital investment fund. Congress set $80 million as the capital investment fund FY2000 level inthe finalbill. The United States contributes in two ways to the United Nations and other international organizations: voluntary paymentsfunded in the Foreign Operations Appropriations bill and assessed contributions included in the Commerce, Justice,andState Appropriations measure. Assessed contributions are provided in two accounts, internationalpeacekeeping and contributions to international organizations (CIO) . Following a periodof dramatic growth in the number and costs ofU.N. peacekeeping missions during the early 1990s, a trend that peaked in FY1994 with a $1.1 billion appropriation,funding requirements have declined in recent years. The FY1999 enacted appropriation for CIO was $922 millionand$231 million for international peacekeeping. The Administration had also requested and received funds for U.N.arrearagepayments of $475 million for FY1999, however, Congress did not provide authority for expenditure of thosefunds. (48) TheFY2000 budget request included $963.3 million for CIO and $235 million for international peacekeeping. TheSenatepassed $943.3 million for CIO, $107 million for U.N. arrearage payments, and $280.9 million for peacekeepingfor a totalof $1,331.2 million. The House passed $842 million for CIO, $200 million for peacekeeping, and $351 million forarrearage payments, totaling $1,393.9 million. Congress approved a total of $1,436.2 million, higher than eitherthe Houseor Senate levels: $885 million for CIO, $200 million for peacekeeping, and $351 million for U.S. arrearages to theU.N.The President, however, vetoed the FY2000 CJS appropriation bill because the amount approved by Congress forpaymentof arrearages was deemed inadequate. The final law provides $885.2 million for CIO, $500 million forpeacekeeping, and$351 million for U.S. arrearage payments to the U.N. Education and cultural exchange programs funded within USIA include programs such as the Fulbright, Muskie, andHumphrey academic exchanges, as well as the international visitor exchanges and Freedom Support Act programs. Government exchange programs have come under close scrutiny in recent years for being excessive in number andduplicative. Funding has declined 14% since FY1995. The FY1999 enacted level for this account was $200.5million,including $95 million for the Fulbright program. The Administration requested $210.3 million for this functionwhich isnow within the State Department. The Senate set FY2000 funding for this account at $216.5 million, while theHousepassed a significantly lower level of $175 million. Congress and the Administration agreed on $205 million for educationand cultural affairs in FY2000, but did not specify an amount for the Fulbright exchange program. USIA's international broadcasting operations account, established after consolidation under the Broadcasting Board ofGovernors (BBG) in FY1995, includes Voice of America (VOA), Radio Free Europe/Radio Liberty (RFE/RL), CubaBroadcasting, and new surrogate facilities: Radio Free Asia (RFA), Radio Free Iraq and Radio Free Iran. ForFY1999,Congress approved of $384.5 million for international broadcasting, including $22.1 million for Cuba Broadcasting,and$13.2 million for radio construction (now referred to as broadcasting capital improvements). When USIA integratedintothe Department of State at the end of FY1999, the BBG became an independent agency. The Administrationrequested$431.7 million for international broadcasting and $20.9 million for capital improvements for FY2000 to assist inthetransition toward becoming an independent agency. The Senate approved $386.1 million for broadcasting (including$23.7million for Cuba Broadcasting) and $13.2 million for capital improvements. The House approved $410.4 millionforinternational broadcasting activities and $11.3 million for capital improvements. Both Congress and theAdministrationagreed on funding international broadcasting at the House levels. ACDA's FY1999 level of $41.5 million is $1.2 million below the FY1998 level. ACDA became integrated into the StateDepartment as of April 1, 1999. The Administration request for State's ACDA-related activities in FY2000 totals$47.7million. Congress did not set a budget level for ACDA as it is currently within State's Administration of ForeignAffairsaccount. The Government Performance and Results Act (GPRA) enacted in 1993 ( P.L. 103-62 ; 107 stat 285) required that agenciesdevelop strategic plans that contain goals, objectives, and performance measures for all major programs. Thesubsequentlypublished reports: U.S. Department of State Strategic Plan and the United States Strategic Planfor International Affairs ,both September 1997, did not refer to specific agencies, but rather identified seven national interests: nationalsecurity,economic prosperity, protection of American citizens and U.S. borders, international law enforcement, democracy,humanitarian response, and involvement in global issues. The plans then established 16 strategic goals andstrategies forpromoting and defending these interests. The goals were long-term with time frames of more than 5 years. TheSenateAppropriations Committee pointed to weaknesses in the State's GPRA plan and recommended that the DepartmentfollowGAO recommendations when preparing its FY2000 plan. This section includes all other related agencies covered by the CJS appropriations bill, whose appropriations exceed $1.5million. (49) Maritime Administration. MARAD administers aid in the development,promotion, and operation of the nation's merchant marine (including programs that benefit vessel owners, shipyards,andship crews). The Administration requested $181 million for MARAD for FY2000, $12 million more than Congressappropriated to it in FY1999. The request consisted of $98.7 million for the Military Security Program (MSP),$72.2million for operating MARAD and training ship crews, $25 million for the higher cost of transporting agriculturalproductsin U.S.-flag vessels, $6 million for ship construction mortgage guarantees ("Title XI Program"), and $3.9 millionforadministering that guarantee program. The MSP program replaces the ODS (Operating Differential Subsidy)program. Only a few ships remained in the ODS program at the end of FY1999, and the last ship contract in the ODS expiresinFY2002. The Senate Appropriations Committee, and the full Senate, recommended $186.3 million, consisting of$98.7million for the MSP, $72.7 million for operations and training, $11 million for Title XI, and $4 million foradministeringthe Title XI program. The House Appropriations Committee, and the full House, recommended $179 million,consisting of$98.7 million for the MSP, $71.3 million for operations and training, $9.1 million for Title XI (including $3.7million foradministering the title XI program. Congress approved $178.1 million for FY2000, comprised of $96.2 million fortheMilitary Security Program (MSP), $72.1 million for Operations and Training, and $9.8 million for the MaritimeGuaranteedLoan (Title XI) Program. This compares to the FY1999 appropriation of $168.7 million, and $180.7 millionrequested bythe President. Census Monitoring Board. The Administration requested $4 million forthe Census Monitoring Board for FY2000. This body is an eight-member bipartisan oversight board charged withobservingand monitoring all aspects of the preparation and implementation of the 2000 decennial census. (50) The Board was fundedwithin the Bureau of Census in FY1999. For FY2000, the House approved $3.5 million, which was included in theoverallappropriation for the Census Bureau. The Senate-passed bill approved the same level requested by the President--$4million. Congress approved $3.5 million for the Board, as part of the overall appropriation for the Census Bureau. The Small Business Administration (SBA). The SBA is an independentfederal agency created by the Small Business Act of 1953. While the agency administers a number of programsintended toassist small firms, arguably its three most important functions are: to guarantee -- via the 7(a) general business loanprogram -- business loans made by banks and other financial institutions; to make long-term, low-interest loans tovictimsof hurricanes, earthquakes, and other physical disasters; and, to serve as an advocate for small business within thefederalgovernment. For FY2000, the Administration requested a total appropriation of $994.5 million -- $761.5 million in regular appropriations and $233 million in contingent and emergency appropriations. (51) This compares to a $819 million CJSappropriation for SBA for FY1999, including $719 million for regular appropriations (and $101 million incontingent andemergency appropriations, primarily to cover anticipated expenses associated with Hurricane George). Thatappropriationincluded $288 million for S&E. At first glance, the $288 million for S&E appears to have provided SBAwith asubstantial increase in this account compared to FY1998; it is perhaps worth noting, however, that more than $50millionincluded in S&E for FY1999 was not requested by SBA, and was earmarked for assorted projects in severalstates. The Senate Appropriations Committee recommended total funding for SBA of $725.6 million for FY2000, a decrease of$186.2 million from the Administration's request. The Committee did not recommend funding any of the newinitiativesrequested by the SBA, noting that the Committee believes "the agency's existing programs should be able to delivertheservices envisioned by implementation of these new initiatives." The Senate approved a slightly lower amount -- $720.6million. The House, following the recommendation of the Appropriations Committee, approved slightly higherfunding forSBA: $734.5 million. This amount was $177 million below the budget request which, as noted above, included$233million in contingent emergency appropriations. More specifically, the House recommended $245.5 million forS&E, anamount $17.5 million below the Administration's request, and $42.8 million below the amount provided forFY1999. In the end, Congress approved $877 million in total funding for SBA in the Consolidated Appropriations Act for FY2000,including $322.8 million for S&E. Thus, total funding for the agency for FY2000 is $57 million greater thanits FY1999CJS appropriation. Legal Services Corporation (LSC). This agencyis a private, non-profit,federally funded corporation that provides grants to local offices that, in turn, provide legal assistance to low-incomepeoplein civil (non-criminal) cases. The LSC has been controversial since its inception in the early 1970s, and has beenoperatingwithout authorizing legislation since 1980. There have been ongoing debates over the adequacy of funding for theagency,and the extent to which certain types of activities are appropriate for federally funded legal aid attorneys toundertake. Inannual appropriations laws, Congress traditionally has included legislative provisions restricting the activities ofLSC-funded grantees, such as prohibiting representation in certain types of cases or conducting any lobbyingactivities. For FY2000, the Administration again requested $340 million for the LSC. The proposal would continue all restrictions onLSC-funded activities currently in effect. The Administration has requested $340 million every year since FY1997,in aneffort to partially restore recent cutbacks in funding. The Administration's FY2000 request for LSC is $40 millionhigherthan the $300 million FY1999 appropriation for the program. Historically, the Corporation's highest level of fundingwas$400 million in FY1994 and FY1995. For FY2000, the Senate Appropriations Committee recommended a total of $300 million for the LSC. This is identical tothe FY1999 appropriation and $40 million lower than the Administration's request. The Senate Committee'srecommendation includes $289 million for basic program operations, $8.9 million for management andadministration ofthe program, and $2.1 million for the Office of the Inspector General. The Committee's recommendation alsoincludesexisting administrative provisions restricting the activities of LSC-funded grantees. The Senate approved the sametotalrecommended by the Senate Appropriation Committee. For FY2000, the House Appropriations Committee recommended a total of $141 million for the LSC. This amount is $159million lower than the FY1999 appropriation and $199 million lower than the Administration's request. The House Committee's recommendation includes $134.6 million for basic program operations, $5.3 million for managementandadministration of the program, and $1.1 million for the Office of the Inspector General. The Committee'srecommendationalso includes existing administrative provisions restricting the activities of LSC-funded grantees. The HouseCommitteealso cited its concerns about inaccuracies in the reporting of the number of cases served and closed and directed theLSC tomake improvement of the accuracy of the annual data reports submitted to Congress a top priority. During the House floor debate, Representative Serrano offered an amendment to increase the funding for LSC by $109million to $250 million for FY2000. As amended, the funding would include $242.6 million for basic programoperations,$5.3 million for management and administration of the program, and $2.0 million for the Office of the InspectorGeneral.The House passed the amendment and thereby approved $250 million for LSC for FY2000. This amount is $50millionlower than the FY1999 appropriation and the Senate request and $90 million lower than the Administration'srequest. The Conference Committee report on H.R. 2670 included $300 million for LSC. This is identical to the FY1999 appropriation and the Administration's FY2000 budget request. Both the House and the Senate approvedtheConference Committee recommendation. H.R. 2670 was vetoed by the President on October 25, 1999. Inhisveto message, President Clinton stated that " adequate funding for legal services is essential to ensuring thatall citizenshave access to the Nation's justice system " and urged Congress to fully fund the program at $340 million. The Conference Committee report on H.R. 3194 contains $305 million for LSC. The new Conference agreement includes $289.0 million for basic program operations and independent audits, $8.9 million formanagement andadministration of the program, $2.1 million for the Office of the Inspector General, and $5.0 million for technologygrantsfor LSC to improve pro se methods and acquire computerized systems that make basic legal information and courtformsaccessible to pro se litigants. The conferees cited their concerns about inaccuracies in the reporting of the numberof casesserved and closed and directed the LSC to make improvement of the accuracy of the annual data reports submittedtoCongress a top priority. The conferees also directed the LSC to submit its 1999 annual case service reports andassociateddata reports to Congress by April 30, 2000. Provisions restricting the activities of LSC-funded grantees, such asprohibiting representation in certain types of cases or conducting any lobbying activities are also included in theconferencereport. The $305 million agreed to in the conference report for LSC for FY2000 is $5 million higher than the FY1999 appropriation and the Senate request and $35 million lower than the Administration's request. Equal Employment Opportunity Commission (EEOC). TheCommission enforces laws banning employment discrimination based on race, color, religion, sex, national origin,orhandicapped status. The EEOC's workload has increased dramatically since the agency first was created under TitleVII ofthe Civil Rights Act of 1964. As new civil rights laws have been enacted and employees' increased awareness oftheirrights has grown, the agency's budget and staffing resources have not been able to keep pace with the substantialincreasein case load. The Congress increased the agency's budget for FY1999, giving it $279 million, an increase of $37millionover the FY1998 appropriation. The additional funds have helped to speed resolution of a large backlog cases andexpandthe use of alternative dispute resolution techniques. For FY2000, the President requested $312 million, an increase of $33 million to continue the agency's effort to lowercharge inventories, reduce excess backlogs in hearings and appeals, and facilitate compliance with EEO laws in theprivateand public sectors. The Senate Appropriations Committee approved $279 million for FY2000. This amount was$33million less than the request and the same as the FY1999 appropriation. In the accompanying committee report, itwassuggested that the EEOC expand its use of alternative dispute resolution techniques. Funding for fair employmentpracticesagencies, requested at $29 million, was included in the total amount. The Senate noted that the agency was to useitsanticipated FY1999 carryover funds and any amounts not used for the above purposes to modernize its computersystems. The full Senate approved the Committee's recommendation. The House Appropriations Committee followed theSenate'slead and approved the $279 million amount. The House Committee noted that no funds were requested for"employmenttesters" and that the EEOC does not intend to use any fiscal year 2000 appropriations for this purpose. TheCommittee saidit expected the EEOC to submit a spending plan to the Committee in accordance with section 605 of this Act beforeDecember 31, 1999. The House approved the same amount recommended by the House Committee. In this roundofsparring over appropriations with the White House, Congress approved an amount of $279 million.. In his message vetoing the initial FY2000 CJS appropriation measure, the President noted that one factor in his vetodecision was that funding for the EEOC was frozen at the FY1999 enacted level, an action which he said wouldunderminethe EEOC's progress in reducing the backlog of employment discrimination cases. Following the veto, Congressraised theEEOC appropriation to $282 million, which was the amount in the measure signed by the President. Commission on Civil Rights. The Commission collects and studiesinformation on discrimination or denials of equal protection of the laws. It received an appropriation of $8.9 millionforFY1999. The President's request for FY2000 called for an increase to $11 million. The Senate Committeerecommended$8.9 million, $2.1 million less than the budget request and the same funding as appropriated for FY1999. The Senateapproved this amount. The House Appropriations Committee also recommended the same amount. The Houseapprovedthe Committee's recommendation. Congress approved $8.9 million. The Federal Communications Commission (FCC). The FCC is anindependent agency charged with regulation of interstate and foreign communication by means of radio, television,wire,cable and satellite. Congress approved $210 million in FY2000 for the Commission--a 9.4% increase over FY1999resources of $192.0 million but $20.9 million less than the Commission's FY2000 request. The total fundingamountapproved by Congress consisted of a direct appropriation of $24.2 million and $185.8 million in offsettingregulatory feecollections--compared with a direct appropriation of $19.5 million and $172.5 million in regulatory fees enactedforFY1999. Before resolving their differences in conference, the House and Senate had approved $192.0 million and$232.8million respectively in total FY2000 funding for the Commission. (52) President Clinton, in his October 25, 1999 veto message on the FY2000 CJS spending bill ( H.R. 2670 ), hadfound the bill's FCC section objectionable on several counts. First, the President said, the bill failed to include aproposedprovision to "clarify current law and protect taxpayer interests in the telecommunications spectrum auctionprocess." (53) This statement concerned the issue of what kind of legislation, if any, was appropriate to deal with "C-blockspectrum" thathad been auctioned off to bidders who subsequently filed for bankruptcy. (The Clinton Administration reportedlyregardedrevenues from this spectrum as offset for other spending in the federal budget and favored a provision to allow theFCC toreclaim spectrum from the bankrupt licensees.) The President also faulted the bill for "deny[ing] funds needed bythe FCCfor investments in technology to better serve the communications industry" and for not providing "sufficient fundsfor thecontinued operations of the FCC." Ultimately, language addressing these presidential concerns was not included in the omnibus budget agreement agreed onby Administration and congressional negotiators. Specifically, the agreement signed into law by President ClintononNovember 29, 1999 was without a provision sought by the President allowing the FCC to reclaim spectrum frombankruptC-block licensees. (Reports in the telecommunications trade press said that the Clinton administration and someSenatorsstill regarded re-auction legislation as a high priority and would push for re-auction legislation in 2000.) Also, thefundingtotal of $210 million enacted for the Commission was precisely the same amount as in the CJS bill vetoed earlierby thePresident. Moreover, the final agreement contained no new language to provide additional funds requested by thePresident for FCC investments in technology. The House-Senate conference report on the CJS bill ultimately agreed to by the President and Congress dropped languagewhich conferees earlier (prior to the President's veto of the CJS bill H.R. 2670 ) had approved involving FCCregulation of telephone companies' accounting methods. (54) Two other FCC provisions approved by the Senate in its CJS bill in July 1999 also were not included in the FY2000funding bill finally approved by Congress. One provision would have given the FCC the authority to independentlyoperateits headquarters building. The other would have called on the FCC to release a report regarding the proliferationof newtelephone area codes no later than December 31, 1999 while minimizing "any disruptions and costs to consumersandbusinesses" associated with the report's implementation. In not including this provision, House-Senate confereesnotedthat the FCC had issued a notice of proposed rulemaking to assist State public utility commissions in their effortstoconserve numbers in specific area codes. The conferees stated they expected the FCC to issue a final order on areacodeconservation measures no later than March 31, 2000. The FY2000 Consolidated Appropriations Act approved by Congress also contained a major new piece of telecommunications legislation separate from the CJS appropriations bill--the Intellectual Property andCommunicationsOmnibus Reform Act of 1999. (55) Earlier in the FY2000 appropriations process, the Senate Appropriations Committee expressed its concern with an FCCdecision to increase charges on citizens' telephone bills for the e-rate program. Further, the committee maintainedthat theadministration of the e-rate program by the Schools and Libraries Corporation (SLC) had "not been adequatelyexaminedand assessed." Accordingly, the committee directed that the General Accounting Office to review the SLC's role,as wellas assess the FCC's statutory authority to increase e-rate fees. For its part, the House Appropriations Committeedirectedthe FCC to submit, no later than December 15, 1999, a financial plan proposing a distribution of all funds in itsbudgetaccount. In keeping with the requirements of the Government Performance and Results Act, the FCC, as part of its FY2000 budgetrequest, presented a strategic plan setting forth its overall mission and general and specific goals for a 6-year timeframe. (56) Federal Maritime Commission (FMC). The FMC regulates a large partof the waterborne foreign offshore commerce of the United States. The Administration requested $15.3 million fortheFMC for FY2000, $1.3 million more than Congress appropriated to it in FY1999. The Senate AppropriationsCommittee,and the full Senate, recommended $14.2 million. The House Appropriations Committee, and the full House,recommendedthe same amount. Congress approved $14.2 million for FY2000, compared to the FY1999 appropriation of $14.1million,and the $15.3 million total requested by the President. Federal Trade Commission (FTC). The FTC, an independent agency, isresponsible for enforcing a number of federal antitrust and consumer protection laws. In the fall of 1998, Congressapproved a total FY1999 appropriation for the agency of $116.7 million, $106.5 million of which was in offsettingfeecollections ($76.5 million from the current year and $30 million in prior-year collections) resulting in a directappropriationof $10.2 million. For FY2000, the Administration requested a total appropriation for the FTC of $133.4 million. This figure was to bederived entirely from premerger filing fees; no direct appropriation were requested for FY2000. Specifically, $93.9million would have come from offsetting collections derived from fees collected for premerger notification filingsunderthe Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the remaining $39.9 million would have come fromprior-year collections. The Senate Appropriations Committee recommended a total operating level of $133.4 million for FY2000, the same as theAdministration's request. The Committee, however, chose a different approach. It recommended $9.3 million bederivedfrom prior-year unobligated fee collections and $144 million from current year offsetting fees. But, as with theAdministration's assumptions, no direct appropriations would have been required. The Senate approved theCommittee'srecommendation. The full House, following the recommendation of the Appropriations Committee, approved atotalbudget authority of $116.7 million for FY2000, a decrease of $16.7 million below the agency's request, and the sameas theFY1999 appropriation. Of this amount, $39.5 million was to be derived from prior year unobligated fee collections,and$77 million from current year offsetting fee collections from premerger filing fees under the Hart-Scott-Rodino Act,resulting -- as with the Senate bill -- in no net direct appropriation for the agency For FY2000, Congress approved a total operating level of $125 million for the FTC, a reduction of $8.4 million from theagency's FY1999 figure. More specifically, the $125 million is comprised of $104 million in offsetting feecollections and$21 million in prior year collections, resulting in no net direct appropriation. Securities and Exchange Commission (SEC). The SEC administers andenforces federal securities laws in order to protect investors and to maintain fair, honest and efficient markets. ForFY1999, the Administration had requested a total appropriation of $341.1 million for the SEC, including a generalfund(direct) appropriation of $118.1 million, $205 million from 1999 offsetting fee collections, and $18 million from1998offsetting fee collections. (This one-time proposed increase in the general fund (direct) appropriation, accordingto theAdministration, would enable the Commission to accommodate the elimination of appropriated budget authoritywhichprovides a guaranteed funding level that is later reduced as actual collections, are received.) The Administration's suggested approach -- noted in the previous paragraph -- generally met with the approval of theHouse CJS appropriations subcommittee, albeit at a funding level of $324 million, $17.1 million less than theagencyrequested. The House-passed bill ( H.R. 4276 ) accepted the subcommittee's recommendation for a totalappropriation of $324 million to be comprised of the following components: (1) a direct appropriation of $23million forFY1999; (2) offsetting fees of $214 million to be collected during FY1999; and (3) offsetting fees of $87 millioncollectedin 1998. The CJS bill ( S. 2260 ) passed by the Senate, following the recommendation of the AppropriationsCommittee, rejected the approach of a one-time-only total direct appropriation. The Senate bill provided a totalappropriation for the agency of $341.1 million as requested in the President's FY1999 budget. However, it providednodirect appropriations at all; the full $341.1 million for the agency's Salaries and Expenses would be derived fromfeescollected in fiscal 1999. Congress generally adopted in P.L. 105-277 the Administration's suggested approach. Itprovided the SEC with a total appropriation of $330 million, including a direct appropriation of $23 million, $214millionfrom 1999 offsetting fees, and $93 million from fees collected in 1998. (57) For FY2000, the Administration requested a total funding level of $360.8 million, a $19.5 million increase over theagency's 1999 funding level of $341.3 million. This total appropriation includes $230 in offsetting fee collectionsfor theyear 2000 and $130 million in 1998 offsetting fee collections. The Senate Appropriations Committee recommended $370.8 million in total funding for the SEC for FY2000. The totalappropriation recommended included $130.8 million in prior-year collections and $240 million in offsetting feecollectionsfor the year 2000. Under these assumptions, no direct appropriations would be required. The Senate approved theCommittee's recommendation. The House Appropriations Committee recommended a significantly lower amount. Itcalled for overall funding of $324 million for the SEC for FY2000, a decrease of $36.8 million below the agency'srequestand the same level provided in FY1999. The overall funding is comprised of the following components: (1) anappropriation of FY2000 offsetting fee collections of $193 million; and (2) an appropriation of 1998 offsetting feecollections of $130 million. The full House approved the Committee's recommendation. The Congress approved a total operating level of $367.8 million for the SEC for FY2000, an increase of $43.8 million overFY1999. The figure is comprised of $194 million in prior year fees collected and $173.8 million in offsetting feecollections for FY2000. The result is that no direct appropriation is required for the agency for FY2000. The State Justice Institute. The agency is a private, non-profitcorporation that makes grants and undertakes other activities designed to improve the administration of justice intheUnited States. The Administration requested $15 million for FY2000, which is $8.2 million above the $6.8 million appropriated for FY1999. The Senate Appropriations Committee recommended $6.8 million for FY2000 for the State Justice Institute, which is thesame as that appropriated in FY1999 and $8.1 below the President's request. The Committee notes that $8 millionisavailable to the Institute from "the Courts of appeals, district courts, and other judicial services" account. TheSenateapproved the Committee's recommendation. The House Appropriations Committee recommended no funding forthisagency. The House-passed bill did not approve any new funding. Congress approved $6.8 million which is thesame totalappropriated for FY1999 and $8.2 million less than the Administration's request. Commission on Ocean Policy (OPC). The Senate passed legislation inNovember 1996, creating a 16-member commission to examine national policy relative to ocean and coastalactivities. TheSenate bill approved $3.5 million for FY1999. (58) No funding was requested in the President's FY1999 budget. The Housebill did not approve any funding for this commission. Congress approved the $3.5 million amount recommendedby theSenate. No funds were requested by the President in his FY2000 request. The Senate Committee recommends nofunds forFY2000. The Senate bill contains no additional funding for the Commission. The House Committee alsorecommended nofunding. The House bill provides no new funding. Congress did not approve additional funding. Office of the United States Trade Representative (USTR). The Congressapproved $25.6 million for FY2000, which is $1.4 million more than the $24.2 million appropriated for FY1999but $0.9million less that the $26.5 million requested by the Administration. The Senate Appropriations Committeerecommended$26.1 million for FY2000, and the Senate approved the Committee's recommendation. The House AppropriationsCommittee approved $25.2 million for FY2000, and the House approved the same level. U.S. International Trade Commission (ITC). The FY2000 appropriationapproved by the Congress was $44.5 million, plus a $2.5 million carryover. This level is the same as the FY1999level and$2.7 million less than the President's request of $47.2 million. The Senate Appropriations Committee recommended$45.7million for FY2000, and the Senate approved the recommended amount. The House Appropriations Committeeapproved$44.5 million, and the full House approved the amount recommended by the Committee. As noted earlier in this report, the Government Performance and Results Act (GPRA) passed by Congress in1993 ( P.L.103-62 ) requires that agencies develop strategic plans that contain goals, objectives, and performance measures forallmajor programs. In its report on the CJS appropriations bill ( S. 2260 ; S.Rept. 105-235 , pp. 5-6), the SenateAppropriations Committee made the following evaluation regarding agency compliance with GPRA requirements: The Committee has received a number of strategic plans from different organizations receiving appropriated funds within the bill. The Committee found weaknesses with the fiscal year1999performance plans of the Departments of Commerce and State and the Small Business Administration. TheCommittee wasespecially troubled by the lack of results-oriented, measurable goals in the performance plans. The Committee isalsoconcerned that the plans did not uniformly display clear linkages between performance goals and the programactivities inagencies' budget requests. Also, some plans did not sufficiently describe approaches to produce credibleperformanceinformation. The Committee considers the full and effective implementation of the Results Act to be a priority forallagencies under its jurisdiction. We recognize that implementation will be an interactive process, likely to involveseveralappropriations cycles. The Committee will consider agencies' progress in addressing weaknesses in strategic andannualperformance plans in tandem with their funding requests in light of their strategic goals. This effort will helpdeterminewhether any changes or realignments would facilitate a more accurate and informed presentation of budgetaryinformation.Agencies are encouraged to consult with the Committee as they consider such revisions prior to finalizing anyrequests. The plan prepared by the Department of Justice was given high marks by the committee. It stated that: "The plan wasreceived in a timely fashion and contained objective, measurable performance goals. The strength of theperformanceplans was its presentation of reasonably clear strategies for its intended performance goals." (59) In its report on its version of the CJS bill, the House Appropriations Committee in 1998 noted that "performance planshave generally been of mixed utility in considering the fiscal year budget request." The committee requests that eachagency consult with it early in the process of formulating the budget and performance plan for FY2000, to improvetheplan's usefulness to the committee when it examines the FY2000 request ( H.Rept. 105-636 , p. 8.). In its report on the FY2000 CJS appropriations, the Senate Appropriations Committee stated that it had "...sent amemorandum to all organizations subject to GPRA funded within this Act. It requested information about theagencies'experiences resulting from the Act. The Committee reiterates that all responses be provided no latter than July 1,1999." (60) Brief descriptions of the latest versions of the Strategic plans of the major agencies covered by CJSappropriations arecontained in the discussions of the FY2000 budget requests of individual agencies included in this CRS report. The table below shows funding trends for the major agencies included in CJS appropriations over the periodFY1995-FY1999. As seen in the table below, funding increased, in current dollars, for the Department of Justice by$5,871 million ( or 47.6%); for the Department of Commerce by $1,020 million ( or 25 %); and for Judiciary $748million(or 25.8%). Funding for the Department of State increased by $215 million (or 5.2%). Table 2. Funding Trends for Departments of Commerce, Justice, and State, and theJudiciary (in millions of current dollars) Sources : Funding totals provided by Budget Offices of CJS and Judiciary agencies, a ndCongressional Record , vol. 145,November 18,1999: H12776-12786. The President's FY2000 budget sent to Congress on February 1, 1999, requested about $40.5 billion for these agencies,about a $4.3 billion increase or about 12% above the FY1999 total. The Senate on July 22, 1999 approved a total of $35.4 billion, $5.1 billion below the Administration's request and $800million below the FY1999 appropriation. On August 5, 1999, the House approved a total of $37.7 billion( H.R. 2670 , H.Rept. 106-283 ), $2.8 billion below the President's request, $2.3 billion below the levelapproved by the Senate and $1.5 billion above the FY1999 appropriation. This amount included $4.5 billion forthedecennial census, designated as emergency spending. The Senate did not include this funding. On October 18, theConference Committee approved a CJS bill totaling $39 billion(including the House-passed total of $4.5 billion forthe2000 census)--$2.8 billion above the FY1999 appropriation and $1.5 billion below the President's request. The billwasapproved by both houses of Congress on October 20,1999. The President vetoed the bill on October 25, because, among other things, it (1) did not provide enough money for hiscommunity policing program (better known as the COPS program), (2) contained no funding for its lawsuit againstthetobacco industry, and (3) did not provide adequate funding for direct payment of dues and arrears to the UnitedNations andother peacekeeping operations abroad. Following negotiations between congressional leaders and the White House, these issues were apparently resolved. Asecond CJS bill approved by Conference ( H.Rept. 106-479 ) included in H.R. 3194 , the ConsolidatedAppropriations Act for FY 2000, was passed by the House on November 18, and the Senate on November 19, 1999. Thenumber for the FY2000 CJS bill is H.R. 3421 which is in Division B of H.R. 3194 , Section1000(a). The President signed the bill into law on November 29, 1999 ( P.L. 106-113 ; 113 Stat. 1501). The lawapprovestotal funding of $39.63 billion which is about $625 million above the level initially approved by Congress, $3.4billion (or9.5%) above FY1999 appropriation and $920 million below the President's request. The bill approved total funding of $39.63 billion which was about $625 million above the level initially approved byCongress, $3.4 billion (or 9.5%) above FY1999 appropriation and $920 million below the President's request. It is important to note that the Consolidated Appropriations Act passed by the House also includes a provision whichmandates a 0.38 percent government-wide recission of discretionary budget authority for FY2000. For more detailsseepage 3 of this Report. A Note about continuing funding resolutions: On September 28, the House and Senate approved stopgap legislation tocontinue funding of agencies at FY1999 levels for the first three weeks of FY 2000, beginning on October 1. Thiswouldcover all agencies that had yet to have their FY2000 appropriations approved by Congress or yet to be signed intolaw bythe President. The measure (H.J.Res 68, P.L. 106-62 )was signed into law by the President on September 30, 1999. (Formore information, see pp. 2-3 of this report) On October 19, Congress passed a second bill extending FY1999fundingthrough October 29, 1999 ( H.J.Res. 71 , 106-75). The legislation was signed by the President on October 21,1999. A third bill ( H.J.Res. 73 , P.L.106-85 ) was passed by Congress on October 28, extending such fundingthrough November 5, 1999. The bill was signed by the President on October 29, 1999. Congress passed a fourthcontinuing resolution on November 4, to continue funding through November 10, 1999 ( H.J.Res. 75 , P.L.106-88 ). The President signed the bill on November 5. A fifth continuing resolution was approved by Congress onNovember 10 ( H.J.Res. 78 , P.L. 106-94 ) signed into law by the President on the same day to continue fundingthrough November 17, 1999. A sixth bill to continue funding through November 18 ( H.J.Res. 80 , P.L.106-105 ) was passed by Congress on November 17. A seventh bill ( H.J.Res. 82 ) was passed on November18which further extended funding through November 23. An eight bill ( H.J.Res. 83 , 106-106) was alsoapproved on November 18 which superceded H.J.Res. 82 and extended FY1999 funding through December2,1999. This was signed by the President on November 19, 1999. As noted earlier in the report, FY1999 appropriations were to expire after June 15, 1999, unless new legislation wereenacted to continue them through the remainder of FY 1999. H.R. 1141 , FY1999 Emergency SupplementalAppropriations, repealed this restriction and included an additional $44.9 million for the Census Bureau's 2000censusactivities in FY1999, contingent on congressional receipt, by June 1,1999, of a revised budget submission forFY2000, withdetailed justification. The revised submission requested an extra $1.7 billion for the census in FY2000. Table 3. Departments of Commerce, Justice, and State, and theJudiciaryAppropriations (in millions of dollars) Source: Congressional Record , vol. 145, November 18, 1999: H12776-12786. H.R. 12 (Delay) Limits the jurisdiction of the federal courts with respect to prison release orders. Introduced January 6, 1999;referred toCommittee on Judiciary. H.R. 357 (Conyers) Combats violence against women by providing for law enforcement and prosecution grants, for education andtraininggrants to promote appropriate responses to victims of violence, for a National Domestic Violence Hotline, forcounselingservices and for transitional compensation for victims of violence. Introduced January 19, 1999; referred toCommittee onJudiciary. S. 5 (DeWine) Drug Free Century Act. Reduces the transportation and distribution of illegal drugs and strengthens domesticdemandreduction. Provides for international reduction of drugs by denying safe havens to international criminals, promotionof global cooperation to fight international crime, money laundering deterrence, increased penalties by raisingmandatoryminimum sentencing for powder cocaine offenses and drug offenses committed in the presence of a child.Authorizesadditional funding for drug eradication and interdiction operations and confirms funding goals set by the WesternHemisphere Drug Elimination Act ( P.L. 105-277 , Title VIII). Contains provisions to protect children and teachersfromdrug-related school violence. Provides for drug education, prevention and treatment programs. Introduced January19,1999; referred to Committee on Judiciary. S. 9 (Daschle) Safe Schools, Safe Streets, and Secure Borders Act. Addresses violent crime in schools, reforms the juvenilejusticesystem, combats gang violence, penalizes the sale and use of illegal drugs, enhances the rights of crime victims, andprovides assistance to law enforcement officers in their battle against street crime, international crime, and terrorism. Authorizes funding to hire or deploy 25,000 additional police officers, and for other crime and drug programs byextendingthe Violent Crime Reduction Trust Fund through FY2002. Permits federal prosecution of juveniles only when theAttorneyGeneral certifies that the state cannot or will not exercise jurisdiction, or when the juvenile is alleged to havecommitted aviolent, drug, or firearm offense. Contains provisions allowing prosecutors sole, nonreviewable authority toprosecute asadults 16- and 17-year-olds who are accused of committing the most serious violent and drug offenses. Enumeratesprevention programs to reduce juvenile crime and includes grants to youth organizations and 'Say No to Drugs'Community Centers. Increases penalties for selling drugs to children, for drug trafficking in or near schools, andor use of"club drugs." Encourages pharmacotherapy research to develop medications for the treatment of drug addiction, andfundsdrug courts, which subject eligible drug offenders to programs of intensive supervision. Contains provisions to fightdrugmoney laundering. Introduced January 19, 1999; referred to Committee on Judiciary. S. 254 (Hatch) Violent and Repeat Juvenile Offender Accountability and Rehabilitation Act. Contains various drug-relatedprovisions:increases the penalties for using minors to distribute controlled substances. Authorizes $1 billion for selected crimeanddrug programs by extending the Violence Crime Reduction Trust Fund through FY2001. Introduced January 20,1999;placed on Senate Legislative Calendar under General Orders; passed Senate with amendments, May 20,1999. H.R. 2528 (Rogers) Immigration Reorganization and Improvement Act of 1999 ( H.R. 2528 ). To dismantle INS and createtwonew bureaus at the Department of Justice, one for immigration services, the other for enforcement. Introduced onJuly 15,1999; referred to Committee on the Judiciary. H.R. 1553 (Calvert) A bill to authorize appropriations for fiscal year 2000 and fiscal year 2001 for the National Weather Service,AtmosphericResearch, and National Environmental Satellite, Data and Information Service activities of the National OceanicandAtmospheric Administration, and for other purposes. Introduced April 26, 1999; referred to House Committee onScience. Reported by Committee, May 18, 1999 ( H.Rept. 106-146 ). Passed House by voice vote, May 19, 1999. H.R. 1744 (Morella) A bill to authorize appropriations for the National Institute of Standards and Technology for fiscal years 2000and 2001,and for other purposes. Introduced May 10, 1999; referred to the House Committee on Science. Mark-up sessionheld, May26, 1999. H.R. 1907 (Coble) Patent and Trademark Office Efficiency Act. Establishes the PTO as an independent agency under the policydirection ofthe Secretary of Commerce. Provides that all revenues collected by PTO will be for the exclusive use of the PTO. Introduced May 24, 1999; referred to House Committee on the Judiciary. Ordered to be reported May 26, 1999. H.R. 2452 (Royce) A bill to dismantle the Department of Commerce. Introduced on July 1, 1999. Referred to the Committees on Commerce,Transportation and Infrastructure, Banking and Financial Services, International Relations, Armed Services, WaysandMeans, Government Reform, the Judiciary, Science, and Resources. H.R. 698 (Wicker) A bill to repeal the requirement relating to specific statutory authorization for increases in judicial salaries, toprovide forautomatic annual increases for judicial salaries, and for other purposes. Referred to House Committee on Judiciary,February 10, 1999; referred to Subcommittee on Courts and Intellectual Property, February 25, 1999. H.R. 833 (Gekas) A bill to amend title 11 of the United States Code. Among many provisions of this bankruptcy reform bill,Section 128 (Bankruptcy Judgeship Act of 1999) creates 18 new temporary bankruptcy judgeships and extends temporarybankruptcyjudgeships in five districts. Referred to House Committee on Judiciary and in addition to Committee on BankingandFinancial Services, February 24, 1999; referred to Subcommittee on Commercial and Administrative Law, March11,1999. Subcommittee hearings held March 16, 17 and 19, 1999; subcommittee markup, March 25, 1999. Committeeconsideration and markup, April 21, 22, 27 and 28, 1999. Reported to House (Amended), April 29, 1999. Committee onBanking and Financial Services discharged, April 29, 1999. Passed House by roll call vote, 313-108, May 5, 1999. Received in Senate, May 6, 1999; read twice and placed on Senate Legislative Calendar under General Orders, May 12,1999. H.R. 1752 (Coble) Federal Courts Improvement Act of 1999. Bill would effect various changes in federal court jurisdiction,authority ofjudicial officers, judicial financial administration, and judicial personnel administration. Referred to HouseCommittee onJudiciary, May 11, 1999; referred to Subcommittee on Courts and Intellectual Property, May 25, 1999. Subcommitteehearings held June 16, 1999; subcommittee markup, July 15, 1999. Committee consideration and markup, July 27,1999. Reported to House (Amended) and placed on Union Calendar, September 9, 1999. S. 159 (Moynihan) A bill to amend chapter 121 of title 28, United States Code, to increase fees paid to Federal jurors, and for otherpurposes. Bill would increase fee Federal jurors are paid for the first thirty days of a trial from $40 per day to $45 per day. Referredto Senate Committee on Judiciary, January 19, 1999; referred to Subcommittee on Oversight and Courts, March24, 1999. S. 253 (Murkowski) Federal Ninth Circuit Reorganization Act of 1999. Bill organizes U.S. Court of Appeals for Ninth Circuit intothreeregional divisions, as recommended by the Commission on Structural Alternatives for Federal Courts of Appeals. Referredto Senate Committee on Judiciary, January 19, 1999; referred to Subcommittee on Oversight and Courts, March 24,1999; Subcommittee hearings held July 16, 1999. S. 625 (Grassley) Companion bill to H.R. 833 , above, including among its provisions Section 1126, Bankruptcy JudgeshipActof 1999, which creates new temporary bankruptcy judgeships and extends temporary bankruptcy judgeships in fivedistricts. Referred to Senate Committee on the Judiciary, March 16, 1999. Committee consideration and markup,April 15and 22, 1999. Reported to Senate and placed on Senate Legislative Calendar under General Orders, May 11, 1999. Laidbefore Senate and cloture motion presented, September 16, 1999. Cloture not invoked in Senate by roll call vote,53-45,September 21, 1999. Measure laid before Senate by unanimous consent, November 5, 1999. Considered by Senate,November 5, 8, 9, 10, 16 and 17, 1999. Cloture motion presented in Senate, November 19, 1999. S. 1145 (Leahy) Federal Judgeship Act. Creates 69 new federal circuit or district judgeships. Referred to the Senate Committeeon theJudiciary, May 27, 1999. S. 1564 (Cochran) Federal Courts Budget Protection Act. Bill would allow the Judiciary to submit its annual budget, includingbuildings,directly to Congress, without going through the Office of Management and Budget. Referred jointly to SenateCommitteeson Budget and Governmental Affairs, August 5, 1999. S. 886 (Helms) A bill to authorize appropriations for the Department of State for fiscal years 2000 and 2001; to provide forenhancedsecurity at U.S. diplomatic facilities; to provide for certain arms control, nonproliferation, and other national securitymeasures; to provide for the reform of the United Nations; and for other purposes. Introduced April 21, 1999;originalmeasure ordered reported by Senate Foreign Relations Committee April 27, 1999. ( S.Rept. 106-43 ). H. R. 2415 (C. Smith) The American Security Act of 1999. Provides authorization for State Department and related agencies and forincreasesoverseas security. Introduced July 1, 1999. Passed by voice vote on July 21, 1999. H.R. 1211 (Smith, C.) A bill to authorize appropriations for the Department of State and related agencies for fiscal year 2000, and forotherpurposes. Introduced March 22, 1999; subcommittee marked-up and forwarded to full committee on March 23;Committee International Relations reported it out April 29, 1999. ( H.Rept. 106-122 ). S. 414 ( Hutchinson); P.L. 105-258 Ocean Shipping Reform Act of 1998. To amend the Shipping Act of 1984 to encourage competition ininternationalshipping and growth of United States imports and exports, and for other purposes. This law is administered by theFederalMaritime Commission. Signed into law October 14, 1998. CRS Issue Briefs CRS Issue Brief IB90078. Crime Control: The Federal Response , by David Teasley. CRS Issue Brief IB95025. Drug Supply Control: Current Legislation , by David Teasley. CRS Issue Brief IB92061. Prisons: Policy Options for Congress , by [author name scrubbed]. CRS Issue Brief IB98049. Police and Law Enforcement: Selected Issues , by [author name scrubbed]. CRS Reports CRS Report 97-265. Crime Control Assistance through the Byrne Programs , by Garrine Laney. CRS Report 98-622. Federal Crime Control Assistance to State and Local Governments: Department of Justice , bySuzanne Cavanagh and David Teasley CRS Report 98-95. Juvenile Justice Act Reauthorization: The Current Debate , by Suzanne Cavanagh and David Teasley. CRS Report 98-498. Federal Drug Control Budget: An Overview , by David Teasley. CRS Report 97-248. Prison Grant Programs , by [author name scrubbed]. CRS Report RS20183. Immigration and Naturalization Service's FY2000 Budget , [author name scrubbed]. CRS Report RS20279. Immigration and Naturalization Service Reorganization and Related Legislative Proposals ,[author name scrubbed]. CRS Report RL30257. Proposals to Restructure the Immigration and Naturalization Service , William Krouse. CRS Issue Briefs CRS Issue Brief IB95100. Economic Development Administration: Overview and Issues , by [author name scrubbed]. CRS Issue Brief IB95051. The National Information Infrastructure: The Federal Role , by [author name scrubbed]. CRS Issue Brief IB10018. Research and Development Funding: Fiscal Year 2000 , by [author name scrubbed]. CRS Reports CRS Report 95-36 . The Advanced Technology Program, by [author name scrubbed]. CRS Report 97-137. Census 2000: The Sampling Debate, by [author name scrubbed]. CRS Report 98-321. Census 2000: Sampling as an Appropriations Issue in the 105th Congress, by [author name scrubbed]. CRS Report 96-537. Department of Commerce Science and Technology Programs: Impacts of Dismantling Proposals , by[author name scrubbed]. CRS Report 97-126. Federal R&D Funding Trends In Five Agencies: NSF, NASA, NIST, DOE (Civilian) and NOAA , by[author name scrubbed]. CRS Report 97-104 . Manufacturing Extension Partnership Program: An Overview , by [author name scrubbed]. CRS Report 95-30 . The National Institute of Standards and Technology: An Overview, by [author name scrubbed] and WendyH. Schacht. CRS Report 95-834. Proposals to Eliminate the U.S. Department of Commerce: An Issue Overview , by [author name scrubbed]. CRS Report RL30139(pdf) . The National Oceanic and Atmospheric Administration (NOAA): Budget Activities and Issues forthe 106th Congress , by Wayne Morrissey. CRS Reports CRS Report 98-510(pdf) . Judicial Nominations by President Clinton During the 103rd- 106th Congresses , by Denis StevenRutkus. CRS Report RS20278. Judicial Salaries: Current Situation , by [author name scrubbed]. Other Information U.S. Administrative Office of the United States Courts. "Finally, a Budget! Year 2000 Brings COLA for Judges," TheThird Branch , vol. 31, December 1999, pp. 1,2. http://www.uscourts.gov/ttb/dec99ttb/budget.html U.S. Administrative Office of the United States Courts. "White House Veto Returns Judiciary Budget to Negotiations," The Third Branch , vol. 31, November 1999, pp. 1,3. http://www.uscourts.gov/ttb/nov99ttb/budget.html U.S. Congress, House Committee on Appropriations, Subcommittee on the Departments of Commerce, Justice, and State,the Judiciary, and Related Agencies, Department of Commerce, Justice, and State, the Judiciary, and RelatedAgencies Appropriations for 2000 , hearings, part 8, 106th Cong., 1st sess., March 4& 10, 1999 (Washington: GPO, 1999), pp. 1-58(Supreme Court of the United States), pp. 59-101 (Architect of the Capitol), and pp. 103-263 (the Federal Judiciaryand theAdministrative Office). CRS Report RL30197(pdf) . State Department and Related Agencies FY2000 Appropriations , by Susan Epstein. CRS Report 98-624. State Department and Related Agencies FY1999 Appropriations , by Susan Epstein. CRS Report 98-771. Embassy Security: Background, Funding, and FY2000 Budget Request , by [author name scrubbed]. CRS Report 97-711. U. N. Funding, Payment of Arrears and Linkage to Reform: Legislation in the 105th Congress, By[author name scrubbed], Marjorie Ann Brown, and Lois McHugh. CRS Report 97-538(pdf) . Foreign Policy Agency Reorganization in the 105th Congress, by [author name scrubbed], Larry Q.Nowels, and [author name scrubbed]. CRS Reports CRS Report 95-178. Legal Services Corporation: Basic Facts and Current Status , by [author name scrubbed] and CarmenSolomon-Fears. CRS Report 96-649 . Small Business Administration: Overview and Issues , by [author name scrubbed]. CRS Report 98-864. The Maritime Security Program (MSP) in an International Commercial Context: A Discussion, byStephen J Thompson. CRS Report 98-971. The Passenger Service Act, Domestic Ocean Passenger Service, and the 106th Congress, by Stephen JThompson. House Committee on Appropriations http://www.house.gov/appropriations Senate Committee on Appropriations http://www.senate.gov/~appropriations/ CRS Appropriations Products Guide http://www.loc.gov/crs/products/apppage.html#la Congressional Budget Office http://www.cbo.gov General Accounting Office http://www.gao.gov Office of Management & Budget http://www.whitehouse.gov/OMB/ Table 1A. Appropriations Funding for Departments ofCommerce, Justice, and State,the Judiciary, and Related Agencies, FY1999 and FY2000 (in millions of dollars)* *Figures are for direct appropriations only; in some cases, agencies supplement these amount withoffsetting feecollections, including collections carried over from previous years. These agencies include: Immigration andNaturalization Service, Patent and Trademark Office, Small Business Administration, Federal CommunicationsCommission, Federal Trade Commission, and the Securities and Exchange Commission. Information on such feesarecontained in the background and issues sections of this report. Note : Details may not add to totals due to rounding. 1 Funds from the Violent Crime Reduction Programs (VCRTF) are provided as a subtotal in parentheses. These areincluded in the overall total for each federal agency. 2 The Patent and Trademark Office (PTO) is fully funded by user fees. The fees collected, but notobligated during thecurrent year, are available for obligation in the following fiscal year. 3 Funds provided for the Institute at Saint Anselm College and the New Hampshire State Library. 4 FY1999, levels exclude $1.56 billion from the FY1999 emergency supplemental appropriationsfor Y2K and embassysecurity ( P.L. 105-277 , Title VIII). 5 As of October 1, 1999 both USIA and ACDA will be consolidated into the Department of State. InternationalBroadcasting will remain an independent agency. 6 Congress has approved $210 million in overall FY2000 funding resources for the Commission,consisting of a directappropriation of $24.2 million (as shown in the above table) and $185.8 million in offsetting regulatory feecollections. Earlier: -- The President had requested $230.9 million funding for the Commission, consisting of a directappropriation of$45.1 million and $185.8 million in offsetting regulatory fee collections; -- the Senate, before going to conference, approved $232.8 million, consisting of a direct appropriation of $47.1 million and $185.8 million in offsettingregulatoryfees; and, -- the House, before going to conference, approved $192 million, consisting of a direct appropriationof $6.2million and $185.8 million in offsetting regulatory fees. 7 For FY2000, the FTC is fully funded by the collection of premerger filing fees. 8 For FY2000, the SEC is fully funded by transaction fees and securities registration fees. 9 Other includes agencies receiving appropriations of less than $1.5 million in FY1999 andFY2000. These agencies includeCommission for the Preservation of American Heritage Abroad; Commission on Security and Cooperation inEurope;Commission on Electronic Commerce; and the Marine Mammal Commission. 10 This total includes emergency appropriations approved under Title VIII of the OmnibusAppropriations Act for FY1999( H.R. 4328 , P.L. 105-277 ). The bulk of this funding was allocated to: Department of State for overseassecurity needs at diplomatic facilities and Y2K computer compliance ($1.56 billion); Department of Justiceprograms forY2K conversion and law enforcement ($206 million); and the SBA disaster loan program ($106 million). 11 Total takes into account rescissions of -$234.8 million for FY1999. 12 Total takes into account rescissions of -$4.5 million proposed by the Administration. 13 Total takes into account rescissions of -$29.5 million recommended by the House. 14 Total takes into account rescissions of -$143.7 million recommended by the Senate. 15 Total takes into account rescissions of -$65.9 million recommended by the ConferenceCommittee and approved byCongress. Source: Congressional Record , vol. 145, November 18, 1999: H12776-12786.

This report tracks action by the 106th Congress on FY2000 appropriations for the Departments of Commerce, Justice, andState, the Judiciary, and other related agencies (often referred to as CJS appropriations). P.L. 105-277 ( H.R. 4328 ) appropriated $36.2 billion for these agencies for FY1999. The President's FY2000 budget requested about $40.5billion for these agencies, about a $4.3 billion increase or 12% above the FY1999 total. On October 18, theConferenceCommittee approved a CJS bill for FY2000 ( H.R. 2670 , H.Rept. 106-283 ) totaling $39 billion--$2.8 billion(or 7.7%) above the FY1999 appropriation and $1.5 billion below the President's request. The bill passed CongressonOctober 20. However, the bill was vetoed by the President on October 25. A second CJS bill approved byConference( H.Rept. 106-479 ) and included in H.R. 3194 , the Consolidated Appropriations Act for FY 2000, was passedby the House on November 18, 1999. The number for the CJS bill is H.R. 3421 which is in Division B of H.R. 3194 , Section 1000(a). The Senate passed the bill on November 19, 1999. The measure was signedintolaw by the President on November 29, 1999 ( P.L. 106-113 ; 113 Stat. 1501). The law approves total funding of$39.63billion which is about $625 million above the level initially approved by Congress, $3.4 billion (or 9.5%) aboveFY1999appropriation and $920 million below the President's request. The major CJS appropriations issues or concerns that received attention in both the Senate and the House included thefollowing. Department of Justice: extending the 1994 Crime Act funding authorization beyondFY2000; eliminating mostfunding under the 1994 Crime Act for Title III crime prevention programs; increasing funding for drug-relatedeffortsamong the Department of Justice (DOJ) agencies; changing the focus and levels of appropriations for DOJ's OfficeofJuvenile Justice and Delinquency Prevention (OJJDP); funding for programs that would reduce violence in schools;determining the level of INS detention capacity necessary to comply with the statutory mandate that certain criminalaliensbe detained until deported; determining the severity of INS budget overruns in FY1999 due to over hiring in FY1998andother mandatory costs; meeting the statutory mandate that the Border Patrol be increased by 1,000 agents inFY2000;restructuring of INS either in the form of legislative proposals to dismantle the agency or as an internal restructuringof theagency by the Administration. Department of Commerce: the progress made in streamlining anddownsizing Departmentprograms; implementation of the forthcoming decennial census; federal financial support of industrial technologydevelopment programs; and implementing new White House environmental initiatives at the National Oceanic andAtmospheric Administration. Department of State: increasing funding for embassy security;reorganization of foreignpolicy agencies of State, USIA, and other foreign policy agencies; and the payment of arrears to the United Nations. TheJudiciary : level of funding required for court staff, defender services, security for the lower courts, courtadministration,and the Supreme Court's building improvements program; and the merits of increasing judges' salaries. OtherRelatedAgencies: adequacy of funding levels for the Legal Services Corporation, and the Equal EmploymentOpportunityCommission, given a rapidly growing workload of civil rights cases. Key Policy Staff Division abbreviations: A = American Law; G&F = Government and Finance; RSI = Resources; Science, and IndustryDivision, DSP = Domestic Social Policy Division; FTD = Foreign Affairs, Defense, and Trade.

Scientific research indicates that in recent years, the frequency and geographic distribution of harmful algal blooms (HABs) have been increasing nationally and globally. HABs can be detrimental to human health, animals, aquatic ecosystems, and local economies. In 2014, a major HAB in Lake Erie caused the city of Toledo, Ohio, to issue a "do not drink" order for tap water that left more than 500,000 people without drinking water for two days and had an estimated impact of $65 million in lost benefits. In the summer of 2016, a massive HAB in Lake Okeechobee—Florida's largest freshwater lake—resulted in beach closures, losses to the tourism industry, and negative impacts on marine life. According to the U.S. Environmental Protection Agency (EPA), between January 1 and August 12, 2016, states reported at least 266 notices for freshwater HABs, including cautions, warnings, public health advisories, and public health warnings. Congress, many federal agencies, states, localities, and other partners have taken and continue to take steps to address the rising trend in HABs and their impacts. However, there are many gaps in current scientific understanding of HABs among the research and management communities and considerable debate as to how best to address the issue from a regulatory standpoint. This report explores these issues as they pertain to HABs in freshwater systems. Specifically, it addresses the conditions and activities that contribute to the occurrence of freshwater HABs; steps that Congress, federal agencies—particularly EPA—and their partners are taking to address and mitigate their occurrence; and the current knowledge gaps on this issue. This report is focused on freshwater HABs, not marine or coastal HABs or issues associated with HABs in drinking water supplies. Algal communities are naturally occurring components of healthy aquatic ecosystems, such as lakes, rivers, and estuaries. However, under certain environmental conditions, such as increased temperatures and nutrient concentrations (e.g., nitrogen and phosphorus), colonies of algae can grow excessively, or "bloom," and produce toxins that pose a threat to human and aquatic ecosystem health and potentially cause economic damage. These HABs sometimes produce discolorations in the water that can appear as scums, paint-like slicks, clotted mats, or foam that may vary in color (i.e., light to dark green, yellow, red, or brown). Even when visible signs of a bloom are absent, however, algal toxins may still cause harmful effects. Figure 1 shows an aerial view of a HAB that produced visible green scums in Lake Okeechobee, Florida, in July 2016. While many types of algae can cause HABs in bodies of freshwater, cyanobacteria (sometimes referred to as blue-green algae) typically cause the most frequent and severe blooms. Cyanobacterial HABs pose a threat to human and aquatic ecosystem health and can kill pets, livestock, and wildlife. Some species of cyanobacteria produce toxins, called cyanotoxins, which can cause hepatic (liver-related), neurologic, respiratory, dermatologic, and other symptoms. These may be acute or chronic, mild or severe, and in some cases may be fatal. Humans may be exposed to cyanotoxins by consuming tainted drinking water, fish, or shellfish; swimming or recreating in waters with certain concentrations of cyanotoxins present; or inhaling aerosolized toxins. The cyanotoxins associated with these HABs can contaminate fish, interfere with a variety of recreational activities, and cause other economic and environmental damages. There are many types of cyanotoxins, which may have multiple variants with a wide range of toxicities. The most commonly occurring and most studied cyanotoxin is microcystin. Although cyanobacterial HABs are considered to be the most prevalent and toxic types of HABs, blooms of "golden algae" ( Prymnesium parvum ) are an emerging problem and likely the most problematic of non-cyanobacterial freshwater HAB taxa (i.e., group of related organisms classified as a unit). Golden algal HABs have caused large fish kills worldwide, including millions of fish in Texas. Most of the major fish kills have occurred since 2000. Golden algae thrive in brackish water, such as the rivers and reservoirs found in areas of Texas, Oklahoma, and Wyoming. The toxins produced by golden algae target gill-breathing organisms, such as fish, clams, and mussels. According to information from two states that experience golden algal blooms, there is currently no evidence that golden algal toxins pose a direct threat to humans, other mammals, or birds. Effects of cyanobacterial HABs and golden algae HABs are detailed in Table 1 . In addition to the effects of algal toxins on human and animal health, HABs can also contribute to deteriorating water quality and ecosystem health. An overabundance of cyanobacteria or other algae can block out sunlight and clog fish gills. In addition, as the algae die and decompose, they consume oxygen, leaving waterways in a hypoxic (or low oxygen) state, sometimes forming "dead zones"—areas where life cannot survive due to lack of oxygen. Low oxygen areas can suffocate and kill fish and bottom-dwelling organisms such as crabs and clams. According to EPA, over 166 dead zones have been documented nationwide, including in waterbodies such as the Chesapeake Bay and the Gulf of Mexico. Significant economic losses have occurred as a result of hypoxia. Many factors may influence the occurrence and prevalence of HABs in freshwater, including nutrient concentrations, water temperature, availability of light, pH, and water circulation. Nutrient enrichment is widely recognized as one of the key causes of HAB formation. Nutrients, such as nitrogen and phosphorus, are essential to plant growth and natural parts of aquatic ecosystems. However, when high levels of nutrients enter a body of water, they stimulate plant and algal growth, which can lead to depletion of dissolved oxygen (as explained above), reduced transparency (i.e., turbidity), changes to the biological community (e.g., loss of sportfish, such as bass), and degradation of the aesthetic appeal of the water (i.e., from odor and scums). This process is called eutrophication. While some sources of nutrients in water bodies are natural, many anthropogenic activities contribute nutrients to waterbodies from a number of point and nonpoint sources. Point sources include municipal and industrial wastewater discharges and concentrated animal feeding operations (CAFOs). Nonpoint sources include urban stormwater runoff, failing septic systems, atmospheric deposition of nitrogen from fossil fuel emissions, runoff from fertilized cropland, and manure runoff from cropland, pastures, and animal feeding operations. See Table 2 for more information on these sources. Studies also indicate that increased temperatures and changes in frequency and intensity of rainfall associated with climate change may also favor HAB formation. HABs generally proliferate in warmer waters. In addition, some studies have found that swings between flooding and drought may enhance HAB formation. For example, if intense rainfall is followed by a drought, the nutrients washed into receiving water bodies may remain in them longer, increasing the potential for HABs. Scientists largely agree that the frequency and distribution of HABs, the economic losses from them, the types of resources affected, and the number of toxins and toxic species have all increased in recent years. Some scientists note that factors such as better detection methods and increased reporting have contributed to the upward trend. HABs, including cyanobacterial HABs, have been recorded in the waters of all 50 states, with some HABs crossing state lines. Figure 2 shows the generalized distribution of selected freshwater HAB events (cyanobacterial HABs and golden algal HABs) that took place between 2006 and 2015 across the United States. The findings of EPA's most recent national assessment of lakes are consistent with other reports of the rising trend in HABs. In EPA's 2012 National Lake Assessment, EPA concluded that there was little change from its 2007 survey of lakes, with two exceptions—trends in algal toxin and nutrient measures. In 2012, EPA and its partners detected microcystin in 39% of lakes, a 9.5% increase from 2007. EPA noted, however, that for both studies, the concentrations of microcystin remained low and rarely exceeded the levels of concern established by the World Health Organization for recreational uses (see " Regulatory Efforts and Guidelines "). EPA also found an 8.3% increase in the percentage of lakes in the "most disturbed condition" category when analyzing the density of cyanobacterial cells (i.e., an indicator of risk for exposure to algal toxins because the cells may produce toxins). Finally, EPA found an overall increase in the median concentration of phosphorus across all lakes and a "dramatic" decline (18.2%) in the percentage of lakes with low nutrients and high oxygen levels. These findings are important because in many lakes, phosphorus is considered the limiting nutrient, meaning that the available quantity of this nutrient controls the pace of algal production. It also means that even small increases in phosphorus can lead to very rapid increases in algal growth. More broadly, the study found that nutrient pollution is a widespread problem across the country. Approximately 35% of lakes have excessive levels of total nitrogen, and 40% of lakes have excessive levels of total phosphorus. Congress has recognized the increasing frequency of HABs and has passed legislation in an effort to address public health, economic, and environmental consequences of HABs. In 1998, Congress passed the Harmful Algal Bloom and Hypoxia Research and Control Act (HABHRCA), which established an Interagency Task Force on Harmful Algal Blooms and Hypoxia. It required the task force to prepare reports assessing HABs and hypoxia with a focus on coastal waters and authorized funding for HAB and hypoxia-related research, education, and monitoring activities. The Department of Commerce's National Oceanic and Atmospheric Administration (NOAA) chaired the task force. In 2004, Congress reauthorized HABHRCA and expanded it to include assessments of HABs in freshwater. In 2014, Congress again reauthorized HABHRCA and established a national HAB/Hypoxia Program to be maintained by NOAA through the task force. It identified NOAA and EPA as the lead federal agencies for marine and freshwater aspects of the program, respectively, and required additional reports and a comprehensive research plan and action strategy. In 2015, in response to public safety concerns arising from the Toledo, Ohio, HAB event, Congress passed legislation addressing algal toxins in drinking water. The Drinking Water Protection Act amended the Safe Drinking Water Act to require EPA to develop a strategic plan to assess and manage the risks associated with algal toxins in public drinking water supplies. The following year, Congress included a provision in the Water Infrastructure Improvements for the Nation (WIIN) Act that required EPA to designate a Harmful Algal Bloom Coordinator to coordinate projects and activities under the Great Lakes Restoration Initiative involving HABs in the Great Lakes. Table 3 provides a list and description of the HAB-specific legislation enacted since 1998. In addition to HAB-specific legislation, the Clean Water Act (CWA) authorizes EPA to address water quality concerns associated with HABs. The act establishes a system, under Section 303, for states to adopt ambient water quality standards consisting of the designated use or uses of a water body (e.g., recreational, public water supply, or aquatic life) and the water quality criteria that are necessary to protect the use or uses. States then use their water quality standards to determine which waters must be cleaned up, how much effluent may be discharged, and what is needed for protection. Section 304(a) requires the EPA Administrator to publish and, from time to time, revise water quality criteria that accurately reflect the latest scientific knowledge on the kind and extent of all identifiable effects on human health and the environment that might be expected from the presence of pollutants. These criteria constitute guidance that states use in adopting their water quality standards. As recognized by Section 510 of the CWA, states may develop water quality standards that are more stringent than required by EPA regulations. EPA's water quality standards regulations require that in developing water quality standards, states must adopt water quality criteria that protect the designated use. States are to establish numerical criteria —based on (1) EPA's recommended criteria, (2) EPA's criteria modified to reflect site-specific conditions, or (3) other scientifically defensible methods—and establish narrative criteria or criteria based on biomonitoring methods where numerical criteria cannot be established or to supplement numerical criteria. Section 303(d) of the CWA requires states to identify waters that are impaired by pollution, even after application of pollution controls. For those waters, states must establish a Total Maximum Daily Load (TMDL) of pollutants to ensure that water quality standards can be attained. A TMDL is a quantitative assessment of pollution sources and pollutant reductions needed to restore and protect U.S. waters; it is also a planning process for attaining water quality standards. TMDLs may address all pollution sources, including point sources, such as municipal sewage treatment or industrial plant discharges, and nonpoint sources such as urban runoff and agricultural runoff. Also, Section 118 of the CWA provides that the United States should seek to attain the goals embodied in the Great Lakes Water Quality Agreement of 1978, as amended by the Water Quality Agreement of 1987 and any other agreements and amendments. It tasks EPA to take the lead in the effort to meet the agreement's goals, working with other federal agencies, states, and localities. As seen in the text box, the most recent amendment includes a HAB-related goal. Many federal agencies are involved in carrying out various HAB-related activities, including conducting HAB research, monitoring algal toxins and water quality, forecasting HABs, supporting projects to improve water quality, and community outreach efforts. Some in Congress, however, have expressed concern about the activities and expenditures of various agencies and potential redundancies. In the Drinking Water Protection Act ( P.L. 114-45 ), enacted August 7, 2015, Congress directed the Government Accountability Office (GAO) to inventory funds expended by federal agencies to examine toxin-producing cyanobacteria and algae or address public health concerns related to harmful algal blooms. GAO was to recommend ways to improve interagency coordination and reduce duplication of efforts. According to the 2016 GAO report that responded to the mandate, 17 agencies conducted research, monitoring, response, or other HAB-related activities between FY2013 and FY2015. The GAO report provides detailed information on federal agencies' key HAB-related activities, expenditures, and specific statutory authorities, and, thus, this report will not discuss these in detail. Rather, this section identifies the federal agencies involved in a key interagency effort and highlights actions EPA specifically is taking in its role as the leader of freshwater HAB issues. As previously mentioned, HABHRCA established an interagency task force that is charged with promoting a national strategy to help communities understand, predict, control, and mitigate freshwater and marine HAB and hypoxia events; enhancing, coordinating, and assessing the activities of existing HABs and hypoxia programs; and providing for development of a comprehensive research plan and action strategy. Table 4 provides a list of the federal agencies and organizations specifically required in HABHRCA to participate on the task force. The reauthorization of HABHRCA in 2014 reconstituted the task force as the Interagency Working Group on the Harmful Algal Bloom and Hypoxia Research and Control Act (IWG-HABHRCA), responsible for maintaining a national HAB/hypoxia program. NOAA and EPA share primary responsibility under HABHRCA for administering the national HAB and hypoxia program, with NOAA leading marine aspects of the program and EPA in charge of freshwater aspects. In addition to agencies listed in the table, the U.S. Army Corps of Engineers is an active member in the IWG-HABHRCA. In its role under HABHRCA and the CWA, EPA's efforts to address HABs include coordinating the efforts of multiple entities, developing regulations and guidelines to protect water quality (see " Regulatory Efforts and Guidelines " section), conducting research, providing financial assistance through grants and other agreements, and educating the public. In its coordination role, EPA leads, chairs, or cochairs several working groups or task forces, including the IWG-HABHRCA, the Inland HAB Discussion Group, the Great Lakes Interagency Task Force, and the Mississippi River/Gulf of Mexico Watershed Nutrient Task Force (Hypoxia Task Force). See Table 5 for a description of these efforts. EPA has also conducted internal research on HABs and their toxins focused on water quality (including how different factors such as nutrients, light, temperature, etc., affect HAB occurrence and toxicity), human and ecological health effects, monitoring and analytical methods research, and drinking water treatment research. The agency also provides research grants, such as those provided through the Science to Achieve Results (STAR) program, focused on topic areas including the prediction, prevention, control, and mitigation of freshwater HABs and the fate and effects from less-common emerging HABs. EPA also provides financial assistance to states, tribes, and others to address water pollution, including nonpoint source pollution. Examples of such assistance include nonpoint source implementation grants under CWA Section 319, capitalization grants under the Clean Water State Revolving Fund, and grants under CWA Section 106, which are provided to states, interstate agencies, and tribes to administer programs that prevent, reduce, and eliminate water pollution. EPA and states have also taken steps to address HABs and nutrient loads that contribute to their proliferation through regulatory efforts and guidelines. This section focuses on regulatory efforts and guidelines related to EPA's authorities under the CWA and specifically excludes efforts under the Safe Drinking Water Act. EPA, the World Health Organization (WHO), and many states have developed guidelines for cyanotoxins in recreational waters. These guidelines are summarized in Table 6 and discussed below. In December 2016, EPA issued draft recreational water quality criteria for microcystins and cylindrospermopsin for public comment. According to EPA, these criteria reflect the concentrations of two cyanotoxins that would be protective of human health in recreational waters used for swimming or other activities: 4 µg/L for microcystin and 8 µg/L for cylindrospermopsin. EPA suggests that states may consider using the proposed values when determining whether to post swimming advisories in recreational waters and may consider using the same values when adopting new or revised water quality standards. Many entities—including states, representatives of publicly owned treatment works, agricultural organizations, and environmental groups—provided comments on the draft criteria: Some commenters, including states, were supportive of the criteria for purposes of informing swimming advisory decisions but did not support the use of the criteria for developing water quality standards, noting, among other concerns, that cyanotoxins are not a pollutant discharged into waterways but rather result from other pollutants (nutrients) entering waterways and other factors. Environmental groups generally supported EPA's criteria for use in both swimming advisories and development of water quality standards. Commenters' opinions varied regarding the proposed concentrations of microcystin and cylindrospermopsin in the draft criteria. Some states felt the levels were appropriate, environmental groups felt they should be more stringent, and other states suggested they are overly protective, particularly when compared to the WHO guideline for microcystin. Many commenters—particularly states, publicly owned treatment works, and agricultural groups—expressed a number of implementation concerns. One key concern raised was that these criteria, if used for water quality standards, would improperly regulate response organisms rather than a discharged pollutant. Some argued that algal toxins are not a pollutant that CWA permittees discharge. Rather, the discharge of other pollutants, such as excess nutrients, may lead to HAB formation. In its draft criteria document, EPA explained that it does not anticipate states using the criteria alone for permitting purposes, recognizing that cyanobacteria and their toxins are not typically present in permitted discharges. EPA goes on to say the following: Permits are more likely to be written to address point source discharges of the causal pollutants, such as nutrients, on a waterbody-specific or watershed basis, where the permit writer has determined there is a reasonable potential for the causal pollutants in the discharge to cause or contribute to an exceedance of the cyanotoxin standards. In this regard, some commenters expressed concern that it is not known precisely what level of nutrients will result in a bloom, nor is it understood what factors will trigger the release of toxins. Several commenters suggested that EPA explore these issues further before moving forward with water quality criteria for purposes other than guiding advisory levels for swimming. Many commenters also expressed implementation concerns regarding monitoring and sampling. According to the Association of Clean Water Administrators many states do not currently have mechanisms in place to adequately sample for the levels of the toxins specified by EPA or lack adequate lab capacity to process increased samples. Some states, publicly owned treatment works, and agricultural groups also commented that the variability of HABs within a body of water and over even short spans of time can make sampling and analysis complicated, particularly when using the data to determine if a water body is impaired. The commenters urged EPA to address these issues in detail before moving forward with the criteria. In 2003, WHO proposed guideline values for protection from adverse health outcomes associated with cyanobacteria blooms in fresh water used for recreational purposes. The guidelines are defined at three levels: low, moderate, and high probability of adverse health effects. WHO concluded that a single guideline value was not appropriate because "it is necessary to differentiate between the chiefly irritative symptoms caused by unknown cyanobacterial substances and the potentially more severe hazard of exposure to high concentrations of known cyanotoxins, particularly microcystins." Table 6 shows the WHO guideline levels for microcystin. According to EPA documents, approximately 30 states have implemented cyanobacterial HAB guidelines for recreational waterways as of November 2015. Some of these states use qualitative guidelines only (i.e., visual inspection for blooms rather than quantitative detection methods) or quantitative guidelines for cyanobacterial cell density rather than guidelines for the specific cyanotoxins. Of the 30 states that have implemented cyanobacterial HAB guidelines, 21 have established numeric guidelines for microcystin or cylindrospermopsin. The levels and associated actions vary considerably among states (see Table 6 ). California has adopted the strictest concentrations for both cyanotoxins (0.8 µg/L for microcystin and 4 µg/L for cylindrospermopsin). Several states have adopted the WHO value of 20 µg/L for microcystin. Only seven states have adopted quantitative guidelines for cylindrospermopsin. Some states have also added waters affected by algal blooms and algal toxins to their impaired water lists (i.e., Section 303(d) lists) for algal blooms and algal toxins. According to data from EPA's Assessment and Total Maximum Daily Load Tracking and Implementation System, 24 states have listed waters impaired for algal blooms, and two states—California and New Hampshire—have listed waters impaired for algal toxins (see Table 7 ). California has listed only one of its waters as impaired for algal toxins and has not yet developed a TMDL. New Hampshire has listed 66 of its waters as impaired for algal toxins and has developed one TMDL that covers two waters. The New Hampshire TMDL establishes a total phosphorus loading target that, if met, is expected to achieve state water quality criteria and thresholds for dissolved oxygen, chlorophyll a (an indicator of algae), and cyanobacteria. Scientists and policymakers widely recognize the need to reduce nutrient inputs to aquatic systems to limit eutrophication and proliferation of HABs. According to EPA, nitrogen and phosphorus pollution is one of the most serious and pervasive water quality problems in the United States. While EPA and states have worked to address nutrient pollution for over a decade, many observers believe more progress is needed to reduce the threat to water quality and public health. EPA has acknowledged that without greater progress, "the successes to date will likely be outpaced by the rapidly increasing population and the resulting increase in the rate and impact of nitrogen and phosphorus pollution." According to EPA, 45 states identified nutrient-related pollution as a priority to be addressed by TMDLs and/or alternative restoration plans in setting long-term priorities for their CWA Section 303(d) programs. To date, more than 8,600 nutrient-related TMDLs have been established, primarily by states, to guide nutrient reduction efforts in more than 5,800 waterbodies. In 2016, EPA issued a memorandum with a renewed call to states and stakeholders to intensify their efforts, in collaboration with EPA, to reduce nutrient pollution. The memorandum emphasized EPA's support for state planning or implementation of watershed-based, multistakeholder projects to reduce the impacts to public health from nitrogen and phosphorus pollution contributing to HABs. EPA listed and described key elements of its plans for working with partners and stakeholders over the next several years, including prioritizing watersheds and setting load reduction goals, developing numeric nutrient criteria, reducing point sources of nutrient pollution, reducing nutrient loads from nonpoint sources, and providing financial and technical assistance. For almost two decades, EPA has expressed support for developing numeric criteria for nutrients. In a memorandum issued in 2011, EPA stated that "it has long been EPA's position that numeric criteria targeted at different categories of water bodies and informed by scientific understanding of the relationship between nutrient loadings and water quality impairment are ultimately necessary for effective state programs." To this end, EPA has provided 30 states with technical assistance for numeric nutrient criteria development through its Nutrient Scientific Technical Exchange Partnership and Support Program. To date, 23 states have adopted numeric criteria into their water quality standards for nitrogen and/or phosphorus for at least one of their water bodies. In 2013, EPA outlined barriers to numeric nutrient criteria implementation and actions to help states address them. The barriers included, among other things, an inability to reduce nonpoint source loads of nitrogen and phosphorus and problems implementing water-quality-based limits. EPA has also emphasized the need to focus on reducing nutrients from all sources—both point and nonpoint sources. Under the CWA, EPA has authority to regulate discharges from point sources. However, the CWA does not authorize EPA to regulate nonpoint sources. EPA can influence activities of nonpoint sources only through use of grants and funding—such as CWA Section 319, which addresses nonpoint source pollution through state-run nonpoint pollution management programs—and related technical assistance. Through such programs, states may, for example, ask farmers or ranchers to use alternative methods in their operations to prevent fertilizers from reaching streams and may provide funds to help them install on-farm pollution management systems or practices. In its document addressing barriers to numeric nutrient criteria, EPA proposed actions to address them, including continuing to collaborate with the U.S. Department of Agriculture to leverage resources for conservation practices and to better quantify the environmental results of best management practices and other efforts, continuing to implement the Section 319 grant program, and addressing the challenges of manure management by working with large animal growers and poultry integrators to develop sustainability agreements and practices that reduce nutrient pollution. Some observers argue that the voluntary nature of controlling nonpoint sources is a key challenge in developing and implementing TMDLs, a primary tool that states are employing to address nutrient pollution. Farming and forestry groups have long been concerned about how their activities might be addressed in TMDLs and whether they might be subject to CWA regulation of some sort, even though the act does not provide EPA with regulatory authority over nonpoint sources. Municipalities and industries contend that regulating only point sources imposes disproportionate requirements on their operations, especially in waters that are impaired both by point and nonpoint sources. Recognizing that a critical role for EPA in addressing nutrient pollution is supporting watershed-based efforts at the state and local level, in its 2016 memorandum, the agency stated that the Office of Water would continue to provide financial assistance to states through CWA Section 106 and Section 319 grant programs and the Clean Water State Revolving Fund (CWSRF) Program, as well as Section 604(b) planning grants, Wetland Program Development grants, and grants targeted toward specific geographic locations, such as the Chesapeake Bay, Great Lakes, and other water bodies. The President's FY2019 budget request for EPA proposes that funding for these programs, with the exception of the CWSRF, be eliminated or significantly reduced (see Table 8 ). The proportion of funds provided to nonpoint source pollution projects through the CWSRF program is relatively minor compared to the amount provided to publicly owned treatment works for infrastructure projects. As reported by EPA, 96% of the cumulative assistance provided through the CWSRF as of 2016 has been provided to publicly owned treatment works; only 4% was provided to nonpoint source pollution projects and National Estuary Program projects. It is unclear how, considering EPA's long-standing emphasis on using these programs to address nonpoint source pollution, the FY2019 budget would support the goals of the agency in its efforts to reduce nutrient pollution, and ultimately reduce the occurrence and frequency of HABs. Table 8 presents a comparison of the President's FY2019 budget request with the FY2016-FY2018 enacted appropriations for selected grants and programs referenced above that include funding support for addressing nonpoint source pollution. These grants and programs are funded within the EPA State and Tribal Assistance Grants and the Environmental Programs and Management appropriations accounts. In addition to the challenges of reducing nutrient pollution contributing to HABs, scientists widely recognize key research gaps that hinder the ability to prevent, predict, minimize, and suppress HABs. In reauthorizing HABHRCA in 2014, as discussed above, Congress directed NOAA—through the IWG-HABHRCA—to prepare a comprehensive research plan and action strategy to address marine and freshwater harmful algal blooms and hypoxia. The February 2016 task force report includes a discussion of the key challenges in HAB and hypoxia management and discusses the many gaps in the research and management communities' knowledge of HAB and hypoxia events. Federal agencies—including USGS, EPA, and NOAA —and research efforts sponsored by these agencies cite similar gaps and areas needing continuing research. The following text box summarizes some of these key research areas. Congressional interest in HABs has largely focused on funding further research and coordinating the efforts of federal agencies and their partners to study and address HABs. In the 115 th Congress, the Senate passed S. 1057 , which would, among other things, reauthorize HABHRCA for FY2019-FY2023, add the Army Corps of Engineers to the interagency task force, and allow the administrators of NOAA (marine) or EPA (freshwater) to declare a HAB or hypoxia event as an event of "national significance." Such a determination would prompt authority for the administrators to provide funding to the affected state or local government. A related bill, H.R. 4417 , has been introduced in the House. The Senate also passed S. 129 , which would reauthorize the National Sea Grant Program and make funds available for HAB research through that program. The bill would authorize grants for university research on several targeted topics, including "the biology, prevention, and forecasting of harmful algal blooms." A related bill, H.R. 4306 , has been introduced in the House. The Great Lakes and Fresh Water Algal Bloom Information Act ( H.R. 1893 ) in the 115 th Congress would require NOAA to create an electronic database of research and information on the causes of, and corrective actions being taken with regard to, algal blooms in the Great Lakes, their tributaries, and other surface fresh waters and for other purposes. H.R. 3661 would establish a program to award prizes for the development of innovative, environmentally safe solutions for reducing, mitigating, and controlling harmful algal blooms and for other purposes. Three bills have been introduced that would seek to address issues specific to Lake Okeechobee and the Florida Everglades: H.R. 2137 seeks to address concerns arising from the HAB outbreak that occurred in Lake Okeechobee, FL, during the summer of 2016. Record rainfalls and an impending hurricane season prompted the U.S. Army Corps of Engineers to release water from the lake into rivers and estuaries in an attempt to keep the lake from overflowing. The releases occurred at a time when a lake-wide HAB was forming, allowing nutrients and algae to move downstream, eventually reaching area beaches and requiring beach closures and cleanups that had substantial impacts on the local and state economy. Florida's governor requested a federal state of emergency declaration, which the Federal Emergency Management Agency denied because it determined that supplemental federal assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act was not considered appropriate for the event. H.R. 2137 would direct the President to treat a harmful algal bloom "caused by certain activities of the Federal Government" as an emergency for the purposes of the Stafford Act. H.R. 3665 would require the IWG-HABHRCA to prepare an assessment and a plan for reducing, mitigating, and controlling HABs and hypoxia in the Greater Everglades region, similar to what the working group has completed at a national level and for the Great Lakes region. H.R. 6645 would—similar to S. 1057 and H.R. 4417 —reauthorize HABHRCA but would also, like H.R. 3665 , require an assessment and action plan for the Everglades region. Recent HAB events highlight the public health, economic, and environmental consequences that communities in the United States may continue to experience, perhaps on a more frequent basis. EPA, NOAA, and other federal agencies are working together to conduct important HAB-related research in an effort to close the gaps in the scientific and management community's understanding of how best to prevent, predict, minimize, and suppress HABs. EPA, states, and their partners are working to identify and restore waterbodies that are affected by HABs and the excess nutrients that contribute to their formation. Congress has passed legislation to help drive and fund research efforts and improve collaboration among the many federal agencies involved in HAB-related activities. Moving forward, Congress may be interested in oversight of the Administration's efforts to implement HABHRCA and other HAB-related authorities. While Congress, federal agencies, and states are taking steps to address HABs, many observers assert that further action is needed to make progress that outpaces the growing consequences of nutrient pollution. Most observers agree that further research is needed to understand the most appropriate way to predict, minimize, and suppress HAB outbreaks, including whether and how to regulate algal toxins. These advocates assert that Congress should ensure that adequate funding is available for such research. To control HABs, some advocate for regulation of nonpoint source pollution, arguing that point sources are disproportionately regulated and that nonpoint sources are the larger contributors to nutrient pollution. Instead of regulation, some argue that EPA and other federal agencies should continue to focus on collaborative, voluntary watershed-level efforts to address nonpoint source pollution that contributes to HAB formation and that Congress should ensure that financial assistance for these efforts continues. Controlling nonpoint sources of excess nutrients that contribute to HAB formation is challenging. They are diffuse and pervasive and often attributable to many sources and activities rather than a single cause. Yet, scientists generally agree that the current trends in overenriched waters and HAB events cannot be corrected without addressing nonpoint source nutrient pollution in a significant way and that controlling point sources alone is not enough. Given the consequences of HABs and the difficulty in controlling nonpoint sources of the nutrients that contribute to their formation, challenges and issues associated with HABs are likely to remain of interest to Congress.

Scientific research indicates that in recent years, the frequency and geographic distribution of harmful algal blooms (HABs) have been increasing nationally and globally. Because the impacts of HABs can be severe and widespread—often with interstate implications—these issues have been a perennial interest for Congress. While algal communities are natural components of healthy aquatic ecosystems, under certain conditions (e.g., increased temperatures and nutrient concentrations), algae may grow excessively, or "bloom," and produce toxins that can harm human health, animals, aquatic ecosystems, and the economy. In 2014, a cyanobacterial HAB in Lake Erie affected the drinking water for more than 500,000 people in Toledo, Ohio. In 2016, a massive HAB in Florida's Lake Okeechobee negatively impacted tourism and aquatic life. HABs have been recorded in every state and have become a concern nationwide. Many types of algae can cause HABs in freshwater systems. The most frequent and severe blooms involve the proliferation of cyanobacteria. Some cyanobacteria species can produce toxins—cyanotoxins—that can cause mild to severe health effects in humans and kill aquatic life and other animals. HABs can also contribute to deteriorating water quality and ecosystem health. As masses of cyanobacteria or other algae die and decompose, they consume oxygen, sometimes forming "dead zones" where life cannot survive. These areas can kill fish and organisms, such as crabs and clams, and have detrimental economic effects. Scientists widely consider nutrient enrichment to be a key cause of HAB formation. While nutrients are essential to plants and natural parts of aquatic ecosystems, excessive amounts can overstimulate algal growth. Sources include point sources (e.g., municipal wastewater discharges) and nonpoint sources (e.g., fertilizer runoff from agricultural and urban areas). Congress, federal agencies, and states have taken steps to address HABs and nutrients that contribute to their occurrence. The Harmful Algal Bloom and Hypoxia Research and Control Act of 1998 (HABHRCA), as amended, established an interagency task force, required the task force to prepare reports and plans addressing marine and freshwater HABs, and authorized funding for research, education, monitoring activities, etc. In December 2016, the Environmental Protection Agency (EPA) used its authority under the Clean Water Act (CWA) to propose water quality criteria for two algal toxins in waters used for recreational purposes. States use such criteria when developing water quality standards—measures that describe the desired condition or level of protection of a water body and what is needed for protection. Further, EPA has emphasized the need to reduce nutrient pollution from all sources to reduce public health and environmental impacts associated with HABs. The CWA does not authorize EPA to regulate all sources. It authorizes EPA to regulate point (direct) sources of nutrients but does not authorize EPA to regulate nonpoint (diffuse) sources of nutrient pollution. Some states have developed guidelines for algal toxins, primarily for use in guiding swimming advisories. Also, states have listed waters as impaired, or not meeting water quality standards, for algal blooms or algal toxins. Some of these states have begun to develop Total Maximum Daily Loads (TMDLs)—essentially pollution budgets—to address them. Most states have identified nutrient-related pollution as a priority to be addressed by their TMDLs and/or alternative restoration plans. States rely heavily on financial assistance from EPA in implementing these plans and, more broadly, in addressing nonpoint source pollution that leads to degraded water quality and HAB formation. Congress has long provided financial assistance through EPA for regional, state, and local programs through CWA Sections 106 and 319 planning grants, geographic programs (such as the Chesapeake Bay and Great Lakes), and other sources. The President's FY2019 budget request for most of these programs is either eliminated or significantly reduced. Congress continues to show interest in addressing HABs. This interest has largely focused on funding research to close research gaps identified by scientists and decisionmakers and to coordinate the efforts of federal agencies and their partners to study and address HABs.

Georgia gained its independence at the end of 1991 with the dissolution of the former Soviet Union. Its elected president, Zviad Gamsakhurdia, faced insurrection and fled the country in January 1992. Coup leaders invited former Soviet Foreign Minister Eduard Shevardnadze to head a ruling State Council, and he was elected the speaker of the legislature in late 1992 and president under a new constitution in 1995. The country was roiled by secessionist conflict by South Ossetia and Abkhazia that resulted in cease-fires in 1992 and 1994, respectively. Shevardnadze was ousted in the wake of a suspect legislative election in late 2003, and coup co-leader Mikheil Saakashvili was elected president in January 2004. A November 2007 government crackdown on political oppositionists led Saakashvili to step down as president in the face of domestic and international criticism to seek a mandate on his continued rule. He was reelected president in January 2008 with 53% of the vote. Electoral observers hosted by the Organization for Security and Cooperation in Europe (OSCE) stated that the election broadly met its standards, but that irregularities needed to be addressed. He is constitutionally limited to two terms in office, and has stated that in accordance with the constitution, he will not run in a planned 2013 presidential election, although he does not plan to leave politics entirely. In an address at the U.N. General Assembly on September 23, 2008, President Saakashvili announced new democratization initiatives as a means to strengthen Georgia's sovereignty and independence and thereby prevent Russia from subverting Georgia's statehood. After lengthy attempts, President Saakashvili met with a few opposition leaders in April-May 2009 to discuss setting up a constitutional commission to work out changes to the political system, and such a commission was established in June 2009. In his March 2010 and February 2011 state of the nation addresses, Saakashvili pledged further democratization efforts. In his 2011 speech, he outlined his goals for the creation of a "modern" Georgia that would be "a democratic European nation with the fastest growing economy in Europe," where Georgian citizens would be more confident, "more educated" and "more competitive," and not subject to subjugation by Russia. He outlined a series of goals to be achieved by 2015 in agriculture, trade, employment, infrastructure development, and tourism. In his February 2012 state of the nation address, President Saakashvili discussed progress in meeting the 2015 goals. In the democracy realm, he did not announce new initiatives, but pledged that the upcoming October 2012 legislative election would be the "freest, most transparent and most democratic ... ever held in Georgia," and asserted that Georgia has a political system open to parties that play by the rules. Local elections to 64 city councils, as well as the first popular election of Tbilisi's mayor, were held at the end of May 2010. The ruling United National Movement (UNM)—headed by President Saakashvili—won over 65% of the vote in the city council races, followed by the moderate opposition Christian Democratic Alliance party bloc with about 12% of the vote. In the Tbisili mayoral race, the UNM incumbent—Gigi Ugulava—was reelected with about 55% of the vote. The elections were widely viewed as a rehearsal for the planned October 2012 legislative and 2013 presidential elections, and as such appeared to be a mandate for the UNM and a legitimization of the moderate opposition, according to some observers. Some observers suggest that Ugulava may be the likely candidate backed by UNM in the 2013 presidential election. The boycott of the elections by much of the radical opposition—including Nino Burjanadze's Democratic Movement-United Georgia, Levan Gachechiladze's Defend Georgia, and Irakli Okruashvili's For a United Georgia parties—appeared to further marginalize them in the public's eyes, according to some observers. Monitors from the OSCE reported that the local elections "marked evident progress towards meeting OSCE and Council of Europe [democratization] commitments," but that "significant shortcomings" remained, including apparent ballot-box stuffing and multiple voting, vote-counting and tabulation problems, the use of administrative resources for favored candidates, and deficiencies in the legal framework and its implementation. Assistant Secretary of State Philip Crowley repeated the findings of the OSCE that the local elections showed progress in democratization, but that "significant shortcomings need to be addressed." In May 2010, the constitutional commission (mentioned above) agreed on amendments to slightly reduce the power of the president and increase the powers of the legislature and prime minister. In October 2010, the Georgian legislature approved the constitutional changes. Most of the changes will not come into effect until after the next presidential election, scheduled for early 2013. Under the changes, the party that has the largest number of seats in the legislature will nominate the candidate for prime minister. This nominee will select ministers and draft a program, and upon approval by the legislature, the president will appoint the prime minister. The changes also call for regional governors to be appointed by the prime minister rather than the president, as is currently the case. Some suggestions by the Venice Commission, an advisory body of the Council of Europe, were not enacted. The Commission had raised concerns that the proposed presidential powers were still substantial relative to those of the prime minister and legislature, and that clashes between the president and prime minister might emerge on foreign policy and other matters. The Venice Commission suggested that a more powerful legislature might appoint the prime minister, be able to remove the prime minister with a simple majority vote (rather than 60% of the vote), and approve changes to the cabinet. A citizen's group likewise complained that the legislature's powers remained weak and criticized the retention of gubernatorial appointments. Some opposition parties allege that the constitutional changes are designed to permit Saakashvili to serve as prime minister after his term as president ends, and have called for a new constitutional amendment to ban a former president from subsequently serving as prime minister. The People's Assembly civic organization— formed in May 2009 by parties and groups comprising the radical opposition, and led by former legislative speaker Nino Burjanadze and former border guards' chief Badri Bitsadze) launched large-scale demonstrations in Tbilisi beginning on May 22, 2011. Their parade permit was due to expire on the evening of May 25, and the government planned to hold an independence day parade the next day. Immediately upon the expiration of the permit, Georgian security forces moved to forcibly disperse the demonstrators, reportedly resulting in four deaths, dozens of injuries, and scores of detentions. The Georgian government alleged that the Russia-backed protesters had planned to launch an armed overthrow of the government. The prosecutor issued a warrant for the arrest of Badri Bitsadze, the husband of Nino Burjanadze, leader of the opposition Democratic Movement-United Georgia Party, on the grounds that he was involved in planning the putsch. U.S. Ambassador John Bass, the U.N. High Commissioner for Human Rights, the EU, and various non-governmental organizations (NGOs) such as Amnesty International and Human Rights Watch called on the government to launch an inquiry into whether security forces used excessive force against the protesters. In July 2011, the Interior Ministry announced that an internal probe had resulted in 16 police being fired or disciplined. In August 2011, Bitsadze was sentenced in absentia to 5.5 years in prison on charges of organizing attacks on police and disturbing the public order. He returned to Georgia in January 2013 after a Tbilisi court annulled his sentence. The ruling UNM and several opposition parties launched talks on reforming the electoral code in November 2010. Talks reached an impasse in early March 2011 but were resumed in June 2011. Later that month, two prominent opposition parties, the Christian Democratic and the New Rights parties, broke with other opposition parties forming the "Opposition Eight" alliance and agreed with the ruling party on several electoral reforms. They formed an inter-party group to draft legislation based on the agreement. The agreement called for increasing the number of legislators from 150 to 190, 107 of whom would be elected by party lists and 83 by single-mandate constituencies. Since the UNM in the past had won most of the majoritarian seats, the increase in the proportion of seats to be allocated through party list voting was viewed by some observers as somewhat increasing the chances for opposition parties to gain seats in the legislature. The draft electoral code was publicized for public discussion in September and then was considered by the legislature. In December 2011, however, the UNM and some opposition parties agreed in approving the new electoral code that 77 members of the 150-seat legislature to be elected in October 2012 would be chosen through proportional voting and the remaining 73 through majoritarian voting in single member districts (previously, 50% of the members had been elected by each method). Another provision guaranteed that a party that gains a minimum of 5% of the vote will get at least six seats. A major provision recommended by the Venice Commission—that single member districts have relatively equal populations—was not included in the new electoral law. Under a 2011 constitutional amendment, the newly elected legislature would convene in a new building being completed in the city of Kutaisi (in western Georgia). In early October 2011, reclusive Georgian oligarch Bidzina Ivanishvili declared that he would set up a party and would participate in 2012 legislative elections in opposition to the ruling UNM. A few days later, Saakashvili signed an order revoking Ivanishvili's Georgian citizenship on the grounds that he also held Russian and French citizenship, and the government reportedly began investigating and seizing assets of Ivanishvili's Cartu Bank. With his citizenship revoked, Ivanishvili was barred from running for office or providing donations to political parties. Ivanishvili relinquished his Russian citizenship, and stated that he intended to give up his French citizenship when he regained his Georgian citizenship. Besides the revocation of citizenship, the ruling party pushed through legislation barring corporate contributions and limiting corporate employee contributions to political parties, which critics viewed as aimed to block Ivanishvili from financing prospective or existing parties. Instead, state financing of campaigns by existing parties that had won past elections was stepped up, also viewed by critics as a means to constrict any new party created through Ivanishvili's interests. His party coalition, Georgia Dream-Democratic Georgia (GD), was launched in April 2012. At the end of May 2012, constitutional changes went into effect permitting a citizen of an EU country who lived for five years in Georgia to be elected to high political office, a provision aimed to ease political tensions and permit Ivanishvili to participate in the October 2012 legislative election or in the 2013 presidential election. However, Ivanishvili proclaimed that he would not run in the legislative election except as a citizen of Georgia. Launching the GD election campaign on May 29, 2012, he affirmed support for Georgian integration into NATO and the EU, pledged to peacefully reintegrate Abkhazia and South Ossetia into Georgia, vowed to reduce poverty, unemployment, and emigration and to increase health, education, and other social services, and generally stated that his coalition aimed to bolster Georgia as a democratic and free market country. Georgia's State Audit Chamber—given responsibilities to monitor the new restrictions on campaign spending—announced on June 7, 2012, that it was filing court documents seeking a fine of over $90 million on GD, and was considering other fines. On June 11, the court decided that Ivanishvili's businesses had provided under-compensated services to GD and free satellite dishes to the public. A U.S. citizen involved in Ivanishvili's broadcasting business briefly was detained. The fine was reduced to $45.4 million on appeal. Ivanishvili refused to pay it, so on June 21 the government raided Global TV, a cable and satellite television provider co-owned by Ivanishvili's brother, and seized satellite dishes. Other businesses linked to Ivanishvili also were seized, including two banks that were placed under state management until the fine was paid. Besides broadcasting on the Internet, a television station owned by Ivanishvili's wife had relied on Global TV to carry its pro-GD Party programming. Some human rights NGOs raised concerns that the raid on Global TV might jeopardize freedom of information in the run-up to the election. Perhaps in response to these concerns, on June 29, the legislature approved an amendment to the electoral code requiring cable providers to carry all significant television channels with news programming for 60 days prior to the election (however, only a tiny fraction of Georgian homes receive cable). In late May 2012, Ivanishvili held a campaign rally in Tbilisi and over the next month held several more in the towns of Kutaisi and Ozurgeti and in several villages. His main campaign priorities included cutting utility rates, investing in agriculture, establishing universal health insurance, and increasing pensions. Two weeks after Ivanishvili visited the Samegrelo region in western Georgia, Saakashvili rushed there following flooding to offer assistance. On June 30, 2012, President Saakashvili appointed Interior Minister Ivane (Vano) Merabishvili as the new Prime Minister. The president stated that the new prime minister would combat unemployment, and Merabishvili added that he also would address problems of agriculture and healthcare. Saakashvili also announced that an Employment Ministry would be created. In early July 2012, the OSCE's Office for Democratic Institutions and Human Rights (ODIHR) issued a report on the political environment in Georgia prior to the planned October legislative election. An ODIHR mission reported that the electoral environment was polarized, with political parties already campaigning. ODIHR raised concerns that the revised law on campaign spending gave too much authority to the State Audit Chamber to investigate campaign spending, and reported there were accusations that the audit chamber was selectively and excessively focusing on Ivanishvili. In another pre-election assessment, the National Democratic Institute (NDI), an NGO, warned on June 29, 2012, that the tense electoral environment already included hate speech against ethnic and religious minorities, harassment of political opponents, improper campaign spending and use of government resources, and attempted bribery of government officials. NDI reported that Georgian civil society organizations and many opposition parties had raised concerns that the new electoral and campaign finance legislation would not be implemented impartially. NDI raised concerns that the State Audit Chamber and the courts had levied several large fines against Ivanishvili, and only a few minor ones against the ruling party, and called for the "transparent, equal, and reasonable application" of the campaign finance law. The election for the 150-member Parliament of Georgia was held on October 1, 2012. Georgia's Central Electoral Commission registered 16 parties and blocs and several thousand candidates to run in mixed party list and single-member constituency races. GD posed the main opposition to UNM, which at that time held the majority of legislative seats. A video tape of abuse in a prison released by GD late in the campaign seemed to be a major factor in the loss of voter support for the UNM and in the electoral victory of GD. After runoffs were held in three districts, GD emerged with 85 (57%) of the 150 legislative seats. According to observers from the Organization for Security and Cooperation in Europe (OSCE), the election freely reflected the will of the people and marked the first peaceful change of power in Georgia, although a few procedural and other problems were reported. The observers described the electoral environment as polarized and tense, with the frequent use of harsh rhetoric and some instances of violence. The campaign appeared to juxtapose the advantages of incumbency on one side against the private financial assets on the other side, rather than on concrete political platforms and programs. Mostly opposition party activists were detained and fined by the authorities. The distinction between state activities and the campaign of the ruling party was at times blurred. Two of the three main nationwide television channels were pro-government, although the third, the public broadcasting channel, provided balanced coverage. Cable networks were required to carry opposition party channels. The enforcement of campaign finance law by the State Audit Office was inconsistent and non-transparent. Voting was generally well organized and polling officials administered the vote in professional manner. Election observers evaluated the process positively in 93% of some 1,450 monitored polling stations. In some cases, voters did not mark their ballots in secret or individuals cast votes for other family members. Observers evaluated the counting and tabulation process less positively. Some technical procedures to be implemented prior to the opening of ballot boxes were not followed, and some indications of ballot box stuffing were observed. In about one-quarter of precinct electoral commissions, there were errors or omissions in completing the results protocols, leading in several cases to corrections. The White House described the election as "another milestone" in Georgia's development as a democracy, and called for Ivanishvili and Saakashvili to work together to ensure the country's continued peaceful transition of power. The Administration also stated that it looked forward to strengthening the U.S.-Georgia partnership. Several Members of Congress observed the election, and several Members of the Senate issued a post-election statement commending President Saakashvili for his efforts to transform Georgia into a prosperous democracy, while cautioning that the future of U.S.-Georgia relations depended on the country's continued commitment to democratization. On October 25, 2012, the new legislature convened and the parties making up the majority GD coalition approved Ivanishvili as prime minister, along with his proposed cabinet ministers and his government program. The program calls for "large-scale reforms in all strategic directions," including changing the constitution to bolster parliamentary power, restructuring the Interior (police) Ministry and depoliticizing the Interior and Defense Ministries, promulgating a new national security strategy, and modernizing the economy. The latter will include new grants for agriculture, pursuit of a free trade agreement with the United States, and talks with Russia to persuade it to lift its embargo on many Georgian products. The program also proclaims that the United States is Georgia's main ally and that foreign policy objectives include EU and NATO membership. At the same time, the program calls for opening a dialogue with Russia to improve relations. The bulk of UNM members in the legislature voted against the new government and criticized its program as failing to build on the reforms of the Saakashvili government. Relations between the parties making up the GD coalition and the UNM in the legislature and between the GD-led cabinet and the president have been contentious, and may well remain so in coming months, as both sides maneuver before a planned 2013 presidential election. Saakashvili is term-limited and cannot run, but the UNM hopes to retain the presidency. Under constitutional provisions already in place, the legislature is slated to gain greater powers vis-à-vis the presidency, so a divided political situation could endure for some time. In such a case, statesmanship and a commitment to compromise and good governance are essential for Georgia's continued democratization, observers stress. In early November 2012, the Ivanishvili government began arresting officials who had served in the previous Saakashvili government or who were active in the UNM, most prominently former defense and interior minister Bacho Akhalaia and chief of the armed forces Georgy Kalandadze, both of whom were charged with allegedly beating six servicemen in 2011. Addressing concerns by many domestic and international observers about due process, Prime Minister Ivanishvili asserted on November 22 that Akhalaia's "guilt will be proven quite soon." During a mid-November visit to Georgia, Assistant Secretary of State Philip Gordon stressed to Prime Minister Ivanishvili that the United States recognized that those who committed crimes should be investigated and prosecuted, but "nobody wants to see or get the perception that what this is about it retribution against political enemies.... For Georgia to continue down the path to Euro-Atlantic integration ... [it needs] to be absolutely scrupulous in making sure that due process and transparency are applied." On November 29, 2012, Georgian Foreign Minister Maia Panjikidze met with then-Secretary Clinton in Washington DC; Clinton urged that prosecutions by the Ivanishvili government against possible "wrongdoers" be undertaken "with due process and the rule of law." Panjikidze assured Clinton that the arrests were not politically motivated but rather represented "the restoration of justice." The next day, Prime Minister Ivanishvili endorsed Clinton's statement, and pledged that investigations would be carried out in a transparent manner. At the same time, he dismissed a Washington Post editorial that raised concerns about the many investigations and arrests, claiming that the newspaper had been influenced by the UNM, an allegation termed "fanciful" by UNM leaders. In December 2012, Senators Jeanne Shaheen, Joe Lieberman, James Risch, Lindsey Graham, and John McCain sent a letter to Prime Minister Ivanishvili raising concerns that the arrests were politically motivated. In an interview in early December 2012, President Saakashvili decried the "dozens" of investigations and arrests of his former colleagues by the Ivanishvili government. He also stated that he wanted to ease tensions with Ivanishvili by relinquishing most influence over domestic affairs and focusing on foreign policy, in order to stress the importance to traditional allies of continuing close ties with Georgia. One sign of cooperation between the two leaders appeared to be their agreement early in December to name Colonel Irakli Dzneladze, a military attaché at the Georgian Embassy in Ukraine, as the next chief of staff of the armed forces. In January 2013, the Ivanishvili government continued to launch investigations and to arrest former government officials and civil servants. At the same time, the legislature overrode a presidential veto of a law on amnesty for "political prisoners," and nearly 200 alleged victims subsequently were released from prison, including 13 individuals sentenced as Russian espionage agents. In addition, courts have exonerated other prominent individuals sentenced by the former Saakashvili government. Some observers have raised concerns that the increasing numbers of arrests might harm Georgia's international reputation and its foreign relations with Western governments and international organizations. Elected local councils and executive leaderships, dominated by members of the UNM, have faced protesters, and many members and leaders have resigned, switched parties, or declared that they are independent of party affiliation. Some observers have decried this situation, terming it an attempt by GD to take over local politics rather than cooperate with the UNM. They also have raised concerns that Georgia will thus come to sustain a political environment where one party is predominant, rather than evolve into a competitive party democracy. On January 23, 2013, Prime Minister Bidzina Ivanishvili dismissed Irakly Alasania as first deputy prime minister, reportedly after the two officials had wrangled over who would be nominated by the GD coalition to run in the planned October 2013 presidential election. Alasania retained his portfolio as defense minister. On February 7, 2013, legislative speaker Davit Usupashvili announced that President Saakashvili would not be permitted to deliver his annual speech to the legislature until he agreed to amend the constitution to reduce his powers (see below). The next day, Saakashvili attempted to deliver the speech from the legislative library, but pro-Ivanishvili protesters blocked the library entrance. Instead, Saakashvili delivered the speech from his residence. Ivanishvili issued a statement after the speech condemning the violence, and suggesting that it could have been avoided if Saakashvili had postponed his speech. After the tumult of the blocked annual address, the co-chairs of the Congressional Caucus on Georgia—Representatives Bill Shuster and Allyson Schwartz—as well as Representative Michael Turner and Representative Mario Diaz-Balert, called in a letter for Secretary Kerry to inform Georgia's leaders of U.S. concerns about the many arrests of former officials and other democratization trends in the country. In late March 2013, GD convinced enough UNM legislators to join in a two-thirds majority vote to amend the constitution to take away President Saakashvili's power to dismiss the sitting cabinet and to appoint a new cabinet without parliamentary approval. He had disavowed any intention of carrying out such an action during the few days that the constitution permitted it between the legislative and presidential elections. Responding to reports of ongoing pressure by GD activists to force UNM local legislators to resign or switch parties, and of the firing of local government workers belonging to UNM, Prime Minister Ivanishvili issued a statement on April 15, 2013, denying any official effort by GD to fire local personnel or to pressure local legislators. He called for local government workers not to be fired for political reasons. At the same time, he indicated that provisions were being developed to support "real and effective local self-governance," presumably after the holding of local legislative elections in 2014. These proposals may include a different process for choosing regional governors (state commissioners), who currently are appointed by the president. In a speech to the Parliamentary Assembly of the Council of Europe (PACE) on April 23, 2013, Ivanishvili asserted that Georgia is committed to democratization and respect for human rights, and remains Western-oriented, pointing to the foreign policy statement recently approved by the Georgian legislature. Seemingly underlining this orientation, he stressed that he remains a French citizen. He stated that he had advocated for the EU's appointment of Thomas Hammarberg, the former COE High Commissioner on Human Rights, as a Special Advisor for Legal and Constitutional Reform and Human Rights in Georgia, and pledged that OSCE observers and other human rights advocates would be permitted to monitor the prosecutions of former government officials. He rebuffed other concerns about judicial independence, and appeared to argue that President Saakashvili was responsible for the August 2008 Russia-Georgia conflict. Some observers have argued that while the Ivanishvili government may be demonstratively less pro-American, it is pro-European. Others raise concerns that Ivanishvili has maintained ties to Russian state-business officials. Ivanishvili announced on May 11, 2013, that GD had selected—in a non-transparent manner—Deputy Prime Minister and Minister of Education Giorgi Margvelashvili as its candidate for president. Other candidates who have declared their intention to run include Labor Party leader Shalva Natelashvili and Democratic Movement-United Georgia leader and former parliamentary speaker Nino Burjanadze. In a poll sponsored by the National Democratic Institute in late March 2013, a majority of respondents stated at that time that they planned to vote for the GD candidate for president. The UNM has stated that it hopes to hold party primaries to select a candidate. On May 21, 2013, former Prime Minister Merabashvili, an UNM official and possible presidential candidate, was arrested on charges of corruption, embezzlement, and abuse of office. Several Members of Congress raised concerns that the arrest was politically motivated and could harm Georgia's democratization and trans-Atlantic aspirations. As of mid-2013, eleven legislators elected under the UNM banner had left the party and declared themselves non-party representatives, reducing the presence of the UNM in the legislature. Freedom House, an NGO, ranked Georgia as "partly free" in its latest assessment of civil liberties and political rights for 2012. Georgia was judged to have improved in political rights during the year, particularly in holding a legislative election that resulted in a peaceful transition of power, but Freedom House also raised concerns about the arrests of former government officials late in the year. According to the State Department's Country Reports on Human Rights Practices for 20 12 , NGOs and the Public Defender's Office documented several cases of police officers mistreating detainees, beating them, and withholding permission to contact a lawyer during the year. The public defender also noted frequent instances of prison employees mistreating inmates. According to some observers, systemic abuse at Gldani Prison in Tbilisi was part of an official strategy to coerce confessions and facilitate convictions in criminal cases. In September 2012, media sources aired a series of graphic videos depicting prison officials assaulting and abusing inmates at Gldani Prison. Although the government took some steps to prosecute and punish officials who committed human rights abuses, the pre-election government frequently terminated or delayed investigations into such allegations, contributing to an atmosphere of impunity. However, after the parliamentary elections, more than two dozen high-level former government officials were indicted on torture, abuse of power, and corruption-related charges by the end of the year. Most arrests were made without a warrant, with courts later rubber-stamped police justifications, leading to a climate of impunity and public perceptions that the judiciary was not a meaningful check on police actions. Observers argued that the executive branch controlled the judiciary through the High Council of Justice (HCOJ), which appointed, promoted, transferred, and dismissed judges as well as implemented judicial reforms. The Supreme Court chairman, who was appointed by the president, chaired the HCOJ and nominated eight of its 15 members. Since only an insignificant percentage of court cases resulted in acquittal, defendants were pressured to enter into plea bargains regardless of their legal interests. NGOs, civil society groups, and opposition party members alleged that politically motivated arbitrary arrests occurred, particularly of GD supporters in the run-up to the election. There were also allegations that family members of GD supporters were fired from public sector jobs. Several NGOs and others alleged that there were political prisoners held by the Saakashvili government. On December 5, 2012, the legislature passed a resolution declaring 190 individuals political prisoners and 25 political exiles. Some opposition figures, including GD leader Ivanishvili, and NGOs alleged that surveillance included monitoring of e-mails and cellular telephone conversations. In November 2012, the Prosecutor's Office arrested Tbilisi's vice mayor, the head of the Constitutional Security Department, and nine other officials of the Ministry of Internal Affairs, and charged them with illegal surveillance through unauthorized access to private computer networks. Although independent media were active and expressed a wide variety of views, direct or indirect government influence over the most watched countrywide media outlets remained a problem. There were reports during the year of physical and verbal assaults of journalists by police, confiscation of journalists' cameras by authorities, and intimidation of journalists by government officials due to their reporting, particularly during the run-up to the legislative election. Some opposition television stations faced tax audits, damage or confiscation of equipment, and liens on broadcast licenses during the election campaign. Observers accused both high-ranking government officials and opposition politicians of influencing editorial and programming decisions through their personal connections with news directors and media executives and by directing advertising using their personal connections with business owners. Georgia was a source, transit, and destination country for women and girls subjected to sex trafficking and men and women subjected to conditions of forced labor. The government worked to eliminate trafficking, and boosted funding for anti-trafficking efforts and for two shelters, and increased the number of convictions of offenders. USAID has argued that Georgia has significant economic resources that could spur growth if it can overcome various impediments to development. Among Georgia's potentialities are its strategic location as an east-west and north-south trade and transit corridor, its climate and agricultural endowments, ample water resources that could be used for hydropower, and inexpensive and eager labor. Economic problems include rising unemployment and lagging educational achievement, a dearth of skilled labor, persistently high poverty rates, and high income and gender inequality. Oligopolistic market conditions hamper private enterprise development. Georgia's role in the global economy is precarious, since it has not bolstered export markets, remains dependent on energy imports, has faltered in attracting foreign direct investment, and imports food in part because agricultural productivity is below the global average. To address these problems, the Georgian government released an economic plan in 2011 to bolster job growth. Georgia's economy suffered in 2008-2009 from the after-effects of the world economic downturn and the Russia-Georgia conflict, but began to recover in 2010. The Economist Intelligence Unit (EIU) estimates that Georgia's gross domestic product (GDP) contracted in 2009, but resumed growth in 2010. The EIU estimates that GDP grew by 7% in 2011, but slowed slightly to 6.1% in 2012, mainly due to a fall-off in economic activity during the fourth quarter related to a poor harvest and post-election uncertainties. Consumer price inflation was 8.5% in 2011 but a slight deflation of -0.9% was reported for 2012, attributable to lower prices for imports and to lower consumer demand. The EIU projects that economic growth might slow to 4.5% in 2013, related to slowed government spending early in the year and to a fall-off in foreign direct investment. Economic activities include agriculture, mining, and a small industrial sector. Civil conflict and poverty have spurred the emigration of about one-fifth (1 million) of the population since 1991. A large percentage of the working population has migrated for work in Russia or elsewhere. After being reduced in 2009 as a result of the world economic downturn, the contribution of migrant worker remittances abroad to GDP increased thereafter, as economic growth returned to Russia and other host countries. Despite Russia's expected poor economic growth in 2013, worker remittances to Georgia are not anticipated to greatly decline. Georgia is a member of the World Trade Organization (see below). In 2012, Georgia exported $3.5 billion in goods and imported $7.7 billion. Turkey, Azerbaijan, and Ukraine were among Georgia's main trade partners. Georgia's main exports during 2012 were automobiles (through reselling rather than production), ferrous metals, and fertilizer. U.S. exports to Georgia were $540.6 million during 2012 (a decrease from $579.3 million the previous year) and U.S. imports from Georgia were $226.2 million (an increase from $176.1 million the previous year). Georgia's State Statistics Department reported that total foreign direct investment (FDI) in Georgia was $1.1 billion in 2012, somewhat less than in 2011 and well below that of the pre-2008 conflict period. Besides FDI, the state-owned Georgian Railways and Georgian Oil and Gas Corporation issued $750 million in Eurobonds in 2012 to finance railway and hydropower projects. The lack of adequate growth in private-sector jobs and Saakashvili's downsizing of the public sector contributed to gradually rising unemployment in recent years (about 15% in 2011). Almost one-half of the working population engages in agriculture, which accounts for a decreasing portion of GDP and an increasing portion of those in poverty. In June 2013, the International Monetary Fund (IMF) commended the Ivanaishvili government for increasing social expenditures and agricultural support to address these problems, but also called for boosting the level of government spending, lowering the interest rate, reforming the tax code, and enacting other policies to increase business confidence and investment. The Ivanishvili government launched trade negotiations with Russia in December 2012 aimed at getting Russia to lift its de facto trade restrictions in place since 2006, particularly those involving mineral water, wine, and agricultural produce. Such trade restrictions are incompatible with Russia's WTO membership (see below), but Russia has appeared to extract maximal concessions and leverage in return for permitting some trade to resume, according to some observers. In late February 2012, representatives from Russia's Federal Service for Control in the Sphere of Consumers' Rights Protection and the Well-Being of Humans (Rospotrebnadzor) visited Georgia to inspect wine and mineral water production facilities. In May 2013, Rospotrebnadzor announced that it had deemed Georgian wines from seven producers and mineral waters from two producers as safe to import into Russia, and some Borzhomi water and wine began to be imported. Seemingly indicative of ongoing tensions, however, Rospotrebnadzor alleged that the Central Public Health Reference Laboratory near Tbilisi—which opened in 2011 as a collaboration between the U.S. Army Medical Research and Materiel Command and the Georgian Defense Ministry —was involved in research on pathogens that endangered Russia, and stated that the laboratory should be closed in order for Russia-Georgia cooperation on sanitary and epidemic issues to proceed. Rospotrebnadzor's head Gennadiy Onishchenko also reiterated in early June 2013 that the persistence of African swine fever that caused some loss of animals in southern Russia was economic subversion carried out from Georgia, possibly alluding that the laboratory was involved. Russian sources have alleged that Georgia has agreed to sever U.S. collaboration with the laboratory. Georgia is a transit state for a pipeline completed in mid-2006 carrying 1 million barrels per day of Azerbaijani oil to the Turkish port of Ceyhan (the Baku-Tbilisi-Ceyhan or BTC pipeline). Another pipeline completed in early 2007 initially carries 2.2 billion cubic meters of Azerbaijani natural gas to Georgia and Turkey, lessening their dependence on Russia as a supplier. In addition, a pipeline transits Georgia to Armenia that carries Russian gas. Georgia receives some gas through this pipeline, including some gas in lieu of transit fees. The United States has backed Georgian ownership of this pipeline and MCC has provided funds for upgrading the pipeline. Azerbaijan provides an increasing portion of the gas needed by Georgia, largely easing Tbilisi's dependence on Russia. Georgia has built and refurbished hydroelectric power plants and plans to increase its export of electricity. When Georgia became a member of the WTO in 2000, it joined an existing Working Party of interested WTO members—established in 1993—that has been considering Russia's WTO bid. Georgia added its main concerns to those of the other 60-odd members of the Working Party, that market access be upheld and that Georgia establish control over customs clearance at posts located along its borders with Russia (including between its breakaway regions and Russia), in accordance with its sovereign territorial rights and the provisions of a 1994 free trade agreement signed by Georgia and Russia (never ratified by Russia). This Georgian request for customs control did not fundamentally change after Russia recognized the independence of the breakaway regions in late August 2008. Although Russia held bilateral talks with all members of the Working Party and by late October 2011 had resolved most of their concerns, Russia long continued to refuse to resolve Georgia's concerns about customs control, arguing that the issue was political and hence irrelevant to WTO accession. Instead, Russia demanded that the United States put pressure on Georgia to drop its request or that the WTO use an unprecedented majority vote of the membership to admit Russia to get around Georgia's request. The Russia-Georgia dispute became the last major obstacle to Russia's WTO accession. According to some observers, powerful interests in Russia that remained opposed to WTO membership were using the dispute to convince others in the Russian leadership to cease efforts to join WTO. Trade monitoring talks moderated by Switzerland began in March 2011 between Russia and Georgia, which resulted in the signing of a trade monitoring agreement in Geneva in November 2011. This accord cleared one of the last major obstacles to Russia being invited to join the WTO at its Ministerial Conference in mid-December 2011 (on July 10, 2012, the Russian Duma approved accession, which was implemented by the WTO in August 2012). The trade monitoring agreement calls for customs observers at three "trade corridors" on the Georgia-Russia border, two running through the breakaway regions and the third running through the uncontested Zemo Larsi-Kazbegi border crossing. In regard to the breakaway regions, a terminal will be located at Russia's border with the region, and another at Georgia's border with the region. A private firm will be hired and managed by Switzerland to check statistics on customs clearance. Georgia and Russia will provide data to the firm, which will forward the data to the WTO. On December 26, 2011, Russian Ministry of Foreign Affairs spokesman Aleksandr Lukashevich appeared to boast that Georgia had been bested during the negotiations, asserting that since Georgia will provide customs clearance information for goods entering Abkhazia and South Ossetia, it effectively will be recognizing their independence, a claim Georgia disagreed with. He also asserted that Georgian customs officials would not be permitted at terminals located between Russia and the breakaway regions. However, at the first meeting in Geneva in December 2012 between Russia and Georgia on the normalization of relations (see below), the two sides reportedly agreed that Georgian customs officials would be permitted to monitor cargoes at these terminals. Among its neighbors, Georgia has developed close ties with Azerbaijan and maintains good relations with Armenia. Georgia has an ongoing interest in ties with about 1 million Georgians residing in Turkey and about 50,000 Georgians in Iran. Georgia is a member of the European Union's (EU's) Eastern Partnership program of enhanced economic ties, and hopes to negotiate a free-trade agreement with the EU. President Saakashvili and Prime Minister Ivanishvili have set a goal for Georgia to eventually become an EU member. Ties with Russia have sharply deteriorated during Saakashvili's presidency. After the August 2008 Russia-Georgia conflict, Georgia broke off diplomatic relations with Russia and withdrew as a member of the Russia-dominated Commonwealth of Independent States (CIS). During the 2012 legislative election campaign, GD called for improving relations with Russia while maintaining a Western orientation. New Prime Minister Ivanishvili appointed Zurab Abashidze to the post of Special Representative for Relations with Russia to work toward better ties. Talks between Abashidze and Russian Deputy Foreign Minister Grigoriy Karasin have been held to normalize trade, transport, and cultural relations between the two countries. Foreign Minister Panjikidze has stressed, however, that diplomatic relations cannot be restored as long as Russia occupies Georgian territory. As one gesture, Georgia's Olympic Committee announced in early May that Georgian athletes would compete in the Sochi 2014 Winter Olympics. Georgia's military is the smallest among those of the South Caucasus states. Its ground forces, air force, and national guard reportedly numbered 20,650 at the beginning of 2013. There were also 5,400 border and coast guards and 6,300 Interior (police) Ministry troops. Most of the ground forces and air force personnel are on contracts, with the remainder conscripted. In 2009, remaining elements of the coast guard—largely decimated during the Russia-Georgia conflict—became part of the border guards, organizationally under the Interior Ministry. According to the Georgian defense ministry, 160 military personnel were killed during the Russia-Georgia conflict. A national security concept approved in late 2011 states that Russia's military "occupation of Georgia's territories ... and terrorist acts organized by Russia from the occupied territories," and "the risk of new military aggression from Russia" are the top national security threats faced by Georgia. The concept warns that Russia "aims to turn Georgia into a failed state, to hinder the realization of Georgia's European and Euro-Atlantic choice, and to forcibly return Georgia to the Russian political orbit." The concept avers that "international support for Georgia, as well as the presence of the European Union Monitoring Mission on the ground, are important deterrents to possible aggression" by Russia. Marking the shift toward more security ties with the West, Georgia withdrew from the CIS Collective Security Treaty in 1999. Georgia assumed full control from Russia over guarding its sea and land borders in 1999. Georgia joined NATO's Partnership for Peace in 1994 and has hosted PFP exercises annually since 2001. NATO signed an Individual Partnership Action Plan (IPAP) with Georgia in October 2004 to deepen cooperation. Although the United States urged that Georgia be considered for a Membership Action Plan (MAP; preparatory to membership), NATO's Riga Summit in November 2006 reaffirmed support for an "intensified dialogue" to assist Georgia in implementing reforms. A MAP for Georgia was a matter of contention at the April 2008 NATO Summit. Although Georgia was not offered a MAP, the Alliance pledged that Georgia would eventually become a member of NATO, and stated that the issue of a MAP for Georgia would be revisited later in the year. After the August 2008 Russia-Georgia conflict, several allies raised heightened concerns that Georgia was not ready to be granted a MAP because of the destruction of much of its military infrastructure by Russia, the uncertain status of the breakaway regions, and the uncertain quality of conflict decision-making by Georgia's political and military leadership. At a NATO foreign ministers' meeting in early December 2008, the allies agreed to step up work within the Georgia-NATO Council (established soon after the Russia-Georgia conflict) to facilitate Georgia's eventual NATO membership, and to prepare annual plans on Georgia's progress toward eventual membership. The first annual national plan was worked out during meetings of the Georgia-NATO Council and started to be implemented in May 2009. During the visit of the North Atlantic Council to Georgia in November 2011, Secretary-General Anders Fogh Rasmussen praised Georgia for making progress in meeting conditions for NATO membership, including by increasing freedom of expression, economic growth, and military reforms, and by combating corruption. However, he also cautioned that the 2012-2013 legislative and presidential elections "will be an important indicator of ... how ready Georgia is for NATO membership." The NATO-Georgia Commission also met in Tbilisi, and NATO pledged to strengthen its NATO liaison office in Tbilisi (set up in 2010), enhance support to the National Defense Academy for education and training, bolster the capacity for civil democratic oversight of the defense sector, and increase support for Georgia's role in Afghanistan. After meeting with President Saakashvili at the White House in late January 2012, President Obama stated that he had "assured [Saakashvili] that the United States will continue to support Georgia's aspirations to ultimately become a member of NATO." At his confirmation hearing in March 2012, Ambassador-designate to Georgia Richard Norland reported that the Administration planned at the upcoming May 2012 NATO summit in Chicago "to signal acknowledgement for Georgia's progress ... and to work with the allies to develop a consensus on the next steps forward." The Chicago Summit Declaration issued at the meeting grouped Georgia with the other three NATO aspirants, Macedonia, Montenegro, and Bosnia-Herzegovina, and announced that the Alliance ties with Georgia would be strengthened. The Declaration reaffirmed NATO support for Georgia's territorial integrity and called on Russia to make a pledge not to use force against Georgia and to rescind its recognition of the breakaway regions as independent. It also raised concerns about Russia's military buildup in the breakaway regions and called on Russia to permit international observers and humanitarian groups free access to the regions. At a mid-November 2012 meeting at NATO headquarters in Brussels with Secretary General Anders Fogh Rasmussen, visiting Prime Minister Ivanishvili assured him that due process would be followed in the cases of former defense and interior minister Bacho Akhalaia, chief of the armed forces Georgy Kalandadze, and others arrested in Georgia, and invited NATO to set up a commission in Georgia to monitor the cases. At a meeting of the NATO-Georgia Commission in Brussels, held a week after Ivanishvili's NATO visit, Georgian Defense Minister Alasania stated that post-election Georgia was now more stable and a stronger and more predictable NATO partner, and that Georgia would uphold the rule of law. At a follow-on meeting of the NATO-Georgia Commission on December 5, 2012, during the NATO foreign ministerial meeting in Brussels, Secretary General Rasmussen reiterated that the Alliance would continue to monitor judicial developments in Georgia, and stressed that NATO looked forward to a "still stronger and closer relationship [with Georgia] in 2013 and beyond." At a meeting of the NATO-Georgia Commission on March 19, 2013, the Georgian side reported on its annual plan for 2013. NATO emissaries reportedly praised the annual plan and offered assistance for its fulfillment, and urged vying political interests in Georgia to work together to further the country's democratization. At a meeting of the NATO-Georgia Commission on June 5, 2013, NATO Secretary General Anders Fogh Rasmussen stated that the Alliance "greatly appreciate[s] the active support that Georgia has made to our operations, past and present.... We are looking to the Georgian government to respect the rule of law, human rights and the rights of minorities. And we encourage Georgia to continue key reforms and to conduct free and fair presidential elections later this year.... I look forward to a future in which Georgia is in the Alliance." He also criticized Russia's fortification of borders, including the stringing of barbed wire, along the South Ossetian-Georgian border. The North Atlantic Council will visit Georgia on June 26-27, 2013. The U.S. Congress approved the NATO Freedom Consolidation Act of 2007, signed into law in April 2007 ( P.L. 110-17 ), to urge NATO to extend a MAP for Georgia and to designate Georgia as eligible to receive security assistance under the program established by the NATO Participation Act of 1994 ( P.L. 103-447 ). The statement released by the U.S. delegation to the NATO Parliamentary Assembly in October 2011 (mentioned above) called for NATO to extend a MAP for Georgia at the upcoming NATO Summit in Chicago in May 2012. In March 2012, then-Senator Richard Lugar introduced S. 2177 , The NATO Enhancement Act, in the 112 th Congress, which reaffirms an "open door" policy with respect to the accession of additional countries to NATO, including NATO aspirant Georgia (a similar bill, H.R. 4243 , was introduced in the House by Rep. Michael Turner later in March 2012). The bills expressed the sense of Congress that the President should lead efforts at the Chicago NATO Summit to provide a clear roadmap for the granting of a MAP (or other equivalent plan) to Georgia and other aspirants. However, as mentioned above, Georgia was not offered a MAP at the Chicago NATO summit. Several of Georgia's ethnic minorities stepped up their dissidence, including separatism, in the late 1980s and early 1990s, resulting in the loss of central government control over the regions of South Ossetia and Abkhazia. Some observers argued that Russia's increasing controls over South Ossetia and Abkhazia over the years transformed the separatist conflicts into essentially Russia-Georgia disputes. Most residents of Abkhazia and South Ossetia had been granted Russian citizenship before the August 2008 Russia-Georgia conflict and most had appeared to want their regions to become independent or parts of Russia. U.S. diplomacy long appeared to urge Georgia to work within existing peace settlement frameworks for Abkhazia and South Ossetia—which allowed for Russian "peacekeeping"—while criticizing some Russian actions in the regions. This stance appeared to change during 2008, when the United States and other governments increasingly came to support Georgia's calls for the creation of alternative peace settlement mechanisms, particularly since talks under existing formats had broken down. This U.S. policy shift was spurred by increasing Russian actions that appeared to threaten Georgia's territorial integrity. Among these, the Russian government in March 2008 formally withdrew from CIS economic sanctions on Abkhazia, permitting open Russian trade and investment. Of greater concern, President Putin issued a directive in April 2008 to step up government-to-government ties with Abkhazia and South Ossetia. He also ordered stepped up consular services for the many "Russian citizens" in the two regions. He proclaimed that many documents issued by the separatist governments and businesses which had been established in the regions would be recognized as legitimate by the Russian government (For other Russian actions during 2008 specific to a breakaway region, see " Developments in Abkhazia before August 2008 ," " Developments in South Ossetia before August 2008 ," or " The August 2008 Conflict ," below.) In July 1992, Abkhazia's legislature declared the region's effective independence, prompting an attack by Georgian national guardsmen. In October 1992, the UNSC approved sending a U.N. Observer Mission in Georgia (UNOMIG), the first to a Eurasian state, to help the parties reach a settlement. Russian and North Caucasian "volunteers" (who reportedly made up the bulk of Abkhaz separatist forces) routed Georgian forces in 1993. Georgia and Abkhazia agreed in April-May 1994 on a framework for a political settlement and the return of refugees. Russian troops (acting as CIS "peacekeepers") were deployed in a zone between Abkhazia and the rest of Georgia. The conflict resulted in about 10,000 deaths and over 200,000 displaced persons, mostly ethnic Georgians. The U.S. Deputy Assistant Secretary of State worked with the Special Representative of the U.N. Secretary General and other "Friends of the Secretary General" (France, Germany, Russia, the United Kingdom, and Ukraine) to facilitate a settlement. Sticking points in talks included Georgia's demand that displaced persons be allowed to return to Abkhazia, after which an agreement on autonomy for Abkhazia would be negotiated. The Abkhazians insisted on recognition of their independence as a precondition to large-scale repatriation. In July 2006, a warlord in the Kodori Gorge area of northern Abkhazia, where many ethnic Svans reside, foreswore his nominal allegiance to the Georgian government. The Georgian government quickly sent forces to the area and defeated the warlord's militia. Georgia claimed that only police were deployed in the Gorge, but Abkhazia asserted that military troops were present, in violation of the cease-fire agreement. Regular Georgia-Abkhazia peace talks were suspended in October 2006. Abkhazia called for Georgia to remove the government representatives and alleged military forces. The United States and others in the international community raised concerns when the Russian foreign and defense ministries announced on April 29, 2008, that the number of "peacekeepers" in Abkhazia would be boosted up to the maximum permitted under ceasefire accords. The ministries claimed that the increases were necessary to counter a buildup of Georgian "military forces" and police in the Kodori Gorge, which they alleged were preparing to attack the de facto Abkhaz government. It was also troubling that 400 Russian paratroopers were deployed to Abkhazia that Russian officials reportedly stated would be fully armed in order to repulse possible Georgian attacks on Abkhazia. In late May 2008, Russia announced that about 400 railway construction troops were being sent to Abkhazia for "humanitarian" work. These troops—whose role is to facilitate military positioning—reportedly left Abkhazia at the end of July 2008 after repairing tracks and bridges. According to former Deputy Assistant Secretary Bryza, the railway was used in August by Russia when its troops moved into Georgia. In 1989, the region lobbied for joining its territory with North Ossetia in Russia or for independence. Repressive efforts by former Georgian President Gamsakhurdia triggered conflict in 1990, reportedly contributing to an estimated 2,000-4,000 deaths and the displacement of tens of thousands of people. In June 1992, Russia brokered a cease-fire, and Russian, Georgian, and Ossetian "peacekeeping" units set up base camps in a security zone around Tskhinvali, South Ossetia. Reportedly, the units totaled around 1,100 troops, including about 530 Russians, a 300-member North Ossetian brigade (which actually was composed of South Ossetians and headed by a North Ossetian), and about 300 Georgians. OSCE monitors did most of the patrolling. In 2004, President Saakashvili increased pressure on South Ossetia by tightening border controls and by breaking up a large-scale smuggling operation in the region that allegedly involved Russian organized crime and corrupt Georgian officials. He also reportedly sent several hundred police, military, and intelligence personnel into the region. Georgia maintained that it was only bolstering its peacekeeping contingent up to the limit of 500 troops, as permitted by the cease-fire agreement. Georgian guerrilla forces also reportedly entered the region. Allegedly, Russian officials likewise assisted several hundred paramilitary elements from Abkhazia, Transnistria, and Russia to enter. Following inconclusive clashes, both sides by late 2004 ostensibly had pulled back most undeclared forces. In November 2006, a popular referendum was held in South Ossetia to reaffirm its "independence" from Georgia. After October 2007, no more peace talks were held. Simmering long-time tensions erupted on the evening of August 7, 2008, when South Ossetia accused Georgia of launching a "massive" artillery barrage against its capital, Tskhinvali, while Georgia reported intense bombing of some Georgian villages in the conflict zone by South Ossetian forces. Georgia claims that South Ossetian forces did not respond to a ceasefire appeal but intensified their shelling, "forcing" Georgia to send in troops that reportedly soon controlled Tskhinvali and other areas. On August 8, Russia launched large-scale air attacks across Georgia and dispatched seasoned troops to South Ossetia that engaged Georgian forces in Tskhinvali later in the day. Reportedly, Russian troops had retaken Tskhinvali, occupied the bulk of South Ossetia, reached its border with the rest of Georgia, and were shelling areas across the border by the morning of August 10. Russian warplanes bombed the outskirts of the capital, Tbilisi, as well as other sites. Russian ships landed troops in Georgia's breakaway Abkhazia region and took up positions off Georgia's Black Sea coast. On August 12, Medvedev declared that "the aim of Russia's operation for coercing the Georgian side to peace had been achieved and it had been decided to conclude the operation.... The aggressor has been punished and suffered very heavy losses." Medvedev endorsed some elements of a European Union (EU) peace plan presented by visiting French President Nicolas Sarkozy. On August 15, the Georgian government accepted the French-brokered six-point cease-fire that left Russian forces in control of South Ossetia, Abkhazia, and "security zones" in undisputed Georgian territory. The six points included commitments not to use force, to halt hostilities, to provide full access for humanitarian aid, to withdraw Georgian forces to the places they were usually stationed prior to the conflict, to withdraw Russian forces to positions prior to the outbreak of hostilities (although they were permitted to implement security measures in the zone of the conflict until international monitors were in place), and to open international discussions on ensuring security and stability in Abkhazia and South Ossetia. Much of the international community condemned President Medvedev's August 26 decree officially recognizing the independence of South Ossetia and Abkhazia. Nicaragua, Venezuela, Nauru, and Tuvalu are the only countries that have followed suit in extending diplomatic relations to Abkhazia and South Ossetia (Vanuatu's prime minister reportedly stated to Saakashvili in May 2013 that the country does not recognize Abkhazia). On September 8, 2008, then-President Medvedev and visiting then-President Sarkozy signed a follow-on ceasefire accord that fleshed out the provisions of the six-point peace plan. Among its provisions, it stipulated that Russian forces would withdraw from areas adjacent to the borders of Abkhazia and South Ossetia by October 11; that Georgian forces would return to their barracks by October 1; that international observers already in place from the U.N. and OSCE would remain; and that the number of international observers would be increased by October 1, to include at least 200 observers from the EU, and perhaps more later. The EU called for Russia to permit these observers to patrol in Abkhazia and South Ossetia. Russia's position has been that these observers cannot patrol in the regions without the approval of the regions, and the regional leaders have refused to permit such patrols. Although Sarkozy strongly implied that the international conference would examine the legal status of Georgia's breakaway Abkhazia and South Ossetia, Medvedev asserted that the regions had been recognized as independent by Russia on August 26, 2008, and that disputing this recognition was a "fantasy." Many observers have argued that Russia aimed both to consolidate control over South Ossetia and Abkhazia and to depose Georgian President Saakashvili when it launched the August 2008 military incursion into Georgia. Russia hoped to achieve this latter goal either directly by occupying Georgia's capital of Tbilisi and killing or arresting Saakashvili, or indirectly by triggering his overthrow, according to these observers. They state that Saakashvili's survival as the popularly elected president was a major accomplishment of the diplomacy of the EU and the United States that ended Russia's offensive. Georgia, the United States, and others have maintained that in violation of the cease-fire accords, Russian troops remain in some areas instead of being removed, the number of its troops in the regions have not been reduced to pre-conflict levels, and the OSCE and U.N. observers have been forced out of the regions. Russia has established military bases in each of the regions and a naval base in Abkhazia. The British publication The Military Balance reports that as of early 2013 there were about 7,000 Russian motorized rifle brigade troops in Abkhazia and South Ossetia, as well as some air force attack helicopters and S-300 surface-to-air missiles. In addition, up to several thousand Russian border guards and security personnel reportedly have been deployed and some Black Sea Fleet naval forces have docked at the port of Ochamchira, Abkhazia. The International Crisis Group (ICG), a non-governmental organization, estimated in June 2010 that there may be fewer than 30,000 people residing in South Ossetia, and that the population continues to decline (a 1989 census, taken before the beginning of conflict, reported a regional population of 98,500). The ICG suggests that the region is increasingly less able to govern or sustain itself economically, and so must rely on Russian aid and thousands of Russian construction and government workers, troops, and border guards that are deployed there. By October 1, 2008, the European Union Monitoring Mission (EUMM) had deployed over 200 monitors and Russia announced on October 9 that its troops had withdrawn from buffer zones. Georgia has maintained that Russian troops have not pulled out of Akhalgori, a district that Russia asserts is within South Ossetia's Soviet-era borders, and the Kodori Gorge, and that no Russian military bases are permitted in the regions. In December 2008, Russia objected to continuing a mandate for about 200 OSCE observers in Georgia—including some observers authorized before the August 2008 conflict and some who were added after the August 2008 conflict—and they pulled out on June 30, 2009. Similarly, in June 2009 Russia vetoed a UNSC resolution that extended the UNOMIG mandate, and they pulled out of Abkhazia. The EUMM is now the sole international group of monitors. It reported in early 2013 that the number of staffers was 300 (of which 200 are monitors) and that the monitors are based in three field offices near the contested borders. According to former Assistant Secretary of Defense Alexander Vershbow and Assistant Secretary of State Philip Gordon, the EUMM has been effective at debunking several allegations made by Russia and the separatist regions that ceasefire violations have been committed by Georgia. The United States and the EU continue to call for unrestricted access to Abkhazia and South Ossetia in order to monitor the ceasefire. Vershbow and Gordon have praised Georgia's cooperation with the EUMM, including Georgia's agreement with the EUMM at the beginning of 2009 to report all movements of its security forces near the administrative borders and to permit unannounced inspections of its military facilities. They contrast this cooperation to the refusal of Russia, Abkhazia, and South Ossetia to permit patrols in the regions. In late April 2012, Abkhazia declared that the head of the EUMM was persona non grata , including because he advocated for the EUMM to patrol inside the breakaway regions. Abkhazia has refused to reconvene meetings of the incident prevention group (see below) since then, because the EUMM head normally would attend. An international conference to discuss security, repatriation, and status issues related to the conflict held its inaugural session in Geneva on October 15, 2008. Facilitators at the talks include the U.N., the EU, and the United States. Russia, South Ossetia, and Abkhazia reject any challenges at the conference to the claimed independence of the breakaway regions. Russia has insisted at these meetings and elsewhere that the international community impose an arms embargo on Georgia. Russia also has insisted at these meetings that Georgia sign non-use-of-force agreements with the breakaway regions. In March 2010, Russia stated that, as a preliminary to the signing of such agreements, Georgia, South Ossetia, and Abkhazia could provide written pledges of the non-use of force to the United Nations (see below). Among significant Geneva conference meetings: In February 2009, the sides agreed to set up an "incident prevention and response mechanism" along the South Ossetian border with the rest of Georgia in order to defuse tensions before they escalate. On April 23, the first meeting of the Georgia-South Ossetia Incident Prevention and Response Mechanism was convened in the Georgian town of Ergneti, with the participation of the Georgian and South Ossetian sides, as well as representatives of the Russian Ministry of Defense, the OSCE and the EU. At the July 2009 Geneva conference meeting, the sides discussed setting up an incident prevention group to resolve issues such as cross-border travel between Abkhazia and the rest of Georgia. A meeting in Gali, Abkhazia, to establish the group was held on July 14, 2009. At the October 14, 2010, meeting, Russia announced that it was pulling its troops out of the town of Perevi, Georgia, near the border with South Ossetia. The troops pulled out on October 18, 2010. Russia declared that this pullout marked its complete fulfillment of the ceasefire accords. South Ossetia refused to discuss problems of refugees and displaced persons after a Georgian-sponsored resolution on the return of displaced persons and refugees to South Ossetia was approved by the U.N. General Assembly in September 2010. At the June 7, 2011, meeting, Georgia raised concerns about alleged Russian terrorist attacks and plans (see below) and stated that it might reconsider participation in the Geneva conference if the terrorism persisted. At the December 14, 2011, meeting, the moderators, the United States, and Georgia argued that if binding nonuse-of-force agreements are signed, they logically should include provisions for international monitors to patrol in the breakaway regions, a stance rejected by Russia, South Ossetia, and Abkhazia. Georgia and South Ossetia agreed to exchange over two dozen detainees who allegedly had illegally crossed disputed borders. The prisoner exchange—under the aegis of the incident prevention mechanism—took place at the end of December 2011. At the June 7-8, 2012, meeting, the Russian side criticized then-Secretary Clinton's announcement during her just-concluded visit to Georgia that U.S. embassies and consulates would recognize the validity of status-neutral travel documents issued by Georgia to residents of Abkhazia and South Ossetia who wished to travel or study in the United States. Russia claimed that the announcement set back the peace process. The new Ivanishvili government hoped for progress at the December 11-12, 2012, Geneva meeting, but voiced disappointment after the meeting and criticized Russia for failing to consider its proposals. Abkhaz authorities also rejected a conciliatory proposal by the Ivanishvili government to restore rail service from Georgia through Abkhazia to Russia, viewing it as a ploy to avoid extending recognition to the region. At the March 26-27, 2013, meeting, Russia's Deputy Foreign Minister, Grigoriy Karasin, accused Georgia of hindering the talks and claimed that the only point of the talks was to convince Georgia to sign a non-use of force agreement with the breakaway regions. At the same time, Russia continued to refuse to pledge not to use force against Georgia. The EU and World Bank convened a donors' conference in Brussels on October 22, 2008, to garner international funds for Georgia's rebuilding. Thirty-eight countries and fifteen international organizations pledged approximately $4.5 billion in aid to Georgia for the 2008-2010 period. The amount pledged was higher than the basic needs outlined in a Joint Needs Assessment report presented to the conference, indicating the high level of international concern over Georgia's fate. The pledges were addressed to meet urgent social needs related to internally displaced people, as well as damaged infrastructure; budgetary shortfalls; loans, equity, and guarantees to the banking sector; and core investments in transportation, energy, and municipal infrastructure that will boost economic growth and employment. The United States pledged the largest amount—$1 billion—for these efforts (see below, " U.S. Humanitarian and Rebuilding Aid after the Russia-Georgia Conflict "). On September 30, 2009, a special EU fact-finding mission led by Swiss diplomat Heidi Tagliavini released a report on the origins and outcome of the August 2008 Russia-Georgia conflict. On the one hand, the mission concluded that "open hostilities began with a large-scale Georgian military operation against the town of Tskhinvali [in South Ossetia] and the surrounding areas, launched on the night of 7 to 8 August 2008. Operations started with a massive Georgian artillery attack." The mission also argued that the artillery attack was not justifiable under international law. However, it also argued that the artillery attack "was only the culminating point of a long period of increasing tensions, provocations and incidents" by the parties to the conflict. On the other hand, the mission suggested that "much of the Russian military action went far beyond the reasonable limits of defense," and that such "action outside South Ossetia was essentially conducted in violation of international law." In Abkhazia, actions by Russian-supported militias in the upper Kodori Valley "constituted an illegal use of force ... not justified under international law." The mission likewise asserted that actions by South Ossetian militias "against ethnic Georgians inside and outside South Ossetia, must be considered as having violated International humanitarian law and in many cases also human rights law." Commenting on the release of the report, a U.S. State Department spokesman stated that "we recognize that all sides made mistakes and miscalculations through the conflict last year. But our focus is on the future." In July 2010, Georgia unveiled an "action plan" to peacefully encourage the breakaway regions to reintegrate with Georgia. The action plan was praised by the United States and others in the international community as illustrating Georgia's "strategic patience" in peacefully engaging with the breakaway regions. The action plan called for a humanitarian commission to be established in Tbilisi and the breakaway region, for status-neutral travel documents to be issued to individuals in the breakaway regions that would facilitate international travel, and an economic zone and other subsidies. The breakaway regions have rejected the plan, and critics have questioned whether Georgia's and international donors' assistance could outmatch Russia's subsidies to the regions. Critics also raise concerns that the action plan appears to be contradicted by an earlier Law on Occupied Territories that restricts unauthorized contacts with the breakaway regions. In late 2010, President Saakashvili gave speeches at sessions of the European Parliament and the OSCE in Astana, Kazakhstan, pledging the non-use of force except in cases of self-defense. In an interview about the pledge, he stated that "we must display strategic patience, which can lead not only to the complete liberation of our territory but also to reconciliation with Russia." South Ossetia and Abkhazia followed suit with oral statements, but Russia refused to issue such a pledge on the grounds that it was not a party to the conflict. In March 2013, the Georgian legislature approved a resolution on foreign policy that reaffirmed the non-use of force pledge. In early March 2011, Assistant Secretary of State Philip Gordon reiterated the U.S. position that Georgia's territory is "occupied" by Russian troops. He explained that We don't know what else to call it.... We believe that Russia used disproportionate force and remains present in what we consider to be sovereign Georgia. So it's not meant to be a particular provocation, it's just a description of what we think the situation is and we've very active in the Geneva talks and bilaterally with Russia to try to bring about an end to what we consider to be a military occupation. On June 2 and June 6, 2011, Georgia announced that it had apprehended Russian terrorist infiltrators who were planning attacks in Georgia, including against the NATO Liaison Office in Tbilisi. Georgia alleged that Russian security agencies were behind the planned attacks. Russia termed these allegations "artificially fabricated arrays of data." In late July 2011, the Washington Times alleged that the U.S. intelligence community had backed up a Georgian claim that Russian intelligence operatives had orchestrated a bombing in September 2010 near the U.S. Embassy in Tbilisi. In late August 2012, over two dozen alleged terrorists affiliated with the Caucasus Emirate supposedly entered Georgian territory from Russia's Dagestan or Chechnya republics and took hostages. Georgian police forces battled the terrorists, killing or apprehending most of them. President Saakashvili declared that he would not permit instability in Russia to spill over into Georgia. On April 1, 2013, the Georgian legislature's human rights ombudsman alleged that Georgian police had been assisting the terrorists to carry out operations in Russia, but that the terrorists had turned on the Georgians. In late May 2013, Russia began stringing up barbed wire and otherwise upgrading border security along parts of South Ossetia's border with the rest of Georgia. Some observers speculated that the Russian move was in response to the easing of entry requirements for South Ossetians by the Ivanishvili government, which Russia viewed as a threat to its control over the region. Signed in January 2009, the U.S.-Georgia Charter on Strategic Partnership reflects strong U.S. support for Georgia's continued sovereignty and independence. In the security realm, "the United States and Georgia intend to expand the scope of their ongoing defense and security cooperation programs to defeat [threats to global peace and stability] and to promote peace and stability." Such cooperation will "increase Georgian capabilities and ... strengthen Georgia's candidacy for NATO membership." In the economic realm, the two countries "intend to pursue an Enhanced Bilateral Investment Treaty, to expand Georgian access to the General System of Preferences, and to explore the possibility of a Free-Trade Agreement." Energy security goals include "increasing Georgia's energy production, enhanc[ing] energy efficiency, and increas[ing] the physical security of energy transit through Georgia to European markets." In the realm of democratization, the two countries "pledge cooperation to bolster independent media, freedom of expression, and access to objective news and information," and to further strengthen the rule of law. The United States pledged to train judges, prosecutors, defense lawyers, and police officers. Three annual meetings have been held: The first meeting of the U.S.-Georgia Strategic Partnership Commission was held on June 22, 2009, in Washington, DC, led by Deputy Secretary of State James Steinberg and Georgian Foreign Minister Grigol Vashadze. The Security Working Group also met, co-headed on the U.S. side by Assistant Secretary of State Philip Gordon and Assistant Secretary of Defense Alexander Vershbow, and headed on the Georgian side by Deputy Foreign Minister Giga Bokeria. Other working groups on the economy, democracy, and people-to-people exchanges held initial meetings over the next few months. The second plenary meeting of the U.S.-Georgia Strategic Partnership Commission was held on October 6, 2010, in Washington, DC. Meeting with then-Prime Minister Nikoloz Gilauri, then-Secretary Clinton stated that "the United States will not waver in its support for Georgia's sovereignty and territorial integrity. That support is a core principle of our Charter on Strategic Partnership, and it is fundamental to our bilateral relationship. The United States remains committed to Georgia's aspirations for membership in NATO…. We continue to call on Russia to end its occupation of Georgian territory…. As part of our commitment to enhancing Georgia's future as a prosperous and secure member of the Western family of nations, we will continue to work with you to strengthen Georgian democracy." Gilauri indicated that Georgia was requesting more educational, security, and economic assistance, including to bolster energy infrastructure. The third plenary meeting of the Strategic Partnership Commission was held on June 5, 2012, in Batumi, Georgia. Then-Secretary Clinton and then-Prime Minister Gilauri apparently mainly held discussions with the four working groups, according to the State Department. The defense and security working group discussed options to assist Georgia to improve air surveillance and air and coastal defense, combat engineer capabilities, and non-combatant officer training, and to upgrade the utility helicopter fleet. The State Department reported that the United States planned to move to implement such programs in coming months, and would also consider requests for "defensive articles." In the democracy working group, the U.S. participants stressed the importance of holding free and fair elections in order to further Euro-Atlantic integration, and called for reforms to the criminal justice system and the administrative code. The economic, energy, and trade working group discussed the talks on a possible free trade agreement and measures to improve Georgia's business climate. The people-to-people working group discussed then-Secretary Clinton's announcement that the United States would accept the Status Neutral Travel Document from residents of South Ossetia and Abkhazia for travel to the United States. At a press conference after meeting with Russian President Dmitriy Medvedev on July 6, 2009—part of the U.S. "reset" of relations with Russia—President Obama reported that he had "reiterated my firm belief that Georgia's sovereignty and territorial integrity must be respected." In Georgia, many officials and others viewed the meeting positively as lessening the chances of renewed Russia-Georgia conflict and as a reaffirmation of the U.S. commitment to Georgia. Perhaps to further reassure Georgians, Vice President Joseph Biden visited Georgia in late July 2009 to emphasize the continued U.S. commitment to its sovereignty and independence. President Obama reaffirmed the U.S. commitment to uphold Georgia's sovereignty and territorial integrity when he met with President Saakashvili at the nuclear summit in Washington, DC, in April 2010 and on January 14, 2011 (with Vice President Biden), but President Obama reportedly did not meet with President Saakashvili during the latter's week-long mid-March 2011 U.S. visit (President Saakashvili did meet with Members of Congress; see below). Then-Secretary of State Hillary Clinton paid a six-hour visit to Georgia on July 5, 2010, during her regional tour. She urged Georgians not to focus on the past, possibly referring to the Russia-Georgia conflict, but to be "focused on what you can do today and tomorrow to improve your lives and the lives of your family and the lives of your fellow citizens by building your democracy and opening your economy and providing more justice and social inclusion, that, to me, is the great mission of Georgia." While stating that the United States continued to call for Russia to pull back its troops to their positions on August 6, 2008 (in line with the 6-point cease-fire agreement), she also "strongly urged" Georgia to "not be baited or provoked into any action that would give any excuse to the Russians to take any further aggressive movements." Vice President Biden revisited Georgia on July 23, 2010—as in 2009, just after a U.S.-Russia summit—to reassure Georgia of U.S. interest in its fate. He urged Georgia to continue to develop democratic institutions and free markets, including as the best means to attract the people of the breakaway areas to reintegrate with the rest of Georgia. He called for further democratization, including constitutional changes to create a balance of power between the legislative and executive branches of government. In 2011-2012, there were further high-level U.S.-Georgia bilateral visits. In January 2011, President Saakashvili met with President Obama during a U.S. visit, and reportedly gave the U.S. President a report detailing Georgia's defense needs. In August 2011, the U.S. Commander of the European Command and NATO's Supreme Allied Commander, Admiral James Stavridis, visited Georgia to discuss Georgia-NATO cooperation and Georgia's participation in the International Security Assistance Force (ISAF) in Afghanistan. According to some reports, Presidents Obama and Saakashvili briefly met on the sidelines of the opening of the U.N. General Assembly in New York in September 2011. Some congressional delegations also visited. During his state visit to the United States in January 2012, President Saakashvili met with President Obama, who praised efforts in Georgia to increase the honesty of police, the rule of law, and free market reforms, and called for free elections in the future. He stated that these democratic and free market reforms could serve as examples for other Eurasian countries. He reiterated the call in the Charter for exploring a free trade agreement, and thanked Saakashvili for Georgia's troop contributions in Afghanistan. He mentioned in a press conference that the two presidents had discussed "strengthen[ing] our defense cooperation," and he voiced continuing support for Georgia's NATO aspirations. In response at the press conference, President Saakashvili stated that "we are grateful for elevating our defense cooperation further and talking about Georgia's self-defense capabilities and developing it." Russia's then-Prime Minister Putin and others in Russia denounced what they inferred was a change in U.S.-Georgia defense ties, although the Administration claimed that its defense cooperation policy toward Georgia had not changed. At his confirmation hearing in March 2012, Ambassador-designate to Georgia Richard Norland stated that the United States would continue to call for the pull-back and reduction of Russian troops in the occupied regions to pre-conflict numbers. U.S. priorities in Georgia included support for its democratization, and he acknowledged that there were "deep concerns" about the harassment of prospective opposition candidates and parties in the run-up to the autumn legislative election. He also stressed that the conduct of the elections would be a "litmus test" of Georgia's readiness for NATO membership. He stated that at the January 2012 U.S.-Georgia summit, the two presidents had agreed to enhance [defense cooperation] programs, to advance Georgian military modernization reform and self-defense capabilities.... Sustaining robust bilateral security and defense cooperation with Georgia will also remain a high priority.... Our plans for security assistance and military engagement with Georgia are to support Georgia's defense reforms, to train and equip Georgian troops for participation in the ISAF mission and to advance Georgia's NATO interoperability. Then-Secretary Clinton announced at her meeting with Saakashvili on June 5, 2012, that U.S. consular officials would recognize so-called status-neutral travel documents issued by the Georgian government to residents of Abkhazia and South Ossetia who wished to visit the United States. She stated that by recognizing such travel documents, the United States was facilitating reconciliation in Georgia. She called for Georgia to hold a democratic legislative election in October 2012, and met with some opposition party officials (she declined to meet separately with Ivanishvili, but some of his representatives attended the meeting). She stated that the two sides had agreed on new areas of defense cooperation, including training and support for monitoring the seacoast and skies, upgrades for the utility helicopter fleet, and enhanced officer training. She reported that an inaugural High-Level Trade and Investment Dialogue meeting had been held the previous week in Washington, D.C., which had included discussion of a prospective free trade agreement. In his annual worldwide threat assessment, Director of National Intelligence James Clapper testified in March 2013 that the Administration hoped that the victory of Georgia Dream in Georgia's legislative election would contribute to improved Georgia-Russia relations. He also raised concerns that Georgia faces a "challenging political transition and an increased risk of domestic political instability," presumably referring to the run-up and aftermath of the prospective October 2013 Georgian presidential election. Meeting with visiting Georgian President Mikheil Saakashvili on April 25, 2013, Vice President Joe Biden stressed the United States' enduring and strong commitment to partnership with Georgia, and called on the country's president, government, and legislature to cooperate to maintain democratic and economic reforms. Saakashvili met with Secretary of State John Kerry on May 1. Kerry urged continued democratization in Georgia, and the two sides indicated that they would discuss Georgia's progress in meeting requirements for membership in NATO. Some observers have called for a reevaluation of some aspects of U.S. support for Georgia. These critics have argued that many U.S. policymakers had been captivated by Saakashvili's charismatic personality and pledges to democratize and tended to overlook his bellicosity. They have warned that U.S. acceptance of Georgian troops for coalition operations in Afghanistan must not lead to U.S. defense commitments to Georgia, and a few have suggested that the United States should not unquestionably back Georgia's territorial integrity, but should rather encourage reconciliation and the consideration of options short of the near-term reintegration of the regions into Georgia. At the same time, most observers advise against extending diplomatic recognition to breakaway regions without an international consensus. Other observers have called for a more robust U.S. and NATO effort to resupply Georgia with defensive weaponry so that it might deter or resist Russian aggression. However, recent arrests of former government officials and other problematic human rights developments in Georgia have led some to re-evaluate such stepped-up defense cooperation. The United States has been Georgia's largest bilateral aid donor, budgeting cumulative aid of $3.37 billion in FY1992-FY2010 (all agencies and programs). See Table 1 and Table 2 . Georgia has regularly ranked among the top world states in terms of per capita U.S. aid. U.S.-budgeted aid for Georgia in FY2012 was $85.5 million. Requested foreign assistance for FY2014 is $62.0 million (data for FY2012 and FY2014 include "Function 150" programs and exclude Defense and Energy Department funds; estimates for FY2013 are not yet available). The Administration budget request for FY2014 calls for slightly over one-third of funding to be spent on security programs, about one-third on democratization, and about one-third on economic growth programs. The Millennium Challenge Corporation (MCC) closed out a 2006-2011 $395 million agreement (termed a "compact") with Georgia that the MCC regarded as highly successful in resurfacing roads, rehabilitating the north-south gas pipeline, rebuilding water supplies, and providing agricultural assistance (much of the MCC spending was in addition to above-mentioned aid). In January 2011, MCC announced that Georgia was eligible for a second compact. Georgia suggested efforts to bolster education, and MCC notified Congress in 2012 that it planned to provide some preliminary funding to assist Georgia in working out details of such a program. On April 9, 2013, MCC notified Congress that it intended to open negotiations with Georgia on a compact worth $140 million for projects in general education, technical and vocational education and training, and higher education, with an emphasis on science, technology, engineering, and math education. To address Georgia's urgent humanitarian needs in the wake of the August 2008 Russia-Georgia conflict, the U.S. Agency for International Development (USAID) and the Defense and State Departments provided Georgia with urgent humanitarian assistance, with the Defense Department quickly beginning naval and air deliveries. Reportedly, the Bush Administration had authorized these Defense Department deliveries to demonstrate U.S. backing for Georgia's continued independence. On September 3, 2008, then-Secretary of State Rice announced a multi-year $1 billion aid plan for Georgia. The Administration envisaged that the proposed $1 billion aid package would be in addition to existing aid and requests for Georgia, such as FREEDOM Support Act assistance. The added aid was planned for humanitarian needs, particularly for internally displaced persons, for the reconstruction of infrastructure and facilities that were damaged or destroyed during the Russian invasion, and for safeguarding Georgia's continued economic growth. Congress acted quickly to flesh out the Administration's aid proposals for Georgia. The Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 ( H.R. 2638 / P.L. 110-329 ), signed into law on September 30, 2008, appropriated an additional $365 million in aid for Georgia and the region (beyond that provided under continuing appropriations based on FY2008 funding) for humanitarian and economic relief, reconstruction, energy-related programs, and democracy activities. Of that amount, $315 million was actually budgeted for Georgia. The Supplemental Appropriations Act for FY2009 ( P.L. 111-32 ; signed into law on June 24, 2009) provided an additional $242 million in Freedom Support Act assistance to Georgia, "the final portion of the $1 billion pledge." A State Department contractor later concluded that the $1 billion had greatly assisted Georgia in easing economic distress and in recovering from the conflict. See Table 3. Among U.S. security programs in Georgia, a $64 million Georgia Train and Equip Program (GTEP) began in 2002. U.S. troops provided training to 200 officers, some 2,000 soldiers, and a small number of Interior (police) Ministry troops and border guards. According to the U.S. Defense Department, the GTEP aimed to help Georgia "to resist pressure to allow the Russian military to pursue Chechen rebels" into Georgia, help it combat terrorists inside the country, and block those trying to infiltrate Georgia. Small arms, communications and medical gear, and uniforms were provided. The program ended in 2004 but a follow-on Sustainment and Stability Operations Program (SSOP) was launched in FY2006. SSOP provided training for 7,800 troops, in part to support U.S.-led coalition operations in Iraq, along with advisory assistance for defense reforms and maintenance for previously supplied helicopters. Georgia pulled most of its troops out of Iraq in the wake of the Russia-Georgia conflict and the rest by the end of 2008. About $124.2 million in Coalition Support Funds were used for SSOP. Congress provided $50 million in FY2008 and $50 million in FY2009 under the (now expired) authority of Section 1207 of the National Defense Authorization Act for FY2006 ( P.L. 109-163 ) for reconstruction and stabilization activities in Georgia, of which only a small portion was defense-related (the restoration of Coast Guard infrastructure; none was weapons-related, see below). Under Section 1206 of the Act, Congress provided $8.8 million to Georgia in FY2008 for special forces training. The Georgia Deployment Program-ISAF, begun in late 2009, is supported by Marine Forces Europe to deploy Georgian forces alongside U.S. Marines to Afghanistan. As capabilities improve, the Georgian forces will operate independently, and a Georgian training group will be created that can largely take over from the Marine trainers. Coalition Readiness Support Program funds are used to train and equip the Georgian troops, amounting to $23.6 million in FY2010, $23.5 million in FY2011, and $81.8 million in FY2012. Under Section 1206, 40 Highly Mobile Multi-Wheeled Vehicles (HMMWV), night vision devices, radios, rifle scopes, and other equipment amounting to $19.07 million were provided in FY2010. In FY 2011, $21.7 million in Section 1206 funds were used to provide vehicles, communication equipment, and night vision devices, and in FY2012, $3.7 million is being used for communications and electronics equipment, weapons sights, and other equipment. Also in FY2012, 48 Mine Resistant Ambush Protected (MRAP) vehicles are being loaned for training in Georgia, under the authority of Section 1202 of the National Defense Authorization Act for FY2007 ( P.L. 109-364 ). Assistant Secretary Vershbow testified in August 2009 that the Obama Administration was "focusing on building defense institutions, assisting defense sector reform, and building the strategic and educational foundations that will facilitate necessary training, education, and rational force structure design and procurement. We are assisting Georgia to move along the path to having modern, western-oriented, NATO-interoperable armed forces capable of territorial defense and coalition contributions." He stressed, however, that "the United States has not 'rearmed' Georgia as some have claimed. There has been no lethal military assistance to Georgia since the August [2008] conflict." Although President Saakashvili seemed to indicate during then-Secretary Clinton's July 2010 visit that U.S. security cooperation with Georgia was adequate, he stated in September 2010 that "leaving Georgia defenseless doesn't help the situation. Georgia cannot attack Russia, while a defenseless Georgia is a big temptation for Russia to change our government through military means…. As part of ongoing security cooperation, we hope that the U.S. will help us with defense-weapons capabilities." Some in Congress and elsewhere have criticized this dearth of lethal security assistance to bolster Georgia's territorial defense capabilities. Although President Saakashvili seemed to indicate during then-Secretary Clinton's July 2010 visit that U.S. security cooperation with Georgia was adequate, he stated in September 2010 that "leaving Georgia defenseless doesn't help the situation. Georgia cannot attack Russia, while a defenseless Georgia is a big temptation for Russia to change our government through military means…. As part of ongoing security cooperation, we hope that the U.S. will help us with defense-weapons capabilities." On December 12, 2010, U.S. Senator John McCain called for the Obama Administration to resume some defensive arms transfers to Georgia, including early warning radars. Three days later, Giorgiy Baramidze, Georgia's then-deputy prime minister and state minister for Euro-Atlantic integration, also called for the United States to resume the transfer of defensive weapons to Georgia. During his March 10-17, 2011, visit to the United States, President Saakashvili reportedly requested U.S. transfers of defensive weapons. In late March 2011, he reportedly stated that while some U.S. small arms transfers were "in the pipeline," Georgia needed anti-air and anti-tank weapons from the United States. During a hearing of the Senate Armed Services Committee on March 29, 2011, Senator McCain asked whether the United States was providing defensive weapons to Georgia, and EUCOM Commander Stavridis stated that "at this moment we are not providing them [with] what I would term high-end military defensive weapons." Senator McCain responded that "it is hard for me to understand, since the Russians still occupy territory that is clearly Georgian territory and continue to threaten Georgia, and yet we're not even giving them weapons with which to defend themselves. It is not comprehensible." After a meeting between U.S. Members of Congress and Georgian legislators on the sidelines of the annual meeting of the NATO Parliamentary Assembly in Bucharest, Romania, in mid-October 2011, the U.S. delegation head, Representative Mike Turner, released a statement of support for Georgia. According to the statement, "the United States recently approved a commercial arms sale to Georgia; all NATO states should look to arms sales with Georgia that can add to the collective defense…. A stronger Georgia is clearly in the interest of all NATO members." A report issued in October 2011 by a team led by Senators Jeanne Shaheen and Lindsey Graham urged that U.S. policy be changed to "normalize ... defense relations with Georgia, including allowing sales of defensive military equipment [which] will encourage other allies to follow suit, enabling Georgia to resume purchasing armaments from Central European allies." On December 31, 2011, President Obama signed into law the National Defense Authorization Act (NDAA) for FY2012 ( P.L. 112-81 ). Section 1242 calls for the Defense Secretary to submit a plan to Congress for the normalization of U.S. defense cooperation with Georgia, including the sale of defensive weapons. In a signing statement, the President stated that if the provisions of the section conflict with his constitutional authority to conduct foreign relations (presumably, in this case, including his "reset" policy with Russia), they would be considered non-binding. At a press conference after he met with President Obama in late January 2012, President Saakashvili stated that "we are very grateful for elevating our defense cooperation further, and talking about [developing] Georgia's self-defense capabilities," while President Obama appeared more reticent in stating only that "we will continue to strengthen our defense cooperation." Russian then-Prime Minister (and current president) Vladimir Putin denounced the reported closer U.S.-Georgia defense cooperation as encouraging Georgia to carry out aggressive military actions. The report required by the NDAA for FY2012 was transmitted to Congress on April 30, 2012. The report states that results of bilateral security collaboration since the 2008 conflict have included the revision of Georgia's national security strategy and defense plan, institutionalizing Afghan training and deployment methods, implementing a military personnel management system, reorganizing the armed forces. The latter has included the creation of a National Defense Academy to train officers who can operate with U.S. and NATO forces and who share Western values. The report stressed that there were two pillars of U.S.-Georgia defense cooperation: U.S. support for modernizing Georgia's armed forces; and U.S. support for Georgia's contributions to ISAF. For the first pillar, there were 63 cooperative training, education, and operational contacts in FY2011, and 23 in FY 2012 through April 2012. According to the report, all of Georgia's 19 requests since May 2010 for foreign military sales equipment and services have resulted in transfers or are in the process of being fulfilled. Six of these requests were to support ISAF deployments, but the rest were to support defense modernization, mostly involving training. Only two transfers seemed to involve military equipment for defense capabilities, in order to enhance communications (the report did not list the sale of carbines, mentioned above). The report stated that Presidents Obama and Saakashvili had agreed in January 2012 on enhanced defense cooperation in the areas of air and coastal surveillance and defense training, train-the-trainer instruction for non-commissioned officers, brigade command and staff training, combat engineer training, and utility helicopter training. The report stated that discussions are underway for Georgia to purchase air and coastal surveillance radar and acoustic systems and small arms ammunition. The report announced that the "enhanced defense cooperation" program would begin in FY2013. During her June 5-6, 2012, visit to Georgia, former Secretary Clinton hailed this planned enhanced defense cooperation. While there, she also highlighted other security cooperation. She helped formally commission a patrol boat that had been modernized with funds from the Export Control and Related Border Security (EXBS) Account of the State Department. She stated that since the 2008 conflict, the United States had supplied $10 million to rebuild Georgia's Coast Guard, including three patrol boats, construction of a ship repair facility, installation of new communications and observation equipment, and a maritime information center. She also hailed other EXBS assistance to Georgia in recent years. In his March 2013 testimony to Congress, EUCOM Commander Stavridis stated that EUCOM had expanded the Georgia Deployment Program to train and deploy two battalions every six months to ISAF's Regional Command Southwest, had supported Armenian-Georgian training on cross-border Humanitarian Assistance and Disaster Response, had led an assessment of junior officer and non-commissioned officer professional development programs as well as combat engineer training and education, and had coordinated brigade command and staff development. He stated that Georgian troops had taken advantage of training at U.S. Army Europe's Joint Multinational Training Center for mission rehearsal exercises prior to ISAF deployment, and had participated in Agile Spirit, a training workup for troops in the Georgia Deployment Program. He also reported that U.S. Naval Forces Europe continued to lead Eurasia Partnership Capstone, which included training with Georgian naval forces, and provided training for non-commissioned officer development, maritime interdiction operations, visit/board/search/ seizure, search and rescue, maritime law enforcement, and environmental protection. U.S. Naval Forces Europe also co-hosted the annual Sea Breeze naval exercise in the Black Sea, which included participation by Georgian forces. Admiral Stavridis did not report on any weapons transfers to Georgia. In his April 11, 2013, nomination hearing to be EUCOM Commander, General Philip Breedlove stated that the United States "has a vigorous defense cooperation program with Georgia," involving hundreds of events annually, including cyber defense, border security, professional military education development, and counterinsurgency operations training. He stated that FMF funding is "robust," amounting to approximately $14 million (presumably referring to FY2012; see below). He reiterated the areas of engagement that President Obama had offered to President Saakashvili in January 2012, and stated that EUCOM "has already conducted or has planned initial engagements with Georgia in all these areas," including through the use of IMET funds. He repeated the language of the April 2012 NDAA Report (discussed above) that the Obama Administration would look favorably on the sale of air surveillance radars, coastal surveillance acoustic systems, and small arms ammunition to Georgia. The Executive Budget Summary: Function 150 and Other International Programs for FY2014 , released on April 10, 2013, calls for $1.8 million in IMET and $12 million in FMF for Georgia, about a $2.5 million reduction from such aid in FY2012. On June 13, 2013, Amendment Number 130 (Turner) to the NDAA for FY2014 ( H.R. 1960 ) to Section 1244 was approved that stated that it is the sense of Congress that the United States should enhance defense cooperation with Georgia. The amendment added findings that the new Georgian government elected in October 2012 charged over 100 former government officials and UNM members with crimes that appear to be motivated by political considerations. The amendment stated that the arrest of the UNM party leader Vano Merabishvili was "especially troubling," because of its "chilling effect" on political contestation in the run-up to the presidential election, and that such actions call into question the Georgian government's continued democratization. The amendment declares that these actions may have a negative impact on U.S.-Georgia relations and on integrating Georgia into international organizations. The House approved H.R. 1960 on June 14, 2014, for further action in the Senate. The former president of Georgia, Eduard Shevardnadze, immediately condemned the attacks on the United States on September 11, 2001, and offered "airspace and territory" for U.S. coalition operations in Afghanistan. Georgia was among the countries in 2003 that openly pledged to support the U.S.-led Operation Iraqi Freedom. In August 2003, Georgia dispatched 69 troops to Iraq, boosted them to over 850 in March 2005, and increased them to 2,000 by September 2007, making it among the top contributors of troops. Georgian troops served under U.S. command. Many provided security in the "Green Zone" in Baghdad, the town of Baqubah northeast of Baghdad, and in Wasit Governorate, along the Iranian border. Most of the troops pulled out in August 2008 in connection with the Russia-Georgia conflict, and the rest pulled out by the end of November 2008. On November 16, 2009, Georgia sent 173 troops for training in Germany before their scheduled deployment at the end of March 2010 to support ISAF. These troops were boosted to 925 in mid-2010. On December 20, 2011, the Georgian legislature approved sending an added Georgian battalion of up to 749 troops to Afghanistan. The troops were deployed in October 2012, boosting the size of the Georgian contingent, reportedly to 1,561 troops as of June 2013. The added deployment made Georgia the largest contributor to the International Security Assistance Force (ISAF) among non-NATO member countries (surpassing Australia with 1,550 troops). The U.S. European Command's Georgia Deployment Program supports Georgian troop training and rotations. Defense Minister Alasania has stated that the Georgian troops will remain beyond 2014 to assist the Afghan National Security Forces. The Labor Party in Georgia is one of the few parties that opposes troop deployments to Afghanistan and calls for the troops to be recalled. On May 13, 2013, a truck bomb was set off near a Georgian base in Helmand Province, Afghanistan, followed by a terrorist attack. Three Georgian troops were killed and 27 wounded. The Taliban claimed responsibility for the attack. On June 6, 2013, another truck bomb was set off near another Georgian base in Helmand Province, killing seven soldiers and wounding nine. The troop contingent reportedly had just been deployed in Helmand in April 2013. An Internet video posted that same day and subsequent statements by the Taliban warned Georgia that its troops in Afghanistan and even its homeland would suffer if all troops were not withdrawn. The new casualties brought the Georgian death toll in Afghanistan to 29 troops. The Georgian president and prime minister stated that Georgia would "not retreat" in the face of such threats and actions.

The small Black Sea-bordering country of Georgia gained its independence at the end of 1991 with the dissolution of the former Soviet Union. The United States had an early interest in its fate, since the well-known former Soviet foreign minister, Eduard Shevardnadze, soon became its leader. Democratic and economic reforms faltered during his rule, however. New prospects for the country emerged after Shevardnadze was ousted in 2003 and the U.S.-educated Mikheil Saakashvili was elected president. Then-U.S. President George W. Bush visited Georgia in 2005, and praised the democratic and economic aims of the Saakashvili government while calling on it to deepen reforms. The August 2008 Russia-Georgia conflict caused much damage to Georgia's economy and military, as well as contributing to hundreds of casualties and tens of thousands of displaced persons in Georgia. The United States quickly pledged $1 billion in humanitarian and recovery assistance for Georgia. In early 2009, the United States and Georgia signed a Strategic Partnership Charter, which pledged U.S. support for democratization, economic development, and security reforms in Georgia. The Obama Administration has provided ongoing support for Georgia's sovereignty and territorial integrity. The United States has been Georgia's largest bilateral aid donor, budgeting cumulative aid of $3.37 billion in FY1992-FY2010 (all agencies and programs). Georgia has regularly ranked among the top world states in terms of per capita U.S. aid. U.S.-budgeted aid for Georgia in FY2012 was $85.5 million. The Administration has requested $62.0 million for foreign assistance for Georgia for FY2014 (data for FY2012 and FY2014 include "Function 150" programs and exclude Defense and Energy Department funds; estimates for FY2013 are not yet available).

Nanotechnology has been an issue of interest to Congress for a number of years, coming into focus in 2000 with the launch of the U.S. National Nanotechnology Initiative (NNI) by President Clinton in his FY2001 budget request to Congress. From FY2001 through FY2015, Congress appropriated approximately $20.9 billion for nanotechnology research and development (R&D). President Obama has proposed $1.5 billion in NNI funding for FY2016. The NNI's efforts have been directed at advancing understanding and control of matter at the nanoscale, where the physical, chemical, and biological properties of materials differ in fundamental and useful ways from the properties of individual atoms or bulk matter. The development and application of nanotechnology—more fully explained below—across a wide array of products and industries holds the potential for significant economic and societal benefits. To capture these benefits, the United States will have to effectively address a variety of technical and policy challenges that stand as potential barriers to commercialization, including environmental, health, and safety (EHS) concerns and their implications for workplace, environmental, food, and drug regulations; development of standards, reference materials, and consistent nomenclature; development of new measurement methods and tools; effective technology transfer to the private sector; protection of intellectual property; availability, affordability, and patience of investment capital; ethical, legal, and societal concerns; public understanding, support, and acceptance; and development of a world-class scientific and technical nanotechnology workforce. This report provides an overview of nanotechnology, the National Nanotechnology Initiative, possible reauthorization of the 21 st Century Nanotechnology Research and Development Act of 2003 ( P.L. 108-153 ), and appropriations issues. The economic and societal promise of nanotechnology has led to involvement and investments by governments and companies around the world. In 2000, the United States became the first nation to establish a formal, national initiative to advance nanoscale science, engineering, and technology—the National Nanotechnology Initiative. Since then, the United States has emerged as a global leader in nanotechnology. However, the competition for global leadership is intensifying as foreign investments in nanoscale science, engineering, and technology increase. Other nations have followed the U.S. lead and established their own national nanotechnology programs, each with varying degrees of investment, foci, and support for industrial applications and commercialization. Today, almost every nation that supports research and development (R&D) has a national-level nanotechnology program. In 2014, Lux Research, an emerging technologies consulting firm, estimated total (public and private) global nanotechnology funding for 2012 to be approximately $18.5 billion. Lux Research had previously estimated that in 2010 corporate R&D had surpassed publicly funded R&D for the first time. Global investments in nanotechnology have begun to yield economic benefits as products incorporating nanotechnology enter the marketplace. Nano-enabled products are estimated to have produced $731 billion in revenues in 2012. By tapping the unique properties that emerge at the nanoscale, proponents maintain that nanotechnology holds the potential for products that could transform existing industries and create new ones, clean and protect the environment, extend and improve the quality of our lives, and strengthen national security. Most nanotechnology products currently on the market—such as faster computer processors, higher density memory devices, lighter-weight auto parts, more energy-efficient computer and television displays, stain-resistant clothing, antibiotic bandages, cosmetics, and clear sunscreen—are evolutionary in nature, offering incremental improvements in characteristics such as performance, aesthetics, cost, size, and weight. Evolutionary nanotechnology products, however, represent only a small fraction of what many see as the substantial longer-term economic and societal promise of nanotechnology. A 2014 estimate by Lux Research projects nanotechnology product revenues would reach $4.4 trillion by 2018. Many nanotechnology advocates—including business executives, scientists, engineers, medical professionals, and venture capitalists—assert that in the longer term, nanotechnology, especially in combination with information technology, biotechnology, and the cognitive sciences, may deliver revolutionary advances, including new prevention, detection, and treatment technologies that could reduce substantially death and suffering from cancer and other deadly illnesses; new organs to replace damaged or diseased ones; contact lenses, skin patches, and glucose-sensing tattoos that monitor diabetics' blood sugar levels and warn when too high or low; clothing that protects against toxins and pathogens; clean, inexpensive, renewable power through energy creation, storage, and transmission technologies; inexpensive, portable water purification systems that provide universal access to safe water; energy efficient, low-emission "green" manufacturing systems; high-density memory systems capable of storing the entire Library of Congress collection on a device the size of a sugar cube; inexpensive, flexible, durable, low-voltage "electronic skin" sensors that allow robots and prosthetic limbs to detect changes in pressure, humidity, and temperature; agricultural technologies that increase crop yield and improve nutritional value, reducing global hunger and malnutrition; self-repairing materials; powerful, small, inexpensive sensors that can warn of minute levels of toxins and pathogens in air, soil, or water; and decontaminated industrial sites through environmental remediation. While some applications of nanotechnology have proven market-ready, much fundamental research remains ahead, including efforts to advance understanding of nanoscale phenomena; characterize nanoscale materials; understand how to control and manipulate nanoscale particles; develop instrumentation and measurement methods; and understand how nanoscale particles interact with humans, animals, plants, and the environment. In addition, several federal agencies—such as the Departments of Defense, Energy, and Homeland Security—see the potential for nanotechnology to help address mission requirements. Historically, the federal government has played a central role in funding these types of R&D activities. Though federal nanoscale science, engineering, and technology R&D had been underway for over a decade, the NNI was first initiated as a Presidential technology initiative in 2000. The original participating agencies were the National Science Foundation (NSF), the Department of Defense (DOD), the Department of Energy (DOE), the Department of Commerce's (DOC) National Institute of Standards and Technology (NIST), the National Aeronautics and Space Administration (NASA), and the Department of Health and Human Services' National Institutes of Health (NIH). In 2013, 27 agencies participate in the NNI, including 16 that have received appropriations to conduct and/or fund nanotechnology R&D. Since its first year of funding in FY2001, the NNI's annual appropriations grew four-fold to a peak of $1.9 billion in FY2010. Since then, however, federal nanotechnology funding has declined, falling to an estimated $1.5 billion in FY2015. President Obama has requested $1.5 billion in NNI funding for FY2016. In 2003, Congress provided a statutory foundation for some of the activities of the NNI through the 21 st Century Nanotechnology Research and Development Act of 2003 ( P.L. 108-153 ). The act established a National Nanotechnology Program (NNP) and provided authorizations for a subset of the NNI agencies, namely the NSF, DOE, NASA, NIST, and Environmental Protection Agency (EPA). The act, however, did not address the participation of several agencies that fund nanotechnology R&D under the NNI, including DOD, NIH, and the Department of Homeland Security (DHS). Nevertheless, coordination of nanotechnology R&D activities across all NNI funding agencies continues under the National Science and Technology Council's (NSTC's) Nanoscale Science, Engineering, and Technology (NSET) Subcommittee. According to the NSET Subcommittee's 2004 NNI Strategic Plan, "For continuity and to capture this broader participation, the coordinated federal activities as a whole will continue to be referred to as the National Nanotechnology Initiative." Accordingly, the functions and activities established under the act are incorporated into the executive branch's implementation of the NNI. The thrust of the NNI has primarily been the development of fundamental scientific knowledge through basic research. Investments at mission agencies, such as DOD, have supported nanotechnology applications development for which they are a primary customer. Other investments have supported infrastructural technologies. For example, NIST has contributed to developing tools and standards that enable measurement and control of matter at the nanoscale, thereby supporting the conduct of R&D and the ability to manufacture nanoscale materials and products. As understanding of nanotechnology has matured, the NNI has worked with a variety of industry organizations to facilitate the movement of research results from the laboratory bench to the marketplace in fields as disparate as semiconductors, energy, concrete, and forest products. The NNI agencies also have sought to address research needs and regulatory issues related to environmental, health, and safety, as well as issues such as public understanding and workforce education and training. The NNI agencies actively engage in a variety of international fora, such as the Organization for Economic Cooperation and Development (OECD) and the International Standards Organization (ISO), to cooperatively address nanotechnology issues related to EHS, metrology and standards, nomenclature, and nanoscale materials characterization. Maintaining U.S. leadership poses a variety of technical, economic, and policy challenges, including safeguarding the environment and ensuring human health and safety; creating the standards, reference materials, nomenclature, methods, and tools for metrology to enable the manufacturing of nanoscale materials and products; developing a world-class scientific and technical nanotechnology workforce; translating research results into products, including effective technology transfer to the private sector; understanding public perceptions and attitudes and fostering public understanding; addressing ethical, legal, and societal implications; protecting intellectual property; securing investment capital for early-stage research, development, and commercialization; and fostering and facilitating international cooperation and coordination. Proponents of the NNI assert that nanotechnology is one of the most important emerging and enabling technologies and that U.S. competitiveness, technological leadership, national security, and societal interests require an aggressive approach to the development and commercialization of nanotechnology. Critics of the NNI hold a variety of competing views, asserting that government is not doing enough, is doing too much, or is moving too quickly. Some in industry have criticized the NNI for being overly focused on basic research and not being aggressive enough in moving NNI-funded R&D out of government and university laboratories and into industry. Others in industry have criticized the federal government for not providing mechanisms to help advance nanotechnology R&D to the point where it becomes economically viable for venture capitalists, corporations, and other investors to create products and bring them to market. Some refer to this gap as the "valley of death." Still others in industry have criticized the NNI for not adequately supporting the development of metrology, standards, equipment, and processes necessary to manufacture nanotechnology materials, products, and systems at a commercial scale. Conversely, some supporters of industry-driven market investments contend that extensive government support for nanotechnology may supplant the judgment of the marketplace by picking "winners and losers" in technological development. For example, the size and directions of the NNI investments may encourage industry to follow the government's lead rather than independently selecting R&D directions itself or, alternatively, may result in the promotion of a less effective technology path over a more effective one. Others assert that federal government funding of scientific research is often wasteful, driven by political considerations and not scientific merit. Some non-governmental organizations (NGOs) are critical of nanotechnology for its potential adverse impacts on human health and safety and on the environment. They assert that the government is pushing ahead too quickly in developing nanotechnology and encouraging its commercialization and use without adequately investing in research focused on understanding and mitigating negative EHS implications. They argue that the very characteristics that make nanotechnology promising also present significant potential risks to human health and safety and the environment. Some of these critics argue for application of the "precautionary principle," which holds that regulatory action may be required to control potentially hazardous substances even before a causal link has been established by scientific evidence. At least one NGO has called for a moratorium on nanotechnology R&D and new commercial products incorporating synthetic nanoparticles. In 2014, the European Parliament Committee on the Environment, Public Health, and Food Safety voted to adopt a draft report that "proposed a moratorium on the use of nanomaterials in food, based on the precautionary principle." The National Nanotechnology Initiative is an interagency program that coordinates federal nanoscale science, engineering, and technology R&D activities and related efforts among participating agencies. The National Science and Technology Council has stated the following vision for the NNI: The vision of the NNI is a future in which the ability to understand and control matter at the nanoscale leads to a revolution in technology and industry that benefits society. The NNI expedites the discovery, development, and deployment of nanoscale science, engineering, and technology to serve the public good, through a program of coordinated research and development aligned with the missions of the participating agencies. To achieve its vision, the NNI has established four goals: advance a world-class nanotechnology R&D program; foster the transfer of new technologies into products for commercial and public benefit; develop and sustain educational resources, a skilled workforce, and a dynamic infrastructure and toolset to advance nanotechnology; and support responsible development of nanotechnology. Attempts to coordinate federal nanoscale R&D began in November 1996, as staff members from several agencies met regularly to discuss their plans and programs in nanoscale science and technology. This group continued informally until September 1998, when it was designated as the Interagency Working Group on Nanotechnology (IWGN) under the NSTC. In August 1999, IWGN completed its first draft of a plan for an initiative in nanoscale science and technology, which was subsequently approved by the President's Council of Advisors on Science and Technology (PCAST) and the White House Office of Science and Technology Policy (OSTP). In his FY2001 budget submission to Congress, then-President Clinton raised nanotechnology-related research to the level of a federal initiative, officially referring to it as the National Nanotechnology Initiative. Congress has played a central role in the National Nanotechnology Initiative, providing appropriations for the conduct of nanoscale science, engineering, and technology research; establishing programs; and creating a legislative foundation for the activities of the NNI. Congressional funding for the NNI is provided through appropriations to each of the NNI-participating agencies. The NNI has no centralized funding. The overall NNI budget is calculated by aggregating the nanotechnology budgets for each of the federal agencies that conduct or provide funding for nanoscale R&D. In FY2001, the first year of NNI funding, Congress provided $464 million to eight agencies for nanoscale R&D. The NNI has continued to receive support from both Congress and the White House. Both the number of agencies participating in the NNI and the size of the federal investment have grown. Currently 27 agencies participate in the NNI, 16 of which have received appropriated funds for nanotechnology R&D. Total NNI funding in FY2015 is estimated at approximately $1.5 billion. The original six agencies identified at the launch of the NNI still account for the vast majority of NNI funding (approximately 94% in FY2015). Congress codified and further defined some of the NNI's activities in the 21 st Century Nanotechnology Research and Development Act of 2003 which was passed by Congress in November 2003, and signed into law ( P.L. 108-153 ) by President Bush on December 3, 2003. The legislation received strong bipartisan support in both the House of Representatives, which passed the bill on a recorded vote of 405-19, and in the Senate, which passed the bill by unanimous consent. Though this act is often referred to as the enabling legislation for the National Nanotechnology Initiative, the act actually establishes a National Nanotechnology Program (NNP). The act provides authorizations for five NNI agencies—the National Science Foundation, Department of Energy, NASA, National Institute of Standards and Technology, and Environmental Protection Agency—but not for the Department of Defense, National Institutes of Health, Department of Homeland Security, or other NNI research agencies that collectively accounted for 46% of NNI funding in FY2003. The act created the NNP for the purposes of establishing the goals, priorities, and metrics for evaluation of federal nanotechnology research, development, and other activities; investing in federal R&D programs in nanotechnology and related sciences to achieve those goals; and providing for interagency coordination of federal nanotechnology research, development, and other activities undertaken pursuant to the NNP. Key provisions of the act include authorizing appropriations for the nanotechnology-related activities of the NSF, DOE, NASA, NIST, and EPA for fiscal years 2005 through 2008, totaling $3.679 billion for the four year period; establishing a National Nanotechnology Coordination Office, with a director and full time staff to provide administrative support to the NSTC; establishing a National Nanotechnology Advisory Panel (NNAP) to advise the President and the NSTC on matters relating to the NNP; establishing a triennial review of the NNP by the National Research Council of the National Academy of Sciences; directing the NSTC to oversee the planning, management, and coordination of the program, including the development of a triennial strategic plan; directing the Department of Commerce's National Institute of Standards and Technology to establish a program to conduct basic research on issues related to the development and manufacture of nanotechnology, and to use the Manufacturing Extension Partnership program to ensure results reach small- and medium-sized manufacturing companies; directing the Secretary of Commerce to use the National Technical Information Service to establish a clearinghouse of information related to commercialization of nanotechnology research; directing the Secretary of Energy to establish a program to support consortia to conduct interdisciplinary nanotechnology R&D designed to integrate newly developed nanotechnology and microfluidic tools with systems biology and molecular imaging; directing the Secretary of Energy to carry out projects to develop, plan, construct, acquire, operate, or support special equipment, instrumentation, or facilities for investigators conducting nanotechnology R&D; and directing the establishment of two centers, on a merit-reviewed and competitive basis: (1) the American Nanotechnology Preparedness Center, to conduct, coordinate, collect, and disseminate studies on the societal, ethical, environmental, educational, legal, and workforce implications of nanotechnology; and to identify anticipated issues related to the responsible research, development, and application of nanotechnology, as well as provide recommendations for preventing or addressing such issues; and (2) the Center for Nanomaterials Manufacturing, to encourage, conduct, coordinate, commission, collect, and disseminate research on new manufacturing technologies for materials, devices, and systems with new combinations of characteristics, such as, but not limited to, strength, toughness, density, conductivity, flame resistance, and membrane separation characteristics; and to develop mechanisms to transfer such manufacturing technologies to U.S. industries. While the act establishes a National Nanotechnology Program, the executive branch continues its broader effort under the NNI framework and name. According to the NNI's 2004 Strategic Plan: Many of the activities outlined in the Act were already in progress as part of the NNI. Moreover, the ongoing management of the initiative involves considerable input from Federal agencies that are not named specifically in the Act.... For continuity, and to capture this broader participation, the coordinated Federal activities as a whole will continue to be referred to as the National Nanotechnology Initiative. The 21 st Century Nanotechnology Research and Development Act provided a legislative foundation for some of the activities of the NNI, authorized agency funding levels through FY2008, and sought to address challenges associated with the development and commercialization of nanotechnology. While many provisions of this act have no sunset provision, FY2008 was the last year of agency authorizations included in the act. Bills to amend and reauthorize the act were introduced in the 114 th , 113 th , 111 th , and 110 th Congresses. No comprehensive reauthorization legislation was introduced in 112 th Congress. In the 114 th Congress, as of the date of this report, one bill has been introduced that seeks to amend the 21 st Century Nanotechnology Research and Development Act. Incorporated as Subtitle B of Title 1 of the America Competes Reauthorization Act of 2015 ( H.R. 1898 ), the National Nanotechnology Initiative Amendments Act of 2015 is nearly identical to provisions included in H.R. 4159 (113 th Congress). The bill was introduced April 21, 2015, and referred to the House Committee on Science, Space, and Technology and the House Committee on Education and the Workforce. In August 2015, the House Committee on Science, Space, and Technology referred the bill to the Subcommittee on Research and Technology. No further action had been taken as of the date of this report. Several earlier efforts were made to amend and/or reauthorize provisions of the 21 st Century Nanotechnology Research and Development Act, including In the 113 th Congress, the National Nanotechnology Initiative Amendments Act of 2014 was incorporated as part of H.R. 4159 (113 th Congress), the America COMPETES Reauthorization Act of 2014. The bill was referred to two House committees and multiple subcommittees. No further action was taken on the bill. Also in the 113 th Congress, the National Nanotechnology Initiative Amendments Act of 2014 was incorporated as part of S. 2757 (113 th Congress), the America COMPETES Reauthorization Act of 2014. S. 2757 was referred to the Senate Committee on Commerce, Science, and Transportation and no further action was taken. On May 7, 2010, the House Committee on Science and Technology reported the America COMPETES Reauthorization Act of 2010 ( H.R. 5116 , 111 th Congress) which included, as Title I, Subtitle A, the "National Nanotechnology Initiative Amendments Act of 2010." Provisions of this subtitle were nearly identical to the provisions of H.R. 554 (111 th Congress). This title was removed from the bill prior to its enactment. H.R. 820 (111 th Congress), the Nanotechnology Advancement and New Opportunities Act, also would have amended P.L. 108-153 . The provisions of H.R. 820 covered a variety of jurisdictions, thus the bill was assigned to multiple House committees. No further action was taken. S. 1482 (111 th Congress), the National Nanotechnology Initiative Amendments Act of 2009, was introduced in the Senate and referred to the Committee on Commerce, Science, and Transportation. No further action was taken. H.R. 554 (111 th Congress), the National Nanotechnology Initiative Amendments Act of 2009, contained essentially the same provisions as H.R. 5940 (110 th Congress). In February 2009, the House passed the bill by voice vote under a suspension of the rules. The Senate did not act on H.R. 554 . H.R. 5940 (110 th Congress) and S. 3274 (110 th Congress) were both titled the National Nanotechnology Initiative Amendments Act of 2008. The House passed H.R. 5940 by a vote of 407-6; the Senate did not act on S. 3274 . For additional information, see Appendix A , "Selected Nanotechnology Legislation in the 114 th , 113 th , 112 th , and 111 th Congresses." The NNI is coordinated within the White House through the NSTC, the Cabinet-level council by which the President coordinates science, space, and technology policies across the federal government. Operationally, NNI coordination is accomplished through the Nanoscale Science, Engineering, and Technology Subcommittee of the NSTC's Committee on Technology (CT). The NSET Subcommittee also has an informal reporting relationship to the NSTC's Committee on Science (CS). The NSET Subcommittee is led by an agency co-chair, currently from NIST, and an OSTP co-chair. The NSET Subcommittee is comprised of representatives from 27 federal entities (including 16 that have funded, over the course of the NNI, nanotechnology R&D), OSTP and the Office of Management and Budget. The NSET Subcommittee has two working groups—Nanotechnology Environmental and Health Implications (NEHI) and Nanomanufacturing, Industry Liaison, and Innovation (NILI). In addition, coordinators have been established for four issue areas: global issues; standards development; environmental, health, and safety research; and education, engagement, and societal dimensions. Two previously established working groups—Global Issues in Nanotechnology and Nanotechnology Public Engagement and Communications—were eliminated. The Nanotechnology Environmental and Health Implications working group was chartered to provide for exchange of information among agencies that support research and those responsible for regulations and guidelines related to nanotechnology products; to facilitate identification, prioritization, and implementation of research and other activities required for the responsible research, development, utilization, and oversight of nanotechnology; and to promote communication of information related to research on environmental and health implications of nanotechnology to other government agencies and non-government parties. To this end, the NEHI working group seeks to identify and prioritize EHS research needs related to nanotechnology. Sixteen NNI agencies (as well as the National Nanotechnology Coordination Office (NNCO), OSTP, and OMB) participate in the NEHI working group, including agencies that fund safety-related nanotechnology research and/or have regulatory authorities to guide the safe use of nanomaterials. The Nanomanufacturing, Industry Liaison, and Innovation (NILI) working group was chartered to enhance collaboration and information sharing between U.S. industry and government on nanotechnology-related activities to advance and accelerate the creation of new products and manufacturing processes derived from discovery at the nanoscale. It also facilitates federal, regional, state, and local nanotechnology R&D and commercialization activities. In addition, the NILI working group is to create innovative methods for transferring federally funded technology to industry. The NILI working group has facilitated collaborations between the NNI and the semiconductor/electronics industry, chemical industry, forest products industry, and the Industrial Research Institute. The National Nanotechnology Coordination Office provides administrative and technical support to the NSET Subcommittee. Initially established in 2001 through a memorandum of understanding among the NNI participating agencies, the NNCO was authorized by the 21 st Century Nanotechnology Research and Development Act of 2003 ( P.L. 108-153 ). The NNCO was charged under the act with providing technical and administrative support to the NSTC and NNAP; serving as the point of contact for information on federal nanotechnology activities for the exchange of technical and programmatic information among stakeholders; conducting public outreach; and promoting access to and early application of NNP technologies, innovation, and expertise. In addition, the NNCO serves as a liaison to academia, industry, professional societies, foreign organizations, and others, facilitating the exchange of technical and programmatic information. The NNCO also coordinates preparation and publication of NNI interagency planning, budget, and assessment documents, and maintains the NNI website, http://www.nano.gov . The act authorizes the work of the NNCO to be funded by contributions from NSET Subcommittee member agencies. According to the NNCO, funding is provided through a memorandum of understanding signed by eight NNI agencies. In principle, each agency contributes to the NNCO budget in proportion to its share of the President's total nanotechnology budget request for the signatory agencies. However, two of the signatories, EPA and DOT, had sufficiently small enough nanotechnology budgets in the early years of the NNI that they were not expected to contribute. EPA now contributes to funding the NNCO. Total NNCO funding from the agencies in FY2013 was $3.0 million. Five agencies—NSF, NIH, DOD, DOE, and DOC—accounted for approximately 95% of this funding. This funding supports NNCO staff and activities, as well as funding for the triennial review of the NNI by the National Research Council. The NNI supports fundamental and applied research on nanotechnology by funding research, creating multidisciplinary centers of excellence, and developing key research infrastructure. It also supports activities aimed at addressing the societal implications of nanotechnology, including ethical, legal, human and environmental health, and workforce issues. This section provides information on NNI funding from two perspectives: organizationally by agency and functionally by program component area. The NNI budget is an aggregation of the nanotechnology components of the individual budgets of NNI-participating agencies. The NNI budget is not a single, centralized source of funds that is allocated to individual agencies. In fact, agency nanotechnology budgets are developed internally as part of each agency's overall budget development process. These budgets are subjected to review, revision, and approval by the Office of Management and Budget and become part of the President's annual budget submission to Congress. The NNI budget is then calculated by aggregating the nanotechnology components of the appropriations provided by Congress to each federal agency. For FY2015, NNI R&D funding totaled an estimated $1.488 billion, a $86.5 million (5.5%) decrease from FY2014. The overall decrease was driven primarily by reductions in the R&D budgets of NSF (down $51.1 million, 11.0%), DOD (down $47.9 million, 25.3%), and NIST (down $14.2 million, 14.5%), and offset, in part, by increases at DOE (up $20.3 million, 6.6%) and FDA (up $6.5 million, 69.9%). The chronology of NNI funding by agency is detailed in Table 1 . President Obama has requested $1.495 billion in funding for the NNI in FY2016, essentially the same as in FY2015. In general, under the request, increases in funding for DOE and NIH would be offset by decreases at DOD, DHS, and NASA. The FY2016 NNI budget request would support a broad range of programs among 15 agencies. Five agencies accounted for 93% of NNI funding in FY2015: NSF (27.8%), which supports fundamental nanotechnology research across science and engineering disciplines; HHS, primarily NIH, (27.6%), which emphasizes nanotechnology-based biomedical advances occurring at the intersection of biology and the physical sciences; DOE (22.2%), which supports nanotechnology research providing a basis for new and improved energy efficiency, production, storage, and transmission technologies; DOD (9.5%), whose investments in nanotechnology are aimed at addressing the department's national security mission; and NIST (5.6%), which focuses on research in instrumentation, measurement, standards, characterization, and nanomanufacturing. Other agencies investing in mission-related nanotechnology R&D are: DHS; NASA; EPA; the National Institute of Food and Agriculture (NIFA), Forest Service, and Agricultural Research Service (ARS) at the Department of Agriculture (USDA); the National Institute of Occupational Safety and Health (NIOSH) and Food and Drug Administration (FDA) at the Department of Health and Human Services (HHS); DHS; Department of Transportation's (DOT) Federal Highway Administration (FHWA); and the Consumer Product Safety Commission (CPSC). (Table 1 continued on next page.) The 21 st Century Nanotechnology R&D Act of 2003 called for the NSET Subcommittee to develop categories of investment called Program Component Areas (PCA) to provide a means by which Congress and the executive branch can be informed of and direct the relative investments in these areas. The PCAs are categories of investments that cut across the needs and interests of individual agencies and contribute to the achievement of one or more of the NNI's goals. The 2004 NNI Strategic Plan identified seven PCAs. The 2007 NNI Strategic Plan split the seventh PCA, Societal Dimensions, into two PCAs: Environment, Health, and Safety; and Education and Societal Dimensions. In 2014, the NSET Subcommittee revised its taxonomy for PCAs in order "to accommodate the maturation of the Initiative, the enhanced emphasis on applications, and the greater participation by agencies and communities that are not focused primarily on R&D." The revision reduces the number of PCAs from eight to five. Of particular note is the addition of a PCA to identify funding devoted to the Nanotechnology Signature Initiatives (NSIs) with a breakout of funding provided for each NSI. According to the NSET Subcommittee "the new PCAs are more broadly strategic, fully inclusive, and consistent with Federal research categories, while correlating well with the NNI goals and high-level objectives." A description of the new PCAs and their current funding is provided below. A chronology of NNI funding by PCA is provided in Table 2 using the new PCA structure for FY2013 to FY2016 (request) and in Table 3 using the previous PCA structure from FY2006-FY2012. The NNI's Nanotechnology Signature Initiatives (NSIs) are multi-agency, cross-sector collaborations designed to accelerate innovation in targeted areas of national priority. According to the NSET Subcommittee: NSIs serve to spotlight topical areas that exhibit particular promise, existing effort, and significant opportunity, and that bridge across multiple Federal agencies. They are intended to be dynamic, with topical areas rotating and evolving over time. This category includes foundational research and nanotechnology-enabled applications, devices, and systems within each NSI, as appropriate. Instrumentation that is specifically developed in support of a confined topical area covered by one of the NSIs is included here, but otherwise, the development or acquisition of more broadly applicable instrumentation (as well as resources devoted to facilities) falls under the separate PCA on Research Infrastructure and Instrumentation. Most research on Environment, Health, and Safety falls within the separate PCA ... but activities directly pertinent to specific NSIs are reported [under the NSI PCA]. Total funding for the NNI Signature Initiatives in FY2015 was $246.5 million, down $26.3 million (9.6%) from FY2014. The President requested $251.5 million for FY2016. The following paragraphs provide a brief description of each NSI, as articulated by the NSET Subcommittee, and current and requested funding levels: Nanotechnology for Solar Energy Collection and Conversion . The Nanotechnology for Solar Energy Collection and Conversion NSI is focused on understanding of energy conversion and storage phenomena at the nanoscale, improving nanoscale characterization of electronic properties relevant to solar energy, and utilization of the unique physical phenomena that occur on the nanoscale to help overcome current performance barriers and substantially improve the collection and conversion of solar energy. This NSI has three thrust areas: (1) improving photovoltaic solar electricity generation; (2) improving solar thermal energy generation and conversion; and (3) improving solar-to-fuel conversions. Funding in FY2015 was $71.7 million, down $1.5 million (2.0%) from FY2014. The President requested $77.0 million for FY2016. Sustainable Nanomanufacturing . The Sustainable Nanomanufacturing NSI is focused on establishing manufacturing technologies for economical and sustainable integration of nanoscale building blocks into complex, large-scale systems by supporting product, tool, and process design informed by and adhering to the overall constraints of safety, sustainability, and scalability. This NSI specifically focuses at this time on high-performance structural carbon-based nanomaterials, optical metamaterials, and cellulosic nanomaterials. The nanomanufacturing NSI has two thrust areas: (1) design of scalable and sustainable nanomaterials, components, devices, and processes; and (2) nanomanufacturing measurement technologies. Funding in FY2015 was $37.1 million, down $10.1 million (21.4%) from FY2014. The President requested $42.6 million for FY2016. Nanoelectronics for 2020 and Beyond . The Nanoelectronics for 2020 and Beyond NSI is focused on discovery and use of novel nanoscale fabrication processes and innovative concepts to produce revolutionary materials, devices, systems, and architectures to advance the field of nanoelectronics. The nanoelectronics NSI has five thrust areas: (1) exploring new or alternative "state variables" for computing; (2) merging nanophotonics with nanoelectronics; (3) exploring carbon-based nanoelectronics; (4) exploiting nanoscale processes and phenomena for quantum information science; and (5) expanding the national nanoelectronics research and manufacturing infrastructure network. Funding in FY2015 was $71.4 million, down $7.2 million (9.2%) from FY2014. The President requested $73.8 million for FY2016. Nanotechnology Knowledge Infrastructure . The Nanotechnology Knowledge Infrastructure NSI has four thrust areas that focus efforts on cooperative interdependent development of (1) a diverse collaborative community; (2) an agile modeling network coupling experimental basic research, modeling, and applications development; (3) a sustainable cyber-toolbox for nanomaterials design; and (4) a robust digital nanotechnology data and information infrastructure. Funding in FY2015 was $22.8 million, up $6.9 million (43.4%) from FY2014. The President requested $23.6 million for FY2016. Nanotechnology for Sensors and Sensors for Nanotechnology . The Nanotechnology for Sensors and Sensors for Nanotechnology NSI has two thrust areas: (1) to develop and promote adoption of new technologies that employ nanoscale materials and features to overcome technical barriers associated with conventional sensors; and (2) to develop methods and devices to detect and identify engineered nanomaterials (ENMs) across their life cycles in order to assess their potential impact on human health and the environment. Funding in FY2015 was $43.6 million, down $14.4 million (24.8%) from FY2014. The President requested $34.5 million for FY2016. The Foundational Research PCA includes discovery and development of fundamental knowledge pertaining to new phenomena in the physical, biological, and engineering sciences that occur at the nanoscale; elucidation of scientific and engineering principles related to nanoscale structures, processes, and mechanisms; research aimed at discovery and synthesis of novel nanoscale and nanostructured materials and at a comprehensive understanding of the properties of nanomaterials ranging across length scales, and including interface interactions; and research directed at identifying and quantifying the broad implications of nanotechnology for society, including social, economic, ethical, and legal implications. Funding for the Foundational Research PCA in FY2015 was $510.6 million, down $38.3 million (7.0%) from FY2014. The President requested $512.4 million for FY2016. (See Figure 3 .) The Nanotechnology-Enabled Applications, Devices, and Systems PCA includes R&D that applies the principles of nanoscale science and engineering to create novel devices and systems, or to improve existing ones, and the incorporation of nanoscale or nanostructured materials and the processes required to achieve improved performance or new functionality, including metrology, scale up, manufacturing technology, and nanoscale reference materials and standards. To meet this definition, the enabling science and technology must be at the nanoscale, but the applications, systems, and devices themselves are not restricted to that size. Funding for the Nanotechnology-Enabled Applications, Devices, and Systems PCA in FY2015 was $395.9 million, down $22.9 million (5.5%) from FY2014. The President requested $385.8 million for FY2016. The Research Infrastructure and Instrumentation PCA includes the establishment and operation of user facilities and networks, acquisition of major instrumentation, workforce development, and other activities that develop, support, or enhance the nation's physical or human infrastructure for nanoscale science, engineering, and technology. This PCA includes R&D pertaining to the tools needed to advance nanotechnology research and commercialization, including next generation instrumentation for characterization, measurement, synthesis, and design of materials, structures, devices, and systems. While student support to perform research is captured in other categories, dedicated educational and workforce efforts ranging from curriculum development to advanced training are included in this PCA as resources supporting the human infrastructure of the NNI. Funding for the Research Infrastructure and Instrumentation PCA in FY2015 was $235.8 million, up $4.2 million (1.8%) from FY2014. The President requested $240.2 million for FY2016. The Environment, Health, and Safety PCA includes R&D primarily directed at understanding the environmental, health, and safety impacts of nanotechnology development and corresponding risk assessment, risk management, and methods for risk mitigation. Funding for the Environment, Health, and Safety PCA in FY2015 was $98.9 million, down $3.2 million (3.1%) from FY2014. The President requested $105.4 million for FY2016. A key facet of the National Nanotechnology Initiative has been the development of an extensive infrastructure of interdisciplinary research and education centers, networks, and user facilities. The centers and user facilities are located at universities and federal laboratories across the country. Centers and networks provide opportunities and support for multidisciplinary research among investigators from a variety of disciplines and research sectors, including academia, industry, and government laboratories. Such multidisciplinary research not only can lead to advances in knowledge, but also may foster relationships that further the development of basic research results into devices and other applications. Many agencies support such centers. Among them: The NSF has established a variety of university-based centers supporting nanotechnology research, including Nanoscale Science and Engineering Centers (NSECs), Nanosystems Engineering Research Centers (NERCs), Science and Technology Centers, Nanoscale Science and Engineering Networks (NSENs), Materials Research Science and Engineering Centers (MRSECs), and Centers for Chemical Innovation (CCIs). In addition, NSF and the Environmental Protection Agency have established two university-based Centers for Environmental Implications of Nanotechnology (CEIN). The NIH has established a variety of centers, including five university-based Nanomedicine Development Centers; a Nanotechnology Characterization Laboratory, established by the National Cancer Institute (NCI), in partnership with NIST and the Food and Drug Administration; six university-based Centers of Cancer Nanotechnology Excellence (CCNEs) and seven university-based Innovative Research in Cancer Nanotechnology (ICRNs), established under the NCI's Alliance for Nanotechnology in Cancer initiative; four university-based centers, established by the National Heart, Lung, and Blood Institute under its Program of Excellence in Nanotechnology; and five university-based NCI Cancer Nanotechnology Training Centers. The DOD supports two university-based nanotechnology research centers, as well as the Institute for Nanoscience at the Naval Research Laboratory. The DOE has established five Nanoscale Science Research Centers (NSRCs). The NSRC user facilities are co-located with DOE national labs. NIST has established a Center for Nanoscale Science and Technology (CNST). NIOSH has established a Nanotechnology Research Center to conduct research into the application of nanoparticles and nanomaterials in occupational safety and health and the implications of nanoparticles and nanomaterials for work-related injury and illness. The USDA Forest Service has established Cellulose Nanomaterial Pilot Facilities, including the Process Development Center/University of Maine School of Forest Resources and the Advance Structures and Composites Center and the Forest Products Laboratory. Some centers are designated as user facilities and are available to researchers not located at the center. User facilities are designed to allow outside researchers to take advantage of facilities, equipment, tools, and expertise. These shared resources provide researchers the opportunity to conduct research, characterize materials, and test products using equipment and facilities that their individual companies, universities, or organizations could not afford to acquire, support, or maintain. Conditions for user access vary by facility and agency. In general, users are not charged for pre-competitive, non-proprietary work leading to publication, and are charged on a cost-recovery basis for proprietary work. In some cases, the user facilities are located at federal government laboratories (e.g., the Department of Energy's NSRCs, and the NIST CNST); other user facilities are located at universities and supported with federal funds (e.g., NSF's university-based MRSECs). As mentioned earlier, the 21 st Century Nanotechnology R&D Act of 2003 directed the establishment of two centers, the American Nanotechnology Preparedness Center and the Center for Nanomaterials Manufacturing. According to the NSET Subcommittee, the requirement to establish the American Nanotechnology Preparedness Center was met by NSF's establishment of the Network for Nanotechnology in Society, comprised of centers at the University of California, Santa Barbara (with the participation of Harvard University and the University of South Carolina) and Arizona State University. These centers were funded under NSF's Nanoscale Science and Engineering Center (NSEC) program and did not include participation by any other NSET Subcommittee agency. The NSET Subcommittee states that the requirement for establishing the Center for Nanomaterials Manufacturing was met by NSF's establishment of a National Nanomanufacturing Network (NNN) comprised of four NSECs. The Center for Integrated Hierarchical Manufacturing at the University of Massachusetts Amherst is the main node of the NNN. The NNN NSECs were established by NSF in collaboration with DOD and NIST, but exclusively with NSF funds. The 21 st Century Nanotechnology R&D Act of 2003 (P.L. 108-153) requires periodic external reviews of the National Nanotechnology Program (NNP) by the National Research Council (NRC) of the National Academy of Sciences (NAS), and by the National Nanotechnology Advisory Panel (NNAP), directing the President to "establish or designate a National Nanotechnology Advisory Panel." Both President Obama and President Bush issued executive orders designating the President's Council of Advisors on Science and Technology to serve as the NNAP. References to PCAST in this section refer to the council operating in its capacity as the NNAP. Under the act, the NNAP is to report to the President and Congress on its assessments of the NNP at least once every two years on a variety of factors, including trends and developments in nanotechnology science and engineering; progress made in implementing the NNP; the need to revise the program; the balance among the program components, including funding levels for the program component areas; whether the program component areas, priorities, and technical goals developed by the NSTC are helping to maintain U.S. leadership in nanotechnology; the management, coordination, implementation, and activities of the program; and whether societal, ethical, legal, environmental, and workforce concerns are adequately being addressed. In addition, the act directs the NNCO to enter into an arrangement with NRC to conduct a triennial review of the program. Each review is to include an evaluation of the technical accomplishments of the program, including the following: a review of whether the program has achieved the goals under the metrics established by the NSTC; a review of the program's management and coordination across agencies and disciplines; a review of the funding levels at each agency for the program's activities and the ability of each agency to achieve the program's stated goals with that funding; an evaluation of the program's success in transferring technology to the private sector; an evaluation of whether the program has been successful in fostering interdisciplinary research and development; an evaluation of the extent to which the program has adequately considered ethical, legal, environmental, and other appropriate societal concerns; recommendations for new or revised program goals; recommendations for new research areas, partnerships, coordination and management mechanisms, or programs to be established to achieve the program's stated goals; recommendations on policy, program, and budget changes with respect to nanotechnology research and development activities; recommendations for improved metrics to evaluate the success of the program in accomplishing its stated goals; a review of the performance of the NNCO and its efforts to promote access to and early application of the technologies, innovations, and expertise derived from program activities to agency missions and systems across the federal government and to U.S. industry; an analysis of the relative position of the United States compared to other nations with respect to nanotechnology R&D, including the identification of any critical research areas where the United States should be the world leader to best achieve the goals of the program; and an analysis of the current impact of nanotechnology on the U.S. economy and recommendations for increasing its future impact. The PCAST has produced five assessments of the NNI and the NRC has produced two. The assessment reports are: The National Nanotechnology Initiative at Five Years: Assessment and Recommendations of the National Nanotechnology Advisory Panel , NNAP/PCAST, May 2005 (hereinafter referred to as " First Assessment "). A Matter of Size: Triennial Review of the National Nanotechnology Initiative , NAS/NRC, 2006. The National Nanotechnology Initiative: Second Assessment and Recommendations of the National Nanotechnology Advisory Panel , NNAP/PCAST, April 2008 (hereinafter referred to as " Second Assessment ") .Report to the President and Congress on the Third Assessment of the National Nanotechnology Initiative , NNAP/PCAST, March 2010, (hereinafter referred to as " Third Assessment "). Report to the President and Congress on the Fourth Assessment of the National Nanotechnology Initiative , NNAP/PCAST, April 2012 (hereinafter referred to as " Fourth Assessment "). Triennial Review of the National Nanotechnology Initiative , NRC, 2013. Report to the President and Congress on the Fifth Assessment of the National Nanotechnology Initiative , NNAP/PCAST, October 2014 (hereinafter referred to as " Fifth Assessment "). Highlights of recommendations included in the Fifth Assessment are provided below, followed by selected findings and recommendations of each of the assessments grouped by broad issue area. In its Fifth Assessment, PCAST asserts that nanotechnology and the NNI are at a "critical transition point." Technologically, PCAST states, there will be an "evolution from nanoscale components to interdisciplinary nano-systems," a change in the complexity and potential of nanotechnology. Organizationally, PCAST states the need for the NNI to evolve from "a foundational research-based initiative to one that also provides the necessary focus to ensure rapid commercialization of nanotechnology." PCAST asserts the importance of adopting an increased focus on enabling commercialization of research in the context of international competition. Further, PCAST asserts, as its "primary conclusion," that the United States will only be able to claim the rewards that come from investing in nanotechnology research and sustaining an overarching Federal initiative if the Federal interagency process, the Office of Science and Technology Policy (OSTP), and the agencies themselves transition their nanotechnology programmatic efforts beyond supporting and reporting on basic and applied research and toward building program, coordination, and leadership frameworks for translating the technologies into commercial products. PCAST identifies the "three most important recommendations" of its Fifth Assessment as 1. transitioning from the NNI's current use of Nanotechnology Signature Initiatives to the concept of Grand Challenges (discussed in the box "Characteristics of Nanotechnology Signature Initiatives and Grand Challenges"); 2. the establishment of a standing committee of cross-sector nanotechnology experts that advises the nanotechnology activities of the federal government, and an NSTC process that enables cross-funding of priorities to address Grand Challenges; and 3. the need for a more formal systems of metrics to assess the effectiveness of NNI research and commercialization activities. In addition, PCAST recommended an expansion of the National Science Foundation's iCorps program to include a specific focus on entrepreneurship in the nanotechnology area; the identification of potential Institutes for Manufacturing Innovation dedicated to nanomanufacturing as part of the President's proposed National Network for Manufacturing Innovation; and additional five-year support for single-investigator pursuing high-risk research in nanoscience and nanotechnology. PCAST adds that, while it encourages the NNI to provide additional focus on and resource for the commercial transition of maturing nanotechnologies, it affirms the importance of the NNI's continuing support for discovery and exploratory research. While acknowledging that "much of the analysis and many of the recommendations are not new," PCAST asserts that implementation of its recommendations is critical to the success of the NNI, adding If another two years passes without these kinds of changes, we believe the value of a centrally-reported NNI will be substantially decreased. The next PCAST review will most certainly focus on the success of this implementation. PCAST's Fifth A s sessment of the NNI recommended several changes to the management of the NNI, including Replacing Nanotechnology Signature Initiatives with Grand Challenges (discussed earlier); Establishing a mechanism for engaging research, development, and industrial stakeholders in the identification and selection of Grand Challenges; Using innovation prize competitions and public-private partnerships to reach critical milestones toward completion of Grand Challenges; Selecting leaders for each Grand Challenge and including them in NSET leadership roles; Putting the PCAST review of the NNI on a three-year time interval concurrent with the National Research Council's review; Establishing a separate standing committee of cross-sector nanotechnology experts to provide guidance to the NNI (but not to function in an evaluative capacity); and Establishing a common set of evaluation metrics to quantify and report the impact on workforce, productivity, and scientific knowledge in nanotechnology In its 2013 Triennial Review of the National Nanotechnology Initiative draft , the NRC identified five crosscutting topics: First, it is essential to identify and support the members of the NNI nanotechnology community.... Second, strengthening NNI planning, management, and coordination can be enabled by developing and implementing interagency plans for focused areas—the signature initiatives and the working groups.... Third, the NNI website (www.nano.gov) needs to serve the various stakeholder groups—including researchers, small and large businesses, educators and students, and the mass media—better.... Fourth, the NSET Subcommittee, NNI agencies, and the NNCO need to take advantage of advances in technology and methods for data collection and social-network analysis to develop and test specific metrics for assessing progress toward NNI goals and informing program management.... Fifth, the NNI would benefit from identifying, sharing, and implementing best practices, such as those described in this report, especially [those] related to technology transfer and commercialization. In support of these themes, the NRC made a number of recommendations related to program management (as well as recommendations to address other issues; these are presented later in this section). Among the NRC recommendations: The NSET Subcommittee should regularly assess working groups, re-defining or eliminating ones that are no longer useful and forming new working groups as needed. The NRC recommended the NSET Subcommittee consider establishing working groups on facility oversight and coordination and on education and workforce development. Each NSET Subcommittee working group should address specific goals, develop annual plans for outputs and shorter-term outcomes, and highlight ties to the NNI signature initiatives. The NSET Subcommittee should inform and obtain input from the NSTC Committee on Technology with respect to NNI objectives and plans at least once a year. The NNI website should be redesigned to provide portals and guidance customized to meet the needs of a variety of NNI stakeholder communities, including companies, user facilities, users, educators, and the media. Each signature initiative team should develop a strategic plan that includes specific goals with quantifiable technical targets where possible, milestones, expected outputs and short-term outcomes, and that identifies the roles and responsibilities of agencies, the NSET Subcommittee, and the NNCO. The NSET Subcommittee should incentivize groups in nanotechnology-enabled industries to participate in developing technical roadmaps and in partnering to address long-term research needs through agency efforts such as the NIST Advanced Manufacturing Technology Consortium program (AmTech). In its 2013 draft report, the NRC (like PCAST in its Third Assessment , see below) also expressed concerns about the adequacy of authority of NSET Subcommittee representatives within their agencies and their ability to influence budget decision making. The NRC does acknowledge that "there may be a tradeoff between authority in the agencies and the ability to devote time and effort to the many NNI coordinating activities." In its Fourth Assessment , PCAST lauded the NNI's "significant progress" in addressing several issues identified in the Third Assessment , but expressed concern about the lack of progress in others, notably "significant and persistent hurdles to an optimal structure and management of the initiative." In particular, PCAST noted that despite the publication in 2011 of the National Nanotechnology Initiative Strategic Plan, individual agency contributions lack the cohesion of an overarching framework, and there is no clear connection between the goals and objectives of the NNI strategic plan with those of individual agencies. While recognizing that some agencies do not have dedicated nanotechnology programs, but rather decentralized nanotechnology activities across multiple organizational units, PCAST recommended the development of implementation plans by each agency—in consultation with external stakeholders—that discuss the alignment of agency activities with the objectives of the NNI strategic plan. PCAST renewed its recommendations that each NSET Subcommittee agency have senior representatives with decision-making authority participate in coordination activities of the NNI, and that the NSET Subcommittee dedicate 0.3% of NNI funding to the NNCO to ensure appropriate staffing and budget levels to effectively develop, monitor, and assess NNI programs. In 2011, NNCO funding was $2.9 million; if funding had been set at 0.3%, the NNCO would have received $5.5 million in FY2011. To expand and strengthen the role of the NNCO in the NNI, PCAST also recommended appointing the NNCO director as a co-chair of the NSET Subcommittee and allowing non-federal experts to serve as NNCO director. PCAST further recommended creating a standing PCAST Nanotechnology Steering Committee of experts from industry, academia, and civil society to provide more frequent and in-depth guidance. This recommendation raises the question of whether the role envisioned for the NNAP, as authorized by the 21 st Century Nanotechnology Research and Development Act, is appropriately being served by PCAST or whether it might be better served by the establishment of a separate, dedicated entity. In its first assessment of the NNI, the NRC recommended that the federal government [should] establish an independent advisory panel with specific operational expertise in nanoscale science and engineering; management of research centers, facilities, and partnerships; and interdisciplinary collaboration to facilitate cutting-edge research on and effective and responsible development of nanotechnology. Coming after President Bush's designation of PCAST to serve as the legislatively mandated NNAP, this recommendation may suggest the need for a separate, NNI-only focused entity to serve as the NNAP. Critics of the use of PCAST to serve as the NNAP maintain that the scope and depth of expertise needed to provide effective guidance on the NNI requires an independent panel of people with nanotechnology-specific and interdisciplinary expertise and an undivided focus. Supporters of using PCAST for this function assert that a single advisory panel provides an integrated perspective, reduces unnecessary cost and management burdens, and allows for expertise to be added to the panel or accessed through non-member technical advisory groups. In its Third Assessment , PCAST praised the NNI for having "distinguished itself during its first decade as a successful cooperative venture," and further described the initiative as well-organized and well-managed. Nevertheless, in both its Third Assessment and Fourth Assessment , PCAST offered a number of recommendations for improving NNI program management. In its Third Assessment , PCAST stated that "the NNCO should broaden its impact and efficacy and improve its ability to coordinate and develop NNI programs and policies." In this regard, PCAST recommended that OSTP undertake the following actions: Require each agency in the NNI to have senior representatives with decision-making authority participate in coordination activities of the NNI. Strengthen the NNCO to enhance its ability to act as the coordinating entity for the NNI. Dedicate 0.3% of NNI funding to the NNCO to ensure the appropriate staffing and budget to effectively develop, monitor and assess NNI programs. In its 2013 budget supplement, the NSET Subcommittee characterized these program management recommendations as actions "unlikely or not needed." With respect to requiring the participation of senior agency representatives with decision-making authority, the NSET Subcommittee replied that member agencies make their own decisions with regard to representation. The NSET Subcommittee also responded to PCAST's recommendation that the NNCO's coordination function be strengthened and better funded. First, the NSET Subcommittee reasserted that it is the NSET Subcommittee, not the NNCO, that serves as the coordinating entity for the NNI, and that the NNCO serves to provide administrative support to the NSET Subcommittee. Second, the NSET Subcommittee stated that it did not support providing the NNCO a fixed percentage of the overall NNI investment, explaining that NNCO activities are based on programmatic needs as proposed each year by the NNCO and vetted by the NSET Subcommittee's Budget Steering Group. A key question for federal policy makers is how much funding should be provided for nanotechnology R&D, and how this funding should be allocated among program component areas and cross-cutting activities. While NNI funding grew from $464 million in FY2001 to a peak of $1.913 billion in FY2010, regular appropriations for the NNI subsequently fell to an estimated $1.488 billion in FY2015 (down $425 million, 22.2%). The President has requested $1.495 billion for FY2016. In its 2013 draft report, the NRC noted that, given the constrained federal budget environment, agencies will need to set priorities for R&D investments and expand coordination of nanotechnology efforts. In its Third Assessment , PCAST recommended that the federal government increase funding for the NNI to ensure that the United States retains its leadership role in the development and commercialization of nanotechnology in the face of mounting competition from countries that have responded to the example set by the NNI. PCAST cautioned that in undertaking these new investments the NNI should maintain or expand the level of funding devoted to basic nanotechnology research. Similarly, in its first assessment of the NNI, the NRC recommended the federal government [should] sustain investments in a manner that balances the pursuit of shorter-term goals with support for longer-term R&D and that ensures a robust supporting infrastructure, broadly defined. Supporting long-term research effectively will require making new funds available that do not come at the expense of much-needed ongoing investment in U.S. physical sciences and engineering research. Given the economic, societal, and national security potential of nanotechnology, Congress maintains ongoing interest in the competitive position of the United States in this emerging field. In its 2013 draft report, the NRC noted that Battelle/ R &D Magazine' s 2012 Global R&D Funding Forecast predicted the United States' share of total R&D would decrease from 32.8% in 2010 to 31.1% in 2012, while the share funded by the nations of Asia is expected to grow from 34.3% to 36.7%, potentially posing long-term challenges to U.S. competitiveness. Nevertheless, the NRC notes that R&D spending is only one factor among many (such as tax, regulatory, health care, energy, and education policies; subsidy programs; currency valuation; science-based industrial parks; and worker training) that can affect national competitiveness. The NRC recommended that the NSET Subcommittee periodically review the status of the competitive environment for nanotechnology-enabled industry in the United States relative to that of other nations. In its Fifth Assessment, PCAST recognized the global competition for nanotechnology talent and recommended that NNI agencies support single investigators engaged in creative, high-risk research, and to fund at least five new National Security Science and Engineering Faculty Fellowship-style grants in nanoscience and nanotechnology annually. PCAST also offered strong support for nanoscale research centers and infrastructure networks—particularly the Next Generation National Nanotechnology Infrastructure Network—for training transdisciplinary scientists and engineers. In its Fourth Assessment, PCAST asserted that the NNI "remains a successful cooperative venture" that has had a "catalytic and substantial impact" on the growth of the U.S. nanotechnology industry, and concluded that the United States is today, by a wide range of measures, the global leader in this exciting and economically promising field of research and technological development. PCAST attributed the U.S. leadership position in nanotechnology, in large part, to the NNI. The assertion of U.S. leadership in nanotechnology echoes PCAST's findings in its Third Assessment . That assessment, however, noted that U.S. leadership was threatened by several aggressive competitors: The United States is clearly the world's leader in nanotechnology R&D and commercialization based on research funding, total number of papers in the most significant scientific publications, patents filed and granted, private sector funding for new and existing companies developing nanotechnologies, and sales of nanotechnology-based products. However, foreign competitors, particularly China, South Korea, Germany, and Japan, are making gains on many of these same metrics. China in particular has significantly increased its share of nanotechnology research publications and patents and now supports nanotechnology as a larger fraction of its total scientific research compared to the United States.... Though still the leader in nanotechnology R&D and commercialization, the United States is losing ground to foreign competitors, particularly China, South Korea, Germany, and Japan, on a number of key metrics of research output and commercial activity. PCAST's Fourth Assessment noted that "in addition to China, South Korea, and other early movers, the Russian Nanotech Corporation (RUSNANO) is now also rising as a major player, second only to the United States in its nanotechnology R&D spending." PCAST cited data from Lux Research indicating that RUSNANO had increased its funding by nearly 40% to $1.05 billion, and planned to increase funding to nearly $1.5 billion by 2015. PCAST's assessment of the U.S. leadership position was founded not on sales, growth, or market share of commercial products—common measures of global competitiveness for established products—but rather on metrics that may serve as early indicators of potential innovation, such as the U.S. share of scientific publications and patents. The use of such metrics may not be universally accepted as predictive of leadership position. Technological leadership—or even leadership in innovation—does not ensure that the economic benefits from such leadership will accrue to the United States. For example, companies may choose to manufacture products or conduct other value-added activities outside the United States. If the assessment of national competitiveness were to be expanded to include value-added activities and jobs generated or retained within the United States, then different metrics for assessing global leadership might be needed. Technology commercialization involves the movement of scientific and technological insights into products and services. It is the process by which knowledge created by investments in R&D is translated into economic benefits (e.g., strengthening existing firms and establishing new ones, creating jobs, producing new products, reducing the cost of existing products and improving their performance, delivering returns to investors) and societal benefits (e.g., offering new and improved sources of renewable energy, reducing pollution and remediating environmental damage, improving human heath). PCAST's Fifth A s sessment of the NNI recommended several changes to improve the commercialization of nanotechnology. PCAST recommended that the NSET Subcommittee should work with federal agencies to define potential Manufacturing Innovation Institutes dedicated to nanomanufacturing as part of the President's proposed National Network for Manufacturing Innovation. PCAST also recommended expansion of the NSF iCorps program—focused on providing hands-on business knowledge to scientists and engineers on bringing technology products to market—to assist researchers engaged in nanoscience and nanotechnology research. Additionally, PCAST called for the NNCO and the Department of Commerce to establish an annual nano-focused economic development forum for academic researchers, the venture capitalists, and industry representatives to facilitate the development of business partnerships. In its 2013 draft report, the NRC credits the NNI agencies and the NNCO for having taken steps to boost technology transfer of NNI research results, including making technology transfer a primary goal; reporting on progress in the annual budget supplement, including the amount of Small Business Innovation Research (SBIR) program and Small Business Technology Transfer (STTR) program funds going to nanotechnology research; providing access to information about the NNI and user facilities through the NNI website; and conducting workshops on regional, state, and local programs related to nanotechnology. The NRC noted that there are a variety of cooperative research models with unique characteristics that the NNI might draw upon to facilitate technology commercialization. In this regard, the NRC recommended that the NNI agencies identify and share best practices in intellectual property management. In its Fourth Assessment , PCAST continued its Third Assessment emphasis on improving commercialization efforts, and lauded the NNI's response to commercialization-related recommendations the council made in its previous assessment, specifically: development of an NNCO Industry and State Liaison position and expanded efforts by the NNCO in supporting nanotechnology commercialization; the NILI working group's development of an agenda focused on job creation and state outreach, as well as mechanisms to incorporate industrial input in NNI planning; DOE programs that include industrial partners to overcome technological barriers to nanotechnology commercialization; NIST's plans to start the Advanced Manufacturing Technology Consortia program in FY2013 to speed development and commercialization of new products and services, including nanotechnology; and NIH's creation of the National Center for Advancing Translational Sciences to accelerate translation of promising technologies and clinical studies to applications and practice. Nevertheless, the PCAST co-chairs also noted in their transmittal letter to President Obama that additional work in a number of areas was still required to facilitate technology commercialization and U.S. leadership in nanotechnology: additional efforts are needed in four areas: strategic planning, program management, metrics for assessing impact, and increasing support for research on environmental, health, and safety issues associated with nanotechnology. Continued lack of attention to these concerns will make it harder for the U.S. to maintain its leadership role in the commercialization of nanotechnology. Previously, in its Third Assessment , PCAST recommended that, to maintain the U.S. leadership position in nanotechnology, the NNI increase its emphasis on nanomanufacturing and commercial deployment of nanotechnology-enabled products, and that the agencies within the NNI must interact and cooperate more with one another to ease the translation of scientific discovery into commercial activity. In this regard, PCAST made a number of recommendations. Among them: double federal funding for nanomanufacturing over five years; launch at least five government-industry-university partnerships modeled after the Nanoelectronics Research Initiative; for each nanotechnology signature initiative, develop milestones, promote strong education components, and create public-private partnerships to leverage the outcomes; fund at least five NSIs over the next two to three years—including ones in priority areas such as homeland security, national defense, and human health—at annual levels of $20 million to $40 million each; tap the Department of Commerce and the Small Business Administration for advice on how the NNI can best ensure its programs create new jobs in the United States, including mechanisms for coordinating with state efforts; and clarify the development pathway and sustain investments by DOE, DOD, NIST, NIH, NCI, and FDA in focused areas to accelerate technology transfer to the marketplace. In its 2013 budget supplement, the NSET Subcommittee responded to PCAST's commercialization-focused recommendations stating that "key NNI agencies" were on track to double their nanomanufacturing investments over five years, while maintaining their investments in fundamental nanotechnology research. The five agencies identified by PCAST as targets for doubling—NSF, DOE, DOD, NIST, and NIH—funded a total of $46.8 million in nanomanufacturing R&D in FY2008; in FY2012 nanomanufacturing funding for these agencies had more than doubled to $101.5 million. Agency funding was concentrated, with NSF and DOD accounting for 86% of this total. However, President Obama has requested $89.9 million in nanomanufacturing funding for these agencies for FY2014, a reduction of $11.6 million (11.4%) from the FY2012 level. The NSET Subcommittee also said that interagency task forces for the three initial NSIs were developing coordination plans with milestones, that there was a likelihood that two additional NSIs would be added within the next year, and that the NILI working group was working in conjunction with the NNCO's Industry and State liaison to produce a work plan that includes job creation and outreach to states and industry. With respect to clarifying the development pathway, the NSET Subcommittee asserted that it is employing well-established mechanisms, such as the SBIR and STTR programs, and that it is developing new programs to accelerate technology transfer and to clarify regulatory pathways. Standards are likely to play a critical role in many aspects of nanotechnology R&D and commercialization, among them the development of research tools, conduct of research, reproducibility of experimental results, development and enforcement of regulations, materials characterization, nanomanufacturing, and product testing and evaluation. In its 2013 draft report, the NRC encouraged the NNI and NNCO to continue efforts focused on facilitating the development of standards: Standards development is critical for commercialization, use, and sound regulation of nanotechnology. The NNCO and NIST have played leading roles in this activity. NNI agencies should continue their active participation in standards development organizations and in the development of metrology and characterization tools, standard reference materials, terminology, and nomenclature. As in earlier assessments, in its Third Assessment , PCAST re-asserted the importance of standards stating that "the establishment of standards is essential to growth of most new technologies, and nanotechnology is no exception." Further, PCAST recommended that the NNCO serve as the coordinating agency for collaborating with stakeholders on enabling programs such as metrology; standards including size, shape and composition of nanomaterials, and databases of physical and chemical properties of nanomaterials; and manufacturing safety. In support of this role, PCAST also recommended that an individual be appointed to the NNCO to lead interagency coordination of standards development efforts. With the departure of NNCO Director Clayton Teague who had served in this capacity, the NSET Subcommittee named Dr. Ajit Jillavenkatesa, senior standards policy advisor for the National Institute of Standards and Technology, to this role. Dr. Jillavenkatesa also co-chairs the Nanotechnology Standards Panel of the American National Standards Institute (ANSI), is active in the ANSI-accredited U.S. Technical Advisory Group to the International Organization for Standardization Technical Committee 229, and participates in the NSET Subcommittee. PCAST's Fifth Assessment of the NNI recommended establishing a common set of evaluation metrics to quantify and report the impact on workforce, productivity, and scientific knowledge in nanotechnology. Economic impact metrics and data collection were also focus areas of the NRC's 2013 draft report. The NRC recommended: the NNI establish a framework that links high level goals with specific actions, outputs, and outcomes, linked to performance-based data; the NNI collect and publish nine data sets to enable a better quantitative assessment of the NNI's success, including (1) NNI-funded projects; (2) published documents resulting from NNI activities; (3) frequently cited and downloaded papers and patents, invited presentations, special sessions at conferences, and media reports; (4) number of students supported; (5) user-facility and network use; (6) technology transfer data; (7) education and outreach data; (8) U.S.-based nanotechnology job advertisements; and (9) NNI-related communications about environmental, health, safety, and societal implications of nanotechnology The NRC cautioned, however, against the exclusive use of strictly quantitative measures for assessing NNI success, stating that "well-crafted qualitative and semi-quantitative metrics and their review, supported by rigorously documented quantitative metrics, are more likely to be useful in producing evaluations that measure success and in setting NNI goals and policy." the NSET Subcommittee and the NNCO obtain data-mining expertise to undertake the collection and collation of essential data sets, to develop analysis tools to support the management and reporting needs of the NNCO and the agencies, and to manage the process of making the data sets publicly available; and agencies link NNI participants to their work products, organizations, and grants, as well as to published paper and patent databases. In its Third Assessment, PCAST highlighted the need for economic impact metrics and data collection, recommending the development of NNI economic impact metrics; making economic impact an explicit metric in the second decade of the NNI; and lodging responsibility with a statistical agency (such as the DOC's Bureau of Economic Analysis) to estimate job creation and the value of nanotechnology products and products incorporating nanotechnology components, rather than relying on funding agencies for such estimates. In its 2013 budget supplement, the NSET Subcommittee also responded that the NNCO had engaged in discussions with the Department of Commerce about economic metrics, provided support for a symposium on the economic value of nanotechnology, and requested the NRC identify metrics to assess the success of nanotechnology as part of the council's triennial review of the NNI. In its first assessment of the NNI, the NRC also recommended a focus on development of metrics and a greater role for the DOC in economic data collection and analysis: [The NRC recommends] the NSET Subcommittee carry out or commission a study on the feasibility of developing metrics to quantify the return to the U.S. economy from the federal investment in nanotechnology R&D. The study should draw on the Department of Commerce's expertise in economic analysis and its existing ability to poll U.S. industry. Among the activities for which metrics should be developed and relevant data collected are technology transfer and commercial development of nanotechnology. Few efforts have been made within the federal government to understand the economic impacts of the nation's investments in the NNI. Identification and tracking of data that could serve as an indicator of success in commercializing nanotechnology research or the effects on U.S. job creation or retention has not been formalized. To the extent that federal assessments of the economic contribution of and/or potential for nanotechnology products have occurred, they have not been performed with analytical rigor. Although the Commerce Department retains its economic analysis expertise, resident primarily in the Economics and Statistics Administration's Bureau of Economic Analysis, the department's Technology Administration, which led Commerce's NNI activities and had government-wide responsibilities for technology transfer activities, was eliminated in August 2007. Prior to its elimination, the Technology Administration contracted for two studies that sought to contribute to addressing this NRC recommendation: an analysis of barriers to nanotechnology commercialization performed by the University of Illinois at Springfield, and an analysis of innovation metrics conducted by the Alliance for Science and Technology Research in America (ASTRA). These reports are publicly available at Commerce Department websites. With nanotechnology advocates promising the creation of many new jobs—some have estimated the number to be in the millions—as a result of global nanotechnology investments, some have asserted that the country must prepare students for nanotechnology research, engineering, and production jobs. Assessing which industries are likely to create such jobs, which skills will be needed, and in what timeframe are key challenges. If workers with nanotechnology-specific skills are needed and no workers are available domestically (e.g., U.S. citizens, resident aliens, or those in the United States on work visas), potential employers may opt to establish or move operations outside the United States to tap workers with those skills abroad. Conversely, if students are trained for jobs that do not emerge or do not emerge in the same timeframe as students are entering the job market, this investment may be lost and human capital underutilized. In addition, potential students may be discouraged from pursuing nanotechnology-related studies in the future. Close coordination among the Departments of Commerce, Education, and Labor might help to align federal education and training efforts better with the labor market for nanotechnology workers. In its 2013 draft report, the NRC noted the NNI's recognition of the importance of nanotechnology education and workforce training, but asserted a need for better coordination and integration among NNI agencies. To this end, the NRC recommended either re-defining the scope of the Nanotechnology Public Engagement and Communications working group to undertake this work or establishing a new NSET Subcommittee Education and Workforce Development Working Group for this purpose. Similarly, in its 2006 assessment, the NRC recommended the NSET Subcommittee "create a working group on education and the workforce that engages the Department of Education and Department of Labor as active participants." In its Third Assessment, PCAST found that the United States remained unchallenged in educating nanotechnology researchers. However, PCAST noted that a large number of foreign students return to their home countries after completing their education: The United States still trains the majority of Ph.D. students in nanoscience and nanotechnology, and though many of these students wish to remain in the United States after completing their degree programs, the data show that over one-third of these students return to their home countries and contribute to the development of nanotechnology R&D programs throughout the world. While acknowledging that the United States may gain some benefits from training nanotechnology researchers who return to their home countries, PCAST recommended the federal government undertake efforts to retain scientific and engineering talent trained in the United States: by developing a program to provide U.S. Permanent Resident Cards for foreign individuals who receive an advanced degree in science or engineering at an accredited institution in the United States and for whom proof of permanent employment in that scientific or engineering discipline exists. PCAST also recommended that NNI agencies continue making investments in innovative and effective education, and that the NNCO consider commissioning a comprehensive evaluation of the outcomes of the overall investment in NNI education. In its 2013 budget supplement, the NSET Subcommittee responded to PCAST's Third Assessment workforce education and training recommendations stating that NNI agencies were contributing to the development of nanotechnology curricula for students in grade school through postdoctoral training, and that NSF is considering supporting an external study to evaluate the NNI's investment in education. In addition, while acknowledging the need to undertake efforts to retain U.S. educated foreign scientific and engineering talent in the United States, the NSET Subcommittee stated that it did not endorse specific approaches at this time. Environmental, health, and safety issues related to nanotechnology research, development, use, and disposal (nanoEHS) continue to be a focus of NNI assessments. Some analysts have described nanotechnology as a two-edged sword. On the one hand, some are concerned, for example, that nanoscale particles may enter and accumulate in vital organs, such as the lungs and brains, potentially causing harm or death to humans and animals, and that the diffusion of nanoscale particles in the environment might harm ecosystems. On the other hand, some analysts believe that nanotechnology has the potential to deliver important EHS benefits (e.g., reducing energy consumption, pollution, and greenhouse gas emissions; remediating environmental damage; curing, managing, or preventing diseases; and offering new safety-enhancing materials that are stronger, self-repairing, and able to adapt to provide protection). Stakeholders generally agree that concerns about potential detrimental effects of nanoscale materials and devices—both real and perceived—must be addressed to protect and improve human health, safety, and the environment; create public faith and confidence in the safety of nanotechnology products; enable accurate and efficient risk assessment, risk management, and cost-benefit trade-offs; reduce EHS and related regulatory uncertainties that may impede investment; foster innovation; and ensure that society can enjoy the widespread economic and societal benefits that nanotechnology may offer. The NSET Subcommittee has sought to address nanotechnology-related EHS concerns through a variety of approaches, including agency funding for EHS-related research, increased coordination of agency EHS-related research through the NSET Subcommittee's NEHI Working Group, and development of a government-wide research strategy. At the request of the NNCO, the NRC conducted a review of the NSET Subcommittee's 2008 nanoEHS research strategy, Strategy for Nanotechnology-Related Environmental, Health, and Safety Research . While the NRC found that the NSET Subcommittee's 2008 strategy "could be an effective tool for communicating the breadth of federally supported research associated with developing a more comprehensive understanding of the environmental, health, and safety implications of nanotechnology" and that it was "likely to eliminate unnecessary duplication of their research efforts," it concluded that [the report] does not describe a strategy for nano-risk research. It lacks input from a diverse stakeholder group, and it lacks essential elements, such as a vision and a clear set of objectives, a comprehensive assessment of the state of the science, a plan or road map that describes how research progress will be measured, and the estimated resources required to conduct such research. There remains an urgent need for the nation to build on the current research base related to the EHS implications of nanotechnology—including the federally supported research described in the 2008 NNI document—by developing a national strategic plan for nanotechnology-related environmental, health, and safety research. Among its criticisms of the 2008 strategy, the NRC asserted that research needs in certain categories, notably risk management and exposure assessment, were "poorly defined" or "incomplete"; certain research needs that did not fall directly in one of the strategy's identified categories could be overlooked; research needs were not presented as concrete, measurable objectives, and that the implementation plan failed "to provide any sense of how success toward specific goals will be measured or what resources might be needed to achieve them"; the gap analysis was flawed and was neither accurate nor complete in laying a foundation for a research strategy, and that consequently it was difficult to understand the priorities of selected research needs and the logic for the priorities; and the federal funding specifically addressing nanotechnology-related EHS issues is far less than portrayed in the NNI document and may be inadequate. The NRC review also called for the development of a national strategic plan, not just a federal government strategic plan. The NRC asserted that the 2008 strategy's focus on federal government agency activities failed to incorporate the role of non-governmental stakeholders with the potential for contributing research and knowledge of the EHS implications of nanotechnology. In 2011, the NSET Subcommittee published Strategy for Nanotechnology-Related Environmental, Health, and Safety Research , which sought to address some of the shortcomings of the 2008 research strategy identified by the NRC. According to the NSET Subcommittee, the strategy was informed by data collected from "the NNI agencies responsible for overseeing the manufacture and use of engineered nanomaterials and nanotechnology-enabled products"; reviews by PCAST and the NRC; and consultation with a wide variety of stakeholders, including industry, academia, non-governmental organizations, and public health advocacy organizations. The 2011 strategy identified five core nanoEHS research needs: nanomaterial measurement infrastructure, human exposure assessment, human health, environment, and risk assessment and risk management methods. For each of the nanoEHS research needs, the NSET Subcommittee set goals, identified needed research, and analyzed ongoing research. The strategy also included a chapter on informatics and modeling for nanoEHS research. In 2012, the NRC published, A Research Strategy for Environmental, Health, and Safety Aspects of Engineered Nanomaterials , in response to a request from the Environmental Protection Agency to perform an independent study to develop and monitor the implementation of an integrated research strategy to address the EHS aspects of engineered nanomaterials. In putting forward its own strategy, the NRC asserted that Despite increasing budgets for nanotechnology-EHS research and a growing number of publications, regulators, decision-makers, and consumers still lack the information needed to make informed public health and environmental policy and regulatory decisions. The conceptual framework put forth by the NRC included three key features: a value-chain and life-cycle perspective that considers potential effects originating in the production and use of nanomaterials, nanomaterial-containing products, and the wastes generated; a focus on determining how nanomaterial properties affect key processes that are relevant to predicting both hazard and exposure; and a reliance on principles that help to identify emergent, plausible, and severe risks resulting from designing and engineering materials at the nanoscale, rather than an adherence to rigid definitions of engineered nanomaterials. PCAST has also made a number of findings and recommendations related to EHS research. In its Fifth Assessment, PCAST recommended that NSET continue development of a multidisciplinary nanotechnology environmental, health, and safety ecosystem that promotes non-animal based (alternative) test strategies for safety assessment and multi-stakeholder participation in regulatory decisionmaking and safe implementation to facilitate market access of nanomaterials and nanotechnology-enabled products. In its Third Assessment , PCAST found that In the absence of more detailed scientific evidence—and effective assessment and communication of the evidence that does exist—the distinction between plausible and implausible risks remains unclear. The resulting uncertainty threatens to undermine confidence and trust among investors, businesses, and consumers, and could jeopardize the success of nanotechnology. This is not a hypothetical threat. Consumer and advocacy groups already have raised concerns over the use of engineered nanomaterials in products as diverse as clothing, fuel additives, and sunscreens. Businesses have been hampered by regulatory uncertainty. A number of industries have shied away from nanotechnology for fear of consumer rejection in the face of speculative concerns. In its 2006 assessment, the NRC recommended expansion of funding for nanoEHS research. The NRC specifically noted the need for assessing the effects of engineered nanomaterials on public health and the environment and recommended the development of effective methods to estimate the exposure of humans, wildlife, and other ecological receptors to source material; assess effects on human health and ecosystems of both occupational and environmental exposure; and characterize, assess, and manage the risks associated with exposure. While the NRC asserted the need for additional EHS research, it did not quantify how much more was needed. PCAST's Fourth Assessment lauded the "significant progress" made by the NNI to address potential EHS risks of nanotechnology, noting the rapid growth rate for EHS-focused research funding compared to overall NNI funding; the implementation of PCAST's earlier recommendation to identify a central coordinator for EHS-research within the NNCO; and for development and release of an EHS research strategy, articulating an approach that incorporates the "evolving research needs and the strategic research plans of three relevant agencies." PCAST noted that the NNI strategy aligned with the findings of the 2012 NRC report, A Research Strategy for Environmental, Health, and Safety Aspects of Engineered Nanomaterials , specifically with respect to the importance of a life cycle approach to assessing risks, the need for more research on human and environmental exposure to nanomaterials, better tools for measuring and tracking nanomaterials, and the need for cross-cutting informatics infrastructure for nanotechnology-related EHS research. However, PCAST expressed concerns about "a lack of integration between nanotechnology-related EHS research funded through the NNI and the kind of information policymakers need to effectively manage potential risks from nanomaterials." To address this concern, PCAST recommended that OSTP and the NSET Subcommittee expand the charter of the NEHI working group to enable the group to address cross-agency nanotechnology-related policy issues more broadly, and that the NNI should ensure close integration of its efforts with those of the Emerging Technologies Interagency Policy Coordination Committee (ETIPC). PCAST also recommended additional funding for cross-cutting areas of EHS that promote knowledge transfer such as informatics, partnerships, and instrumentation development. In its Third Assessment, PCAST credited the NNI with increasing funding for EHS-focused research. Funding for EHS-related nanotechnology research across all agencies grew from $37.7 million in FY2006 to $109.9 million in FY2012. President Obama has requested $121.1 million in nanoEHS funding for FY2014. Some advocates for increased focus on nanotechnology-related EHS issues have proposed the establishment of a separate agency or office devoted to nanotechnology EHS research, and/or to set aside a particular percentage of NNI funding for EHS research. In its Second Assessment , PCAST found these proposals to be "misguided" and potentially counterproductive as such approaches may direct resources away from research "on beneficial applications and on risk." The panel also concluded that nanotechnology does not raise ethical concerns unique from those accompanying other technological advances. The term "societal implications" in the context of the NNI refers to the effects, broadly speaking, that advances in nanotechnology research and application may have on individuals, groups, and society as a whole. With nanotechnology holding potential breakthroughs in areas such as materials and manufacturing, medicine and healthcare, environment and energy, biotechnology and agriculture, electronics and information technology, and national security, the societal implications—including ethical, economic, and legal implications—may be both deep and widespread. Understanding the potential societal implications of nanotechnology is considered important to federal efforts to maximize nanotechnology's potential positive effects and minimize its potential negative effects. Beginning with its first review of the NNI, PCAST stressed the importance of research aimed at understanding the societal implications of nanotechnology and recommended the NNI actively work to inform the public about nanotechnology and to confront societal issues in an open, straightforward, and science-based manner. PCAST has continued to stress the importance of a strong NNI program in societal implications, recommending in its Fourth Assessment: The NSET Subcommittee should develop a clear expectation and strategy for programs in the societal dimensions of nanotechnology. An effective program in societal implications would have well-defined areas of focus, clearly articulated outcomes as well as plans for assessing and evaluating those outcomes, and partnerships that leverage the value of its activities. Ultimately, the inclusion of such programs in the NNI has the goal of streamlining nanotechnology innovation and its positive impact on society, and the creation of new jobs, opportunities and a robust economy. Some critics of the NNI hold deep reservations about the ethical, societal, economic, and legal implications of nanotechnology. Some of these concerns are common to many technologies, such as the allocation of risk and benefit during manufacturing. For example, a neighborhood located near a production facility may bear risks associated with exposure to the byproducts (or products) of nanoscale manufacturing, while gaining few of the benefits. Concerns about possible adverse effects of nanoscale particles on human health and the environment resulting from their small particle size and unique characteristics may result in increased attention to such costs and benefits with respect to nanoscale material production. Currently, nanotechnology EHS risks are not well understood and may be acute, pose no more risk than other manufacturing processes, or perhaps even less. Privacy rights are another issue associated with the products of nanotechnology. Nanotechnology may enable the production of highly sensitive, inexpensive sensors that could be deployed ubiquitously in commercial and public settings. While these sensors may allow beneficial applications, such as check-out-free purchases from stores or the monitoring of the environment for toxic substances, critics argue that they could also impinge on the privacy rights of individuals if, for example, the sensors could detect chemicals related to the use of tobacco, alcohol, or illegal substances without the permission of the individual. Such information might be later applied in law enforcement, life insurance, health insurance, or employment decisions. Others express concern that the economically disadvantaged and less educated—both individuals and nations—might be unable or less able to take part in the benefits that nanotechnology products could offer. Many expect nanotechnology to bring significant economic and societal returns. The United States was the first government to launch a national-level nanotechnology program and has invested more than any other nation. Many experts believe that, as a result of this focus and these sustained investments, the United States enjoys a technological leadership position in nanotechnology. Other nations are investing heavily and some industrialized and emerging economies have formidable capabilities in nanotechnology. Assessments of the National Nanotechnology Initiative have concluded that the effort is well-managed and has been successful in achieving its objectives so far. However, these assessments have recognized that the NNI faces a variety of challenges in ensuring that the full promise of nanotechnology is realized and that the United States remains the global leader in nanoscale science, engineering, and technology. Congress may choose to address some or many of the issues identified in the body of this report in the course of deliberation on the reauthorization of the 21 st Century Nanotechnology R&D Act of 2003 or, alternatively, in separate legislation. The 21 st Century Nanotechnology R&D Act's funding authorizations extended through FY2008. The 109 th Congress, 110 th Congress, 111 th Congress, and 113 th Congress considered legislation to reauthorize the program. If the 114 th Congress opts to consider reauthorization of the act, some of the issues it may wish to consider include budget authorization levels for the covered agencies; R&D funding levels, priorities, and balance across the program component areas; administration and management of the NNI; translation of research results and early-stage technology into commercially viable applications; environmental, health, and safety issues; ethical, legal, and societal implications; education and training for the nanotechnology workforce; metrology, standards, and nomenclature; public understanding; and international dimensions. Consideration may also be given to the establishment of an independent review panel and to coordination of the timing for the NNAP assessment, the NRC assessment, and the NSET Subcommittee's strategic plan for the NNI. Selected Nanotechnology Legislation in the 114 th , 113 th , 112 th , and 111 th Congresses H.R. 1898 (114 th Congress) —America COMP ETES Reauthorization Act of 2015 H.R. 1898, the America COMPETES Reauthorization Act of 2015, was introduced on April 21, 2015, and referred to the House Committee on Science, Space, and Technology and the House Committee on Education and the Workforce. In August 2015, the House Committee on Science, Space, and Technology referred the bill to the Subcommittee on Research and Technology. No further action had been taken as of the date of this report. The provisions of the bill's nanotechnology subtitle—which are nearly identical to those included in H.R. 4159 (113 th Congress)—include the following: The National Science and Technology Council would be required to publish a strategic plan every three years to guide the activities of the NNI. The strategic plan is required to include near-term and long-term objectives for the NNI, the anticipated timeframe for achieving the near-term objectives, and the metrics to be used for assessing progress toward the objectives. Federal agencies would be directed to support nanotechnology standards development efforts. Funding for the National Nanotechnology Coordination Office would be provided by each NNI agency in proportion to its share of total NNI funding for the previous fiscal year; the director of the NNCO would be authorized to establish a minimum contribution level or other exception for agencies whose share of total funding is below a threshold level. The NNCO would be required to maintain (1) a publicly accessible database of NNI-funded environmental, health, and safety (EHS) activities; and (2) links to agency information on nanotechnology facilities that are accessible to individuals from academic institutions and industry. The National Nanotechnology Advisory Panel would be required to produce triennial reviews of the NNI, and to do so, to the extent practicable, in the year following each review by the National Research Council. The director of the NNCO would be required to enter into an arrangement with the National Research Council of the National Academies of Sciences to produce a triennial report on the NNI, including an evaluation of research priorities, technical content, scientific and technological accomplishments, success in technology transfer, and adequacy of the NNI's activities addressing ethical, legal, environmental, and other appropriate societal concerns, including human health. The Director of the President's Office of Science and Technology Policy would be required to designate a Coordinator for Environmental, Health, and Safety Research to provide oversight of coordination, planning, and budget prioritization of research and other activities related to nanotechnology EHS research. The coordinator would be required to develop and update a research plan triennially. NSET agencies would be encouraged to introduce nanoscale science, engineering, and technology into undergraduate science and engineering education by supporting the development of courses of instruction or modules to existing courses, faculty professional development, and acquisition of equipment and instrumentation suitable for undergraduate education and research in nanotechnology. These educational efforts would be coordinated by the NSET Subcommittee and the NSTC Committee on Science, Technology, Engineering, and Math Education (CoSTEM). Any nanotechnology educational activity supported under the NNI's Education and Societal Dimensions program component area would be required to include an educational component on the EHS aspects of nanotechnology. Agencies supporting nanotechnology research would be required to provide remote access to their facilities via the Internet by secondary school students and teachers. Agencies supporting nanotechnology research would be required to provide access to their nanotechnology research facilities to companies for the purpose of assisting the companies in the development of prototypes of nanoscale products, devices, or processes for determining proof-of-concept. The NNI would be directed to support Signature Initiatives—nanotechnology research and development activities directed toward application areas that have the potential for significant contributions to national economic competitiveness and for other significant societal benefits. The NNI would be directed to support nanomanufacturing research, including the development of instrumentation and tools required for the rapid characterization of nanoscale materials and for monitoring of nanoscale manufacturing processes, and approaches and techniques for scaling the synthesis of new nanoscale materials to achieve industrial-level production rates. Certain NNI centers would be directed to support "Green Manufacturing" activities, including research on methods and approaches to develop environmentally benign nanoscale products and nanoscale manufacturing processes, fostering the transfer of research results to industry, and providing for the education of scientists and engineers through interdisciplinary studies in the principles and techniques for the design and development of environmentally benign nanoscale products and processes. S. 2757 (113 th Congress)—America COMPETES Reauthorization Act of 2014 S. 2757, the America COMPETES Reauthorization Act of 2014, was introduced on July 31, 2014, and referred to the Committee on Commerce, Science, and Transportation. The National Nanotechnology Initiative Amendments Act of 2014 is included as Subtitle B of Title VI of the bill. Among the provisions of the bill's nanotechnology subtitle: The National Science and Technology Council would be directed to establish nanotechnology signature initiatives in focused areas of national importance. The NSTC would be required to produce a strategic plan at least once every four years. The strategic plan would specify the overarching goals for the program; near-term and long-term objectives; and the metrics to be used for assessing progress toward such objectives. In addition, the strategic plan would describe how the program intends to allocate funding for interagency nanotechnology projects; encourage and support interdisciplinary research and development in nanotechnology; and support the engineering, scale-up, and commercialization of nanotechnology necessary to move results out of the laboratory and into applications. The federal multi-agency nanotechnology effort would be officially designated as the "National Nanotechnology Initiative." The Director of OSTP would be required to appoint the NNCO director to serve as a co-chair of the NSET Subcommittee of the NSTC. The National Nanotechnology Advisory Panel (currently PCAST, as designated by the President) would be required to conduct reviews at least once every four years. The NNCO would be required to engage the National Academy of Sciences in a review of the program every four years. The review is to include a review of the research priorities of the program, including whether the amount and allocation of funding among program component areas and nanotechnology signature initiatives is appropriate to accomplish the program's goals and objectives; an evaluation of the program's management and coordination across agencies and disciplines, including the effectiveness of the NNCO in providing technical and administrative support to the program; and an assessment of the program's success in transferring technology to the private sector and recommendations for improving technology demonstration, transfer, and commercialization. With respect to technology transfer, the NNCO director and NNI agencies would be encouraged to inform the public about the science, technology, and benefits of nanotechnology; and the commercial products enabled by nanotechnology. NNI agencies would be encouraged to provide access to federally owned or operated nanotechnology research centers or designated user facilities to a representative of industry, academia, or other potential user for the purpose of transferring research results; demonstrating models of nanoscale- or nanotechnology-enabled products or devices; or demonstrative processes for determining proof of concept. Agency heads would be authorized to reimburse the travel expenses of an employee of the agency who participates in the development of domestic and international standards for nanotechnology. The NNCO would serve as a central repository to collect, track, analyze, and report data regarding the impact of nanotechnology on the U.S. economy; publications concerning nanotechnology; patents relating to nanotechnology; educational activities relating to nanotechnology; and matters concerning the U.S. workforce and nanotechnology. The NSF in cooperation with the Secretary of Education and Secretary of Labor, working with the NNCO, would be required to evaluate the investments of the NNI in education and workforce training in a report to Congress. The Council, working with the NNCO director, would be required to periodically convene meetings for nanotechnology related centers, networks, and user facilities to share best practices regarding strategic planning, intellectual property management, outreach to industry; and technology demonstration, transfer, and commercialization. Congress also would express its sense that the NSTC should coordinate development by the NNI agencies of performance measures, targets, timeframes, cost estimates and available resources for nanotechnology environment, health, and safety research that align with the research needs of the NNI, consistent with the agencies' respective statutory authorities, and to provide the information in publicly available reports. H.R. 4159 (113 th Congress)—America Competes Reauthorization Act of 2014 (including Subtitle B, the National Nanotechnology Initiative Amendments Act of 2014) H.R. 4159 (113 th Congress), the America Competes Reauthorization Act of 2014, was introduced on March 6, 2014, and referred to the Committee on Science, Space, and Technology and the Committee on Higher Education and the Workforce. The National Nanotechnology Initiative Amendments Act of 2014 is included as Subtitle B of Title I of the bill. Among the provisions of the bill's nanotechnology subtitle: The National Science and Technology Council would be required to publish a strategic plan every three years to guide the activities of the NNI. The strategic plan is required to include near-term and long-term objectives for the NNI, the anticipated timeframe for achieving the near-term objectives, and the metrics to be used for assessing progress toward the objectives. Federal agencies would be directed to support nanotechnology standards development efforts. Funding for the National Nanotechnology Coordination Office would be provided by each NNI agency in proportion to its share of total NNI funding for the previous fiscal year; the director of the NNCO would be authorized to establish a minimum contribution level or other exception for agencies whose share of total funding is below a threshold level. The NNCO would be required to maintain (1) a publicly accessible database of NNI-funded environmental, health, and safety (EHS) activities (2) links to agency information on nanotechnology facilities that are accessible to individuals from academic institutions and industry. The National Nanotechnology Advisory Panel would be required to produce triennial reviews of the NNI, and to do so, to the extent practicable, in the year following each review by the National Research Council. The director of the NNCO would be required to enter into an arrangement with the National Research Council of the National Academies of Sciences to produce a triennial report on the NNI, including an evaluation of research priorities, technical content, scientific and technological accomplishments, success in technology transfer, and adequacy of the NNI's activities addressing ethical, legal, environmental, and other appropriate societal concerns, including human health. The Director of the President's Office of Science and Technology Policy would be required to designate a Coordinator for Environmental, Health, and Safety Research to provide oversight of coordination, planning, and budget prioritization of research and other activities related to nanotechnology EHS research. The coordinator would be required to develop and update a research plan triennially. NSET agencies would be encouraged to introduce nanoscale science, engineering, and technology into undergraduate science and engineering education by supporting the development of courses of instruction or modules to existing courses, faculty professional development, and acquisition of equipment and instrumentation suitable for undergraduate education and research in nanotechnology. These educational efforts would be coordinated by the NSET Subcommittee and the NSTC Committee on Science, Technology, Engineering, and Math Education (CoSTEM). Any nanotechnology educational activity supported under the NNI's Education and Societal Dimensions program component area would be required to include an educational component on the EHS aspects of nanotechnology. Agencies supporting nanotechnology research would be required to provide remote access to their facilities via the Internet by secondary school students and teachers. Agencies supporting nanotechnology research would be required to provide access to their nanotechnology research facilities to companies for the purpose of assisting the companies in the development of prototypes of nanoscale products, devices, or processes for determining proof-of-concept. The NNI would be directed to support Signature Initiatives—nanotechnology research and development activities directed toward application areas that have the potential for significant contributions to national economic competitiveness and for other significant societal benefits. The NNI would be directed to support nanomanufacturing research, including the development of instrumentation and tools required for the rapid characterization of nanoscale materials and for monitoring of nanoscale manufacturing processes, and approaches and techniques for scaling the synthesis of new nanoscale materials to achieve industrial-level production rates. Certain NNI centers would be directed to support "Green Manufacturing" activities, including research on methods and approaches to develop environmentally benign nanoscale products and nanoscale manufacturing processes, fostering the transfer of research results to industry, and providing for the education of scientists and engineers through interdisciplinary studies in the principles and techniques for the design and development of environmentally benign nanoscale products and processes. H.R. 2996 (113 th Congress) — Revitalize American Manufacturing and Innovation Act of 2014 H.R. 2996, the Revitalize American Manufacturing and Innovation Act of 2014, was introduced on August 2, 2014, reported by the House Committee on Science, Space, and Technology on September 15, 2014, and passed by the House by voice vote on September 15, 2014. The primary purpose of the bill is to establish a Network for Manufacturing Innovation Program. Centers with a nanotechnology focus would qualify under the bill as a "center for manufacturing innovation." H.R. 1385 (113 th Congress)—Safe Cosmetics and Personal Care Products Act of 2013 H.R. 1385, the Safe Cosmetics and Personal Care Products Act of 2013, was introduced on March 21, 2013, and referred to the Committee on Energy and Commerce and the Committee on Education and the Workforce. The nanotechnology-related provisions of this bill are essentially identical to those included in both H.R. 2359 (112 th Congress) and H.R. 5786 (111 th Congress). Among its provisions are several related to nanotechnology. Under the bill, the Secretary of HHS would be authorized to require that minerals and other particulate ingredients be labeled as "nano-scale" on a cosmetic ingredient label or list if not less than 1% of the ingredient particles in the cosmetic are 100 nanometers or smaller in not less than 1 dimension, and that other ingredients in a cosmetic be designated with scale-specific information on a cosmetic ingredient label or list if such ingredients possess scale-specific hazard properties. The bill would also require the Secretary of HHS to monitor developments in the scientific understanding of any adverse health effects related to the use of nanotechnology in the formulation of cosmetics and to consider scale specific hazard properties of ingredients when reviewing or evaluating the safety of cosmetics and ingredients. In addition, the bill would require manufacturers to submit to the Secretary a statement for each cosmetic that includes an ingredient list, including the particle size range of any nanoscale cosmetic ingredients. H.R. 394 (113 th Congress)—Nanotechnology Advancement and New Opportunities Act H.R. 394, the Nanotechnology Advancement and New Opportunities Act, was introduced on January 23, 2013, and subsequently referred to the House Committee on Science, Space, and Technology, and to the Committees on Energy and Commerce, Ways and Means, and Homeland Security. The purpose of the bill is to ensure the development and responsible stewardship of nanotechnology. The provisions of this bill are essentially identical to those in both H.R. 2749 (112 th Congress) and H.R. 820 (111 th Congress). The bill would establish a $100 million Nanomanufacturing Investment Partnership at the Department of Commerce to work with private investors to advance the commercialization of nanomanufacturing technologies and to increase the commercial application of federally supported research results; establish a 15% tax credit, taken over five years, for the purchase of up to $10 million of stock in qualified nanotechnology companies; establish a grant program within the DOC to support the establishment and development of nanotechnology incubators by non-profit entities and degree-granting institutions; require the NNCO Director to prepare a report to Congress on a nanotechnology research strategy for government and industry that will ensure the development and responsible stewardship of nanotechnology; provide a tax credit of 50% for nanotechnology education and training expenses for businesses and individuals; authorize an annual appropriation of $15 million for FY2012 through FY2015 for the NSF to conduct a grant program for the development of curriculum materials for interdisciplinary nanotechnology courses at institutions of higher education; direct the NSF to establish, through its Advanced Technological Education program, a program to encourage manufacturing companies to enter into partnerships with occupational training centers for the development of training to support nanomanufacturing; and direct the Secretary of Energy to submit a report to Congress containing a strategy for increasing interaction among scientists and engineers at DOE national laboratories and the informal science education community to prepare appropriate exhibits for school age children and the general public. In addition, the bill would have amended the 21 st Century Nanotechnology Research and Development Act of 2003 to authorize $10 million for NSF to establish a center for the development of computer-aided design tools for nanotechnology applications; authorize an annual appropriation of $30 million for the Department of Energy to conduct a grant program for nanotechnology research to address the need for "clean, cheap, renewable energy"; authorize an annual appropriation of $30 million for the Environmental Protection Agency for a grant program for nanotechnology research to address technologies for the remediation of pollution and other environmental protection technologies; authorize an annual appropriation of $30 million for the Department of Homeland Security to conduct a grant program for nanotechnology research to address the need for sensors and materials related to homeland security needs; and authorize an annual appropriation of $30 million for the Department of Health and Human Services to conduct a grant program for nanotechnology research to address health-related applications. S. 3187 / P.L. 112-144 (112 th Congress)—Food and Drug Administration Safety and Innovation Act S. 3187, the Food and Drug Administration Safety and Innovation Act, was introduced May 15, 2012, and became law (P.L. 112-144) on July 9, 2012. Among its provisions, P.L. 112-144 directs the Secretary of Health and Human Services to intensify and expand activities related to enhancing scientific knowledge regarding nanomaterials included or intended for inclusion in products regulated under the Federal Food, Drug, and Cosmetic Act or other statutes administered by the Food and Drug Administration, to address issues relevant to the regulation of those products, including the potential toxicology of such nanomaterials, the potential benefit of new therapies derived from nanotechnology, the effects of such nanomaterials on biological systems, and the interaction of such nanomaterials with biological systems. In this regard, the HHS Secretary is authorized to (1) assess scientific literature and data on general nanomaterials interactions with biological systems and on specific nanomaterials of concern to the Food and Drug Administration; (2) in cooperation with other federal agencies, develop and organize information using databases and models that will facilitate the identification of generalized principles characteristics regarding the behavior of classes of nanomaterials with biological systems; (3) promote Food and Drug Administration programs and participate in collaborative efforts, to further the understanding of the science of novel properties of nanomaterials that might contribute to toxicity; (4) promote and participate in collaborative efforts to further the understanding of measurement and detection methods for nanomaterials; (5) collect, synthesize, interpret, and disseminate scientific information and data related to the interactions of nanomaterials with biological systems; (6) build scientific expertise on nanomaterials within the Food and Drug Administration, including field and laboratory expertise, for monitoring the production and presence of nanomaterials in domestic and imported products regulated under this act; (7) ensure ongoing training, as well as dissemination of new information within the centers of the Food and Drug Administration, and more broadly across the Food and Drug Administration, to ensure timely, informed consideration of the most current science pertaining to nanomaterials; (8) encourage the Food and Drug Administration to participate in international and national consensus standards activities pertaining to nanomaterials; and (9) carry out other activities that the Secretary determines are necessary and consistent with the purposes described in paragraphs (1) through (8). S. 1662 (112 th Congress) —Nanotechnology Regulatory Science Act of 2011 S. 1662 , the Nanotechnology Regulatory Science Act of 2011 , was introduced on October 6, 2011, and referred to the Senate Committee on Health, Education, Labor, and Pensions . The bill would have amended the Federal Food, Drug, and Cosmetic Act (FFDCA) to require the Secretary of Health and Human Services to establish within the Food and Drug Administration a program for the scientific investigation of nanomaterials included or intended for inclusion in products regulated under the FFDCA to address the potential toxicology of such materials; the effects of such materials on biological systems; and the interaction of such materials with biological systems. H.R. 2749 (112 th Congress) — Nanotechnology Advancement and New Opportunities Act H.R. 820 (111 th Congress), the Nanotechnology Advancement and New Opportunities Act, was introduced on February 3, 2009, and referred to four House committees: the Committee on Science and Technology, the Committee on Energy and Commerce, the Committee on Ways and Means, and the Committee on Homeland Security. The purpose of the bill was to ensure the development and responsible stewardship of nanotechnology. The provisions of this bill are essentially identical to those of H.R. 394, introduced in the 113 th Congress (described above). H.R. 2359 (112 th Congress) — Safe Cosmetics Act of 2011 H.R. 2359, the Safe Cosmetics Act of 2011, was introduced on June 24, 2011, and referred to two House committees: the Committee on Energy and Commerce and the Committee on Education and the Workforce. The nanotechnology-related provisions of this bill are essentially identical to those of H.R. 1385, introduced in the 113 th Congress (described above). S. 1867 (112 th Congress)—National Defense Authorization Act for Fiscal Year 2012 S. 1867, the National Defense Authorization Act for Fiscal Year 2012, was introduced on November 11, 2011, and passed by the Senate on December 1, 2011. Section 5501 of the bill would have expanded the research topics given special consideration under the SBIR and STTR programs to include rare diseases, security, energy, transportation, or improving the security and quality of the water supply of the United States, and the efficiency of water delivery systems and usage patterns in the United States (including the territories of the United States) through the use of technology (to the extent that the projects relate to the mission of the federal agency), broad research topics, and topics that further one or more critical technologies or research priorities; research topics identified in the NNI's strategic plan (required under Section 2(c)(4) of the 21 st Century Nanotechnology Research and Development Act); and in any report of the National Science and Technology Committee's Committee on Technology focused on areas of nanotechnology identified in the strategic plan. S. 493 (112 th Congress) —SBIR/S TTR Reauthorization Act of 2011 S. 493, the SBIR/STTR Reauthorization Act of 2011, was introduced in the Senate on March 4, 2011, and referred to the Committee on Small Business and Entrepreneurship. The bill was reported with amendments but without a written report on March 9, 2011. On May 4, 2011, a cloture motion on the bill failed. As part of the larger purpose of reauthorizing the SBIR and STTR programs, S. 493 would have required agencies with SBIR and STTR programs to give consideration to research topics identified in the NSET Subcommittee's national nanotechnology strategic plan mandated by P.L. 108-153 and related documents, and to give special priority to applications for the support of projects related to nanotechnology and other specified fields of application. Section 501 (Research Topics and Program Diversification) of S. 493, which contained the nanotechnology related provisions, was incorporated in its entirety in S. 1867, the National Defense Authorization Act for Fiscal Year 2012. This bill was passed by the Senate, but the provision was not included in the final enacted version of the House bill (P.L. 112-81). Title I, Subtitle A, H.R. 5116 (111 th Congress) —National Nanotechnology Initiative Amendments Act of 20 10 The provisions of Title I, Subtitle A of H.R. 5116 (111 th Congress), the National Nanotechnology Initiative Amendments Act of 2010, were nearly identical to H.R. 554 (111 th Congress) (see " H.R. 554 (111 th Congress) —National Nanotechnology Initiative Amendments Act of 2009 " below). H.R. 5116 changed the name of the act from the "National Nanotechnology Initiative Amendments Act of 2009," to "National Nanotechnology Initiative Amendments Act of 2010," and removed the term "interdisciplinary" from a provision establishing "green nanotechnology" research centers. The Senate removed this title before the bill was enacted. H.R. 554 (111 th Congress)—National Nanotechnology Initiative Amendments Act of 2009 H.R. 554 (111 th Congress), the National Nanotechnology Initiative Amendments Act of 2009, was introduced on January 15, 2009, and passed by the House of Representatives on February 11, 2009. The bill was referred to the Senate Commerce, Science, and Transportation Committee on February 12, 2009. The purpose of the bill was to authorize activities for support of nanotechnology R&D and for other purposes. Among its provisions, the bill would have amended the 21 st Century Nanotechnology Research and Development Act of 2003 to require the NSTC triennial strategic plan to include near-term and long-term objectives, the anticipated timeframe for achieving near-term objectives, and metrics for assessing progress; cooperative and collaborative activities in R&D and technology transition supported by the states; and proposed research in areas of national priority; require the NSTC annual nanotechnology report supplementing the President's budget request to include a breakout of spending for the development and acquisition of research facilities and instrumentation for each program component area, and a breakout of spending on all activities related to ethical, legal, environmental, and societal implications; direct NNP agencies to support the activities of committees involved in the development of standards for nanotechnology and allow agencies to reimburse the travel costs of scientists and engineers who participate in activities of such committees; direct the agencies to fund the National Nanotechnology Coordination Office, and to do so in proportion to each agency's share of the previous year's NNP budget; require the NNCO to develop and maintain a publicly accessible database of projects funded under the Environmental, Health, and Safety, the Education and Societal Dimensions, and the Nanomanufacturing program component areas; require the NNCO to develop, maintain, and publicize information on nanotechnology facilities supported by the NNP, including at a minimum the terms and conditions for the use of each facility, a description of the capabilities of the instruments and equipment available for use at the facility, and a description of the technical support available to assist users of the facility; require the establishment of a National Nanotechnology Advisory Panel (NNAP) "as a distinct entity." Currently, under the provisions of presidential Executive Order 13349, the President's Council of Advisors on Science and Technology serves as the NNAP; direct the NNCO to enter into an arrangement with the National Research Council to conduct a triennial review of the NNP, and authorizes funds for FY2010, FY2011, and FY2012; and define nanotechnology as "the science and technology that will enable one to understand, measure, manipulate, and manufacture at the nanoscale, aimed at creating materials, devices, and systems with fundamentally new properties or functions," and define nanoscale as "one or more dimensions of between approximately 1 and 100 nanometers." In addition, the bill would have required the designation of a White House Office of Science and Technology Policy associate director to serve as the "Coordinator for Societal Dimensions of Nanotechnology" and would charge the coordinator with convening and chairing a panel of federal agency representatives and others to develop, maintain, implement, and monitor an annual EHS research plan that includes, among other things, standards related to nanotechnology nomenclature; standards for methods and procedures for detecting, measuring, monitoring, sampling, and testing engineered nanoscale materials for environmental, health, and safety impacts; and standard reference materials for EHS testing; required the National Science Foundation to provide grants to establish Nanotechnology Education Partnerships to recruit and help prepare secondary school students to pursue postsecondary level courses of instruction in nanotechnology; directed the NSTC to establish an Education Working Group under the NSET Subcommittee to coordinate, prioritize, and plan NNP educational activities; directed certain NNP agencies to provide companies access to their supported facilities to assist in the development of prototypes of nanoscale products, devices, or processes for determining proof of concept; directed NNP agencies to encourage nanotechnology-related submissions to their Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs; directed NIST to encourage nanotechnology-related submissions to its Technology Innovation Program (TIP), and directs the TIP advisory Board to provide advice to NIST to accomplish this, and to provide an assessment of the adequacy of TIP resources allocated to nanotechnology related projects; directed the NSTC to actively pursue industry liaison groups for all industries; directed the NNP to coordinate and leverage federal investments with nanotechnology research, development, and technology transition initiatives supported by the States; directed the NNP to support nanotechnology R&D activities directed toward application areas that have the potential for significant contributions to national economic competitiveness and for other significant societal benefits, such as nano-electronics, energy efficiency, health care, and water remediation and purification; directed the NNP to support research on the development of instrumentation and tools required for the rapid characterization of nanoscale materials and for monitoring of nanoscale manufacturing processes, and to support approaches and techniques for scaling the synthesis of new nanoscale materials to achieve industrial-level production rates; and directed certain NNP-supported interdisciplinary research centers to support research on methods and approaches to environmentally benign nanoscale products and nanoscale manufacturing processes, as well as related technology transfer and education activities. S. 1482 (111 th Congress)—National Nanotechnology Amendments Act of 2009 S. 1482 (111 th Congress), the National Nanotechnology Amendments Act of 2009, was introduced on July 21, 2009, and referred to the Senate Commerce, Science, and Transportation Committee. The purpose of the bill was to reauthorize the 21 st Century Nanotechnology Research and Development Act and to expand the scope of the N ational Nanotechnology Program (NNP). Among its provisions, the bill would have required the NNP to solicit and draw upon the perspectives of the industrial community to promote the rapid commercial development of nanoscale-enabled devices, systems, and technologies and to coordinate research in determining the key physical and chemical characteristics of nanoparticles and nanomaterials that may pose environm ental, health, and safety risks; r equire d the NNCO and other appropriate agencies and councils to issue guidance to agencies that describes a strategy for transitioning research into commercial products and technologies and how the program will coordinate or conduct research on the environmental, health, and safety issues related to nanotechnology; required the NSTC triennial strategic plan to include near-term and long-term objectives, the anticipated timeframe for achieving near-term objectives, and metrics for assessing progress; cooperative and collaborative activities in R&D and technology transition supported by the states; how the NNP intends to encourage and support interdisciplinary research; and proposed research in areas of national priority; encouraged joint interagency solicitation of grant applications in high priority, multi-disciplinary research areas; r equire d participating agencies to support the activities of the committees of standards setting bodies involved in the development of standards for nanotechnology;require d each participating agency to provide funds to support the work of the NNCO. Authorizes appropriations to (1) NIST for the development of nanotechnology standards; and (2) NSF, for use by the NNCO, to develop and maintain a public information database of NNP projects in EHS; education; public outreach; ethical, legal, and other societal issues; and of nanotechnology facilities accessible for use by individuals from academia and industry;ma de the National Nanotechnology Advisory Panel (NNAP) a distinct entity, and requires the NNAP to establish a subpanel to enable it to assess whether societal, ethical, legal, environmental, and workforce concerns are adequately addressed by the NNP ; r evise d provisions for triennial external review of the NNP ; required the designation of a "coordinator for societal dimensions of nanotechnology," within OSTP, to convene a panel to develop a research plan, and requires the coordinator to enter into an arrangement with the National Science Board to create a report that identifies the broad goals and needs of EHS researchers;d irected the NSTC to establish an interagency Education Working Group to coordinate, prioritize, and plan formal and informal educational activities supported under the NNP , including activities to help participants understand the EHS implications of nanotechnology ;provide d for one or more grants to establish Nanotechnology Education Partnerships to recruit and help prepare secondary school students to pursue postsecondary l evel courses in nanotechnology;r equire d agencies supporting nanotechnology research facilities to provide access to representatives from industry and other stakeholders for the transfer of research results or assist in developing proof-of-concept prototypes of nanoscale p roducts, devices, or processes;directed NIST, in its Technology Innovation Program, and all agencies with Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, to encourage the submission of nanotechnology related grant proposals; set, for the NNP, the objective of establishing industry liaison group s for all industry sectors that would benefit from nanotechnology applications;r equire d coordination and leveraging of federal investments with nanotechnology research, development, and tec hnology transition initiatives supported by state governments;required the NNP to support nanotechnology R&D in areas of national importance (e.g., economic competitiveness, energy production, water purification , agriculture, and health care; in environment al , health, and safety research on the risks of nanoparticles ) and in ethical, legal, and societal is sues related to nanotechnology;required the NNP to support a wide array of research in support of nanomanufacturing ;required the director of the NNCO to review and report on nanomanufacturing research and research facilities;required an NNAP review of the nanomanufacturing program com ponent area and the capabilities of nanotechnology research facilities supported by the NNP;set forth provisions regarding NNP nanoscale characterization and metrology research; andr equire d deliberative public input in the decision making processes affecting policies for the research, develop ment, and use of nanotechnology, and authorizes $2.0 million for the NNCO to carry out this responsibility. S. 596 (111 th Congress)—Nanotechnology Innovation and Prize Competition Act of 2009 S. 596 (111 th Congress) , the Nanotechnology Innovation and Prize Competition Act of 2009, was introduced on March 16, 2009, and referred to the Senate Commerce, Science, and Transportation Committee. The purpose of the bill was to establish an award program to honor achievements in nanotechnology. Under the bill, the Department of Commerce's National Institute of Standards and Technology is directed to award prizes to individuals and companies for achievement in one or more of the following areas: improvement of the environment, consistent with EPA's Twelve Principles of Green Chemistry; development of alternative energy that has the potential to lessen the dependence of the United States on fossil fuels; and/or improvement of human health, consistent with regulations promulgated by the FDA. The bill would have authorized financial prizes for being the first to achieve a specific criteria, as well as recognition prizes, made as part of the previously established National Technology and Innovation Medal award program. The bill would have authorized $2 million annually for the financial prizes as well as $750,000 annually for administration of the prize competitions. H.R. 820 (111 th Congress)— Nanotechnology Advancement and New Opportunities Act H.R. 820 (111 th Congress), the Nanotechnology Advancement and New Opportunities Act, was introduced on February 3, 2009, and referred to four House committees: the Committee on Science and Technology, the Committee on Energy and Commerce, the Committee on Ways and Means, and the Committee on Homeland Security. The purpose of the bill was to ensure the development and responsible stewardship of nanotechnology. The provisions of this bill are essentially identical to those of H.R. 394, introduced in the 113 th Congress (described above). H.R. 2647 (111 th Congress) — National Defense Authorization Act for Fiscal Year 2010 Section 242 of the National Defense Authorization Act for Fiscal Year 2010 (H.R. 2647, P.L. 111-84) amends the Department of Defense's nanotechnology reporting responsibilities to align with those required of other agencies under the 21 st Century Nanotechnology Research and Development Act (P.L. 108-153). H.R. 2647 was signed into law on October 28, 2009. S. 3117 (111 th Congress)—Promote Nanotechnology in Schools Act S. 3117 (111 th Congress), the Promote Nanotechnology in Schools Act, was introduced on March 15, 2010, and referred to the Senate Committee on Health, Education, Labor, and Pensions. The purpose of the bill was to strengthen the capacity of eligible institutions (i.e., secondary schools, community colleges, two-year and four-year institutions of higher education, and informal learning science centers) to provide instruction in nanotechnology. The bill would have authorized a program at the National Science Foundation for this purpose that would offer eligible institutions grants of up to $400,000 (subject to a 25% match from non-federal sources) to assist in the purchase and maintenance of nanotechnology equipment and software, to develop and provide educational services, and to support teacher education and certification. The bill would have authorized $15 million for FY2010 and "such sums as may be necessary" for FY2011 through FY2013. H.R. 4502 (111 th Congress) —Nanotechnology Education Act H.R. 4502 (111 th Congress), the Nanotechnology Education Act, was introduced on February 19, 2010, and referred to the House Committee on Science and Technology's Subcommittee on Research and Science Education. The purpose of the bill was to strengthen the capacity of eligible institutions (i.e., secondary schools, community colleges, four-year institutions of higher education, and informal learning science centers) to provide instruction in nanotechnology. The bill would have authorized a program for this purpose at the National Science Foundation that would offer eligible institutions grants of up to $400,000 (subject to a 25% match from non-federal sources) to assist in the purchase and maintenance of nanotechnology equipment and software, to develop and provide educational services, and to support teacher education and certification. The bill would have authorized $40 million for FY2011 and "such sums as may be necessary" for FY2012 through FY2014. S. 2942 (111 th Congress) —Nanotechnology Safety Act of 2010 S. 2942 (111 th Congress), the Nanotechnology Safety Act of 2010, was introduced on January 21, 2010, and referred to the Senate Committee on Health, Education, Labor, and Pensions. The bill would have required the Secretary of Health and Human Services to establish within 180 days a program for the scientific investigation of nanoscale materials included or intended for inclusion in FDA-regulated products, to address the potential toxicology of such materials, the effects of such materials on biological systems, and interaction of such materials with biological systems. The bill would have authorized $25 million per year for fiscal years 2011 to 2015. H.R. 5786 (111 th Congress) — Safe Cosmetics Act of 2010 H.R. 5786 (111 th Congress), the Safe Cosmetics Act of 2010, was introduced on July 20, 2010, and referred to the House Committee on Energy and Commerce and the House Committee on Education and Labor. The nanotechnology-related provisions of this bill are essentially identical to those of H.R. 1385, introduced in the 113 th Congress (described above). Description of Program Component Areas In Use from FY2006 to FY2013 Fundamental Phenomena and Processes Fundamental Phenomena and Processes includes investments in the discovery and development of fundamental knowledge pertaining to the new phenomena in the physical, biological, and engineering sciences that occur at the nanoscale, as well as in understanding and articulation of scientific and engineering principles related to nanoscale structures, processes, and mechanisms. Nanomaterials Nanomaterials includes research investments to discover novel nanoscale and nanostructured materials. This PCA also attempts to understand the properties of nanomaterials, and supports R&D to enable the design and synthesis, in a controlled manner, of nanoscale materials with targeted properties. Nanoscale Devices and Systems Nanoscale Devices and Systems includes R&D investments that apply nanoscale science and engineering principles to create novel devices and systems or to improve existing ones. It also includes the use of nanoscale or nanostructured materials to achieve improved performance or new functionality. To meet this definition, the enabling science and technology must be at the nanoscale, but the systems and devices are not restricted to that size. Instrumentation Research, Metrology, and Standards Instrumentation Research, Metrology, and Standards includes R&D investments for development of tools needed to advance nanotechnology research and commercialization. Instrumentation for characterization, measurement, synthesis, and design of nanotechnology materials, structures, devices, and systems is funded through this PCA. R&D and other activities related to development of standards, including standards for nomenclature, materials, characterization, testing, and manufacture, are also in this PCA. Nanomanufacturing Nanomanufacturing R&D supports the development of scalable, reliable, cost-effective manufacturing of nanoscale materials, structures, devices, and systems. It also includes R&D and integration of ultra-miniaturized top-down processes and complex bottom-up processes. Major Research Facilities and Instrumentation Acquisition Major Research Facilities and Instrumentation Acquisition includes investments in the establishment and ongoing operations of user facilities and networks, the acquisition of major instrumentation, and other activities related to infrastructure for the conduct of nanoscale science, engineering, and technology R&D. Societal Dimensions Under the 2007 NNI Strategic Plan, the Societal Dimensions PCA was divided into two separate PCAs: Environment, Health, and Safety, and Education and Societal Dimensions. Environment, Health, and Safety Environment, Health, and Safety addresses research primarily directed at understanding the environmental, health, and safety impacts of nanotechnology development and corresponding risk assessment, risk management, and methods for risk mitigation. Education and Societal Dimensions Education and Societal Dimensions addresses education-related activities such as development of materials for schools, undergraduate programs, technical training, and public communication, including outreach and engagement. Such activities include research directed at identifying and quantifying the broad implications of nanotechnology for society, including social, economic, workforce, educational, ethical, and legal implications. Selected Reports on the National Nanotechnology Initiative Reports of the Nanoscale Science, Engineering, and Technology Subcommittee of the National Science and Technology Council A Progress Review of the NNI Nanotechnology Signature Initiatives: Executive Summary , November 2015, http://www.nano.gov/sites/default/files/pub_resource/20151110_nsi_status_report_executive_summary_final_v2_mm.pdf Workshop Report: Sensor Fabrication, Integration, and Commercialization , June 19, 2015, http://www.nano.gov/sites/default/files/pub_resource/nnisensorsworkshopreport.pdf Workshop Report: Stakeholder Perspectives on Perception, Assessment, and Management of the Potential Risks of Nanotechnology, March 20, 2015, http://www.nano.gov/sites/default/files/pub_resource/2013_nni_r3_workshop_report.pdf Technical Interchange Proceedings: Realizing the Promise of Carbon Nanotubes: Challenges, Opportunities, and the Pathway to Commercialization, March 12, 2015, http://www.nano.gov/sites/default/files/pub_resource/2014_nni_cnt_tech_meeting_report.pdf The National Nanotechnology Initiative: Supplement to the President's FY201 6 Budget , March 2015, http://www.nano.gov/sites/default/files/pub_resource/nni_fy16_budget_supplement.pdf Workshop Proceedings— U.S.-EU: Bridging NanoEHS Research Efforts Joint Workshop, February 6, 2015, http://www.nano.gov/sites/default/files/pub_resource/2013_us-eunanoehsworkshopsummaryfinal.pdf Workshop Report: Cellulose Nanomaterials: A Path Towards Commercialization , August 1, 2014, http://www.fpl.fs.fed.us/documnts/pdf2014/usforestservice_nih_2014_cellulose_nano_workshop_report.pdf Progress Review on the Coordinated Implementation of the 2011 NNI Environmental, Health, and Safety Research Strategy, June 25, 2014. http://www.nano.gov/sites/default/files/pub_resource/2014_nni_ehs_progress_review.pdf The National Nanotechnology Initiative: Supplement to the President's FY201 5 Budget , March 2014. http://nano.gov/sites/default/files/pub_resource/nni_fy15_budget_supplement.pdf National Nanotechnology Initiative Strategic Plan, February 2014. http://nano.gov/sites/default/files/pub_resource/2014_nni_strategic_plan.pdf Regional, State, and Local Initiatives in Nanotechnology: Report of the National Nanotechnology Initiative Workshop , May 17, 2013. http://nano.gov/sites/default/files/pub_resource/nni_rsl_2012_rpt_0.pdf The National Nanotechnology Initiative: Research and Development Leading to a Revolution in Technology and Industry, Supplement to the President's FY2014 Budget , May 14, 2013. http://www.nano.gov/sites/default/files/pub_resource/nni_fy14_budget_supplement.pdf Nanotechnology Knowledge Infrastructure (NKI): Enabling National Leadership in Sustainable Design , white paper, discussion draft, May 9, 2013. http://nano.gov/sites/default/files/pub_resource/nki_data_readiness_levels_draft_discussion_doc_for_web.pdf Bridging NanoEHS Research Efforts: A Joint U.S.–EU Workshop, workshop proceedings, October 2012. http://nano.gov/sites/default/files/pub_resource/2011_us-eu_workshop_proceedings_-_final_locked.pdf Nanotechnology for Sensors and Sensors for Nanotechnology: Improving and Protecting Health, Safety, and the Environment , white paper, July 2012. http://nano.gov/sites/default/files/pub_resource/sensors_nsi_2012_07_09_final_for_web.pdf Nanotechnology Knowledge Infrastructure (NKI):Enabling National Leadership in Sustainable Design , white paper, May 14, 2012. http://nano.gov/sites/default/files/pub_resource/nki_nsi_white_paper_-_final_for_web.pdf Public Participation in Nanotechnology, Report of the National Nanote chnology Initiative Workshop , April 17, 2012. http://nano.gov/sites/default/files/pub_resource/nni_public_participation_ws_report.pdf The National Nanotechnology Initiative: Research and Development Leading to a Revolution in Technology and Industry, Supplement to the President's FY2013 Budget , February 2012. http://nano.gov/sites/default/files/pub_resource/nni_2013_budget_supplement.pdf Environmental, Health, and Safety Research Strategy , October 2011. http://nano.gov/sites/default/files/pub_resource/nni_2011_ehs_research_strategy.pdf Policy Principles for the U.S. Decision-Making Concerning Regulation and Oversight of Applications of Nanotechnology and Nanomaterials , June 2011. http://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/nanotechnology-regulation-and-oversight-principles.pdf The National Nanotechnology Initiative: Research and Development Leading to a Revolution in Technology and Industry, Supplement to the President's FY2012 Budget , March 2011. http://nano.gov/sites/default/files/pub_resource/nni_2012_budget_supplement.pdf Regional, State, and Local Initiatives in Nanotechnology: Report of the National Nanotechnology Initiative Workshop , February 2011. http://nano.gov/sites/default/files/pub_resource/nni_2012_budget_supplement.pdf National Nanotechnology Initiative Strategic Plan , February 2011. http://nano.gov/sites/default/files/pub_resource/2011_strategic_plan.pdf National Nanotechnology Initiative Signature Initiative: Nanotechnology for Solar Energy Collection and Conversion , July 2010. http://nano.gov/sites/default/files/pub_resource/nnisiginitsolarenergyfinaljuly2010.pdf National Nanotechnology Initiative Signature Initiative: Sustainable Nanomanufacturing – Creating the Industries of the Future , July 2010. http://nano.gov/sites/default/files/pub_resource/nni_siginit_sustainable_mfr_revised_nov_2011.pdf National Nanotechnology Initiative Signature Initiative: Nanoelectronics for 2020 and Beyond, July 2010. http://nano.gov/sites/default/files/pub_resource/nni_siginit_nanoelectronics_jul_2010.pdf nanoEHS Series: Risk Management Methods & Ethical, Legal, and Societal Implications of Nanotechnology: Report of the National Nanotechnology Initiative Workshop , March 2010. Communicating Risk in the 21 st Century: The Case of Nanotechnology, February 2010. http://nano.gov/sites/default/files/pub_resource/berube_risk_white_paper_feb_2010.pdf The National Nanotechnology Initiative: Research and Development Leading to a Revolution in Technology and Industry, Supplement to the President's FY2011 Budget , February 2010. http://nano.gov/sites/default/files/pub_resource/nni_2011_budget_supplement.pdf nanoEHS Series: Nanomaterials and Human Health & Instrumentation, Metrology, and Analytical Methods: Report of the National Nanotechnology Initiative Workshop , November 2009. http://nano.gov/sites/default/files/pub_resource/nanoandhumanhealthandinstrumentation.pdf The National Nanotechnology Initiative: Research and Development Leading to a Revolution in Technology and Industry, Supplement to the President's FY2010 Budget , May 2009. http://nano.gov/sites/default/files/pub_resource/nni_2010_budget_supplement.pdf Nanotechnology-Enabled Sensing, Report of the National Nanotechnology Initiative Workshop , May 2009. http://nano.gov/sites/default/files/NNI-Nanosensors-stdres.pdf nanoEHS Series: Human and Environmental Exposure Assessment Workshop Materials , February 2009. http://nano.gov/node/122 The National Nanotechnology Initiative: Research and Development Leading to a Revolution in Technology and Industry, Supplement to the President's FY2009 Budget , September 2008. http://nano.gov/sites/default/files/pub_resource/nni_09budget.pdf Strategy for Nanotechnology-Related Environmental, Health, and Safety Research , February 2008. http://nano.gov/sites/default/files/pub_resource/nni_ehs_research_strategy.pdf The National Nanotechnology Initiative Strategic Plan , December 2007. http://nano.gov/sites/default/files/pub_resource/nni_strategic_plan_2007.pdf Prioritization of Environmental, Health, and Safety Research Needs for Engineered Nanoscale Materials , August 2007. http://nano.gov/sites/default/files/pub_resource/prioritization_ehs_research_needs_engineered_nanoscale_materials.pdf The National Nanotechnology Initiative: Research and Development Leading to a Revolution in Technology and Industry, Supplement to the President's FY2008 Budget , July 2007. http://nano.gov/sites/default/files/pub_resource/nni_08budget.pdf Manufacturing at the Nanoscale: Report of the National Nanotechnology Initiative Workshop , January 2007. http://nano.gov/sites/default/files/pub_resource/manufacturing_at_the_nanoscale.pdf The National Nanotechnology Initiative: Environmental, Health, and Safety Research Needs for Engineered Nanoscale Materials , September 2006. http://nano.gov/sites/default/files/pub_resource/nni_ehs_research_needs.pdf The National Nanotechnology Initiative: Research and Development Leading to a Revolution in Technology and Industry, Supplement to the President's FY2007 Budget , July 2006. http://nano.gov/sites/default/files/pub_resource/nni_07budget.pdf The National Nanotechnology Initiative: Research and Development Leading to a Revolution in Technology and Industry, Supplement to the President's FY2006 Budget , March 2005. http://nano.gov/sites/default/files/pub_resource/nni_06budget.pdf The National Nanotechnology Initiative Strategic Plan , December 2004. Research Directions II: Long-Term Research and Development Opportunities in Nanotechnology, Report of the National Nanotechnology Initiative Workshop , September 2004. http://nano.gov/sites/default/files/pub_resource/research_directionsii.pdf Nanotechnology in Space Exploration , August 2004. http://nano.gov/sites/default/files/pub_resource/space_exploration_rpt_0.pdf Nanoscience Research for Energy Needs: Report of the National Nanotechnology Initiative Grand Challenge Workshop , March 2004. http://nano.gov/sites/default/files/nni_energy_rpt.pdf Nanoelectronics, Nanophotonics, & Nanomagnetics: Report of the National Nanotechnology Initiative Workshop , February 2004. http://nano.gov/sites/default/files/pub_resource/nni_electronic_photonics_m.pdf Instrumentation and Metrology for Nanotechnology: Report of the National Nanotechnology Initiative Workshop , January 2004. http://nano.gov/sites/default/files/pub_resource/nni_instrumentation_metrology_rpt.pdf Nanotechnology: Societal Implications-Maximizing Benefits for Humanity: Report of the National Nanotechnology Initiative Workshop , December 2003. http://nano.gov/sites/default/files/nni_societal_implications.pdf Nanobiotechnology: Report of the National Nanotechnology Initiative Workshop, October 2003 . http://nano.gov/sites/default/files/pub_resource/nni_nanobiotechnology_rpt.pdf Regional, State, and Local Initiatives in Nanotechnolog y, September-October 2003. [No URL available.] National Nanotechnology Initiative: Research and Development Supporting the Next Industrial Revolution, Supplement to the President's FY2004 Budget . August 2003. http://nano.gov/sites/default/files/pub_resource/nni04_budget_supplement.pdf Materials by Design: Report of the National Nanotechnology Initiative Workshop, June 2003. http://nano.gov/sites/default/files/pub_resource/nni_materials_by_design.pdf Nanotechnology and the Environment: Report of the National Nanotechnology Initiative Workshop, May 2003. http://nano.gov/sites/default/files/pub_resource/nanotechnology_and_the_environment_app_imp.pdf National Nanotechnology Initiative: The Initiative and Its Implementation Plan, Detailed Technical Report Associated with the Supplemental Report to the President's FY2003 Budget , June 2002. Societal Implications of Nanoscience and Nanotechnology , March 2001. http://www.wtec.org/loyola/nano/NSET.Societal.Implications/report-grayscale.pdf National Nanotechnology Initiative: The Initiative and Its Implementation Plan, Detailed Technical Report Associated with the Supplemental Report to the President's FY2001 Budget , July 2000. http://nano.gov/sites/default/files/pub_resource/nni_implementation_plan_2000.pdf Report of the Interagency Working Group on Nanoscience, Technology, and Engineering (NSET Subcommittee Predecessor) Nanotechnology Research Directions, IWGN Workshop Report , September 1999. http://nano.gov/sites/default/files/pub_resource/research_directions_1999.pdf Nanotechnology: Shaping the World Atom by Atom, 1999. http://www.wtec.org/loyola/nano/IWGN.Public.Brochure/IWGN.Nanotechnology.Brochure.pdf Agency Reports Defense Nanotechnology Research and Development Program , Office of the Director of Defense Research and Engineering, Department of Defense, December 2009. http://nano.gov/sites/default/files/pub_resource/dod-report_to_congress_final_1mar10.pdf Current Intelligence Bulletin 60: Interim Guidance for Medical Screening and Hazard Surveillance for Workers Potentially Exposed to Engineered Nanoparticles , National Institute for Occupational Safety and Health, Centers for Disease Control and Prevention, Department of Health and Human Services. February 2009. http://www.cdc.gov/niosh/docs/2009-116/pdfs/2009-116.pdf Progress Toward Safe Nanotechnology in the Workplace : A Report from the NIOSH Nan o technology Research Center , National Institute for Occupational Safety and Health, Centers for Disease Control and Prevention, Department of Health and Human Services, June 2007. http://www.cdc.gov/niosh/docs/2010-104/pdfs/2010-104.pdf Approaches to Safe Nanotechnology in the Workplace : Managing the Health and Safety Concerns Associated with Engineering Nanomaterials, National Institute for Occupational Safety and Health, Centers for Disease Control and Prevention, Department of Health and Human Services , March 2009. External Reviews Report to the President and Congress on the Fifth Assessment of the National Nanotechnology Initiative , PCAST (acting as the NNAP), October 2014. http://www.whitehouse.gov/sites/default/files/microsites/ostp/PCAST/pcast_fifth_nni_review_oct2014_final.pdf GAO Nanomanufacturing: Emergence and Implications for U.S. Competitiveness, the Environment, and Human Health, January 2014. http://www.gao.gov/assets/670/660591.pdf Triennial Review of the National Nanotechnology Initiative , NRC, September 2013. http://www.nap.edu/catalog/18271/triennial-review-of-the-national-nanotechnology-initiative A Research Strategy for Environmental, Health, and Safety Aspects of Engineered Nanomaterials , NRC, 2012, http://www.nap.edu/catalog.php?record_id=13347 Report to the President and Congress on the Fourth Assessment of the National Nanotechnology Initiative , PCAST (acting as the NNAP), April 2012. http://www.whitehouse.gov/sites/default/files/microsites/ostp/PCAST_2012_Nanotechnology_FINAL.pdf Review of Federal Strategy for Nanotechnology-Related Environmental, Health, and Safety Research , Committee for Review of the Federal Strategy to Address Environmental, Health, and Safety Research Needs for Engineered Nanoscale Materials, Committee on Toxicology, NRC, 2009. http://www.nap.edu/catalog.php?record_id=12559#toc Report to the President and Congress on the Third Assessment of the National Nanotechnology Initiative , PCAST (acting as the NNAP), March 2010. http://www.whitehouse.gov/sites/default/files/microsites/ostp/pcast-nni-report.pdf The National Nanotechnology Initiative: Second Assessment and Recommendations of the National Nanotechnology Advisory Panel , PCAST (acting as the NNAP), April 2008. http://www.whitehouse.gov/sites/default/files/microsites/ostp/PCAST-NNAP-NNI-Assessment-2008.pdf A Matter of Size: Triennial Review of the National Nanotechnology Initiative , NRC, 2006. http://www.nap.edu/catalog.php?record_id=11752 The National Nanotechnology Initiative at Five Years: Assessment and Recommendations of the National Nanotechnology Advisory Panel , PCAST (acting as the NNAP), May 2005. http://www.whitehouse.gov/sites/default/files/microsites/ostp/pcast-nni-five-years.pdf Small Wonders, Endless Frontiers: A Review of the National Nanotechnology Initiative , NRC, June 2002. http://www.nap.edu/openbook.php?isbn=0309084547 List of NNI and Nanotechnology-Related Acronyms

Nanotechnology—a term encompassing the science, engineering, and applications of submicron materials—involves the harnessing of unique physical, chemical, and biological properties of nanoscale substances in fundamentally new and useful ways. The economic and societal promise of nanotechnology has led to investments by governments and companies around the world. In 2000, the United States launched the world's first national nanotechnology program. From FY2001 through FY2015, the federal government invested approximately $20.9 billion in nanoscale science, engineering, and technology through the U.S. National Nanotechnology Initiative (NNI). President Obama has requested $1.5 billion in NNI funding for FY2016. U.S. companies and state governments have invested billions more. The United States has, in the view of many experts, emerged as a global leader in nanotechnology, though the competition for global leadership is intensifying as countries and companies around the world increase their investments. Nanotechnology's complexity and intricacies, early stage of development (with commercial pay-off possibly years away for many potential applications), and broad scope of potential applications engender a wide range of public policy issues. Maintaining U.S. technological and commercial leadership in nanotechnology poses a variety of technical and policy challenges, including development of technologies that will enable commercial scale manufacturing of nanotechnology materials and products, as well as environmental, health, and safety concerns. Congress established programs, assigned responsibilities, and initiated research and development related to these issues in the 21st Century Nanotechnology Research and Development Act of 2003 (P.L. 108-153). Although many provisions of this act have no sunset provision, FY2008 was the last year of agency authorizations included in the act. Bills to amend and reauthorize the act were introduced in the 110th, 111th, and 113th Congresses but were not enacted. No comprehensive reauthorization bill was introduced in the 112th Congress. In the 114th Congress, as of the date of this report, one bill has been introduced that seeks to amend the 21st Century Nanotechnology Research and Development Act. The National Nanotechnology Initiative Amendments Act of 2015 is incorporated as Subtitle B of Title 1 of the America Competes Reauthorization Act of 2015 (H.R. 1898). The bill was introduced April 21, 2015, and referred to the House Committee on Science, Space, and Technology and the House Committee on Education and the Workforce. In August 2015, the House Committee on Science, Space, and Technology referred the bill to the Subcommittee on Research and Technology. No further action had been taken as of the date of this report. Proponents of the NNI assert that nanotechnology is one of the most important emerging and enabling technologies and that U.S. competitiveness, technological leadership, national security, and societal interests require an aggressive approach to its development and commercialization. Critics of the NNI voice concerns that reflect disparate underlying beliefs. Some critics assert that the government is not doing enough to move technology from the laboratory into the marketplace. Others argue that the magnitude of the public investment may skew what should be market-based decisions in research, development, and commercialization. Still other critics say that the inherent risks of nanotechnology are not being addressed in a timely or effective manner.

RS20913 -- Farm "Counter-Cyclical Assistance" Updated May 31, 2002 Farming often is characterized as a "cyclical" business with exaggerated price swings that are destabilizing. Farmersrespond to high prices by boosting output. However, when prices drop, farmers are not quick to cut backproduction. Theyare more likely to operate at a loss and draw down resources. Contributing to the unstable nature of the farmeconomy arethe weather, export demand, currency exchange rate fluctuations, and the farm support and export subsidy programsofforeign competitors. Typically, farmers do not view the eventual self-correcting character of commodity prices and production with the sameequanimity as economists. In fact, U.S. producers of the major crops have asked for and received federalintervention --including various forms of counter-cyclical assistance -- to support their commodity prices and incomes for nearlythe past70 years. Between 1973 and 1995, a prominent form of counter-cyclical aid was deficiency payments linked to target prices. Congress specified, for each major crop, an annual per-unit target price (e.g., $4 per bushel for wheat). If, as oftenoccurred, the market price was below the target price, eligible producers received a deficiency payment to make upthedifference. This aid was ended by the Federal Agriculture Improvement and Reform (FAIR) Act of 1996 ( P.L.104-127 ). Under Title I of the 1996 Act, fixed production flexibility contract (PFC) payments replaced target price deficiencypayments. These payments were intended to provide, over 7 years, a total of about $36 billion to eligible producersorlandowners. The PFC payments were not linked to either current production or prices. By design, lawmakersintended thatthese fixed payments, along with the ability to make unconstrained planting decisions, would cause the marketplaceratherthan subsidies to guide farmers' production choices. However, the 1996 law did continue another form of counter-cyclical support: marketing assistance loans. Producers could(and, under the new 2002 law, continue to) pledge their stored grain, cotton, or oilseeds as collateral for a U.S.Departmentof Agriculture (USDA) nonrecourse commodity loan after harvest. These loans are based on a per-unit (bushel,pound)rate. In earlier years, these nonrecourse loans were set higher than market prices in order to support farm incomes, and farmersforfeited the commodities pledged as collateral at the end of the loan term (about 9 months). Under the more recentdesign,farmers can repay the nonrecourse "marketing assistance loans" at less than the original loan rate when market pricesarelower than that loan rate. The difference between the USDA loan rate and the lower repayment rate (times thenumber ofbushels under loan) constitutes the federal subsidy. In addition, those producers who choose not take out USDAcommodity loans can instead receive the equivalent subsidy as a direct payment, called a "loan deficiency payment"(LDP). The federal subsidy (either a loan gain or LDP) increases as market prices drop below the loan rate, and the subsidydiminishes as prices rise -- thus, the "counter-cyclical" nature of the marketing loan program. When the 1996 farm bill was passed, commodity prices were relatively high, and policymakers widely anticipated that thePFC payments, when combined with whatever was earned from the market, would provide sufficient income toproducers. Marketing loans were set at relatively low rates so that they only would be needed as a safety net if prices declinedrelatively steeply. However, by the late 1990s, major commodity prices declined even more than expected, andgenerallydid not recover to what farmers regarded as acceptable levels. As a result, they relied heavily on marketing loanbenefits,which went from zero in FY1996, to a high of over $8 billion in FY2000 (the cost has declined somewhat sincethen). Congress determined that the "safety net" provided by the 1996 FAIR Act (i.e., marketing assistance loans and fixed PFCpayments) was inadequate, and supplemented the benefits with additional, emergency "market loss payments." Thesepayments, mainly to PFC enrollees, added about $3 billion in FY1999, $11 billion in FY2000, and $5.5 billion inFY2001to program costs. These supplemental payments also can be characterized as counter-cyclical -- even though theyare adhoc and not "programmed" into standing law -- because they were made (according to the sponsors) inresponse to lowprices and incomes. Nearly all of the numerous farm and commodity organizations that testified before the House and Senate AgricultureCommittees in 2001 requested that additional counter-cyclical support be developed as a supplement to the currentmarketing assistance loans and fixed annual payments. In response, the separate farm bills passed in October 2001by theHouse and February 2002 by the Senate, incorporated new counter-cyclical measures into standing law. Thus,Congresspresumably would no longer have to debate and enact periodic emergency ad hoc assistance. The final farm bill, the Farm Security and Rural Investment Act (FSRIA) of 2002 ( H.R. 2646 , P.L. 107-171 ),provides new long-term counter-cyclical support for grains and cotton, by restoring target prices and deficiencypayments,similar in some respects to the program terminated by the 1996 Act. What are now called annual PFC paymentsarereplaced with fixed, "direct payments" to farmers. Both types of payments will be available to producers withannualagreements with USDA. In addition, the measure maintains marketing assistance loans and loan deficiencypayments asthey now function, with changes in most loan rates. The new law, which covers the 2002-2007 crop years, brings soybeans and the minor oilseeds (e.g., sunflowers, etc.) fullyunder the support program rules that apply to grains and cotton. In a major departure from the past, FSRIAredesignspeanut support to operate like that for grains, oilseeds, and cotton -- instead of the traditional system of peanutmarketingquotas and nonrecourse price support loans. Under the new law, fixed payments and target price deficiency payments will be paid on 85% of each farm's baseproduction (base acres times base yield of each commodity). A farmer may choose, as base production, either theacreageused for PFC payments, or average acres planted to eligible crops from 1998 through 2001. Yields effectively arethe1981-85 averages, except that, for counter-cyclical payments, yields also can be updated under astatutorily-prescribedformula. A key difference between the new target price payments and those made until 1995, is that the old payments were tied toannual planting rules (i.e., an acreage reduction program.) The new system is not contingent upon such rules:payments arebased upon historical, not current, production, and farmers can plant virtually any crops except most fruits andvegetables. Under the new counter-cyclical program, the deficiency payment rate will be calculated as the difference between the targetprice, and the lower average season market price (but not to exceed the difference between the target price and thesum ofthe loan rate and fixed payment). (See Table 1 for rates). An individual may receive no more than $130,000 peryear incounter-cyclical assistance. Milk support would continue under FSRIA through government purchases of nonfat dry milk, butter, and cheese. However, it has an added feature of counter-cyclical payments. Dairy farmers nationwide will be eligible for"nationaldairy market loss payments" whenever the minimum monthly market price for farm milk used for fluid consumptioninBoston falls below $16.94 per hundredweight (cwt.). In order to receive a payment, a dairy farmer must enter intoacontract with the Secretary of Agriculture. The value of the payment equals 45% of the difference between the$16.94 percwt. target price in any month that the Boston market price falls below $16.94. A producer can receive a paymenton allmilk production during that month, but no payments will be made on any annual production in excess of 2.4 millionpoundsper dairy operation. All contracts expire on September 30, 2005. (See Dairy Farmer Counter-Cyclical Assistance in theCRS electronic briefing book on AgriculturePolicy and the Farm Bill .) Table 1. Loan Rates, Fixed Payment Rates, and Target Prices * Reflects rates that change in some years. NA=not applicable. Whereas the final farm bill ties the availability of counter-cyclical assistance to target prices for specified commodities,other designs also were discussed. For example: One plan would have triggered payments in a state whenever state (as opposed to national) gross cash receipts for any of eight program or oilseed crops are forecast for the year to be less than 94% of that state's annualaveragecash receipts for the crop during 1996-1999. Cash receipts would be defined as the national average price timesstate-levelproduction. Those who produced the crop during 1998-2000 would be eligible for a share of total payments(AmericanFarm Bureau Federation). Another would have established a "national target income" for each major crop: that is, the national average annual market value of the crop during 1996-2000, plus the annual average of any marketing loan benefitsandmarket loss assistance payments made during those years. A further adjustment would be made to account for yieldincreases since then. Those who produced that crop during 1996-2000 would be eligible for a share of totalpaymentswhenever returns (defined as the crop's U.S. production times the average price for the first 3 months of themarketingyear) are below the national target income for the crop (National Corn Growers Association). The Congressional Budget Office (CBO) has estimated the commodity support provisions (Title I) of FSRIA at $98.9billion over 6 years (budget authority, March 2002 estimate, FY2002-2007). This is $37.6 billion more than thebaselinepolicy of simply extending current programs into the future. The new counter-cyclical payments for grains, cotton,andoilseeds account for $23.6 billion of the new costs (i.e., above baseline). The peanut and dairy counter-cyclicalpaymentsare projected to cost, respectively, another $904 million and $963 million. However, such cost estimates are speculative due to the extreme difficulty of predicting future market conditions, includingprices. If prices are lower than CBO's assumptions, then costs will be higher, and vice versa. Some other analystsalreadyhave differing projections. For example, the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri estimates that thetotal cost of the dairy program alone could exceed $3.6 billion. That's mainly because FAPRI projects significantlylowermarket prices for milk than CBO over the 46-month life of the program. CBO estimates that the average monthlypaymentrate over the 46-month life of the program will be about $0.45 per cwt.; FAPRI estimates an average monthlypayment rateof $0.89 per cwt. (See also What Is the Cost of the 2002 Farm Bill? in the CRS electronic briefing book on Agriculture Policy and the FarmBill .) The 1994 Uruguay Round Agreement on Agriculture (URAA) obligates countries to discipline their agricultural subsidyprograms and reduce import barriers in order to promote more open trade. Under the URAA, the United States iscommitted to providing subsidies of no more than $19.1 billion per year through domestic farm policies with themostpotential to distort production and trade. The URAA contains detailed rules for how countries should determine which of their programs must be counted towardtheir assigned subsidy limits (e.g., $19.1 billion for the United States). Generally, however, programs that are tiedtocurrent prices or current production must be counted (these are called "amber box" policies). Thus, marketing loangains,which rise when crop prices decline and vice versa, are "amber" and must be counted (but only if their value, alongwithother subsidies, exceeds 5% of the value of annual production of that crop). On the other hand, subsidies that are not linked to prices or production, and/or meet other specified criteria, might beexempted as "green box" policies. The United States has classified its PFC payments as "green" because they aremadewithout regard to prices or current production. It is anticipated the fixed, decoupled payments in the new law alsowill fallwithin the green box. The new counter-cyclical assistance will be decoupled from current output because the producer would not have to produceany particular crop now to receive the payments. However, because (like marketing loan gains) the target pricedeficiencypayments would be triggered by current market prices , they are expected to be placed in the amber box. So, they conclude, if counter-cyclical payments, when added to other "amber" subsidies such as marketing loanbenefits,caused U.S. spending to exceed $19.1 billion, the United States could be in violation of its world tradecommitments. Whether that would happen is unclear, in part because of the difficulty of predicting future market prices, but alsobecauseof the technicalities involved in classifying and valuing subsidies under the WTO system. "Circuit breaker" language in FSRIA is intended to require USDA to keep trade-distorting farm subsidies at or below the$19.1 billion limit. Questions arise about the administrative, economic, and political implications of changing (i.e.,reducing) benefits, particularly after they are announced and/or awarded. (See CRS Report RL30612(pdf) , FarmSupportPrograms and World Trade Commitments .) Some groups had argued that their own counter-cyclical policies could be designed in a way that they would not have to becounted toward the $19.1 billion limit. For example, if payments to farmers were triggered by low income (asmeasured bygross receipts for one or more commodities) rather than by low prices, they would be exempt, it has been argued. Othersdispute this assertion, noting that it is usually low prices that cause low income. The new counter-cyclical aid in the 2002 law focuses on the "major" commodities -- grains, cotton, oilseeds, peanuts, andmilk. These generally are the most widely produced, but that still leaves much of U.S. agriculture ineligible for suchpayments, raising questions of equity among commodities, and of the potential for distorting production towarditems thatmight receive more support (contributing to surplus production). But extending such aid to more commodities, suchasfruits, vegetables, or livestock, also would have increased federal costs, or else reduced assistance levels for themajorcommodities. Also, not all commodity groups sought such aid. For example, the National Cattlemen's BeefAssociationwas among those that opposed most forms of direct assistance, counter-cyclical or otherwise. And, the UnitedFresh Fruitand Vegetable Association argued against any subsidies that would insulate fruit or vegetable producers from marketsignals or would sustain or encourage production. Another issue was whether a new counter-cyclical program should perpetuate past patterns that tie aid to output rather thaneconomic need. Farm programs, including direct payments, marketing loans and the ad hoc "marketloss payments," havebeen based on either past or current production by individual farmers, meaning that larger payments have trendedtowardlarger operations -- which do not or should not need them, critics argue. They add that if Congress intends to helpproducers in economic distress, then such recipients should have to document their need. Others counter that farmprograms are not "welfare" but rather part of a larger policy to ensure that U.S. agriculture remains competitive intheglobal economy (an assertion that critics challenge).

Congress has approved legislation (P.L. 107-171) reauthorizing major farmincome and commodity price support programs through crop year 2007. This legislation includes new"counter-cyclicalassistance" programs for grains, cotton, oilseeds, peanuts, and milk. The intent of counter-cyclical assistance is toprovidemore government support when farm prices and/or incomes decline, and less support when they improve. In fact,farmershave, for many years, been eligible for various forms of counter-cyclical assistance. At issue has been the need for,andpotential impacts of, another counter-cyclical program. This report will not be updated.

The enacted 2008 farm bill (Food, Conservation, and Energy Act of 2008, P.L. 110 - 246 ) includes a new conservation provision that seeks to facilitate the participation of farmers and landowners in environmental services markets, covering a range of farm and forestry services, including improved water and air quality, increased carbon storage, and habitat protection. The inclusion of this provision could expand the scope of existing farmland conservation programs and facilitate the development of private-sector markets for agriculture- and forestry-based environmental goods and services. In part, congressional interest in this area has developed in response to increased attention to the agriculture and forestry sectors' contributions to existing environmental pollution and resource degradation. For example, the U.S. Environmental Protection Agency (EPA) reports that agriculture is the leading source of water pollution in U.S. lakes and rivers, and a major contributor of pollution in U.S. estuaries. EPA also reports that agriculture contributes to an estimated 6% of all greenhouse gas emissions in the United States. At the same time, some in Congress are suggesting that U.S. farm support programs should do a better job promoting environmental benefits and also complying with domestic support constraints called for by the World Trade Organization. The agriculture and forestry sectors are also being regarded as a possible source of carbon capture and storage within the broader climate change debate. The development of market-based approaches to farm conservation and land management might complement existing and/or emerging environmental regulations or natural resource requirements affecting the agriculture and forestry sectors, as well as complement existing federally supported programs that promote conservation in the farm and forestry sectors. Environmental goods and services from the agriculture and forestry sectors might also provide for environmental improvements and mitigation at a relatively lower cost, compared to mitigation in other sectors of the economy. Environmental services markets may also offer additional financial opportunities to farmers and landowners. Ecosystem (or environmental) goods and services are the benefits society obtains from the environment and ecosystems, both natural and managed, such as water filtration, flood control, provision of habitat, carbon storage, and many others ( Table 1 ). In most cases, these constitute "free services" since landowners and managers are not compensated in the marketplace. However, as many such services have become degraded over time, there is growing recognition that they should be sustained or substituted by market capital, similar to investing in water treatment plants and engineered flood control systems. One solution would be to create markets, often developed through regulation, so that providers of environmental services can be compensated in private markets for the services they provide. This could offer a potential business opportunity to the farm and forest sectors, which may be able to provide for such services and participate in the market, for example, by creating, restoring, preserving function and value in a natural resources area, or by capturing and storing carbon before gases that contribute to global climate change are released into the atmosphere. These services would be in addition to the food and fiber services traditionally supplied by the agriculture and forestry sectors. The market for environmental goods and services involving the agricultural and forestry sectors began mostly through various pilot programs starting in the 1990s. The development of voluntary carbon credit markets and watershed approaches incorporating nutrient credit trading, along with wetlands mitigation banking, have involved the farm and forestry sectors. These programs provide a market for farmers to sell carbon or nutrient farm-based offsets to emitters/dischargers that are looking to buy offsets to mitigate their own emissions/discharges. These efforts have triggered interest in other types of tradable permits and credits, including habitat credit trading and other types of conservation banking. USDA identifies environmental markets with relevance to the agriculture and forestry sectors to include water quality, air quality, wetlands, endangered species, greenhouse gases, and developmental rights. Often the impetus for these efforts may be linked to a "regulatory driver" specific to an actual or anticipated environmental regulation or natural resource requirement, such as requirements in the Clean Water Act (CWA), Endangered Species Act (ESA), or other state or local regulation. Other incentives may include market drivers that make trading environmental services financially attractive, or the desire to cultivate community goodwill. The participation of agriculture and forestry in emerging environmental services markets is gaining wide support within the farm community and its supporting organizations and agencies, as well as among the regulatory agencies and some environmental groups. As part of its recommendations for the 2007 farm bill, the U.S. Department of Agriculture (USDA) proposed to further facilitate the development of environmental services markets in ways that would more effectively involve the farm and forestry sectors. Both the House- and the Senate-passed versions of the 2008 farm bill included similar provisions as part of the conservation title in their respective bills. A version of this provision is in the enacted 2008 farm bill (for further discussion, see section titled " Enacted 2008 Farm Bill "). Information and examples of ecosystems services markets that have involved the participation of U.S. farmers and landowners include voluntary markets for land-based reductions or storage of carbon, water quality improvements, and preservation or restoration of habitat, as briefly described below. Farmer participation in voluntary carbon credit trading programs has been growing rapidly. As of mid-2009, participation involved an estimated roughly 10,000 farmers across about 35 states covering more than more than 10 million acres . The two largest programs providing for farm-based carbon offsets are programs operated by the North Dakota National Farmers Union and the Iowa Farm Bureau. The National Farmers Union program involves more than 4,000 producers in more than 30 states, with more than 5 million acres of farmland enrolled. The Iowa Farm Bureau involves 5,000 to 6,000 producers also in more than 30 states, with more than 5 million acres enrolled. Most projects are located within the Central and Midwestern states. Other similar programs are operated by the Illinois Conservation and Climate Initiative, the Environmental Credit Corporation (based in Indiana), the Upper Columbia Resource Conservation and Development Council (Northwest), and Terrapass (based in California). Among the types of practices that are eligible to participate are no-till crop management; conversion of cropland to grass; managed forests, grasslands, and rangelands; new tree plantings; anaerobic digesters and methane projects; wind, solar, or other renewable energy use; and forest restoration. Water quality trading programs involve the participation of an estimated more than 300 farmers in programs across six states. These include initiatives such as those by the Southern Minnesota Beet Sugar Cooperative, the Grassland Areas Farmers (California), the Rahr Malting Company (Minnesota), the Great Miami River Watershed (Ohio), and the Red Cedar River (Wisconsin), among others. These programs cover some or all of the following types of nutrient runoff reduction activities: cover cropping; reduced fertilizer use; conservation tillage; tree-plantings; buffers; drainage management; and wetlands mitigation trading. Most water quality trading programs are initiated at the local or state level, often involving EPA, and cover impaired waters as well as unimpaired waters to maintain water quality standards. In general, EPA supports trading of nutrients and sediment load, as well as cross-pollutant trading of oxygen-demanding pollutants. EPA also works with USDA's Natural Resources Conservation Service (NRCS) and, in 2006, signed a partnership agreement to establish uniform trading standards, along with supporting other collaborative efforts. USDA programs related to water quality trading include funding for best management practice (BMP) installation and farmland conservation practices, technical assistance, and tool development and outreach efforts; USDA is also developing a handbook for NRCS field staff and partners to explain and support various types of trading, including water quality trading, wetlands trading, and carbon offsets. Habitat or conservation markets and trading are still mostly under development. In April 2007, the U.S. Fish and Wildlife Service, USDA's NRCS, and the Association of Fish and Wildlife Agencies signed a partnership agreement to promote habitat credits that could offer incentives to landowners who preserve and enhance the habitat of endangered or at-risk species. Among the stated objectives of this agreement is to develop and adopt common definitions, standards, and measurement protocols. Habitat credits or "conservation banking" act like a savings account, where credits are earned for land preservation of habitat and credits can then be sold to land use industries or others who are required to mitigate the loss of habitat under the ESA and other laws that restrict or prohibit development. This is conceptually similar to wetlands and stream mitigation banking, which allows for compensation of adverse impacts of development activities ("compensatory mitigation") to wetlands, streams, wildlife refuges, or other aquatic resources. Such allowances, whether through wetlands or conservation banking, typically involve creating, restoring, enhancing, or preserving function and value in a natural resources area, often within the context of meeting a federal, state, or local regulatory requirement. The development of market-based approaches has been widely touted as a possible source of additional farm income, whether through the sale of tradable credits or from other types of payments, such as recreational use or hunting fees. This could offset or partially offset the costs of pollution abatement incurred by farmers who make environmental improvements on their farmlands. In some cases, adopting alternative production practices could also result in on-farm cost savings, such as the use of renewable fuel generated on-farm. Market-based approaches are also often viewed as encompassing broader societal benefits by complementing existing farm conservation programs and evolving regulatory approaches intended to address environmental improvements in the farm and forestry sectors. USDA recognizes that creating markets for ecosystem services could increase farmer investments in environmental stewardship and provide for environmental services including clean air and water, carbon sequestration, and improved wildlife habitat, among other conservation benefits. However, USDA also reports that there are several existing barriers that may prevent the development of fully functioning markets for agricultural environmental services and may be difficult or costly to overcome. These impediments include but may not be limited to: uncertainty quantifying, measuring, and valuing credits; low demand for or discounted value of credits from agricultural sources because of uncertainty about the measurement and value of these credits; low participation in the farm and forestry sectors due to uncertainty over the value of environmental credits compared to the cost of pollution abatement; reluctance by farmers and landowners to participate in a regulatory-based program; small quantity of benefits that can be provided by individual farmers or landowners; high transaction costs; performance risks and liability; lack of information about program benefits and how to participate; lack of monitoring and enforcement; and uncertainty about whether conservation and environmental improvements that were initially funded through other publicly funded programs, such as cost-share programs administered by USDA, will be allowed to be traded. The 2008 farm bill ( P.L. 110-246 , the Food, Conservation, and Energy Act of 2008) contains a new conservation provision that seeks to facilitate the participation of farmers and landowners in environmental services markets by directing USDA to develop technical guidelines for measuring farm- and forestry-based environmental services. This provision focuses first on carbon storage and indirectly references various agriculture and forestry provisions in some legislative initiatives that are being considered as part of the broader climate change debate, which have highlighted the perceived need for uniform standards and ways of measuring emissions reduction and increases in carbon storage in the agriculture and forestry sectors. In the managers report on the 2008 farm bill, the conferees state that "the largest barrier to participation [in emerging environmental services markets] is the lack of standards and accounting procedures that make transparent the benefits that are being produced and marketed." To address this concern, the enacted bill contains a new provision in the bill's conservation title that seeks to "establish technical guidelines that outline science-based methods to measure the environmental services benefits from conservation and land management activities in order to facilitate the participation of farmers, ranchers, and forest landowners in emerging environmental services markets" (Sec. 2709, Environmental Services Markets). The intended purpose of these technical guidelines is to develop (1) a procedure to measure environmental services benefits; (2) a protocol to report environmental services benefits; and (3) a registry to collect, record, and maintain data on the benefits measured. The provision also requires that USDA provide guidelines for establishing a verification process as part of the protocol for reporting environmental services, but it allows USDA to consider the role of third parties in conducting independent verification. In carrying out this directive, USDA is directed to work in consultation with other federal and state government agencies, nongovernmental interests, and other interested persons as determined by USDA. The inclusion of this provision could expand the scope of existing farmland conservation programs by facilitating the development of private-sector markets for a range of environmental goods and services from farmers and landowners. Although the provision covers a range of farm and forestry services, including improved water and air quality, increased carbon storage, and habitat protection, among other types of environmental services, it explicitly gives priority to first establishing guidelines related to participation in carbon markets. Both the House- and Senate-passed farm bills ( H.R. 2419 ) proposed versions of this provision in their respective bills. Although the two versions differed in scope and in overall approach, both were similar in their intent to establish a framework to develop consistent standards and processes for quantifying farm- and forestry-based environmental services. The House-passed provision (Sec. 2407) proposed to establish a USDA-led Environmental Services Standards Board, which would provide contracts, cooperative agreements, and grants to develop consistent standards and processes for quantifying environmental benefits from the farm and forestry sectors, thus establishing a framework to develop such standards and processes. The Senate-passed version (Sec. 2406) also directed USDA to establish a framework to develop consistent standards and processes that would facilitate the marketability of farm- and forestry-based environmental services, but differed in that it directed USDA to "give priority" to providing assistance to farmers and landowners participating in carbon markets. The Senate version differed also in that it called for a "collaborative" process involving governmental and nongovernmental representatives. It also required a series of progress reports to Congress, which were subsequently not included in the enacted bill. The House, Senate and conference versions of this provision differed in terms of funding. For FY2008-FY2012, the House bill authorized $50 million to be appropriated for this provision, whereas the Senate bill authorized such sums as are necessary annually. However, the enacted bill does not specifically address funding; instead, the manager's report states that USDA is expected to "fulfill the intent of this section with resources available to the Department." In contrast, USDA's farm bill recommendations requested authorization of $50 million in mandatory funds to cover the types of tasks addressed in this provision. In December 2008, USDA announced it would create a federal government-wide "Conservation and Land Management Environmental Services Board" to assist USDA with the "development of new technical guidelines and science-based methods to assess environmental service benefits which will in turn promote markets for ecosystem services including carbon trading to mitigate climate change." A federally chartered public advisory committee will advise the board, and will include farmers, ranchers, forest landowners, and tribal representatives, as well as representatives from state natural resource and environmental agencies, agriculture departments, and conservation and environmental organizations. USDA's press release also announced that USDA was establishing a new Office of Ecosystem Services and Markets (OESM), which will be located within the Office of the Secretary. OESM will provide administrative and technical assistance in developing the uniform guidelines and tools needed to create and expand markets for ecosystem services in the farming and forestry sectors. At a May 2009 briefing, USDA's Sally Collins indicated that official meetings and proceedings of the USDA-led Environmental Services Board, as well as formal actions within OESM, have been delayed by leadership changes due to the Administration's transition. Aside from the 2008 farm bill, other legislative initiatives might also facilitate the development of environmental services markets involving the farm and forestry sectors—particularly in the areas of carbon storage and emissions reduction—as part of the ongoing climate change debate. Starting in the 110 th Congress, Congress debated a range of climate change policy options that would have either mandated or authorized a cap-and-trade program to reduce greenhouse gas (GHG) emissions. These actions have continued in the 111 th Congress. Some proposals dovetail with provisions enacted as part of the 2008 farm bill, including a provision that directs USDA to develop guidelines and standards for quantifying carbon storage by the agriculture and forestry sectors, among other farm bill provisions that indirectly encourage emissions reductions and carbon capture and storage. The current cap-and-trade proposals would not require emission reductions in the agriculture and forestry sectors. However, many of these proposals would allow for regulated entities (e.g., power plants) to purchase carbon offsets, including those generated in the agriculture and forestry sectors. The inclusion of these provisions as part of a cap-and-trade framework could provide financial incentives to encourage additional land-based conservation activities involving the agriculture and forestry sectors. For example, the provisions could allow farmers and landowners to participate in this emerging market by generating (and selling) carbon offsets and credits associated with carbon capture and storage, emissions reductions, and/or other implemented environmental improvements on their farm or forested lands. These allowances and credits could be sold to regulated facilities (e.g., power plants) covered by a cap-and-trade program to meet their emission reduction obligations. Under some cap-and-trade proposals, certain segments of the agriculture and forestry sectors also might receive proceeds from the sale of allowances, credits, and auctions to further promote and support activities in these sectors that reduce, avoid, or sequester emissions. Many of these bills contain language highlighting the perceived need for uniform standards and ways of measuring emissions reduction and increases in carbon storage in the agriculture and forestry sectors. Such initiatives generally stipulate that measurements of emissions reductions and carbon uptake should be real, verifiable, additional, permanent, and enforceable. However, there is considerable uncertainty about the accuracy of measuring and verifying emissions reductions and carbon storage using various forestry and agricultural and land management practices. This uncertainty has led some to question the potential for carbon offset projects in the agriculture and forestry sectors, but these types of projects are nonetheless being considered as part of a cap-and-trade program. The new conservation provision in the 2008 farm bill (see previous section) that seeks to establish technical standards and accounting procedures for environmental services generated in the agriculture and forestry sectors is intended to address such measurement, verification, and monitoring issues. For more information, see CRS Report R40896, Climate Change: Comparison of the Cap-and-Trade Provisions in H.R. 2454 and S. 1733 , and CRS Report RS22834, Agriculture and Forestry Provisions in Climate Change Bills in the 110 th Congress . For information on the measurement, verification, and monitoring challenges in the agriculture and forestry sectors in the context of evolving carbon markets, see CRS Report RS22964, Measuring and Monitoring Carbon in the Agricultural and Forestry Sectors . For other general information on the current GHG policy debate and legislative proposals, see CRS Report R40896, Climate Change: Comparison of the Cap-and-Trade Provisions in H.R. 2454 and S. 1733 , and CRS Report R40556, Market-Based Greenhouse Gas Control: Selected Proposals in the 111 th Congress . A separate provision enacted as part of the Energy Independence and Security Act of 2007 ( P.L. 110-140 ) directs the Department of the Interior to conduct a national assessment and a methodology to assess carbon sequestration and emissions from ecosystems (Section 712, "Assessment of Carbon Sequestration and Methane and Nitrous Oxide Emissions from Ecosystems"). Once completed, this assessment will provide additional information regarding the two primary greenhouse gases associated with agricultural practices: methane and nitrous oxide. DOI's national assessment will address the quantity of carbon stored in and released from ecosystems, and the annual flux of covered greenhouse gases in and out of ecosystems. The methodology to assess carbon sequestration and emissions from ecosystems will cover measuring, monitoring, and quantifying GHG emissions and reductions, and provide estimates of sequestration capacity and the mitigation potential of different ecosystem management practices. Identified components of the national assessment are (1) determining the processes that control the flux of covered greenhouse gases in and out of each ecosystem; (2) estimating the potential for increasing carbon sequestration in natural and managed ecosystems through management activities or restoration activities in each ecosystem; (3) developing near-term and long-term adaptation strategies or mitigation strategies that can be employed; and (4) estimating the annual carbon sequestration capacity of ecosystems under a range of policies in support of management activities to optimize sequestration. In conducting its assessment and developing the underlying methodology for the assessment, EISA directs DOI to consult with other agencies, including USDA, EPA, the Department of Energy, the Department of Commerce, and other relevant agencies. DOI is directed to develop its methodology for conducting the assessment, and then to release its national assessment. To date, the report has not yet been released. Among the principal questions regarding the inclusion of these types of provisions as part of any major legislative initiative is whether the agriculture and forestry sectors can effectively provide environmental goods and services along with the more traditional food, fiber, and other services these sectors already provide. The inclusion of these provisions could also raise certain procedural or implementation questions as Congress debates future farm policy or as it continues to consider the role of the agriculture and forestry sectors in climate change legislation. Standards - setting process/implementation. Aside from establishing the board discussed earlier, how will USDA implement its new farm bill directive for establishing uniform standards, accounting procedures, protocols, and registries for quantifying farm- and forestry-based environmental services? Can USDA accomplish its task using available agency resources? Jurisdictional issues. What are the advantages of establishing USDA as the lead role? What lead role will USDA play, given the mostly regulatory authority and statutory obligations of other likely participating federal agencies? Might putting USDA as the lead create conflict of interest as both the regulator and promoter of standards? Are there other jurisdictional issues, such that this provision needs to be referred to other authorizing congressional committees? How might existing state and local programs implemented by other agencies be affected? How will the collaborative effort between USDA and the other participating federal agencies be put into practice? How will disagreements be addressed and resolved among all federal partners? Consistency with existing and possible future authorities and initiatives. Will the agreed-upon decisions and standards resulting from such an effort be binding among all federal agencies? What assurances are there that these decisions will not override the authorizing legislation regulating water and air quality, and wildlife habitat? Will regulatory agencies with authorizing legislation have the flexibility to not adopt the standards authorized by the board or other collaborative process, if they violate the individual agencies' authorizing statutes, or contain regulations, such as measurement protocols? What are the possible implications if these decisions and standards are inconsistent with other existing regulatory guidelines and authorities? Will such a standard-setting framework and the agreed-upon standards be consistent with, or readily adapted to, other possible future regulatory initiatives, such as those involving climate change? If possible future climate change initiatives do not provide for carbon offsets and credits from the agriculture and forestry sector, will the agreed-upon standards be enforceable within the existing voluntary carbon market? What are the potential implications if these decisions and standards are inconsistent with other possible forthcoming regulatory guidelines and authorities? Standards. Will uniform standards be national, regional, local, or site-specific in scope? How will uniform standards address differences within different production areas, types of resources, and ecosystems? Will established protocols and management practices take into account these differences? Will these standards consist of an assigned value? Given the wide range in the types of environmental services, how will outcomes or benefits be measured and expressed as standards? Will there be penalties for non-compliance? Federal versus marketplace functions. What roles should government agencies play in actually establishing environmental services markets involving agriculture and forestry? What roles will be strictly within the purview of the private-sector and independent credit markets? Is there a federal role beyond developing the reporting and credit registries that would require the board to act as intermediary between sellers and buyers? Who will be responsible for oversight of third party verification and certification, and for assigning market value to tradable credits within an environmental services market? Will the federal agencies play a role in market oversight, enforcement, risk management, and capital investment? What other types of federal assistance may be needed to further facilitate the development of environmental services markets? Congressional reporting/timeline. How and when will the agencies involved in setting standards be expected to report their accomplishments to Congress? Should reporting requirements be included as part of these provisions? Market barriers. How effectively do the current proposals address the types of barriers that have been identified by USDA and others that may prevent the development of environmental goods and services markets? Possible unintended consequences. Might establishing a market-based approach shift governmental and/or industry priorities away from addressing more serious environmental problems by allowing some industrial facilities to buy relatively lower-cost farm-based carbon credits rather than pay for on-site pollution abatement at the facility? Might a market-based program shift USDA resources away from established farm conservation programs?

Environmental goods and services are the benefits society obtains from the environment and ecosystems, both natural and managed, such as water filtration, flood control, provision of habitat, carbon storage, and many others. Farmers' participation in providing these types of goods and services began in earnest in the 1990s with the development of watershed approaches incorporating nutrient credit trading and wetlands mitigation banking, and continued with the more recent development of voluntary carbon credit markets. These efforts have triggered further interest in the possibility of developing market and trading opportunities for farmers and landowners as a source of environmental offsets. These services would be in addition to the food and fiber services traditionally supplied by the agriculture and forestry sectors. Congress is expressing growing interest in developing such market-based approaches to complement existing federally supported programs that promote conservation in the farm and forestry sectors, as well as to complement existing and/or emerging environmental regulations or natural resource requirements that may affect the agriculture and forestry sectors. The enacted 2008 farm bill (P.L. 110-246, the Food, Conservation, and Energy Act of 2008) contains a new conservation provision that seeks to facilitate the participation of farmers and landowners in environmental services markets by directing USDA to develop technical guidelines for measuring farm- and forestry-based environmental services. This provision focuses first on carbon storage and indirectly references various agriculture and forestry provisions in some legislative initiatives that are being considered as part of the broader climate change debate, which have highlighted the perceived need for uniform standards and ways of measuring emissions reduction and increases in carbon storage in the agriculture and forestry sectors. These types of provisions could expand the scope of existing land-based conservation programs and facilitate the development of private-sector markets for a range of environmental goods and services from farmers and landowners. Among the possible questions that may emerge as these agriculture and forestry provisions are either implemented as part of U.S. farm conservation policy, or considered as part of a broader climate change initiative, are the following: Can agricultural interests effectively provide environmental services along with traditional food and forestry services? How would uniform standards address differences within production areas, types of resources, and ecosystems? What is the role of USDA as the lead federal agency in establishing technical guidelines for the agriculture and forestry sectors? How would collaboration work between other participating federal agencies? How would the agreed-upon decisions and standards work within existing regulatory authorities, and within possible forthcoming regulatory authorities, such as proposed climate change options currently being debated in Congress? What role should federal agencies play in establishing environmental services markets?

The United Nations High Commissioner for Refugees (UNHCR) is the U.N. agency dedicated to the protection of refugees and other populations displaced by conflict, famine, and natural disasters. This report describes the mandate, operations, and budget of UNHCR. It looks at the challenges facing the organization and issues of concern for Congress. UNHCR provides legal protection, implements long-term solutions, and coordinates emergency humanitarian relief for refugees and other displaced persons. An understanding of UNHCR and its challenges is particularly relevant today with the possibility of war in Iraq, which might create new populations of refugees and other displaced persons, and the continuing refugee situations in Afghanistan and other parts of the world. Issues of particular concern to Congress are funding shortages at UNHCR, burdensharing, and avenues for U.S. influence within UNHCR. Established by the U.N. General Assembly in 1950 and made operational in 1951, UNHCR is mandated to lead and coordinate international action for the protection of refugees and the resolution of refugee problems worldwide. The current High Commissioner is Ruud Lubbers, a former Dutch prime minister, who began his five-year term in January 2001. UNHCR is headquartered in Geneva and employs over 5,000 staff in more than 110 countries. Its governing body, the Executive Committee, approves the High Commissioner's assistance programs, advises the High Commissioner, and oversees UNHCR finances and administration. The Executive Committee meets every year and has 61 members, all of whom are representatives of governments, including the United States. A smaller Standing Committee meets every three or four months. UNHCR is mainly supported by voluntary contributions from governments. Refugees are granted a special status under international law. Once an individual is considered a refugee, that individual automatically has certain rights, and states that are parties to the 1951 U.N. Convention Relating to the Status of Refugees (1951 Convention) and/or its 1967 Protocol are obligated to provide certain resources and protection. UNHCR ensures these rights, works to find permanent solutions for refugees, and coordinates immediate humanitarian assistance. UNHCR was established to help resettle European refugees after World War II, and its mandate reflects this history. It became the institutional mechanism for the implementation of the 1951 Convention. Under the 1951 Convention, a refugee is legally defined as a person fleeing his or her country because of persecution or "owing to a well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside of the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country." The central rights accorded to refugees are non-rejection of asylum seekers at the border, non-forced repatriation (non-refoulement), admission to safety, access to fair and efficient procedures for determination of refugee status, assurance of the same rights and basic help received by any other foreigner who is a legal resident, and appropriate lasting solutions. The 1951 Convention limits the definition of refugees to those created by events occurring prior to 1951. In response to the emergence of large refugee movements since 1951, the 1967 Protocol incorporates the measures included in the 1951 Convention, but imposes no time or geographical limits. States may be a party to one or both instruments. UNHCR often works with states on national laws to implement provisions of these international treaties and argues that international law overrides other bilateral agreements that may exist. Enforcement of the 1951 Convention and/or its 1967 Protocol remains a challenge. Over time, the U.N. General Assembly has passed resolutions expanding UNHCR's involvement to those escaping armed conflict, generalized violence, foreign aggression, and other circumstances. While UNHCR's mandate is to protect refugees (and by legal definition, refugees have crossed an international border because of persecution or a well-founded fear of being persecuted) it now provides assistance to a broader group known as "persons of concern" to UNHCR. UNHCR estimates as of January 1, 2002, indicate that there are 19.8 million persons of concern worldwide. This category includes refugees, returnees, internally displaced persons (IDPs), asylum seekers, stateless persons, and others. Compared with the year before, this number has decreased by 2 million, as many refugees have returned to their home countries. When refugees begin to return to their home countries, UNHCR often provides assistance to these "returnees" and monitors their well-being. UNHCR may provide transportation, a start-up package (which may contain such items as cash grants, farm tools, and seeds), and assistance rebuilding homes and schools. Monitoring of their well-being rarely continues longer than two years. Unlike refugees who seek asylum outside their country of citizenship, internally displaced persons have not crossed an international border but remain inside their own country. Under international law, IDPs do not have the same protection as refugees. IDPs fall into the gaps between the mandates of different agencies. By default, UNHCR has provided assistance and some protection to IDPs, but it has argued that it lacks the capacity and resources to cope systematically with the needs of IDPs in addition to its refugee caseload. The plight of this group has gained international recognition as a problem that needs to be addressed. There are other groups requiring assistance. Asylum seekers are people who flee their home country and seek sanctuary in a second state. They apply for asylum—which is the right to be recognized as a refugee—and receive legal protection and material assistance. UNHCR helps these asylum seekers, whose formal status has not yet been determined. In addition to asylum seekers, there are other refugee-like populations. For example, UNHCR assists stateless persons, such as those from the former Soviet Union who have not been able to obtain citizenship in any of the former republics. UNHCR has three main functions. First, it provides legal protection to those who fall within its mandate. Governments establish procedures to determine refugee status and related rights in accordance with their own legal systems. UNHCR offers advice and non-binding guidelines to these governments. In countries, which are not party to international refugee treaties but request UNHCR assistance, UNHCR may determine refugee status and offer its own protection and assistance. Second, UNHCR seeks permanent solutions to refugee situations. In general, there are three solutions for refugees: 1) voluntary repatriation, 2) local integration in the country of first asylum, and 3) resettlement from the country of first asylum to a third country. UNHCR prefers voluntary repatriation, whereby refugees return to their home countries. If repatriation is impossible, then UNHCR seeks either local integration or, if this is impossible, resettlement in a third country. Third, UNHCR also coordinates numerous non-governmental organizations (NGOs) that provide emergency humanitarian relief to refugees. This relief includes shelter, food, and basic medical care. UNHCR also carries out a variety of other activities. For example, in the past UNHCR has provided training for border guards on how to handle refugee situations, developed an intergovernmental emergency response team for greater integration and coordination, and resolved particularly sensitive situations between governments and those seeking asylum. Some of these situations involved behind-the-scene negotiations and discussions. As humanitarian crises became more complex through the 1990s, UNHCR began working with a wider number and variety of organizations. Within the U.N. system, UNHCR works most closely with the World Food Program (WFP), the U.N. Children's Fund (UNICEF), the World Health Organization (WHO), the U.N. Development Program (UNDP), the Office for the Coordination of Humanitarian Affairs (OCHA), and the U.N. High Commissioner for Human Rights. UNHCR also coordinates with international organizations (IOs), such as the International Committee of the Red Cross (ICRC) and the International Federation of Red Cross and Red Crescent Societies (IFRC), and NGOs such as the International Rescue Committee (IRC) and the International Organization for Migration (IOM). UNHCR works with over 500 NGOs that provide much of the operational support for refugees. In the past decade, UNHCR has dealt with massive population movements, including those from Rwanda, the Balkans, and Afghanistan. Thousands of Afghans have lived for years in refugee camps, partly supported by UNHCR, in Pakistan and Iran. Since September 11, 2001, a reverse situation has taken place as many more Afghans have returned home from Pakistan and Iran than were expected, putting a strain on UNHCR programs and leading to a reduction in the resources provided to these returnees. UNHCR is putting together a contingency plan for Iraq in the event of a war. Currently, while there are a small number of NGOs in Iraq, U.N. agencies provide the bulk of humanitarian assistance in the form of food and medicine. Reportedly, the United Nations estimates that over 60 percent of 24 million people in Iraq receive monthly food distributions. Depending on its scope and duration, war could create a humanitarian emergency with large population movements across borders or within Iraq itself. UNHCR depends almost entirely on voluntary contributions to fund its operations. Of UNHCR's budget, 98% comes from voluntary contributions from governments and other donors, such as foundations, corporations, and the public at large. Two per cent comes from the U.N. regular budget and covers administrative personnel costs in the Geneva headquarters. Nearly 95% of the total contributions to UNHCR come from 15 donors (14 governments and the European Union). The Calendar Year (CY) 2002 budget of UNHCR is currently $1.05 billion, composed of $801.7 million from the annual budget, $219 million from supplementals to cover new emergency needs, $20 million from the U.N. regular budget, and $7 million from a young professional recruitment program. The CY2003 UNHCR appeal is for $837 million for the annual budget and $39.5 million for supplementals. Since 1999, UNHCR's annual budget has seen shortfalls, which have required cuts in planned programs. Since UNHCR relies on voluntary contributions, it depends on the annual generosity of its donors and cannot anticipate from year to year how much money will be available nor how much it will have to spend. Some pledged contributions are also late. These problems create a general cash availability crisis and budget shortfalls. In February 2002, UNHCR froze its administrative budgets. As of June 30, 2002, only $678 million had been received as income, which led to an 11% decrease in planned programs. The UNHCR annual budget was cut in CY2002 from just over $800 million to $710 million. These funding shortfalls have most seriously affected programs in Africa, as well as in Thailand, Papua New Guinea, and the Caucasus. The unpredictability of global conflicts also contributes to UNHCR's financial difficulties. UNHCR cannot fully anticipate the extent and costs of new refugee emergencies. During CY2002, UNHCR had to make a supplemental appeal to fund new emergency needs in Afghanistan, Macedonia, East Timor, Liberia, Angola, and Zambia, as well as new programs to protect U.N. personnel. For CY2003, UNHCR has made another supplemental appeal. UNHCR has introduced new mechanisms to improve its funding flows, including the creation of an operational reserve to cover some emergencies and other unexpected costs. Countries often earmark their funds for specific programs. The United States earmarks 97% of its contributions with 25% tightly earmarked (to be used only for specific countries or types of activities) and 72% lightly earmarked (allocated for use within specified geographic regions). Other countries tightly earmark a larger proportion of their contributions, such as the European Commission, which does so for its entire contribution. In contrast, the Netherlands provides 65% of its contribution in unrestricted funds. Tight earmarking, in particular, means that some programs are well funded and other programs experience shortages. For example, countries provided a high level of funding earmarked to the Kosovo crisis, but African crises have not received the same level of funding. Countries that tightly earmark "appear to view UNHCR as an implementing partner rather than a global multilateral agency with a universal mandate." High Commissioner Ruud Lubbers has reportedly stated that UNHCR will care for IDPs only under certain conditions and only if UNHCR has adequate resources: "I will not say that UNHCR will care for all IDPs. I do not believe in that at all." Instead, High Commissioner Lubbers seeks a broader response from the U.N. system and the international community. The lack of a designated organization mandated to focus on IDPs has resulted in an inconsistent and often incomplete response to IDP crises. A number of questions remain unresolved. Which organization(s) should take on this role? What kind of protective legal mechanism might be established to provide for IDPs in much the same way the 1951 Convention and 1967 Protocol have done for refugees? UNHCR has been coping with increased numbers of asylum seekers. At the same time, states are less willing to provide asylum. Developing countries host the overwhelming majority of the world's refugees. The top five refugee-hosting countries are Pakistan, Iran, Germany, Tanzania, and the United States. However, the countries with the most refugees per 1,000 inhabitants are Armenia, Guinea, Federal Republic of Yugoslavia, Republic of the Congo, and Djibouti. When one takes into account GDP, those countries with the largest refugee populations per $1 million of GDP are Armenia, Guinea, Tanzania, Zambia, and Congo. These countries have generously accepted refugees and often receive international assistance from UNHCR. However, the international community does not cover all the costs associated with large refugee populations. These countries and many others have become less willing to take in asylum seekers because they already have substantial refugee populations, face increasing economic problems, and worry about perceived threats to domestic security. Even developed countries are less willing to accept asylum seekers. The European Union, for example, sought to stem the flow of asylum seekers by promoting regional protection (relying on safe havens and other zones in the region of origin) and interpreting narrowly the definition of refugees (for example, excluding those persecuted by non-state actors). These measures may have the unintended consequence of expanding illegal migration, migrant trafficking, and organized crime, as refugees under duress seek other avenues of asylum. In November 2001, UNHCR requested an investigation into allegations of sexual exploitation of refugees by its own aid workers in West Africa. The resulting report in July 2002 could not verify the allegations, but found 10 cases of sexual exploitation, of which one case involved a U.N. Volunteer. Even though no allegations against U.N. staff members have been substantiated, the report does reveal that sexual exploitation occurs in refugee camps perhaps due to a lack of day-to-day UNHCR management and the conditions of camp life. Through 2002 and 2003, UNHCR is implementing a series of reforms to stop sexual exploitation among refugees. In some regional and civil wars, combatants have used refugees as pawns in their overall strategy. For example, some experts argue that in Kosovo Milosovic and other leaders may have purposely created large-scale refugee crises to shape the outcome of the war and manipulate the response by the international community. As a result, refugees may be seen as central to the objectives and strategies of war, and yet many remain innocent victims caught in the crossfire. In many cases, refugees seek to escape violence, but violence often follows them to refugee camps. These camps may house rival ethnic groups and armed rebels as in Democratic Republic of Congo and Pakistan in the 1990s, may be invaded by rebel forces as is currently the case in Uganda, and may not be able to protect refugees from sexual exploitation and general violence. UNHCR has sought to protect refugees and its workers from this violence, but some argue that more needs to be done. Since UNHCR often operates in the midst of wars, humanitarian assistance to refugees is not always viewed by the combatants as a neutral act. UNHCR and other humanitarian actors are increasingly perceived as taking sides. Further aggravating these problems, humanitarian agencies have needed to work with military forces, which also increasingly provide humanitarian assistance (as was the case in Macedonia during the Kosovo conflict). The risk, some argue, is that the humanitarian assistance community and refugees they protect may appear to be parties to the conflict. As a result of these trends, some U.N. humanitarian aid workers have become targets in civil wars. To improve security to its personnel, the United Nations established at the end of 2001 a new Emergency and Security Service program, of which each U.N. agency pays a portion of the costs. UNHCR will pay $2 million for this program, as well as another $7 million for other security programs. UNHCR has included the costs of these programs in its budget appeal for CY2003. The U.S. government is the largest contributor to UNHCR, representing at least 25% of all contributions. The largest share of U.S. contributions is voluntary. In FY2002, the U.S. government contributed $255 million to UNHCR. Until FY2003 funding has been appropriated, programs will continue to operate at FY2002 funding levels. A key concern is whether UNHCR will receive adequate contributions from the United States in FY2003. The State Department's Population, Refugees, and Migration (PRM) Bureau expects to have refugee needs equal to FY2002, and there could be a significant shortage in refugee program funding, including funding to UNHCR. Any additional funds would depend on the possibility of a supplemental appropriation (with a likely delay in funding of UNHCR programs). Furthermore, many countries follow the U.S. lead in making their own voluntary contributions. If the United States lowers its contributions, other countries may follow suit. In general, both the Executive branch and Congress value the work of UNHCR. For example, the Senate Committee on Appropriations' most recent foreign operations report stated that the Committee "strongly supports" the work of UNHCR, is "deeply concerned" by the large budget shortfall, and is "alarmed that this shortfall is beginning to adversely impact field operations in a number of regions." Authorization for participation in the UNHCR program is through the Migration and Refugee Assistance Act of 1962 (P.L. 87-510), as amended. Authorization is found in the Department of State authorization bill, which is determined by the Senate Committee on Foreign Relations and the House Committee on International Relations. Appropriations for UNHCR programs are provided in the Foreign Operations Appropriations bill to the Migration and Refugee Assistance (MRA) Account and to the Emergency Refugee and Migration Assistance (ERMA) Fund, which are overseen by the State Department. How much of UNHCR's expenses should the United States cover? According to U.S. Assistant Secretary for Population, Refugees and Migration Arthur E. Dewey, the European Union has not made adequate contributions to UNHCR, providing only 15% of its budget, in contrast to the 25% contributed by the United States. Through its European Community Humanitarian Office (ECHO), the European Union has distributed humanitarian assistance through NGOs, instead of through multilateral agencies like UNHCR. According to Dewey, ECHO should contribute the same level to UNHCR as the United States. However, individual European governments also provide money directly to UNHCR. According to UNHCR, ECHO and the European Union member governments have collectively provided about $70 million more than the United States to UNHCR in FY2002. The main issue appears to be whether ECHO and the member governments should redirect more funds from their own bilateral programs into multilateral programs like UNHCR. The U.S. government has reduced the number of refugees admitted into the United States. Until 1995, the ceiling for admissions was over 100,000. This ceiling has fallen to 70,000 for 2003. These reductions should be considered within the context of the broader international asylum crisis. In addition, U.S. response to asylum seekers and protection of refugees will likely impact its ability to influence other countries' behavior with regard to the protection of asylum seekers. Congress has sought to make certain that specific programs and geographical areas receive adequate resources. The House Committee on International Relations has emphasized protecting Afghan refugees, East Timorese refugees, and refugees in Africa. The U.S. government influences the activities of the UNHCR in many ways. First, since it contributes a substantial proportion of the total UNHCR budget and earmarks these funds, the U.S. government supports certain programs and certain geographical areas, and allows U.S. policy priorities to influence UNHCR priorities. Second, through the very act of contributing money and protecting refugees according to certain standards, the U.S. government also encourages other countries to contribute at appropriate levels and treat refugees at a certain standard. Third, the United States is an active member of UNHCR's Executive Committee and, therefore, has a voice in the administration of UNHCR. Fourth, U.S. nationals work for UNHCR and bring U.S. interests, values, and perspectives with them. Congress may address two related questions. What kind of influence should the United States have? How can the United States balance its priorities with the fact that UNHCR is a global, multilateral agency with a universal mandate?

Established in 1950, the United Nations High Commissioner for Refugees (UNHCR) provides legal protection, implements long-term solutions, and coordinates emergency humanitarian relief for refugees and other displaced persons around the world. At the beginning of 2002, the populations of concern to UNHCR totaled 19.8 million people, which included 12 million refugees. Currently, UNHCR faces a series of challenges: the protection of displaced populations that are not technically refugees and thus fall outside the mandate of UNHCR; availability of resources; a worldwide asylum crisis; accusations of misconduct by UNHCR employees; and the security of refugees and U.N. workers. Issues of particular concern to Congress are funding shortages at UNHCR, burdensharing, and avenues for U.S. influence within UNHCR. This report will be updated periodically.

The annual Interior, Environment, and Related Agencies appropriations bill, which began its consideration as H.R. 2584 and ended as Division E of the Consolidated Appropriations Act ( P.L. 112-74 ), funds agencies and programs in parts of three federal departments (Interior, Agriculture, and Health and Human Services), as well as numerous related agencies and bureaus, including the Environmental Protection Agency. Among the more controversial agencies represented in the bill is the Fish and Wildlife Service (FWS), in the Department of the Interior (DOI). House floor consideration of Interior and Environment appropriations was not completed, and the Senate first considered these programs in the context of Division E of the conference report on a bill whose original subject was appropriations for military construction. The House next considered FWS appropriations in the context of the conference report for the same measure. As a result, the legislative history of Interior and Environment appropriations in general, and FWS specifically, is truncated relative to most years, and the emphasis below is largely on the final bill. Congress approved $1.48 billion for the agency for FY2012. The President had requested $1.69 billion (up 13% from FY2011); on July 12, 2011, the House committee approved $1.19 billion (down 21% from FY2011). (See Table 1 .) Most accounts and subaccounts were reduced relative to FY2011 levels. At the account level, percentage changes from FY2011 to FY2012 ranged from a reduction of 20.4% for the Cooperative Endangered Species Conservation Fund to an increase of 10.8% for Construction. This report analyzes FY2012 appropriations in a policy context, with reference to past appropriations. Floor action on Interior and Environment appropriations began on July 25, 2011, when the House began consideration of H.R. 2584 . Consideration continued to July 28, 2011, when the House rose, leaving H.R. 2584 as unfinished business. During floor consideration, there were three amendments affecting FWS; two were adopted, and one was rejected. The first amendment ( H.Amdt. 732 ; Bass, NH) increased land acquisition funding by $4 million for FWS, as well as making increases for specified other agencies, with offsetting reductions in funds for the Office of the DOI Secretary. It was adopted by voice vote. (In the end, P.L. 112-74 contained funding for land acquisition, though at a lower level than in FY2011. See " Land Acquisition .") The second amendment ( H.Amdt. 735 ; Dicks, WA) was also adopted; it removed certain restrictions in the bill concerning funding limitations for endangered species protection. ( P.L. 112-74 contained some limits on listing; see discussion " Endangered Species Funding .") A third amendment ( H.Amdt. 750 ; Dicks, WA), affecting judicial review of wolf management, was rejected; P.L. 112-74 contained no language regarding wolf management and judicial review. (See " Wolf Delisting ," below.) By far the largest portion of the FWS annual appropriation is the Resource Management account, for which Congress approved $1.23 billion for FY2012, down 1.5% from FY2011. Among the programs included in Resource Management are Endangered Species, the Refuge System, Law Enforcement, Fisheries, and Cooperative Landscape Conservation and Adaptive Science (formerly called Climate Change Adaptive Science Capacity). In the FY2012 FWS appropriations cycle several issues emerged: elimination of funding for the adding of new species to the list of those protected under the Endangered Species Act; elimination of funding for critical habitat designation; cuts in funding for fish hatcheries; restoration to near FY2011 levels for the National Wildlife Refuge Fund, a fund that provides payments in lieu of taxes to local governments for the presence of non-taxable refuge land—a program for which the President proposed no appropriation; elimination of annual funding for most land acquisition for the National Wildlife Refuge System; and response to the FY2011 legislative delisting of certain populations of gray wolves. Each of the points above will be discussed in the appropriate account's section below. Funding for the endangered species program is part of the Resource Management account, and is a perennially controversial portion of the FWS budget. Congress approved $176.0 million, up 0.3% from the FY2011 level of $175.4 million. The Administration's FY2012 request was $182.6 million. (See Table 2 .) The House Committee approved $138.7 million; the accompanying committee report, citing the absence of a reauthorization for the Endangered Species Act (ESA), gave statistics on the low rate for recovery of listed species as evidence that the ESA has failed. Over half of the House committee's reduction from FY2011 level came from elimination of funding for adding new species to the list of species protected under the ESA, and for the designation of new critical habitat for species. The reductions were contained in the tables accompanying the bill; but in addition, the committee's bill language itself reinforced that elimination by directing that "none of the funds shall be used for implementing subsections (a), (b), (c), and (e) of Section 4 of the Endangered Species Act, (except for processing petitions, developing and issuing proposed and final regulations, and taking any other steps to implement actions described in subsection (c)(2)(A), (c)(2)(B)(i), or (c)(2)(B)(ii) of such section)." The language would have prevented listing new species or changing a species from threatened to endangered, or a designating new critical habitat. It would have allowed action to delist species or to downlist species from endangered to threatened, although with no funding in the committee's bill for the listing program it is not clear what funds would have been available for such actions. On July 26, 2011, the House considered H.Amdt. 735 (Dicks, WA) to strike this language. Supporters of H.Amdt. 735 rejected the claim that the ESA has failed, and cited the continued existence of all but a few of the listed species struggling in the face lost habitat and other dangers as an alternative measure of success. The amendment passed (yeas 224, nays 202; roll call #652) on July 27, 2011. In the end, P.L. 112-74 contained limits on spending for listing species in response to petitions, for listing foreign species, and for designation of critical habitat. The limitations on listing foreign species or responding to petitions were not found in the previous appropriations bill; limitations on critical habitat designation have been a feature of appropriations bills for over 15 years. P.L. 112-74 reduced funding for consultation under Section 7 of the ESA by 1.5% from FY2011. Under Section 7, federal agencies are obliged to consult with FWS on their actions which may affect listed species, and obtain a biological opinion (BiOp) from FWS on whether the action might jeopardize the species. The BiOp may include reasonable and prudent alternatives for the agency action that would avoid jeopardy. Reduced funding for FWS to consult could delay federal actions, because the action agency might hesitate to open its actions to the citizen suit provisions of the ESA in the absence of the FWS BiOp. The Cooperative Endangered Species Conservation Fund also benefits species that are listed or proposed for listing under ESA, through grants to states and territories. P.L. 112-74 provided $47.7 million, down 20.4% from the FY2011 level of $59.9 million. The program assists states with, among other things, the preparation of Habitat Conservation Plans (HCPs). HCPs are developed for non-federal actions by state, local, business or private entities as a requirement for obtaining an Incidental Take Permit for actions that may affect listed species. For HCPs involving many actors, states may use their funds from this program to coordinate the HCPs, to develop a single umbrella plan on behalf of a region, or to acquire land to mitigate effects of a project. Reduction of state support leaves states with the option of funding some of these efforts alone, or leaving individual actors to develop their own plans. Taking the two programs together, the final bill projects savings in endangered species funding, compared to FY2011 levels, at 5.0%. Because Section 15 (16 U.S.C. §1542) authorizing ESA appropriations expired in FY1992, it is sometimes said that the ESA is not authorized. However, that does not mean that the agencies lack authority to conduct actions (§§4, 6-8, 10, and 11; 16 U.S.C. §§1533, 1535-1537, 1539, and 1540), or that prohibitions within the act are no longer enforceable (§9; 16 U.S.C. §1538). Those statutory provisions continue to be law, even when money has not been appropriated. The expiration of a provision authorizing appropriations does not end the statutory obligations created by that law. The U.S. Supreme Court has long held that "the mere failure of Congress to appropriate funds, without further words modifying or repealing, expressly or by clear implication, the substantive law, does not in and of itself defeat a Government obligation created by statute." Moreover, Section 11(g) (16 U.S.C. §1540(g)) "allows any citizen to commence a civil suit on his own behalf" on various broad, specified provisions of the act. This option would still be available, regardless of agency funding. Appropriations bills have been vehicles for action on the status of wolves. While P.L. 112-74 contained no provisions regarding wolves, substantial action on delisting of gray wolves occurred in the FY2011 appropriation process ( P.L. 112-10 ), and provides background for additional action occurring during consideration of the House committee bill for FY2012. Section 1713 of P.L. 112-10 removed most wolves in the Northern Rockies from the protections of ESA. This removal from the ESA's list of protected species (or "delisting") makes these gray wolves the 49 th species to be delisted, and the only one delisted due to specific legislative action. In April 2009, FWS had issued a regulation to delist the population of wolves that had been reintroduced in the Northern Rockies. The rule removed wolves in Montana, Idaho, and parts of Washington, Oregon, and Utah from ESA protections, but the rule did not change the wolf's status outside these five states. The wolves of Wyoming were to remain protected because FWS held that Wyoming's proposed management plan was not adequate to avoid population declines that would result in relisting the wolves. In August 2010, a federal court overturned the rule. In addition, in November 2010, a federal district court in Wyoming ordered FWS to reconsider the Wyoming plan for wolf management, holding that FWS had acted arbitrarily and capriciously in rejecting the plan. Section 1713 ordered FWS to reissue the April 2009 rule and insulated the new rule from judicial review. It further stated that the section was to have no effect on the Wyoming case. FWS reissued the rule on May 5, 2011. The provision appears to leave open the option for a subsequent proposal to re-list the species. Two factors made this delisting distinct from past efforts to delist species legislatively. First, FWS had previously delisted the species though the action was later rejected by a court. FWS had argued that the best available science supported delisting. Second, the species had met and exceeded the numeric goals for delisting in the species' recovery plan, although some aspects of its recovery were disputed. In H.R. 2584 (§119), the House committee addressed concerns that the re-issued rule or other rules delisting wolves might be challenged in court. The section directed that any final rule delisting wolves in Wyoming or in the western Great Lakes area not be subject to judicial review, provided that FWS had authorized the state(s) to manage the wolf population. H.Amdt. 750 (Dicks, WA) was offered to strike this section. In a recorded vote on July 27, 2011, the House rejected the amendment (yeas 174; nays 250, roll call #659), leaving the language in place. In the end, though, P.L. 112-74 omitted the House's provision. The only language concerning wolves in the final bill was contained in the conference report ( H.Rept. 112-331 , p. 1051). The language instructed FWS to provide $1 million from its ESA recovery funds to "re-instate a livestock loss demonstration program as authorized by P.L. 111-11 ." The program compensates ranchers for their losses due to wolf predation. The final bill contained $485.7 million for the National Wildlife Refuge System (NWRS), down 1.3% from the FY2011 level of $492.1 million. Costs of operations have increased on many refuges, partly due to special problems such as hurricane damage and more aggressive border enforcement, but also due to increased use, invasive species control, maintenance backlog, and other demands. According to FWS, refuge funding has not been keeping pace with these demands. Combined with the rising costs of rent, salaries, fuel, and utilities, the agency says these demands have led to cuts in funding for programs to aid endangered species, reduce infestation by invasive species, protect water supplies, address habitat restoration, and ensure staffing at the less popular refuges. While some increases were provided to address these problems in recent years, the FY2009 stimulus law provided additional funding to address these concerns. One response to reduced funding has been the consolidation of refuges (called "complexing" by FWS) under a single refuge manager and staff, as a means of sharing staff and equipment. This program has met resistance from refuge supporters who argue that refuge units will lose resources and adequate supervision. Balanced against these concerns is congressional interest in general deficit reduction. Law Enforcement is part of the Subaccount for Migratory Birds, Law Enforcement, and International Affairs. Nationwide law enforcement covers wildlife inspections at international borders, investigations of violations of endangered species or waterfowl hunting laws, and other activities. The consolidated bill contained $62.1 million for the Law Enforcement program, down 1.2% from the FY2011 level of $62.9 million. The consolidated bill provided $135.3 million for this account, down 2.6% from the FY2011 level of $138.9 million. Within the program, Congress rejected most of the President's proposed cuts in the hatchery program, funding it at $46.1 million rather than the requested $42.8 million; the new level was down 5.7% from the FY2011 level of $48.9 million. However, concern had been generated early in the FY2012 appropriations cycle when the Administration proposed that FWS negotiate reimbursable agreements with responsible parties for mitigation activities at National Fish Hatcheries. Until such reimbursement was negotiated, FWS proposed to eliminate or substantially reduce activities at the nine National Fish Hatcheries where mitigation costs were at least 40% of total operating expenses. FWS manages a number of hatcheries under the National Fish Hatchery System. In some cases the mandated role of a hatchery, in whole or in part, is to provide mitigation for activities by other agencies. For FY2012, FWS projected annual expenditures to mitigate projects of four agencies: Army Corps of Engineers ($4.7 million), Tennessee Valley Authority ($835,000), Bonneville Power Authority ($40,000), and the Bureau of Reclamation ($715,000). (See Table 3 . ) Nine hatcheries met or exceeded the Administration's 40% mitigation threshold: more than 40% of the benefit of the hatchery was attributed to mitigation of the effects of a water project. These nine hatcheries were then targeted for reduction or elimination of FWS support. FWS argued that some or all of the hatchery costs should be borne by the responsible water project agencies. This issue was addressed and resolved in conference: The conferees have restored the proposed $3,388,000 shortfall in the budget for mitigation hatchery operations and critical supplies. An additional $3,800,000 is appropriated elsewhere in this consolidated Act for the U.S. Army Corps of Engineers to reimburse the Service. Together, these amounts fully fund mitigation hatcheries operated by the Service for the Corps, Tennessee Valley Authority, Bureau of Reclamation's Central Utah Project and the Bonneville Power Administration. The conferees support efforts by the Service to recover costs of programs that are conducted to mitigate the environmental effects of other Federal partners. However, future budget requests must ensure that Federal partners have committed to make sufficient funding available to reimburse the Service before the Service proposes to eliminate funding for mitigations hatcheries so that operations at these hatcheries are not disrupted. For this program (formerly called Climate Change Planning and Adaptive Science Capacity), P.L. 112-74 provided $32.2 million, an increase of 4% from the FY2011 level of $31.0 million. Part of the program supports work with partners at federal, state, tribal, and local levels to develop strategies to address climate impacts on wildlife at local and regional scales. The remainder is used to support cooperative scientific research on climate change as it relates to wildlife impacts and habitat. Both portions support and work through a network of Landscape Conservation Cooperatives (LCCs) to ameliorate the effects of climate change. The LCCs are an amalgam of research institutions, federal resource managers and scientists, and lands managed by agencies at various levels of government. The conference report directed FWS to explain how it planned to integrate its LCCs with its Joint Ventures and its Fish Habitat Partnerships, as well as with the U.S. Geological Survey's Climate Science Centers, Cooperative Fish and Wildlife Research units, and Cooperative Ecosystem Studies Units. The consolidated bill provided $54.6 million for land acquisition, to be derived from the Land and Water Conservation Fund. The amount was down less than 1% from the FY2011 level of $54.9 million. The Administration had requested $140.0 million. See Table 1 . P.L. 112-74 also specified that "$5,000,000 shall be for land conservation partnerships authorized by the Highlands Conservation Act of 2004, including not to exceed $160,000 for administrative expenses." The Administration's top five acquisition priorities (of 63 listed projects) were, in descending order: Alaska Maritime National Wildlife Refuge (NWR), Silvio Conte NWR (CT, MA, NH, VT), Laguna Atascosa NWR (TX), St. Marks NWR (FL), and Cache River NWR (AR). The Migratory Bird Conservation Account is a source of mandatory spending for FWS land acquisition (in contrast to the other three federal lands agencies, which rely on annual appropriations). The MBCA does not receive funding in annual Interior appropriations bills. Rather, funds are derived from the sale of duck stamps to hunters and recreationists, and from import duties on certain arms and ammunition. For FY2011, available funds are estimated at $58.0 million. This estimate is $14.0 million above the previous year, and was based on the assumption that Congress would approve a proposed increase in the price of duck stamps from $15 to $25. No such increase has been introduced, so a more reliable estimate would be that $44.0 million would be available for FWS land acquisition from the account. The National Wildlife Refuge Fund (NWRF, also called the Refuge Revenue Sharing Fund) compensates counties for the presence of the non-taxable federal lands under the primary jurisdiction of FWS. A portion of the fund is supported by the permanent appropriation of receipts from various activities carried out on the NWRS. However, these receipts are sufficient for funding a small fraction of the authorized formula, and county governments have long urged additional appropriations to make up the difference. The Administration requested no funding for NWRF in FY2012, which would have meant that based on receipts alone, counties would have received 5% of the authorized level. The Administration argued that the savings were justified based on low costs of refuges to county infrastructure and economic benefits to local economies from increased tourism. P.L. 112-74 rejected the Administration's argument, and provided $14.0 million, down 3.5% from the FY2011 level of $14.5 million. This level, combined with receipts, will be sufficient for counties to receive 30.8% of the authorized level. FWS has long had a role in conserving species across international boundaries, beginning with species such as migratory birds, which spend some part of their life cycle within U.S. boundaries, and more recently including selected species of broader international interest. One of the programs, the Multinational Species Conservation Fund, generates considerable constituent interest despite the small size of the program. It benefits Asian and African elephants, tigers, rhinoceroses, great apes, and marine turtles. P.L. 112-74 provided $9.5 million, down 5.2% from FY2011. (See Table 4 .) The Administration requested $9.8 million. Congress approved $3.8 million for the Neotropical Migratory Bird Conservation Fund, down 5.2% from FY2011. The program provides grants for the conservation of hundreds of bird species that migrate among North and South America and the Caribbean. The act requires spending 75% of the funds on projects outside of the United States. State and Tribal Wildlife Grants help fund efforts to conserve species (including nongame species) of concern to states, territories, and tribes. The program was created in the FY2001 Interior appropriations law ( P.L. 106-291 ) and further detailed in subsequent Interior appropriations laws. (It has no separate authorizing statute.) Funds may be used to develop state conservation plans as well as to support specific practical conservation projects. A portion of the funding is set aside for competitive grants to tribal governments or tribal wildlife agencies. The remaining portion is for grants to states. Part of the state share is for competitive grants, and part is allocated by formula. This grant program has generated considerable support from state governments. Congress provided $61.3 million for these grants, down less than 1% from FY2011. It provided $51.3 million for formula grants and $5.7 million for competitive grants for states. Tribes received $4.3 million for competitive grants. See Table 1 , above. The Administration's request for FY2012 was $95.0 million. Congress specified that states must provide at least 25% matching funds for planning grants and 35% for implementation grants. CRS Report R41608, The Endangered Species Act (ESA) in the 112 th Congress: Conflicting Values and Difficult Choices , by [author name scrubbed] et al. CRS Report RS21157, International Species Conservation Funds , by [author name scrubbed] and [author name scrubbed]. For general information on the Fish and Wildlife Service , see its website at http://www.fws.gov/ .

The annual Interior, Environment, and Related Agencies appropriation funds agencies and programs in three federal departments, as well as numerous related agencies and bureaus. Among the agencies represented is the Fish and Wildlife Service (FWS), in the Department of the Interior. Many of its programs are among the more controversial of those funded in the bill. For FY2012, the Consolidated Appropriations Act (P.L. 112-74, Division E, H.Rept. 112-331) provided $1.48 billion for FWS, down 2% from the FY2011 level of $1.50 billion. (This measure also provided appropriations for most federal government operations for the remainder of FY2012.) For FWS, most accounts were reduced to some degree relative to the FY2011 level. This report analyzes the FWS funding levels contained in the FY2012 appropriations bill. Emphasis is on FWS funding for programs that have generated congressional debate or particular constituent interest, now or in recent years. Several controversies arose during the appropriations cycle over funding levels or restrictions on funding: The Administration proposed limitations on funds that could be used to respond to petitions to list new species under the Endangered Species Act (ESA), arguing that petitions diverted the agency from listing species with higher conservation priority; others argued that without petitions FWS would list fewer species. The Administration also proposed to limit spending on listing foreign species. Both limits were accepted. The House bill proposed to limit judicial review of FWS decisions concerning the delisting of gray wolves under ESA. This provision was eliminated from the final bill. The Administration proposed cutbacks in funding for certain fish hatcheries involved in mitigation of the effects of federal water projects. FWS argued that the mitigation burden belonged on the shoulders of the agencies responsible for the projects. Congress did cut some of the program, but also specified a transfer of funds to FWS to support hatchery mitigation. The Administration proposed elimination of annual appropriations for payments to counties for lost revenues due to the presence of non-taxable FWS lands. Congress continued the appropriation, with small reductions from previous appropriations. The House bill proposed to eliminate nearly all funding for FWS land acquisition. Congress reduced but did not eliminate the program. All of these issues are discussed in more detail below, along with funding levels for other programs.

As part of WIPO's Digital Agenda, a WIPO Treaty on the Protection of Broadcasting Organizations is envisioned to adapt broadcasters' rights to the digital era. Advocates of this treaty from the broadcasting industry observe that relevant international agreements do not offer sufficient protection because advances in broadcasting technology and the parallel evolution of the industry are not covered by the terms of existing agreements. These proponents note that the primary agreement covering broadcasting and cablecasting rights, the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, was concluded in 1961 and predates home audio and video recording, telecommunications satellite systems and consumer satellite dishes, digital technology, wireless networks, and the ability of consumers to receive broadcasts via computer or mobile telephone. Accordingly, proponents assert the Convention does not adequately protect these new modes of broadcasting. The proposed new broadcasting treaty would grant broadcasting and cablecasting organizations protection of their program transmissions for a fixed term of years, enabling them to prohibit copying and redistribution of transmissions without authorization, which could be enforced through technological means of preventing circumvention of encrypted transmissions and the like. Such protections would be distinct from the copyright of the creators of the content for program transmissions. However, opponents of the treaty respond that it is not necessary, noting that the development of the broadcasting industry in the United States has not been hurt by the fact that it is not even a party to the Rome Convention. At its first session in November 1998, the Standing Committee on Copyright and Related Rights (SCCR) of the World Intellectual Property Organization (WIPO) decided to pursue in earnest discussions and submissions concerning the text of a new broadcasting treaty. Since 2004, the SCCR has been pushing for a diplomatic conference for final negotiations and adoption of a treaty; however, after ten years and 17 sessions plus two special sessions of preliminary negotiations in Geneva, Switzerland, no consensus has been reached on a text adequate for a diplomatic conference. At its May 2006 meeting, the SCCR decided to drop webcasting (transmitting over the Internet) and simulcasting (transmitting simultaneously via traditional broadcasting over the air and on the Internet) from the scope of the treaty, placing them into a separate, parallel negotiating track. The United States was almost the sole proponent of including webcasting in the treaty and had tried to bolster support for it by linking it to simulcasting, which the European Union advocated. The SCCR hoped to increase the likelihood of successfully concluding the treaty by dropping these highly controversial issues. At its fall 2006 meeting, the WIPO General Assembly tentatively agreed to convene a diplomatic conference in November/December 2007 to conclude a treaty for the protection of only traditional broadcasting organizations and cablecasting organizations, contingent on the SCCR's successfully tabling a consensus proposed text. To that end, the SCCR held two special sessions, in January and June 2007, to "aim to agree and finalize, on a signal-based approach, the objectives, specific scope and object of protection." The emphasis on a signal-based approach was an attempt to narrow the focus of the treaty to signal theft and piracy in order to allay concerns that a new layer of intellectual property rights in the content of broadcasts would, in effect, extend protection beyond the expiration of copyrights for each broadcast transmission and keep or remove content from the public domain. At the second special session, it became apparent that the conclusion of a treaty by the end of 2007 would not be feasible, given the significant differences that remained among the positions of various parties. No further steps have been taken to organize a diplomatic conference, although the treaty remains on the agenda of the SCCR and was discussed during SCCR meetings in March and November 2008. The Revised Draft Basic Proposal (WIPO Doc. SCCR/15/2/Rev.) and the Non-Paper on the WIPO Treaty on the Protection of Broadcasting Organizations (SCCR/S1/WWW[75352]), an unofficial paper prepared by the SCCR Chair in April 2007, provided the basis for negotiations at the second special session in June 2007, and apparently remain the current working text. The Revised Draft Basic Proposal is considered inadequate to support a successful diplomatic conference because it essentially incorporates every major alternative text for those articles where major differences remain among the WIPO parties. For example, there are two alternatives for Article 18, one providing that the term of protection shall be 50 years, the other, that the term be 20 years. The protections available under the Rome Convention have a term of 20 years, and the longer 50-year term proposed for the new treaty has been controversial. Furthermore, this text does not define a "signal," although the Chairman of the SCCR reportedly floated a proposed definition of "signal" in an earlier informal non-paper at the first special session in January 2007. Article 2 in the April 2007 Non-Paper does not define "signal" but does define "broadcast" in terms of signals. There appears to be uncertainty and disagreement among the negotiating parties as to precisely what a "signal-based" approach means for the narrowed focus of a new treaty. Consequently, some parties suggest that a "signal-based" approach, mandated by the WIPO General Assembly, may still encompass certain elements of exclusive rights including the right to prohibit certain uses of a broadcast, which remains a major point of contention. These two examples are indicative of the lack of consensus affecting most of the provisions of the Revised Draft Basic Proposal. At the November 2008 meeting of the SCCR, an Informal Paper was issued by the Chairman of the SCCR, but the SCCR did not make any formal decisions based on the paper. The paper sets forth and analyzes the range of positions on various issues that remain unresolved. It is intended to facilitate further discussion by examining the reasons behind some of the major differences among the negotiators and their stakeholders. For example, a number of WIPO member countries are parties to the 1961 Rome Convention; therefore, they view the new treaty as building on concepts in the Rome Convention which granted broadcasting organizations exclusive rights over rebroadcasting, fixation (recording of a broadcast in a medium such as optical disk), reproduction, and communication to the public. These rights are related to and are based on traditional concepts of intellectual property rights, that is, copyright in content which may be the subject of a broadcast. These WIPO members want the new treaty to provide for exclusive rights, which would be extended to new areas such as webcasting (broadcasts over the Internet), retransmission, protection of pre-broadcast signals, and technological devices to protect such exclusive rights. On the other hand, WIPO member countries that are not parties to the Rome Convention view the treaty as a free-standing endeavor that need not be based on the provision of exclusive rights. Some stakeholders are concerned that an exclusive rights-type of treaty would extend a new layer of intellectual property rights in content similar to copyright-type protections. They argue that this type of treaty would keep content out of the public domain and thus restrict the public's access to such content. The Chairman's informal paper discusses other issues, including the scope of post-fixation rights, the right of retransmission over the Internet, the term of protection, the protection of technological measures, limitations on and exceptions from the protections granted under the treaty (similar to existing exceptions to copyright for news reporting, education, and scientific research), definition of "signal-based" protection, and other secondary issues. Some of these are discussed below as points of contention. The paper concludes with two options for proceeding with negotiations. One option would be to make another attempt to conclude a treaty based on the Revised Draft Basic Proposal. The other option would be to conclude a treaty based on the Geneva Phonograms Convention of 1971 and the Brussels Satellite Convention. This would depart from the existing documents and proposals under consideration by the SCCR, but it would accomplish the goals of international protection for broadcast signals and prevention of piracy of signals. Protection at the national level could be accomplished via copyright laws, unfair competition laws, or administrative laws and sanctions. If neither of these options or other possible options can lead to a decision on a new treaty, the paper ends by recommending that the SCCR should expressly end current efforts to conclude a new treaty, remove it from its active agenda, and avoid spending further time, energy and resources. Such a decision could include a timetable for revisiting the matter later. Although further discussions occurred during the November 2008 SCCR meetings, no decisions were made, and the proposed treaty remains an active item on the SCCR agenda. Given the current lack of consensus, it may be useful to consider some of the major points of contention for the treaty as expressed by various stakeholders. The principles expressed in various stakeholder statements are fairly representative of common objections raised by treaty opponents and also of some of the concerns or positions expressed by various WIPO country-parties during negotiations. A joint statement distributed by 41 corporations, industry associations, and non-governmental organizations at the first special session of the SCCR advocated several guidelines for a treaty text, while not conceding their position that a treaty is not necessary at all. This statement is similar to earlier statements issued by many of the same stakeholders at the September 2006 meeting of the WIPO General Assembly and to positions expressed at U.S. stakeholder roundtables held jointly by the U.S. Copyright Office and the U.S. Patent and Trademark Office (USPTO) in September 2006, January 2007, and May 2007. The stakeholders issuing these statements at the SCCR meetings and the U.S. roundtables comprise a range of international and national organizations representing Internet service providers, computer technology companies, libraries and information professionals, content creators/owners, and consumer groups. First, the stakeholders assert there is no need for a treaty: "The United States has a flourishing and well-capitalized broadcasting and cablecasting sector, notwithstanding its decision not to accede to the [Rome Convention]. We see no necessity for the creation of new rights to stimulate economic activity in this area. [Longstanding negotiations do not] justify the creation of rights that would be exceedingly novel in U.S. law and that are likely to harm consumers' existing rights, and stifle technology innovation." Before the creation of such rights, the stakeholders maintain that "there should be a demonstrated need for such rights, and a clear understanding of how they will impact the public, educators, existing copyright holders, online communications, and new Internet technologies." Second, according to the stakeholders, the treaty should not be "rights-based," that is, grant exclusive rights in broadcasts similar to copyright. Rather, it should be, in their view, "signal-based," meaning that the prevention of theft or piracy of pre-broadcast signals should be the focus of the treaty. Third, stakeholders assert that the treaty should not be negotiated with reference to whether it detracts or departs from the Rome Convention, although the signers of the statement believe that strong signal protections are consistent with the Rome Convention. Some stakeholders have observed that the narrowed treaty focus on a signal-based approach is more akin to the Brussels Convention. Fourth, to the extent the treaty permits rights beyond protection against signal theft/piracy, the stakeholders claim that mandatory limitations and exceptions similar to those under copyright laws should be included in the treaty to ensure that the treaty does not prohibit uses of broadcast content that are lawful under copyright law. The treaty should also, in their view, permit additional limitations and exceptions appropriate in a digital network environment. Fifth, the stakeholders contend that the treaty should exclude coverage of fixations, transmissions or retransmissions over a home network or personal network. Concerns have been raised that because the Revised Draft Basic Proposal envisions protections for technological protections measures (TPM) and digital rights management schemes (DRM), the beneficiary broadcasting organizations would have the ability to control signals in a home or personal network environment. Stakeholders allege that this would inhibit such networking services and related technology innovations. Sixth, despite the removal of webcasting and simulcasting from the scope of the treaty, the phrase "by any means" in various articles of the Revised Draft Basic Proposal would, in the stakeholders' view, include control over Internet retransmissions of broadcasts and cablecasts. Finally, to the extent that Internet transmissions may be included in the scope of the treaty (or future related treaty), stakeholders advocate that it should ensure that intermediate network service providers are not subject to liability for alleged infringement of rights or violations of prohibitions due to actions in the normal course of business or actions of customers. The South Centre, an intergovernmental organization of developing countries, issued a research paper on the broadcast treaty in January 2007, which expressed some of the same concerns with regard to the benefits that the treaty would have for developing countries, as well as additional concerns. The South Centre paper makes recommendations similar to those discussed above. It suggests that the negotiators: (1) consider maintaining that the rationale and scope of application of the new instrument be limited to signal protection; (2) do not accept the inclusion of any exclusive rights, or at the least, that such rights do not extend beyond those incorporated in the Rome Convention, unless clear evidence is found for the need to grant such rights and mechanisms to address the potential harms they may cause are developed; and (3) ensure that appropriate safeguards to pursue public policy objectives and limitations and exceptions are included in the text. Additionally, the South Centre recommends that the negotiators: (1) refrain from expanding protection to include delivery via computer networks as well as any reference to webcasting (which is at odds with the position of the United States and webcasting advocates); (2) provide for special treatment to public service broadcasting and/or discrimination between commercial and non-commercial broadcasting; (3) limit the maximum term of protection to 20 years, if exclusive rights are required for signal protection, rather than the 50 years in the Revised Draft Basic Proposal; and (4) do not include obligations concerning the protection of technological protections measures (TPM) and digital rights management schemes (DRM), or at least consider including limitations and exceptions as minimum standards to these obligations to ensure they do not impede access to content. As noted above, the United States has been the primary advocate for extending protections to webcasting, whether in a new broadcasting treaty or in a separate agreement or protocol. In a statement submitted to the SCCR, the United States clarified that it "never intended that protection be afforded to the ordinary use of the Internet or World Wide Web, such as through e-mail, blogs, websites and the like. We intended only to cover programming and signals which are like traditional broadcasting and cablecasting, i.e. simultaneous transmission of scheduled programming for reception by the public." In the statement, the United States sought to replace the term "webcasting" with "netcasting" and clarified that "netcasting" was limited to transmissions over computer networks carrying programs consisting of audio, visual or audio-visual content or representations thereof which are of the type that can be, but are not necessarily, carried by the program carrying signal of a broadcast or cablecast, and which are delivered to the public in a format similar to broadcasting or cablecasting. The United States noted that "webcasting" "unnecessarily implied that ordinary activity on the World Wide Web would be covered by the definition." The United States reaffirmed its position that extending the same protections to "netcasting" as were and would be extended to traditional broadcasting and cablecasting, but asserted that such protections would be limited to preventing signal theft/piracy. Assuming that the treaty is eventually successfully concluded and that the United States is a signatory, any such treaty would not take effect for the United States unless and until the treaty was ratified by the United States with the advice and consent of the Senate, and Congress enacted implementing legislation. Furthermore, if the final text of the treaty adopted by WIPO includes Article 27, Alternative AAA (one of several alternate versions of Article 27 included in the draft), of the Revised Draft Basic Proposal, a party to the new broadcast treaty would be required to become a party to the Rome Convention first, which would mean that the United States would also have to consider ratification of that Convention, to which it is not currently a party. Implementing legislation would likely be necessary to establish new protections or amend existing ones in broadcasting laws and perhaps copyright laws. Currently, 47 USC §§ 325 and 605 and 18 USC §§ 2510-2512 provide for broadcasting protections, and title 17 of the U.S. Code contains the copyright laws. Additionally, webcasting/netcasting and simulcasting may be included in a separate agreement or as a protocol to a new broadcasting treaty, unless they are reconsidered for inclusion in the new broadcast treaty itself. Certain U.S. stakeholders, either opposed to the treaty or concerned about the potential inclusion of certain protections, have called on Congress to hold hearings on the treaty to determine whether a new treaty is necessary or at least to exercise greater oversight over the U.S. delegation's positions on the treaty. They had also urged the U.S. Copyright Office and the U.S. Patent and Trademark Office (USPTO) to solicit public commentary, which those agencies did through the aforementioned roundtables. These stakeholders are concerned that without public input, major changes in U.S. telecommunications and copyright laws will be effected via implementation of a new broadcast treaty without a full opportunity for domestic debate. Partly in response to the objections raised by stakeholders in the information and communications technology industries, the United States reportedly sought to ensure that a diplomatic conference would not proceed if special sessions failed to resolve the major disagreements. Furthermore, the Senate Judiciary Committee expressed concerns about the Treaty to the U.S. Copyright Office and USPTO, urging advocacy of a narrow, signal-theft based approach, and opposing a new layer of exclusive rights.

Existing international agreements relevant to broadcasting protections do not cover advancements in broadcasting technology that were not envisioned when they were concluded. Therefore, in 1998 the Standing Committee on Copyright and Related Rights (SCCR) of the World Intellectual Property Organization (WIPO) decided to negotiate and draft a new treaty that would extend protection to new methods of broadcasting. The SCCR has not yet achieved consensus on a text. In recent years, a growing signal piracy problem has increased the urgency of concluding a new treaty, resulting in a decision by the WIPO General Assembly to restrict the focus of the treaty to signal-based protections for traditional broadcasting organizations and cablecasting. Consideration of controversial issues of webcasting (advocated by the United States) and simulcasting protections have been postponed. However, much work remains to achieve a final proposed text as the basis for formal negotiations to conclude a treaty. Despite a concerted effort to conclude a treaty in 2007, in June 2007 the SCCR decided that more time and work were needed. Further discussions occurred during SCCR meetings in 2008, but no decisions were made. The treaty remains an active item on the SCCR agenda. A concluded treaty would not take effect for the United States unless Congress were to enact implementing legislation and the United States were to ratify the treaty with the advice and consent of the Senate. Noting that the United States is not a party to the existing 1961 Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, various U.S. stakeholders have argued that a new broadcasting treaty is not needed, that any new treaty should not inhibit technological innovation or consumer use, and that Congress should exercise greater oversight over U.S. participation in the negotiations.

The Education for Homeless Children and Youth Program (EHCY) is intended to ensure that all homeless children and youth have equal access to the same free and appropriate public education, including public preschool education that is provided to other children and youth. It is the only federal education program exclusively focused on homeless children and youth. Federal education funding for homeless children and youth is provided by EHCY and through required set-asides for homeless children and youth from Elementary and Secondary Education Act (ESEA) Title I-A funds received by local educational agencies (LEAs). Reauthorization of EHCY may be considered by the 113 th Congress as part of the reauthorization of ESEA. This report provides an overview of the purposes and program structure of EHCY; the history of the program's funding; issues that have arisen regarding the implementation of ESEA Title I-A set-asides for homeless students; data on the number of LEAs receiving EHCY grants and on the characteristics of homeless students; and a discussion of proposed changes to EHCY included in bills introduced in the 112 th Congress to reauthorize the ESEA. The report also includes two appendices: the first provides information on the number and percentage of homeless students by state; the second discusses legislation adopted in the 110 th -111 th Congresses that impacts EHCY. EHCY provides grants to state educational agencies (SEAs) to help ensure that all homeless children and youth have equal access to the same free and appropriate public education, including public preschool education that is provided to other children and youth. The text box above provides the definition of "homeless" that is used in the program. SEAs competitively subgrant funds to local educational agencies. Not all LEAs receive EHCY grants. In school year (SY) 2010-2011, 3,651 LEAs, out of a total of 16,290, received awards. In order to receive EHCY funds, each state must submit a plan indicating how homeless children and youth will be identified; how the state will ensure that homeless children will participate in federal, state, and local food programs, if eligible; and how issues such as transportation, immunization, residency requirements, and the lack of birth certificates or school records will be addressed. EHCY grants are allocated to SEAs in proportion to grants made under Title I-A of the ESEA, except that no state can receive less than the greater of $150,000, 0.25% of the total annual appropriation, or the amount it received in FY2001. The Department of Education (ED) reserves 0.1% of the total appropriation to provide grants to outlying areas (Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands), and 1.0% for the Department of the Interior for services to homeless children and youth provided by the Bureau of Indian Education. The law also authorizes the reservation of funds for national activities but does not specify a percentage. Authorized national activities include program evaluation, technical assistance, and information dissemination. States may reserve up to 25% of their EHCY funding for state activities. "Minimally funded" states are permitted to reserve up to 50% of their funding for state activities. After state reservations, remaining state funds are subgranted to LEAs competitively, based on the LEA's need and the quality of its application. LEAs may receive subgrant funds for a period of up to three years, and they may reapply for a new subgrant when their current subgrant expires. LEAs are authorized to use the funds for the following activities: The excess costs of transportation so that a student can attend his/her school of origin; Supplemental educational services, including tutoring; Provision of expedited evaluations on the strengths and needs of homeless students; Professional development to assist school personnel in understanding the needs and rights of homeless students; Referral services for medical, dental, mental, and other health services; Provision of early childhood education not otherwise available; Services and assistance to retain homeless students, including unaccompanied youth, in school; Mentoring and out-of-school time programs; Payment of costs for tracing, obtaining, and transferring needed records; Education and training of parents of homeless students regarding their student's rights; Coordination between schools and service agencies; Provision of, or referral for, services such as violence prevention counseling; Activities to address domestic violence; Adapting school space and purchasing supplies needed to provide services; Provision of school supplies; and Other emergency assistance needed to enable homeless students to attend school. Each state is required to designate an EHCY coordinator, and each LEA is required to appoint a local EHCY liaison (whether they have an EHCY grant or not). The law is silent on the issue of whether a state coordinator must work full time on EHCY duties—most coordinators are responsible for additional programs. The law explicitly states that the local liaison may be a coordinator of other federal programs in addition to EHCY. The state EHCY coordinator is responsible for implementing the state's plan for the education of homeless children and youth; gathering reliable, comprehensive data on the difficulties homeless students have enrolling in public school, including public preschools; identifying any progress made by the state in ensuring homeless students are enrolled in, attending, and succeeding in school; submitting reports that the Secretary of Education (Secretary) determines are necessary; providing technical assistance to LEAs in the state; and facilitating coordination between the SEA and other entities and providers including state social service agencies, educators, preschool providers, and other community organizations and agencies that provide services to homeless children and youth and their families. Local EHCY liaisons are responsible for identifying and enrolling homeless students and ensuring that these students have a full and equal opportunity to succeed in school; ensuring that these students are receiving all the education services for which they are eligible; providing referrals to health care, dental, mental health, and other appropriate services; informing parents of the educational and other opportunities available to their children and providing meaningful opportunities for them to participate in their children's education; providing families and youth with information on their right to transportation, including transportation to the school of origin; widely disseminating public notice of the rights of homeless students and youth; and ensuring that enrollment disputes are mediated. Appropriations for EHCY increased following the program's most recent reauthorization by ESEA ( P.L. 107-110 )—from $35.0 million in FY2001 to $50.0 million in FY2002. This increase was, however, substantially lower than the amount authorized for EHCY in FY2002 by P.L. 107-110 . It authorized "$70,000,000 for EHCY for FY2002 and such sums as may be necessary for each of fiscal years 2003 through 2007." Funding continued to increase in FY2003-FY2005, then decreased to $61.9 million in FY2006 and FY2007. Regular appropriations have remained at approximately $65 million since FY2009. (See Table 1 .) In addition to regular appropriations, the EHCY program received $70 million in American Recovery and Reinvestment Act (ARRA, P.L. 111-5 ) funds in FY2009. Funds were awarded to SEAs on April 10, 2009; SEAs were required to award ARRA funds to LEAs within 120 days (by August 8, 2009). LEAs were required to obligate funds by September 30, 2011. States and LEAs were required to keep a separate record of how ARRA funds were used and states were required to report this information to ED quarterly. ARRA funds were to be used for the same local activities as those authorized by the regular EHCY program. After reservations (0.1% for the outlying areas and 1% for the Bureau of Indian Education), ARRA funding was distributed by formula to states. The formula used to distribute ARRA funds to states was different from the formula used to distribute regular appropriations. ARRA funds were distributed to states in proportion to their reported share of total enrolled homeless students in SY2007-2008. Unlike regular EHCY funding that is awarded by SEAs to LEAs competitively, states could choose to award subgrants to LEAs competitively or by formula (based on numbers of homeless students), or they could use a combination of both methods. States were permitted to calculate their FY2009 reservation for state activities based on the total of their ARRA allocation and their regular FY2009 program allocation. However, any funding reserved for state activities had to be drawn from regular EHCY program allocations, not from ARRA funding. First Focus and the National Association for the Education of Homeless Children and Youth (NAEHCY) jointly issued a report in 2010 that examined the increasing number of homeless students reported as enrolled by LEAs, and how ARRA funds were being used by LEAs. The report was based on a survey of 2,200 LEAs from 47 states and 45 Homeless Education state coordinators. Survey respondents indicated that ARRA funds were being used for a variety of purposes, including academic support, transportation, outreach and identification, increasing support for specific subpopulations of homeless students, and enhancing collaboration with other community organizations. According to the report: Prior to the receipt of ARRA funds, many school districts had never received funding to support homeless children and youth. For the first time, these districts have been able to dedicate resources to procedures and programming to ensure that homeless children and youth are identified, enrolled, and attending school. Respondents frequently commented that loss of funding would result in loss of educational access, stability, and success. Due in large part to ARRA funding, there was a 76% percent increase in the number of LEAs receiving EHCY grants between SY2008-2009 and SY2009-2010 (from 1,729 to 3,046). Children and youth who are homeless are automatically considered eligible for ESEA Title I-A services, whether or not they meet the performance requirements normally required for Title I-A eligibility. In addition, LEAs are required to set aside a portion of their Title I-A funds for homeless students who do not attend schools receiving Title I-A funds: A local educational agency shall reserve such funds as are necessary under this part to provide services comparable to those provided to children in schools funded under this part to serve—(A) homeless children who do not attend participating schools including providing educationally related support services to children in shelters and other locations where children may live. However, ED non-regulatory guidance has indicated that the Title I-A funding set aside for homeless students not attending Title I-A schools may also be used to provide services for homeless students attending Title I-A schools. ED non-regulatory guidance also states that comparable services provided to homeless students may include services that are specifically tailored to the needs of homeless students: An LEA has the discretion to use reserved funds to provide a homeless student with services that are not ordinarily provided to other Title I students and that are not available from other sources. For example, where appropriate, a LEA at its discretion may provide a student with an item of clothing to meet a school's dress or uniform requirement so that students may effectively take advantage of educational opportunities. The guidance also indicates that Title I-A funds may not be used to provide transportation to the school of origin for homeless students, since this would violate the supplement-not-supplant provisions applicable to Title I-A funds (because EHCY requires that transportation to the school of origin be provided for homeless students, if requested). However, non-regulatory guidance states that "it may be appropriate in certain circumstances for an LEA to use title I, Part A funds to transport formerly homeless students to or from their school of origin for the remainder of the school year in which they become permanently housed." National data on the amount of ESEA Title I-A funding being set aside by LEAs for homeless students are not available. Some states require LEAs to report this information. ED does not require that the amount set aside be reported. All states are required to report data to ED on the number of homeless students enrolled in school each year, regardless of whether or not they receive an EHCY grant. In SY2009-2010, there were 16,290 LEAs; 3,651 (22%) of these LEAs received EHCY subgrants in that year. Although only 22% of LEAs received EHCY grants in SY20010-2011, they accounted for 71% of all enrolled homeless students in that year. It is important to note, however, that the number of homeless children and youth discussed here only includes those who are enrolled in school. As a consequence, because these data do not include the number of homeless students not enrolled in school, they do not represent the total number of homeless children and youth. In SY2008-2009, 956,914 homeless students were reported enrolled; in SY2009-2010, the number of enrolled homeless students reported was 939,903; and in SY2010-2011, 1,056,794 homeless students were reported enrolled (see Figure 1 ). The total number of homeless students enrolled declined by 2% between SY2008-SY2009 and SY2009-2010, but it increased by 13% between SY2009-2010 and SY2010-2011. The SY2008-2010 decline was due in part to changes in data collection procedures in California. If California were excluded from the total, there would have been an increase of 11% in enrolled homeless students between SY2008-2009 and SY2009-2010. According to the First Focus and NAEHCY report discussed above, between SY2006-2007 and SY2008-2009, the number of homeless students increased from 679,724 to 956,914. Sixty-two percent of respondents attributed the increase in homeless students to the economic downturn; some of the additional factors cited included greater awareness of homelessness (40%), the foreclosure crisis (38%), improved outreach and identification (33%), and an increase in factors affecting mental or physical health, such as incidents of domestic violence or substance abuse (29%). Four states accounted for 42% of the total number of students enrolled in both LEAs with EHCY subgrants and those without in SY2010-2011. Those states, and their percentages of total homeless student enrollment, were California (21%), New York (9%), Texas (8%), and Florida (5%). Forty-four states reported an increase in the number of homeless students enrolled between SY2009-2010 and SY2010-2011; nine states reported a decrease in the number of homeless students enrolled during this period. (See Appendix A for SY2008-2011 data on homeless student enrollment by state.) States are required to report on the number of homeless children (ages 3-5, not in kindergarten) enrolled in public preschool programs. For SY2008-2009, 33,433 preschoolers were reported enrolled in public preschool programs; this compares to 30,955 enrolled in SY2009-2010, and 36,308 in SY2010-2011. It is important to note, however, that obtaining accurate counts of homeless preschoolers is even more difficult than it is for homeless students in grades K-12. (See the discussion below on reauthorization issues.) States must also report data on the primary nighttime residence of each homeless student who is counted as enrolled in school. The list of reporting options for primary nighttime residence includes shelters (this category includes both transitional housing and awaiting foster care); doubled-up (e.g., living with another family); unsheltered (e.g., cars, parks, campgrounds, temporary trailers, or abandoned buildings); and hotels/motels. In SY2010-2011, all LEAs reporting indicated that doubled-up accounted for the largest share of homeless students (72%). Doubled-up has accounted for the largest share of reported primary nighttime residences during the entire three-year period from SY2008-2009 through SY2010-2011. Additional primary residences reported for SY2010-2011, by share of total homeless students, were shelters (18%); hotels/motels (5%); and unsheltered (5%). Each LEA that receives an EHCY grant is required to provide additional data on homeless students not required of LEAs without an EHCY grant. The additional information required includes data on subpopulations of homeless students served, and information on academic achievement. Data are reported on the following subpopulations of homeless students served: English language learners, children with disabilities, unaccompanied youth, and migratory children and youth. During the three-year period between SY2008-2009 and SY2010-2011, the percentage increase in homeless students served was 55% for migratory children and youth, 51% for English language learners, 51% for children with disabilities, and 4% for unaccompanied youth. LEAs with EHCY subgrants report on both the number of homeless students tested each year and on the proficiency of these students in reading and mathematics. Homeless students must be tested annually in grades 3-8 and once in high school. Data on homeless students' proficiency based on state tests are reported in each state's annual Consolidated State Performance Report (CSPR) submitted to the Department of Education. However, there are no data on the academic performance of homeless students that rely on the same measure of proficiency across states. As a consequence, these reported proficiency rates are not comparable across states. As of SY2010-2011, academic performance data was required to be reported for homeless children enrolled in all LEAs. Previously, data were reported only for students served by LEAs with EHCY grants. As a consequence, data from earlier years are not comparable with data for SY2010-2011. Data for SY2010-2011 are reported in Table 2 . For FY2010-2011, out of all enrolled homeless students, 71% of students in grades 3-8 and 15% of high school students took the reading and mathematics assessment tests. In reading, 52% of students in grades 3-8 and 49% of high school students met or exceeded state proficiency standards. In mathematics, 51% of students in grades 3-8 and 44% of high school students met or exceeded state proficiency standards. The final section of this report discusses changes to EHCY proposed by legislation introduced in the 112 th Congress. Reauthorization of EHCY may be considered by the 113 th Congress as part of ESEA reauthorization. Where relevant, background information on the context for proposed changes is also included. On October 20, 2011, the Senate Committee on Health, Education, Labor, and Pensions (HELP) ordered reported a bill to reauthorize the ESEA, titled the Elementary and Secondary Education Reauthorization Act of 2011 ( S. 3578 , hereinafter referred to as the Senate HELP Committee bill). Reauthorization of EHCY was included as part of this legislation. On February 28 th , 2012, the House Committee on Education and the Workforce (Education and Workforce) ordered reported two bills to reauthorize portions of the ESEA. One of these bills H.R. 3990 , the Encouraging Innovation and Effective Teachers Act (hereinafter referred to as the House Education and Workforce Committee bill ( H.R. 3990 )), would have reauthorized the EHCY program. The other bill H.R. 3989 , the Student Success Act (hereinafter referred to as the House Education and Workforce Committee bill ( H.R. 3989 )), included amendments to ESEA Title I-A that would have impacted EHCY. In addition, H.R. 32 , The Homeless Children and Youth Act of 2011, was ordered reported by the Subcommittee on Insurance, Housing, and Community Opportunity of the House Committee on Financial Services on February 6, 2012. This bill is discussed under the Definition heading in this section of the report. The EHCY issues discussed in this section include: funding; transportation of homeless students to their school of origin; ESEA Title I-A set asides; separate schools for homeless students; clarifying the "best interest" school selection process; enhancing the ability of LEA homeless liaisons and state coordinators to meet the needs of homeless students; improving identification and services for preschool students and unaccompanied youth; increasing access to education and related services for homeless students; the definition of homeless children and youth in EHCY and other federal programs; and additional issues. There has been some concern that funding for the EHCY program may not be sufficient to meet the educational needs of the increasing number of homeless children and youth. Although the number of homeless students reported enrolled by LEAs increased 11% between SY2008-2009 through SY2010-2011, EHCY regular appropriations have been stagnant in recent years (see Table 1 ). Nevertheless, in the current context of limited federal resources, funding increases in the near future for many federal programs, including EHCY, may be unlikely. The Senate HELP Committee bill would have authorized "such sums as may be necessary for fiscal year 2012 and each of the 6 succeeding fiscal years." The House Education and Workforce Committee bill ( H.R. 3990 ) would have authorized "$65,173,000 for fiscal year 2013 ... " and stated that this amount "shall be increased for each of fiscal years 2014 through 2018 by a percentage equal to the percentage of inflation according to the Consumer Price Index, for the calendar year ending prior to the beginning of that fiscal year." As discussed earlier in this report, transportation is cited as the most serious barrier to the enrollment of homeless students. Many school districts have limited funds, and transportation is an expensive service to provide. Current law prohibits the use of ESEA Title I-A funds to provide EHCY transportation, except under limited circumstances (see earlier discussion). National level estimates of the costs of transporting homeless students are not available. Therefore, data from a survey of eight districts in Washington state are included to provide an illustration of the potential costs of transporting homeless students. These data indicate that: The majority of homeless student trips (79 percent) cost the school districts from just under $3 per one-way trip to over $40 per one-way trip, as opposed to an average of just $.67 for the general student population. Transportation of homeless students by school bus accounted for the largest percentage of student rides provided overall (38 percent), with costs ranging from $4.24 to $53.79 per one-way trip. In addition to the costs involved in transportation, there are often disputes among LEAs regarding how costs of transportation are to be allocated if a student is temporarily housed in one district, but is transported to the school of origin in another district. These disputes can potentially delay the enrollment of homeless students in their school of origin. Some have suggested that this situation could be improved if the following issues were addressed as part of ESEA reauthorization: more specific requirements were included on the rules for cost sharing by LEAs; a separate funding stream was provided for transportation; and LEAs were permitted to use their ESEA Title I-A set aside for transportation costs. The Senate HELP Committee bill included new language that would have required states and LEAs to ensure that transportation to the school of origin was provided for as long as the student had the right to attend that school. Both the Senate HELP Committee bill and the House Education and Workforce Committee bill ( H.R. 3989 ) included new language that would have permitted ESEA Title I-A funds to be used to provide transportation for homeless students to their school of origin. LEAs are responsible for developing their own procedures for determining the amount of ESEA Title I-A funds that are set aside for homeless students; as a consequence, the amount of Title I-A funding set aside for this purpose varies considerably across LEAs. Homeless advocates argue that the lack of clarity regarding Title I-A set-asides has led to inadequate set-asides. Although no national data on set-asides are available, a survey of local homeless liaisons by the National Association for the Education of Homeless Children and Youth (NAEHCY) in January of 2010 included a question asking liaisons whether their district (LEA) set aside Title I-A funds for homeless students, and if so, how much was set aside. Out of the 2,234 liaisons who answered the question, 67% indicated that their district did set aside Title I-A funds; 23% indicated that their district did not set aside funds; and 11% did not know. The Senate HELP Committee bill included new provisions under ESEA Title I-A that would have require d Title I-A set-asides to be based on a needs assessment that reflected the number of homeless children and youth identified in the previous year and included the collaboration and input from other agencies. It also would have expanded the allowable uses of these funds to include, among other things, funding for local liaisons and the provision of transportation to the school of origin. The House Education and Workforce Committee bill ( H.R. 3989 ) included new provisions under ESEA Title I-A stating that Title I-A EHCY set-asides may be based on: a needs assessment that reflected the number of homeless children and youth identified in the previous year; and included collaboration and input from other agencies. It also would have expanded the allowable uses of these funds to include, among other things, the provision of transportation to the school of origin. The most recent reauthorization of the ESEA ( P.L. 107-110 ) amended EHCY to explicitly prohibit states that receive program funding from segregating homeless students from non-homeless students, except for short periods of time for health and safety emergencies or to provide temporary, special, supplementary services. An exception was made for four counties that operated separate schools for homeless students in FY2000 (San Joaquin, Orange, and San Diego counties in California, and Maricopa County in Arizona), as long as (1) those separate schools offer services that are comparable to local schools; and (2) homeless children are not required to attend them. Four schools operate under this exception. Some argue that segregation is harmful to homeless students and no exceptions should be permitted. They believe that homeless students are better served, and perform better academically, if they attend the same schools as other students. Others argue that homeless students benefit from the wider array of services that are provided in separate schools, and that the greater sense of community and belonging provided by these schools is critical for homeless students. Both the Senate HELP Committee bill and the House Education and Workforce Committee bill ( H.R. 3990 ) would have continued the overall prohibition on the segregation on homeless students; they would have also retained the limited exception for those schools in exempt counties that were in operation in FY2000, as under present law. The House Education and Workforce Committee bill ( H.R. 3990 ) also included language that would have increased the reporting frequency (to once a year) for the Secretary's required report on separate schools. Both the Senate HELP Committee bill and the House Education and Workforce Committee bill ( H.R. 3990 ) would have required that the LEA presume that keeping a homeless student in the school of origin would be in the student's best interest unless the parent or guardian disagrees. In addition, both bills would have required that the "best interest" determination by an LEA consider student-centered factors "including factors related to the impact of mobility on achievement, education, health, and safety of homeless children and youth ... " Both bills included new language stating that if an LEA determined it to be in the best interest of the homeless student to attend a different school, it must provide the parent, guardian, or unaccompanied youth with its decision in writing and must include information on appeal rights in a form that is understandable to parents and guardians of homeless children and youth. The House Education and Workforce Committee bill ( H.R. 3990 ) also included new language stating that "the term 'school of origin' should include the designated receiving school at the next grade level for all feeder schools." This would have permitted, for example, homeless students graduating from elementary school to be eligible to attend the same middle school serving their elementary school as non-homeless students. The Senate HELP Committee bill stated that if parents and guardians have exhausted all available dispute procedures, they could appeal to the SEA. It also would have required that until there is a final resolution of the dispute, the LEA must enroll the student and provide transportation to the school of origin. In addition, it would have expanded the issues subject to dispute by explicitly adding: eligibility, services in a public school or public preschool, or any other issues relating to services. The EHCY program requires that each LEA, whether it receives an EHCY subgrant or not, designate a homeless liaison for the LEA. Many state coordinators and homeless liaisons are responsible for the coordination of several programs, and some argue that they have insufficient time to perform their duties under the EHCY. Both the Senate HELP Committee bill and the House Education and Workforce Committee bill ( H.R. 3990 ) would have included new language requiring that training be provided for local liaisons and other school personnel providing services under EHCY. In addition, the Senate HELP Committee bill stated that the Office of Coordinator for EHCY must have "sufficient knowledge, authority, and time to carry out the duties described in this title," and that local liaisons must have "sufficient training and time" to carry out their duties. The House Education and Workforce Committee bill ( H.R. 3990 ) stated that the Office of Coordinator for EHCY must be able to "sufficiently carry out the duties described in this subtitle." It would have also required each state coordinator to annually post data on the number of homeless children and youth identified in the state. Homeless preschoolers are particularly difficult to identify, in part because they are not yet old enough to be covered by state compulsory attendance laws. For this reason, although preschool students are guaranteed equal access to public preschool and Pre-K programs under EHCY, they do not have the same guarantee of being able to attend public school as K-12 homeless students do. Although homeless preschoolers are eligible to attend public preschool programs, placement of homeless preschoolers in public programs is limited by the fact that there is not a sufficient supply of these programs, and programs that do exist often do not have sufficient vacancies to fill the need. In addition, preschoolers, unlike K-12 children and youth, are only guaranteed transportation if it is provided to non-homeless preschoolers at the school. This creates a significant barrier to school attendance for homeless preschoolers, because many homeless families are often unable to provide the needed transportation for their preschoolers. The Senate HELP Committee bill included an increased emphasis on school readiness for homeless preschoolers. New provisions would have required each state plan to ensure that preschools that are funded, administered, or overseen by an SEA or LEA prioritize the enrollment of homeless preschoolers, and coordinate the review of educational and related needs of homeless children and their families with the local liaison in the relevant service area. However, these preschools would not be required to immediately enroll homeless preschoolers if they are at full capacity. The term 'unaccompanied youth' includes a youth not in the physical custody of a parent or guardian. These youth are covered by the same protections that are provided to other homeless youth under EHCY. However, outreach to these youth is difficult because they usually do not stay in shelters, and in some cases they are fearful of being identified, even though they may wish to complete their education. Unaccompanied homeless youth have often run away from a difficult home situation, or been forced to leave by a parent or guardian. These students often struggle to find a place to sleep and meet their basic needs. In addition, many of these youth worry that attending school would be unsafe because the school might involve child welfare agencies or law enforcement. According to advocates, providing programs that make schools safe and welcoming to subgroups of unaccompanied youth who are overrepresented can help. Because of their situation, these youth benefit from receiving more flexibility in their school schedule than other students, and from diversified learning opportunities such as vocational education. Promising approaches to serving these students include providing a mentor; coordinating with other agencies to help meet the basic needs of these youth; as well as policies that facilitate the awarding of partial credit or recovery of previous credits. Both the Senate HELP Committee bill and the House Education and Workforce Committee bill ( H.R. 3990 ) included new language that would have required that homeless liaisons ensure that unaccompanied youth are enrolled and have the same opportunities to meet state academic standards as other students. In addition, both bills would have required that unaccompanied youth be told about their rights to apply for financial aid as an independent student. Both bills also included language that would have protected LEAs from liability for enrolling an unaccompanied youth without the consent of a parent or guardian. Both the Senate HELP Committee bill and the House Education and Workforce Committee bill ( H.R. 3990 ) would have required that homeless students be able to participate in all the educational programs for which they meet the eligibility requirements. Both bills included language that stated that homeless children are to be immediately enrolled even if they have missed application or enrollment deadlines. In addition, the Senate HELP Committee bill would have required states to ensure that homeless students receive credits for previous coursework and that they not be hindered from enrolling due to overdue fines or fees. It also would have required that previous school records be released, even if a student owed fines or fees, or had not met the previous school's withdrawal requirements. Both bills would have required LEAs to coordinate services for homeless children and youth with disabilities with the Individuals with Disabilities Act and Section 504 of the Rehabilitation Act. On February 7, 2012, H.R. 32 , The Homeless Children and Youth Act of 2011 , was reported out by the Subcommittee on Insurance, Housing, and Community Opportunity of the House Committee on Financial Services. This bill would have amended HUD's definition of homelessness to include children and families that have been verified as homeless through the following federal programs: the EHCY program, the IDEA Part C program, Early Head Start program, and the Runaway and Homeless Youth program. This change would have made these newly identified individuals and their families eligible for HUD housing assistance services, without requiring that they meet the detailed criteria or be subject to the funding cap included in the HEARTH Act ( P.L. 111-22 ). However, it would not have guaranteed that they would receive services. Receipt of services would have been based on local providers' needs assessments. An amendment (identified as Franken Title I-Amendment 3) introduced by Senator Franken and subsequently adopted as part of the final Senate HELP Committee bill, would have included the provision of services for foster children and youth. Among other things, the Franken amendment would have changed the definition of homeless in the EHCY by striking children who are "awaiting foster care placement" from the definition of homeless. This would have meant that children "awaiting foster care placement," as defined by each state, would no longer have been eligible for services under EHCY. The amendment would also have created a new program under ESEA Title I-A to ensure that foster children and youth would have improved access to education and related services. Only the proposed changes to the EHCY definition of homeless are discussed in the text of this report. However, a brief summary of the entire amendment is available in the separate text box below. Both the HELP Committee bill and the House Education and Workforce Committee bill ( H.R. 3990 ) would have incorporated changes to EHCY to increase cooperation across agencies and within ED to better serve homeless children. They both would have established privacy requirements to protect information on homeless children and youth's living situation from being released to anyone not authorized to have such information. Both the Senate HELP Committee bill and the House Education and Workforce Committee bill ( H.R. 3990 ) would have increased the amount of time that states have to submit required information for an EHCY grant to ED to 120 days. The Senate HELP Committee bill would have reduced the state set-aside to the greater of 20% of the state allocation or $85,000. It also would have expanded the time available for ED (from to 60 days to 90 days after enactment) to issue and publish school enrollment guidelines for states in the Federal Register. It also stated that the Secretary's required report on homeless children and youth must be published at least every two years (no timeline is specified in current law.) In addition, the Senate HELP Committee bill included provisions that would have allowed the Secretary to reserve EHCY funds for emergency assistance to homeless children, youth and their families, if appropriations for the program exceeded $70 million. The House Education and Workforce Committee bill ( H.R. 3990 ) would have removed the clause in current law requiring that an LEA provide an assurance in its application that it would maintain its fiscal effort at a percentage specified in law. Appendix A. Number and Percentage of Enrolled Homeless Students by State for Selected Years Appendix B. Legislation Adopted in the 110 th -111 th Congresses that affects the Education for Homeless Children and Youth Program Several bills were passed in the 110 th -111 th Congresses that will potentially increase the programs and/or services available to homeless students. This appendix summarizes the portions of these bills with relevance for homeless students. The Homeless Emergency and Rapid Transition to Housing Act (HEARTH Act) was passed as part of the Helping Families Save Their Home Act ( P.L. 111-22 ). This legislation amended and reauthorized the Housing and Urban Development (HUD) homeless programs under the McKinney-Vento Act, among other things. The HEARTH Act expanded the definition of homeless used by HUD and several other agencies. However, the definition of homeless used by ED in administering the EHCY program remains more expansive than the definition included in the HEARTH Act. The amended definition of homeless included in the HEARTH Act does allow children and youth that meet EHCY eligibility criteria (or eligibility under certain other federal programs) to be considered eligible under the HEARTH Act in limited circumstances. It requires that youth and families who are defined as homeless under another federal program meet each of the following criteria: They have experienced a long-term period without living independently in permanent housing. In its final regulation, HUD defined "long-term period" to mean at least 60 days. They have experienced instability as evidenced by frequent moves during this long-term period, defined by HUD to mean at least two moves during the 60 days prior to applying for assistance. The youth or families with children can be expected to continue in unstable housing due to factors such as chronic disabilities, chronic physical health or mental health conditions, substance addiction, histories of domestic violence or childhood abuse, the presence of a child or youth with a disability, or multiple barriers to employment. Under the final regulation, barriers to employment may include the lack of a high school degree, illiteracy, lack of English proficiency, a history of incarceration, or a history of unstable employment. The HEARTH Act includes additional provisions relevant for EHCY. The most important are the new requirements that in order to receive funds: Continuum of care (CoC) applicants must show that they have collaborated with LEAs in identifying homeless families, and in informing families and homeless youth of eligibility for EHCY services. CoC applicants must also show that they have considered the educational needs of homeless students when determining shelter placements, including placing families with children in shelters as close to the school of origin as possible. CoCs must obtain certification from each project applicant that provides housing or services that they have designated a staff person to ensure that children are enrolled in school and are connected to appropriate community services, and that these services are consistent with the provisions of Title VII of McKinney-Vento, as well as other relevant laws. The reauthorization of the HEAD Start Act through the Improving Head Start for School Readiness Act of 2007 ( P.L. 110-134 ) strengthened requirements regarding homeless preschoolers. Two of the most important changes are the requirement that homeless preschoolers be automatically deemed eligible for Head Start and Early Head Start; and a requirement that homeless children be identified and prioritized for enrollment in these programs. The Higher Education Opportunity Act, ( P.L. 110-315 ) included amendments prioritizing the provision of services for homeless students in the TRIO programs (several programs that provide support so that at-risk junior high and high school students graduate from high school and attend and complete college); and in the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR-UP) program. It also permits these programs to offer programs specifically designed for at risk groups, including homeless youth. The College Cost Reduction and Access Act ( P.L. 110-84 ) included provisions that allow youth who are verified as homeless and unaccompanied to be considered independent, thereby allowing them to apply for financial aid without the requirement that they obtain a parent's signature or provide information on family income. These students often face considerable obstacles to attending college, including the cost of attendance. This law is intended to ensure that these students will be able to apply for financial aid. It specifies that verification of independent student status must be made by a LEA homeless liaison, the director (or designee) of the Runaway Homeless Youth Act program, the director (or designee) of a Housing and Urban Development homeless shelter program, or a college financial aid administrator.

The Education for Homeless Children and Youth program (EHCY) provides formula grants to state educational agencies (SEAs) to help ensure that all homeless children and youth have equal access to the same free and appropriate public education, including public preschool education that is provided to other children and youth. It is the only federal education program exclusively focused on homeless children and youth. SEAs competitively subgrant funds to local educational agencies (LEAs). Not all LEAs receive EHCY grants. In school year (SY) 2010-2011, 3,651 LEAs, out of a total of 16,290, received awards. Although only 22% of LEAs received EHCY grants in SY2010-2011, they enrolled 71% of all homeless students in that year. Education and related services for homeless children and youth are also funded through required set-asides from Title I-A of the Elementary and Secondary Education Act. National data on the amount of funding set aside are not available. The EHCY program was most recently reauthorized as part of the Elementary and Secondary Education Act (ESEA, P.L. 107-110). Reauthorization of EHCY may be considered by the 113th Congress as part of the reauthorization of ESEA. EHCY received $65.2 million in funding for FY2012. EHCY is currently funded through March 27, 2013, by a government-wide Continuing Resolution (P.L. 112-175) at the FY2012 level plus 0.612%. All LEAs are required to report data to the Department of Education on the number of homeless students enrolled in school each year, regardless of whether or not they receive an EHCY grant. In SY2008-2009, 956,914 homeless students were reported enrolled in school; in SY2009-2010, 939,903 homeless students were reported enrolled; and in SY2010-2011, the number of enrolled homeless students reported was 1,065,794. The total number of homeless students enrolled decreased by 2% between SY2008-2009 and SY2009-2010; it increased 13% between SY2009-2010 and SY2010-2011. During the three-year period between SY2008-2009 and SY2010-2011, it increased by 11%. Four states accounted for 42% of the total number of students enrolled in both LEAs with EHCY subgrants and those without in SY2010-2011. Those states, and their percentages of total homeless student enrollment were, California (21%), New York (9%), Texas (8%), and Florida (5%). Legislation to reauthorize EHCY as part of the reauthorization of ESEA was reported by both House and Senate committees in the 112th Congress, and may be considered in the 113th Congress. Some of the issues that are under consideration include EHCY program funding; costs of transporting homeless students to their school of origin; implementation of the ESEA Title I-A set-aside for EHCY; whether to permit separate schools for homeless students; clarification of the "best interest" school selection process; how to enhance the ability of LEA homeless liaisons and state coordinators to meet the needs of homeless students; how to improve the identification of, and services provided to, preschool students and unaccompanied youth; how to increase access to education and related services for homeless students; and the impact of potential changes to the definition of homeless in EHCY and other legislation.

Some lawmakers have expressed concern over the impact on small business of several proposed increases in the income tax rates for high-income individuals being considered in the current Congress. In his budget request for FY2011, President Obama is proposing to extend permanently most of the individual income tax cuts that were enacted in 2001 and 2003 and are due to expire at the end of 2010. But the request also called for restoring the top two tax brackets (currently 35% and 33%) to their levels prior to the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16 ): 39.6% and 36%; the higher rates would become effective in 2011. Under the proposal, the 39.6% rate would apply that year to all filers with adjusted gross incomes (AGIs) above $373,650, and the 36% rate would affect single filers with AGIs from $200,000 to $373,650 and joint filers with AGIs from $250,00 to $373,650. Upper-income individuals would also face higher marginal tax rates under the versions of health care reform legislation passed by the House ( H.R. 3962 ) and the Senate ( S.Amdt. 2786 to H.R. 3590 ). The House measure would impose a surtax equal to 5.4% of modified adjusted gross income (MAGI) in excess of $500,000 for single filers and in excess of $1 million for joint filers. Though the Senate bill does not include the surtax, it would impose an added payroll tax of 0.5% on the wage income of single filers above $200,000 and on the wage income of joint filers above $250,000; the tax would also apply to self-employed workers with business incomes above those thresholds. Proponents of the proposed rate hikes say they are needed to raise revenue for a variety of crucial budgetary purposes (including reducing projected federal budget deficits). In their view, the hikes would also reverse the decline in the progressivity of the individual income tax ushered in by the sweeping tax cuts enacted during the Bush Administration. Critics, by contrast, argue the rate increases would ultimately shrink the economy's long-term growth potential through their impact on savings, investment, and wages. One of their main concerns is the effect that higher rates would have on small business formation, growth, and investment. Citing recent research findings, critics maintain that firms with fewer than 500 employees historically have accounted for a substantial share of business investment and made important contributions to the commercial development of new technologies. In their view, the proposed higher marginal tax rates would boost the tax burden for many small business owners, reducing their incentives to open new lines of business, expand current operations, or invest in the development of new products and processes. This report seeks to shed some light on the validity of such an argument by exploring what is known about the share of small business owners and of small business income that is subject to the top two marginal income tax rates. The analysis at the heart of this report is built around the distribution of small business income by marginal individual tax rates. While the Internal Revenue Service (IRS) does not release to the general public the data needed to compute such a distribution, the figures can be extracted from the vast store of individual tax data collected by the agency. Using a micro-simulation model, economists at the Tax Policy Center (TPC) jointly managed by the Urban Institute and the Brookings Institution have generated a distribution of small business income and filers with such income by tax bracket for 2007 and 2009. Before discussing the results, however, it is useful to know what is meant by a small business owner and small business income in this context. Providing such an explanation is not as simple or straightforward an exercise as it may appear. This is because a small business can be defined in several ways, and there is no consensus among analysts on the proper or correct definition. Still, a line must be drawn between small business income and all other sources of income in order to determine the share of small business owners and small business income that could be affected by an increase in the marginal tax rates affecting upper-income individuals. In estimating the distribution of small business income by tax bracket, TPC uses the same definition of a small business owner that the Treasury Department has employed in several recent studies. In both cases, such an owner is anyone who reports any income or loss on Schedule C (self-employment income), Schedule E (income from rents, royalties, partnerships, limited liability companies, and S corporations), and Schedule F (farm income). Such a definition seems to have little in common with the popular image of a small business as a start-up firm owned by risk-taking entrepreneurs bent on commercializing some new technology, or a one-of-a-kind family-owned firm serving mostly local customers. There are advantages and disadvantages to using such a definition as a basis for estimating the distribution of small business income by tax bracket. On the one hand, it covers all income earned in a tax year by what are referred to as passthrough entities, many of which could be considered small on the basis of the size of their workforces, revenue, or assets. The definition also makes it possible to separate small business income from all other sources of income using available tax data. On the other hand, the definition has several limitations that call into question its usefulness for policy analysis. First, it excludes income earned by small C corporations and passed on to owners as compensation, dividends, or capital gains. There is no clear economic justification for omitting income from small C corporations when estimating the distribution of small business income by tax bracket. Second, the TPC/Treasury definition allows some firms that could be considered medium-sized or large using different criteria to be counted as small. For example, in 2005, 620,682 S corporations (or 17% of all S corporation tax returns) and 197,404 partnerships (7% of all partnership tax returns) reported receipts of $1 million or more on their federal tax returns; the same firms accounted for 91% of the combined receipts for S corporations and partnerships that year. Third, under the TPC/Treasury definition, it is likely that many upper-income individuals who are what the IRS views as passive investors in partnerships and S corporations are counted as small business owners. In 2004, for example, passive investment income from those entities made up some or all the business income reported by 9% of households, and 58% of all individuals with adjusted gross incomes (AGIs) above $1 million reported receiving some or all of their small business income as passive investment income. Yet another limitation with the TPC definition is that it treats certain kinds of miscellaneous income unrelated to investment or wages as small business income, even though the miscellaneous income has no clear-cut relationship to the ownership and management of a business; noteworthy examples include the fees given to CEOs for sitting on corporate boards, proceeds from sales on eBay, the honoraria received by journalists, and the royalties paid to book authors. It is not known to what extent these limitations might distort a distribution of small business owners or income by tax bracket based on what many would regard as a more plausible definition of a small business owner. The linkages between the individual and business tax data collected by the IRS needed to generate such a distribution simply do not exist. So given the limitations of any distribution of small business owners and income by tax bracket that relies on the TPC/Treasury definition, its results should be viewed as illustrative or suggestive rather than definitive or conclusive. Table 1 shows the key results of the estimated distribution of small business income in 2007 and 2009 generated by TPC's microsimulation model. At least four conclusions relevant to the argument that the growth of small firms would be stunted by a rise in the top two individual tax rates can be drawn from the figures in the table. First, the results indicate that few small business owners face the current top two marginal tax rates of 33% and 35%. Less than 2% of tax filers in those brackets in both 2007 and 2009 reported any small business income. At the same time, a majority of small business owners are subject to marginal tax rates ranging from 0% to 15%: in 2007, 68% of tax filers with small business income were in that position; the share rose to 72% in 2009. Thus, it seems reasonable to conclude that even after allowing for the limitations to the measurement of small business income in the TPC analysis, a tiny share of individual taxpayers who own and are actively involved in the management of firms that many would regard as small on the basis of their employment, revenue, or asset size would be affected by an increase in the top two individual tax rates. Second, small business income is not the dominant form of income in any tax bracket above zero. In 2009, such income totaled anywhere from 6.0% of AGI in the 15% bracket to 39.6% in the 35% bracket. (The high shares shown in the table for the 0% bracket stem from substantial business losses and the use of the absolute value of those losses to compute the ratio of small business income to AGI.) Third, while most filers in the top two brackets report some small business income, a majority derive less than half of their AGIs from small business. In 2009, small business income accounted for over 50% of AGI for 40% of filers in the top bracket and for 33% of filers in the second bracket. Finally, the results suggest that the proposed tax hikes for upper-income individuals would affect a greater share of small business income than small business owners. In 2007 and 2009, small business income represented an average of 30% of AGI for filers in the 33% tax bracket, and an average of 35% of AGI for filers in the 35% bracket; by contrast, the average for all taxpayers (including non-filers) was 14%. While it is unclear what proportion of small business income fell into each bracket shown in the table, there is evidence that taxpayers subject to the top two marginal rates earn a major share of that income. According to IRS individual income tax data (which can be accessed through the agency's website: http://www.irs.gov ), small business income (as defined in the TPC analysis) accounted for 61% of the aggregate AGI for all filers with AGIs of $200,000 or more in 2006 and 62% of the aggregate AGI for the same set of filers in 2007. Proposals to increase the marginal tax rates facing upper-income individuals raise several policy issues related to small business. One concerns the legal form of organization in which small firms operate. The enactment of a rate increase could modify the tax incentives to operate as a corporation. Another issue is the effect of rate increases on small business formation and investment. The results of the TPC analysis suggest that a major share of small business income could be affected by a rise in the marginal tax rates facing upper-income individuals. Some are concerned that a larger tax burden on small business income could lead to reduced rates of small business formation and investment. Both issues are explored below. Under current federal tax law, the owner(s) of a business can choose to operate either as a C corporation or some kind of passthrough entity (i.e., partnership, limited liability company, sole proprietorship, or S corporation). The decision hinges on a variety of tax and non-tax considerations. Foremost among the tax considerations are the rates at which individual and corporate income are taxed, tax rates for dividends and long-term capital gains, and the length of the investment horizon. In combination, they determine the expected after-tax rate of return on investment in or by any business entity. In general, non-tax considerations appear to be of greater importance to large firms that wish to raise capital globally from a variety of investors and lenders than they are to smaller firms. The former are organized largely as C corporations to allow them to take advantage of the benefits of operating in that legal form. Unlike other forms of organization, a C corporation faces no limits on the number of shareholders it may have, the kinds of stock it may issue, or the nationality of its shareholders. In addition, the shares of C corporations generally are traded in established exchanges, making it possible for ownership interests to be transferred readily at relatively low transactions costs. The earnings of C corporations are taxed twice: first at the corporate level and a second time at the individual level when the earnings are distributed—or passed through—to shareholders as compensation, dividends, or capital gains. By contrast, the earnings of passthrough entities are taxed only once: at the individual level of the owners as part of their taxable income from all sources, whether they are distributed or not. Given that a major proportion of small business income is taxed at the top two marginal tax rates, a rise in those rates, coupled with no change in the top rates for corporate income, dividends, and capital gains, could trigger an increase in the fraction of small firms organized as C corporations. In this case, the magnitude of the difference between the maximum individual and corporate rates could prove decisive in determining whether such a rise occurs and its extent. Both the individual and corporate rate structures are progressive. In 2010, for taxpayers with sufficient taxable income, the former ranges from 10% to 35%, while the latter has a minimum rate of 15% and a maximum rate of 35%. Qualified dividends and long-term capital gains are either not taxed or taxed at a rate of 15% in the same year. Under the Obama Administration's budget request, the top individual rate would rise to 39.6% starting in 2011, leaving it nearly five percentage points above the top corporate rate. The Administration's FY2011 budget request also calls for re-setting the top tax rate for long-term capital gains and dividends at 20% for single filers with AGIs of more than $200,000 and joint filers with AGIs in excess of $250,000, beginning in 2011. If enacted, these changes are likely to alter the tax incentives for operating as a C corporation. For lawmakers, an interesting question is whether the alteration would be sufficient to usher in a significant rise in the fraction of small firms operating as corporations. One way to address this question is to construct a series of simplified investment scenarios involving a partnership and a corporation and compare their after-tax profitability. In essence, the scenarios would reflect the interaction of current top individual, corporate, and capital gains tax rates, as well as proposed changes in them, over a variety of investment horizons. The results of such an exercise are summarized in Table 2 below. Three sets of four scenarios are analyzed, using a simple model for determining after-tax rates of return for investing in a passthrough entity like a partnership or a C corporation. Each set is built around a different investment horizon: one year, five years, and 10 years. The first scenario reflects current law in that it sets the individual tax rate at 35%, the corporate rate at 35%, and the long-term capital gains rate at 15%. In the second scenario, the individual rate rises to 39.6% (as proposed by the Obama Administration for 2011 and thereafter), while the corporate rate and the capital gains rate remain at 35% and 15%, respectively. For the third scenario, the individual rate stays at 39.6% and the corporate rate at 35%, but the capital gains rate rises to 20% (as proposed by the Obama Administration for 2011 and beyond). The fourth scenario combines an individual rate of 39.6% and a capital gains rate of 20% with a reduction in the corporate rate to 30.5%, as proposed by House Ways and Means Committee Chair Charles B. Rangel in a tax reform bill ( H.R. 3970 ) he introduced in 2007. Several simplifying assumptions undergird each scenario. First, an investor can expect to earn a constant pre-tax rate of return of 20%, regardless of whether she invests in a partnership or a corporation. Second, all after-tax income generated during the life of an investment that is not distributed is reinvested in the business. In the case of a partnership, each partner receives an annual distribution equal to 7% of partnership earnings to pay her federal tax on her share of the earnings. In the case of a corporation, shareholders receive no dividends. Third, the business is liquidated after five years. In the case of a partnership, there is no capital gain or loss at the time of the liquidation, and all partners receive a liquidating distribution of the remaining after-tax income, plus their initial investments. In the case of a corporation, the shareholders pay a capital gains tax at the top rate when they sell their shares or when the business is liquidated. Finally, the earnings of both the corporation and the partners are taxed at the top rates. As the figures in Table 2 suggest, small business owners subject to the top individual and capital gains tax rates appear to be better off operating as a partnership rather than a C corporation under both current law and the proposed changes in the maximum individual, corporate, and long-term capital gains tax rates examined here. In the scenario reflecting current law, a partnership would earn an after-tax rate of return that is 2.0 percentage points greater over one year, 1.5 percentage points greater over five years, and 1.1 percentage points greater over 10 years. Boosting the top individual rate to 39.6% while holding the other two rates constant narrows the gap significantly, but the partnership still comes out ahead over one year and 10 years. A partnership would realize a greater after-tax rate of return in all three periods when the top individual rate is 39.6%, the top capital gains rate is 20%, and the top corporate rate is 35%. And a reduction in the corporate rate to 30.5%, coupled with no change in the other two rates, results in a greater after-tax rate of return over one year and five years for a partnership, although a corporation would gain a slight edge over 10 years. The distribution of taxable income among the main forms of business organization can affect the amount of revenue flowing into the U.S. Treasury. Evidence substantiating such a link can be found in a recent report released by the Small Business Administration's Office of Advocacy that addressed average effective tax rates for the various forms of business organization. A firm's average effective tax rate is the ratio of taxes paid to gross receipts; as such, the rate reflects both the appropriate statutory tax rate and the reduction in that rate owing to any tax benefits a firm can claim, such as credits, exemptions, exclusions, and special deductions. Using IRS tax return data for individuals and corporations, the report estimated an average effective tax rate in 2004 of 26.9% for S corporations, 17.5% for C corporations, 13.3% for sole proprietorships, and 23.6% for partnerships (including limited liability companies); the rate for all small businesses was 19.8%. These findings indicate that everything else being equal, more revenue would have been raised that year if a larger amount of small business taxable income had been attributable to S corporations or partnerships than to C corporations. Federal tax policy has the potential to affect the performance of small firms through its impact on the incentives for savings, investment, and entry into self-employment. Decisions about critical matters such as whether or not to launch a new business, how a firm should be organized, how much it should invest in a certain period, and how to finance that investment can be swayed by the taxation of business income. The extent to which taxes influence the decisions of small business owners is no trivial issue, as those decisions, collectively, have important implications for the performance of the U.S. economy. Critics of the proposed increases in the marginal tax rates for high-income taxpayers claim they would harm the domestic climate for small business formation and investment. More specifically, in their view, upper-income households earn the major share of capital income, and boosting their tax burden would end up shrinking their incentives to save, form a new business, or invest in an existing small business by giving the federal government a larger share of the returns from those activities. For critics, the data in Table 1 suggesting that individuals in the top two tax brackets receive a large share of small business income validate this concern. In making such a claim, critics draw in part on some of the findings from recent research into the effect of tax policy on entrepreneurial firms, which typically are equated with the self-employed population, owing to a lack of consensus over the definition of such firms. Of particular significance is a 2001 study by economists Douglas Holtz-Eakin and Harvey S. Rosen of the impact of the individual income tax on entrepreneurial activities. They found that a rise in individual marginal tax rates contributed to lower investment spending by profitable sole proprietors, reduced growth in their workforces and payrolls, and slower expansion of their businesses (as measured by business receipts) from 1985 to 1988, relative to a scenario based on no change in those rates. Given that small firms (as defined by the Small Business Administration) are thought to account for about half of gross domestic product and non-agricultural employment in the private sector, on average, and to play critical roles in the commercial development of many new technologies, the concerns raised by critics warrant serious consideration. Yet neither the literature on taxation and entrepreneurship nor the current tax treatment of small business offers robust, unqualified support for those concerns. Instead, both this literature and current tax policy sketch a more complicated and less clear-cut picture of the relationship between income taxes and entrepreneurial activity. On the issue of the formation of new firms (which tend to be small in employment size), there is general agreement among economists that tax policy has the potential to make entering self-employment more or less attractive than working for a wage or salary. What is more open to question (and controversy) is the role taxes play in the creation of new firms. This issue is explored in depth in a 2004 review of the theoretical and empirical literature on taxation and self-employment by Herbert J. Schuetze and Donald Bruce. Their findings reveal a lack of consensus among economists on the relationship between the two. The theoretical literature suggests that taxation has a complex and ultimately ambiguous effect on the decision to become self-employed. In theory, several tax considerations are thought to influence this decision. Those discussed in the literature include differences between the tax treatment of business income and wage or salary income, the extent to which the government shares the risks associated with becoming self-employed through the offset of net operating losses against other sources of taxable income, the progressivity of the individual and corporate income tax systems, and opportunities to avoid or evade the taxation of business income. Models of the decision to enter into self-employment derived from these considerations have yielded inconclusive or contradictory results, implying that taxes have no clear-cut impact on the formation of entrepreneurial firms. A similar conclusion evidently applies to the findings of the empirical literature. Some studies discussed in the review have found that higher rates fostered increased "rates of entrepreneurial activity," while other, more recent ones have challenged that finding. The former support the popular notion that individuals become self-employed to avoid paying higher taxes on their wage or salary income. But the latter generally have detected no more than a weak link between tax rates or opportunities for tax avoidance or evasion, on the one hand, and entry into self-employment, on the other hand. For instance, in a 2006 study, Donald Bruce and Mohammed Mohsin estimated that a 50 percentage point cut in the top marginal tax rate would be required to engender a 1% gain in "entrepreneurial activity." Schuetze and Bruce attributed this weak link to the opposing effects of higher tax rates on the decision to become self-employed: a higher top rate reduces the expected returns from self-employment but increases the sharing of risk associated with starting a new business. In the view of Schuetze and Bruce, more research needs to be done on the relative importance of risk-sharing and opportunities for tax evasion in the decision to become self-employed. They contend that the development of a theoretical model incorporating both factors would make it possible for lawmakers to make more informed decisions about tax legislation affecting the incentives for small business formation, increasing the chances of achieving the intended objectives. On the issue of investment by small firms, a rise in the top two individual tax rates may not be as damaging as some have argued. In fact, a careful consideration of the major forces driving small business investment casts some doubt on the notion a rate increase would reflexively cause a drop in small business investment. In theory, if most small business income is subject to those rates, then an increase in both might result in less investment by small firms than otherwise would be the case, all other things being equal. There are two possible explanations for such an outcome. One flows from what is known as the neoclassical theory of business investment. According to the theory, the cost of capital is the main driver of this investment; so when it rises in a way that affects most firms, business investment declines, and the opposite occurs when the cost falls. For any firm, the cost of capital combines the opportunity cost of making an investment, economic depreciation for the acquired asset, and the tax burden on the returns the investment generates. By itself, an increase in a business taxpayer's marginal tax rate has the effect of boosting its cost of capital. If the neoclassical model is accurate, the taxpayer will respond by cutting back its investment spending. In the face of a higher cost of capital, the number of projects a firm can undertake profitably decreases, as does its desired capital stock. Plenty of studies indicate that business investment is responsive to changes in the cost of capital, but considerable uncertainty still surrounds the degree of responsiveness. A second reason why higher tax rates could spark a decline in business investment is tied to what might be called the cash flow theory of business investment. Under the theory, the main driver of business investment is a firm's cash flow or its retained earnings. Whereas the neoclassical model assumes that the opportunity cost of internal and external funds are the same, and that it can borrow as much money as it wants at that cost, the cash flow model proceeds from the supposition that for most firms, the cost of internal funds is lower than that of external funds. So how much a firm invests over time hinges on its cash flow in that period. All other things being equal, a rise in tax rates should lead to reduced business investment, as most firms would have lower retained earnings as a result. At least one study has found a notable correlation between cash flow and business investment, but what this means for the relationship between the two is far from clear. Do firms invest more because their retained earnings are growing, or is it the case that profitable firms have both relatively high cash flows and levels of investment? But the story does not end there. There is an alternative theory of business investment that has little to do with the cost of capital or cash flow. According to the theory, the main engine powering expansions or contractions in investment is the level of overall demand in an economy for goods and services. Rises in demand will translate to higher investment spending largely because the ratio of capital and labor to output is fixed in the short run. Under what some call the accelerator model of business investment, changes in the cost of capital generated by changes in tax policy essentially do not matter. While there is no doubt that expected increases in sales play a powerful role in determining how much a firm invests in a given period, there is little doubt that the cost of capital also plays an influential role. In addition, current federal tax law contains several tax incentives that directly affect business investment, one of which is targeted at small firms. Under Section 179 of the Internal Revenue Code (IRC), small firms have the option to write off (or expense) the cost of qualified assets in the tax year when they are placed in service, within certain limits; an enhanced version of the expensing allowance was available in 2008 and 2009 as a stimulative measure. The same firms (as well as all larger firms) were allowed to expense up to 50% of the cost of qualified assets bought and placed in service in 2008 and 2009. (Congressional leaders among the Democrats and Republicans and the Obama Administration have endorsed an extension of both the enhanced expensing allowance and the so-called bonus depreciation allowance through 2010, as a stimulative measure.) It is not known how many small firms took advantage of either or both special deductions, owing to a lack of tax and other data on small business investment. Expensing is the most accelerated form of depreciation and can result in taxing the returns to investment at a marginal effective rate of zero. So business taxpayers facing the top individual and corporate tax rates can lower the tax burden on the returns to qualified investments by claiming current expensing allowances. A similar outcome can be achieved when a small firm invests in research that qualifies for the research tax credit under IRC Section 41 and has research expenditures that may be expensed under IRS Section 174. In combination, the tax incentives can produce a negative marginal effective tax rate on the returns to investment in research and development. These considerations raise the possibility that those who claim that a rise in the tax rates affecting upper-income individuals would curtail small business investment may not be taking into account all the key forces shaping the domestic climate for that investment. The availability of investment tax incentives and other business tax benefits may lessen or offset the dampening effect of such a rise. And starting in 2011, a sustained upturn in domestic and foreign demand for goods and services produced in the United States could go a step further and overwhelm any such effect.

Some lawmakers have expressed concern over several proposals being considered in the current Congress to raise the tax burden on high-income individuals. Of particular concern are a proposal by the Obama Administration to allow the top two individual marginal tax rates (currently 33% and 35%) to return to their pre-2001 levels of 36% and 39.6%, starting in 2011, and a provision in the health care reform bill passed by the House (H.R. 3962) to impose a 5.4% surtax on the modified adjusted gross incomes (MAGIs) of single filers above $500,000 and the MAGIs of joint filers above $1 million, also starting in 2011. Critics claim the proposed tax hikes would undermine the economic incentives for small business formation and investment. By contrast, backers of the Administration's proposal say it is needed to raise revenue during a time of large budget deficits, inject greater progressivity into the federal income tax in the wake of the sweeping tax cuts enacted during the Bush Administration, and promote a fairer distribution by income level of the cost of government services. A similar argument underlies support for the surtax in H.R. 3962. One approach to evaluating the contention that the proposed tax hikes would harm small business investment, formation, and growth is to examine the distribution of small business income and the tax returns of small business owners by tax bracket. Two critical considerations in undertaking such an evaluation are the definition of small business income and ownership and its compatibility with available federal income tax data. An analysis by the Urban Institute-Brookings Institution Tax Policy Center (TPC) of the distribution of small business income and tax filers reporting such income by tax bracket in 2007 and 2009 defines a small business owner as anyone who reports income or loss on Schedule C (self-employment income), Schedule E (income from rents, royalties, partnerships, limited liability companies, and S corporations), and Schedule F (income from farming). Such a broad definition arguably has more disadvantages than advantages, calling into question its usefulness for policy analysis. So any results based on such a definition should be seen as illustrative or suggestive rather than definitive or conclusive. The TPC analysis found that a small share of small business owners would likely be affected by the proposed tax hikes: an average of less than 2% of such individuals were subject to the 33% or 35% marginal tax rates in 2007 and 2009. At the same time, the results suggested that a significant share of small business income could be subject to the higher rates. In 2007 and 2009, small business income represented an average of 30% of adjusted gross income (AGI) for filers in the 33% tax bracket, and an average of 35% of AGI for filers in the 35% bracket; the average for all filers was 14%. Raising the marginal tax rates facing high-income individuals without changing the top corporate or capital gains tax rates in theory could increase the share of firms organized as C corporations rather than passthrough entities. A shift in the distribution of taxable income among the main forms of business organization might have a significant impact on business tax revenue. A rate hike also has the potential to harm the domestic climate for small business formation and investment. But current business tax benefits, if retained beyond 2010, would lessen a rate hike's dampening effect on investment, and its impact on the creation of new firms may be difficult to determine.

In 1993, after many months of study, debate, and political controversy, Congress passed and President Clinton signed legislation establishing a revised "[p]olicy concerning homosexuality in the armed forces." The new legislation reflected a compromise regarding the U.S. military's policy toward members of the Armed Forces who engage in homosexual conduct. This compromise, colloquially referred to as "Don't Ask, Don't Tell (DADT)," held that "[t]he presence in the armed forces of persons who demonstrate a propensity or intent to engage in homosexual acts would create an unacceptable risk to the high standards of morale, good order and discipline, and unit cohesion which are the essence of military capability." Service members are not to be asked about, nor allowed to discuss, their sexual orientation. This compromise notwithstanding, the issue has remained both politically and legally contentious, and Congress ultimately passed legislation to repeal DADT. As described in greater detail below, this repeal became effective on September 20, 2011. This report provides a legal analysis of the various constitutional challenges that have been brought against DADT. For policy analyses, see CRS Report R42003, The Repeal of "Don't Ask, Don't Tell": Issues for Congress , by [author name scrubbed], and CRS Report R40782, "Don't Ask, Don't Tell": Military Policy and the Law on Same-Sex Behavior , by [author name scrubbed]. Under DADT, which was repealed on September 20, 2011, a member of the Armed Forces could be discharged from the military if (1) the member engaged in, attempted to engage in, or solicited another to engage in a homosexual act or acts; (2) the member stated that he or she was a "homosexual or bisexual"; or (3) the member married or attempted to marry someone of the same sex. The statute defined "homosexual" as an individual who "engages in, attempts to engage in, has a propensity to engage in, or intends to engage in homosexual acts," and similarly defined "bisexual" as an individual who "engages in, attempts to engage in, has a propensity to engage in, or intends to engage in homosexual and heterosexual acts." The term "homosexual" was also defined to include the terms "gay" and "lesbian." It is important to note that DADT did not prohibit the military from questioning new recruits or members about their sexual orientation, although the legislation establishing the policy did contain a statement reflecting the sense of Congress that such questioning should be suspended but could be reinstated if the Secretary of Defense determined such inquiries were necessary to implement the policy. Indicating that such questioning may have been discouraged, the Department of Defense (DOD) Directive implementing the DADT policy stated that sexual orientation is a "personal and private matter and is not a bar to current military service ... unless manifested by homosexual conduct." The DADT regulations, therefore, were based on conduct, including verbal or written statements. Since sexual "orientation" is "personal and private," DOD was not to ask and personnel were not to tell. If an individual chose to make his or her homosexual "orientation" public, however, an investigation and discharge were likely to occur. It is also important to note that the law contained no mention of "sexual orientation," although DOD defined the term as "[a]n abstract sexual preference for persons of a particular sex, as distinct from a propensity or intent to engage in sexual acts." Therefore, both the law and the regulations distinguished between sexual orientation and sexual conduct, and both were structured entirely around the concept of homosexual conduct as opposed to orientation, including statements concerning an individual's sexuality. As a result, attempts to implement the statute, or analyze and evaluate it, in terms of sexual orientation, often resulted in confusion and ambiguity. In recent years, several Members of Congress expressed interest in amending or repealing DADT, as did some military officials. In February 2010, Secretary of Defense Robert Gates established a DOD working group to review issues that could arise if DADT were repealed. Gates simultaneously directed DOD to review regulations regarding DADT and to propose any changes that would allow DOD to "enforce the law in a fairer and more appropriate manner." Based on this review, Secretary Gates announced revisions to the DADT regulations in March 2010 that eased certain requirements for discharging service members pursuant to DADT. Subsequently, DOD issued the results of its study and concluded that repeal of DADT would pose a low risk to military readiness. In a related move, Congress passed legislation to repeal DADT if certain conditions were met. Under the Don't Ask, Don't Tell Repeal Act of 2010, DADT repeal became effective 60 days after the President, the Secretary of Defense, and the Chairman of the Joint Chiefs of Staff certified that they considered the recommendations contained in a recent Department of Defense (DOD) report on the effect of repeal; that DOD has prepared the necessary policies and regulations to implement the new law; and that the implementation of such policies and regulations "is consistent with the standards of military readiness, military effectiveness, unit cohesion, and recruiting and retention of the Armed Forces." This certification occurred on July 22, 2011, and the repeal took effect on September 20, 2011. In general, DADT repeal appears to have proceeded smoothly. DOD has issued new policy guidance, as well as identified benefits that can be extended to the same-sex partners of service members. However, the availability of such benefits was originally limited by Section 3 of the federal Defense of Marriage Act (DOMA), which, for purposes of federal law, defined marriage as between one man and one woman. On June 26, 2013, the Supreme Court struck down this provision as unconstitutional. In the wake of this decision, DOD announced that military spouses in same-sex marriages will be eligible to receive military benefits that had previously been available only to opposite-sex spouses. Meanwhile, in the midst of the debate over repealing DADT, several court cases challenging the constitutionality of DADT continued to unfold. For historical purposes, these lawsuits are described in detail below, although such challenges became moot after repeal took effect. Constitutional challenges to military policies regarding homosexual conduct began to accelerate following implementation of the DADT compromise in 1993. Similar challenges have also been brought against Article 125 of the Uniform Code of Military Justice, which provides for court-martial and punishment as the court-martial may direct for acts of sodomy committed by military personnel. The Supreme Court never directly considered a challenge to DADT and refused to review the military's policy on several occasions. Although the Court has never directly addressed the constitutionality of DADT, the Court has considered cases involving allegations of discrimination by the military, as well as cases involving the rights of individuals who engage in homosexual conduct, and these cases are informative. Indeed, most federal courts that have rejected challenges to DADT have relied upon judicial precedents involving "special deference" to the political branches to affirm the "considered professional judgment" of military leaders to discipline or discharge a service member for homosexual conduct or speech. This doctrine of military deference and its application in several Court decisions involving allegations of discrimination by the military are discussed in greater detail below. Like the doctrine of military deference, Court rulings in two cases involving homosexual conduct— Bowers v. Hardwick and Lawrence v. Texas —have also played a prominent role in lower court cases involving constitutional challenges to DADT. In its 1986 ruling in Bowers , the Court held that there was no fundamental right to engage in consensual homosexual sodomy. Based on this decision, the courts uniformly ruled that the military could constitutionally discharge a service member for overt homosexual behavior. Complicating the legal picture, however, was the Court's 2003 ruling in Lawrence , which expressly overruled Bowers and declared unconstitutional a Texas law that prohibited sexual acts between same-sex couples. In Lawrence , the Court held that the "liberty" interest in privacy guaranteed by the due process clause of the Fourteenth Amendment protects a right for adults to engage in private, consensual homosexual conduct, expressly overruling Bowers 's contrary conclusion. In particular, the community's moral disapproval of homosexuality was no "rational" justification for deploying the power of the state to enforce those views. According to the Court: The petitioners are entitled to respect for their private lives. The State cannot demean their existence or control their destiny by making their private sexual conduct a crime. The right to liberty under the Due Process Clause gives them the full right to engage in their conduct without the intervention of the government. It is a promise of the Constitution that there is a realm of personal liberty which the government cannot enter. The Texas statute furthers no legitimate state interest which can justify its intrusion into the personal and private life of the individual. As noted above , earlier federal appellate courts, relying on Bowers , uniformly ruled that the military ban on homosexual acts intruded upon no constitutionally protected right and was "rationally related" to legitimate military needs for "unit cohesion" and discipline. Moreover, by equating the admission of homosexuality by individual service members—unless demonstrated otherwise—with "propensity" for illegal conduct, the DADT policy successfully avoided equal protection and First Amendment challenge as well. After Lawrence , however, the constitutional bulwark of Bowers began to crumble, arming opponents of Article 125 and DADT with an argument that such military policies abridge the due process right to privacy of service members who are gay. But to prevail in that argument, challengers had to demonstrate that findings by Congress regarding those policies defy minimal rationality, a weighty burden given the deference historically accorded the political branches in the management of military affairs. The precise standard of judicial review, however, has yet to be firmly established. A tradition of deference by the courts to Congress and the executive in the organization and regulation of the military dates from the earliest days of the republic. Motivating development of this constitutional doctrine was the separation of powers among the executive, judicial, and legislative branches. The Constitution grants exclusive authority to raise and support the Armed Forces to Congress, which has "broad and sweeping" power to make all laws necessary for that purpose. Similarly, the Constitution grants exclusive command of the Armed Forces to the executive branch, designating the President as "commander-in-chief." Nowhere does the Constitution delineate a specific role for the judiciary in military matters. Judicial authority over the Armed Forces arises only indirectly as arbiter of constitutional rights. Thus, the policy of extraordinary deference "to the professional judgment of military authorities" has emerged from case law, particularly "when legislative action under the congressional authority to raise and support armies and make rules and regulations for their governance is challenged." Originally framed as a doctrine of noninterference, the early Court avoided all substantive review of military disciplinary proceedings, provided only that jurisdictional prerequisites were met. A more skeptical judicial attitude emerged during the Warren Court era, which frequently questioned the scope and operation of military rules, particularly as applied to on-base civilians and non-duty-related conduct of service members. But the pendulum returned to what has been described as the "modern military deference doctrine" with a series of Burger Court decisions in the mid-1970s. Rather than abandoning all substantive review, the current judicial approach is to apply federal constitutional standards in a more lenient fashion which, with rare exception, favors military needs for obedience and discipline over the rights of the individual servicemen. "The fundamental necessity for obedience, and the consequent necessity for imposition of discipline, may render permissible within the military that which would be constitutionally impermissible outside it." Among leading contemporary precedents are the Supreme Court rulings in Goldman v. Weinberger and Rostker v. Goldberg . Goldman was an Orthodox Jew and rabbi serving as a commissioned officer and psychologist for the Air Force. For five years, he wore a yarmulke while in uniform, without objection from superiors until he testified as a defense witness in a court martial proceeding. The prosecuting attorney at the court martial complained to Goldman's commanding officer that wearing the yarmulke violated Air Force regulations that prohibited wearing of headgear indoors. Goldman was ultimately separated from the service for refusal to remove the yarmulke. Goldman argued that the Air Force regulation banning headgear "infringed upon his First Amendment freedom to exercise his religious beliefs." A majority of the Court disagreed: Our review of military regulation challenged on First Amendment grounds is far more deferential than constitutional review of similar laws or regulations designed for civilian society. The military need not encourage debate or tolerate protest to the extent that such tolerance is required of the civilian state by the First Amendment; to accomplish its mission the military must foster instinctive obedience, unity, commitment, and esprit de corps. The essence of military service "is the subordination of the desires and interests of the individual to the needs of the service." Because the Air Force argued that standardized uniforms were necessary to "encourage the subordination of personal preferences," the majority deferred to the "professional judgment" of the Air Force. The ramifications of the majority's "subrational-basis standard—absolute, uncritical deference"—drew vigorous objections from the dissenting justices: The Court rejects Captain Goldman's claim without even the slightest attempt to weigh his asserted right to the free exercise of his religion against the interest of the Air Force in uniformity of dress within the military hospital. No test for free exercise claims in the military context is even articulated, much less applied. It is entirely sufficient for the Court if the military perceives a need for uniformity. In Rostker v. Goldberg , the Supreme Court dealt specifically with an equal protection challenge to gender-based military classifications—namely, Congress's decision to register men, but not women, for the military draft. In applying the "intermediate scrutiny" test of Craig v. Boren, the majority found the draft law did not reflect "unthinking" gender stereotypes, but was the product of extensive congressional deliberations on the role of women in combat and the necessities of military mobilization. The purpose of registration was to create a pool from which combat troops could be drawn as needed. Because women were barred from combat by another law, they were not "similarly situated" to men, and their exemption from registration was "not only sufficiently but closely related to" an "important" governmental purpose. As important to the outcome, however, was the Court's articulation of the "healthy deference" due the political branches in managing military affairs. Thus, according to the majority opinion, "[t]he military constitutes a specialized community governed by a separate discipline from that of the civilian," such that "Congress is permitted to legislate both with greater breadth and with greater flexibility when prescribing the rules by which [military society] shall be governed." Constitutional rules apply, and may not be disregarded, but "the different character of the military community and of the military mission requires different application of those principles." Equal deference to the military's judgment was apparent in four federal appeals court rulings to uphold the DADT policy before Lawrence . First to rule was the Fourth Circuit in an appeal by Lieutenant Paul G. Thomasson, who had been honorably discharged under the policy after he announced in March 1994 that he was gay. In Thomasson v. Perry , the court stressed Congress's "plenary control" of the military and the "deference" owed both the executive and legislative branches in matters of national defense as factors calling for judicial restraint when faced with challenges to military decision making. "What Thomasson challenges," the opinion notes, "is a statute that embodies the exhaustive efforts of the democratically accountable branches of American government and an enactment that reflects month upon month of political negotiation and deliberation." Under this standard, the Fourth Circuit concluded that the government articulated a "legitimate purpose" for excluding individuals who commit homosexual acts—that of maintaining unit cohesion and military readiness—and that the law's rebuttable presumption was a "rational means" of preventing individuals who engage in, or have a "propensity" to engage in, homosexual conduct from serving in the military. Similarly, Thomasson's First Amendment claims were rejected for the reason that [t]he statute does not target speech declaring homosexuality; rather it targets homosexual acts and the propensity or intent to engage in homosexual acts and permissibly uses the speech as evidence. The use of speech as evidence in this manner does not raise a constitutional issue—the First Amendment does not prohibit the evidentiary use of speech to establish the elements of a crime, or, as is the case here, to prove motive or intent. Subsequently, the Fourth Circuit relied on Thomasson to affirm a district court ruling in Thorne v. U.S. Department of Defense. After reviewing the record in eight other administrative separation proceedings where the presumption that someone who has declared his homosexuality has a propensity to engage in forbidden conduct was successfully rebutted, the lower court in Thorne held that conduct rather than speech was the target of the DADT policy. In Richenberg v. Perry , the Eighth Circuit upheld the "statement" provision of DADT as applied to the discharge of an Air Force captain who had informed his commanding officer that he was gay. As in Thomasson, the policy was alleged to violate equal protection and free speech rights by targeting declarations of "homosexual orientation or status" unrelated to conduct and for "irrational catering to prejudice against and hatred of homosexuals." Agreeing with the Fourth Circuit, however, the Richenberg court found that the policy ban on homosexual acts was justified by legitimate military needs and rationally served by the rebuttable presumption of a "propensity" to act on the part of someone who has declared his homosexuality. And because the focus of DADT was to "identify and exclude those who are likely to engage in homosexual acts," while prohibiting direct inquiries into an applicant's sexual orientation, there was no basis for a First Amendment challenge, the court concluded. In appeals from three district court rulings during 1997, the Ninth Circuit approved the discharge of a naval petty officer who admitted to sexual relations with other men and of a California National Guardsman and Navy lieutenant who had submitted written documents to their commanding officers acknowledging that they were gay. In the former case, Philips v. Perry , the appeals court ruled that individuals who are gay are not members of a "suspect class" for purposes of federal equal protection analysis, that the military ban on homosexual "acts" was rationally related to legitimate governmental interest in "maintaining effective armed forces," and that evidentiary use of admitted homosexuality did not violate a service member's First Amendment rights. Because sufficient homosexual acts were alleged to justify discharge, the Perry court declined considering the constitutionality of the rebuttable presumption and statements prong of the military policy. That issue was revisited in the consolidated case Holmes v. California Army National Guard , however, where the Ninth Circuit ruled that military personnel who "tell," without also presenting evidence to rebut the inference that they engage in homosexual acts, may constitutionally be discharged from the service. According to the court, "We agree with the Second, Fourth, and Eighth Circuits on this issue. Although the legislature's assumption that someone who has declared his homosexuality will engage in homosexual conduct is imperfect, it is sufficiently rational to survive [equal protection] scrutiny." In Able v. United States , upholding the DADT policy, the Second Circuit faulted a contrary federal district judge's decision for failing to give proper deference to Congress and the military judgment. The opinion emphasized a judicial tradition of applying "less stringent standards" of constitutional review to military rules than to laws and regulations governing civilian society. Judicial deference was warranted by the need for discipline and unit cohesion within this "specialized community," matters for which courts "are ill-suited to second-guess military judgments that bear upon military capability and readiness." In addition, "extensive Congressional hearings and deliberation" provided a "rational basis" for the government's contention that the prohibition on homosexual conduct "promotes unit cohesion, enhances privacy and reduces sexual tension." Consequently, the court concluded, "[g]iven the strong presumption of validity we give to classifications under rational basis review and the special respect accorded to Congress' decisions regarding military matters, we will not substitute our judgment for that of Congress." Some argue that the Lawrence ruling in 2003 altered the constitutional framework for analyzing both Article 125 and the DADT policy. According to this view, by finding a fundamental liberty interest in consensual homosexual activity, Lawrence demanded closer scrutiny of both the means and ends of these military policies. Under traditional equal protection doctrine, the legislature has broad latitude to draw lines based on any "non-suspect" classification—homosexuality included—provided only that the policy is "rationally related" to a "legitimate" governmental interest. In the past, the military has satisfied this "lenient" test by invoking the need for unit cohesion, discipline, and morale—interests uniformly affirmed by pre- Lawrence appellate courts to uphold the DADT policy. The government generally bears a far greater burden, however, when defending any action that interferes with individual rights or liberty interests deemed "fundamental" for due process purposes. To pass constitutional muster, the challenged measure or policy must be "narrowly tailored" to a "compelling" governmental interest. In this regard, Article 125 has been criticized by its opponents for codifying the same "moral disapproval" as the Texas statute involved in Lawrence and for being overbroad and underinclusive. One commentator stated: This broad ban does not limit itself to sodomy on military premises, nor to acts of sodomy between superiors and inferiors in the chain of command.... It is not limited to any context in which one might think there were secondary effects separate from moral disapproval. Lawrence tells us that mere disapproval, standing alone, is an inadequate basis for such a law. Consequently, some have argued that military interests in good order and discipline previously accepted by the courts are not sufficient to trump the liberty interest identified by Lawrence . Supporters of the continued viability of Article 125 and the DADT policy, however, have argued that there is no immediate parallel between constitutional precedent as applied to the civilian and military sectors. Thus, the unbroken line of appellate decisions supporting policies against homosexuality, aided by the modern military deference doctrine, would as likely tilt the balance in the government's favor in any judicial contest. Moreover, some have argued that whatever implications Lawrence may have on Article 125, a penal statute, may not be directly translatable to the DADT policy, which provided for administrative separation from the military, but no criminal penalty. The task of parsing these issues fell to the courts as they confronted a new generation of legal challenges to the military's policies regarding homosexuality. In 2004, for example, the U.S. Court of Appeals for the Armed Forces, which is the military's highest judicial tribunal, issued a decision regarding the appeal of an Air Force linguistic specialist who was convicted by court martial on sex-related charges, including consensual sodomy with a subordinate. That case, United States v. Marcum , appears to have established the current standard that military courts use to evaluate post- Lawrence challenges to military policies regarding homosexuality. A central issue in the case was whether Lawrence nullifies Article 125 and compels reversal of the service-member's sodomy conviction. The appeals court upheld Marcum's conviction, but not strictly on the basis of homosexual activity, instead pointing to the inappropriateness of sex between subordinate and superiors in the same chain of command. In dicta , the court strongly suggested that Lawrence 's ban on laws prohibiting sexual intimacy may apply to the military as well. It even went on to "assume without deciding" that Marcum's conduct did fall within the protections of Lawrence. Such protection, however, was insufficient to shield him from the gender-neutral charge of sex with a subordinate. In reaching its decision, the Marcum court established a test that provides guidance on how to apply the principles of Lawrence to the military environment. Any challenge to convictions under Article 125 is reviewed on a case-by-case basis according to the following three-part test: First, was the conduct that the accused was found guilty of committing of a nature to bring it within the liberty interest identified by the Supreme Court? Second, did the conduct encompass any behavior or factors identified by the Supreme Court as outside the analysis in Lawrence [e.g., involving public conduct, minors, prostitutes, or persons who might be injured/coerced or who are situated in relationships where consent might not easily be refused]? Third, are there additional factors relevant solely in the military environment that affect the nature and reach of the Lawrence liberty interest? In the wake of Marcum , some courts appeared to be skeptical of challenges to Article 125 and DADT, especially when other factors, such as homosexual activity with a subordinate, are involved. For example, in Loomis v. United States , the United States Court of Federal Claims applied the Marcum test to the case of a lieutenant colonel who was discharged for homosexual conduct. Because the lieutenant colonel was of significantly higher rank than the private with whom he had had sexual relations, the court found that "the nature of the relationship between plaintiff and the PFC ... is such that consent might not easily be refused and thus it is outside of the liberty interest protected by Lawrence ." In other cases, however, courts were more receptive to Lawrence -based challenges to military policies regarding homosexuality. For example in United States v. Bullock , the U.S. Army Court of Criminal Appeals relied on Lawrence to overturn the guilty plea of a male soldier who engaged in consensual oral sodomy with a female civilian in a military barracks. Although the case involved heterosexual conduct, it appears to be the first decision by a military tribunal to recognize a right to engage in consensual adult sodomy, under principles that may be equally applicable to Article 125 prosecutions targeting homosexual activity. Meanwhile, only two federal courts of appeals have issued decisions in cases involving post- Lawrence challenges to DADT, and both of these courts grappled with questions regarding the standard of review that should apply. The problem is that the Lawrence decision did not explicitly deem the right to engage in private consensual homosexual conduct to be a "fundamental" liberty interest, nor did the Court specifically identify the standard of review to be used in the future. Indeed, the decision appeared to apply neither traditional rational basis review nor strict scrutiny. The two federal appellate decisions that addressed this issue— Witt v. Department of the Air Force and Cook v. Gates —are discussed below, as is the more recent decision in Log Cabin Republicans v. United States , in which a district court used the new post- Lawrence standard of review established by the Witt court to rule that DADT was unconstitutional. Identifying the standard of judicial review to apply was the central issue in Witt v. Department of the Air Force , a decision in which the Court of Appeals for the Ninth Circuit reinstated a lawsuit against the military's DADT policy. In 2004, Major Margaret Witt, a decorated Air Force officer who had been in a long-term relationship with another woman, was placed under investigation for being a homosexual. Although Witt shared a home 250 miles away from base with her partner, never engaged in homosexual acts while on base, and never disclosed her sexual orientation, the Air Force initiated formal separation proceedings against her due to her homosexuality. Witt filed suit in district court, claiming that the DADT policy violated her constitutional right to procedural due process, substantive due process, and equal protection, but the district court dismissed her suit for failure to state a claim. The Ninth Circuit affirmed the district court's dismissal of the equal protection claim, but remanded the procedural and substantive due process claims to the district court for further consideration. Finding that the result in Lawrence was "inconsistent with the minimal protections afforded by traditional rational basis review" and that the cases upon which the Lawrence Court relied all involved heightened scrutiny, the Ninth Circuit ultimately held that " Lawrence applied something more than traditional rational basis review," but left open the question whether the Court had applied strict scrutiny, intermediate scrutiny, or a different type of heightened scrutiny. Hesitating to apply traditional strict scrutiny to Witt's claim in the absence of the application of "narrow tailoring" and "compelling governmental interest" requirements in Lawrence , the Ninth Circuit instead looked to another Supreme Court case that had applied a heightened level of scrutiny to a substantive due process claim. Extrapolating from its analysis of this case, the Ninth Circuit concluded: We hold that when the government attempts to intrude upon the personal and private lives of homosexuals, in a manner that implicates the rights identified in Lawrence , the government must advance an important governmental interest, the intrusion must significantly further that interest, and the intrusion must be necessary to further that interest. In other words, for the third factor, a less intrusive means must be unlikely to achieve substantially the government's interest.... In addition, we hold that this heightened scrutiny analysis is as-applied rather than facial.... Under this review, we must determine not whether DADT has some hypothetical, post hoc rationalization in general, but whether a justification exists for the application of the policy as applied to Major Witt. Although the court ruled that the government clearly advanced an important governmental interest in management of the military, the court was unable to determine from the existing record whether DADT satisfied the second and third factors and therefore remanded the case to the district court for further development of the record. In 2010, the district court ruled in favor of Major Witt. In evaluating whether the government had met its burden under the second prong of the Ninth Circuit's test, the district court concluded: [t]he evidence produced at trial overwhelmingly supports the conclusion that the suspension and discharge of Margaret Witt did not significantly further the important government interest in advancing unit morale and cohesion. To the contrary, the actions taken against Major Witt had the opposite effect.... The evidence before the Court is that Major Margaret Witt was an exemplary officer.... Her loss within the squadron resulted in a diminution of the unit's ability to carry out its mission. Because the district court held that DADT, as applied to Witt, did not further the government's interest, the court did not address the third prong of the three-part test, which would have required the government to establish that DADT was necessary to further that governmental interest. Instead, the court held that the application of DADT violated Witt's substantive due process rights and ruled that she should be reinstated as soon as possible. Witt and DOD ultimately reached a settlement agreement in the case. Notably, the district court's decision in favor of Major Witt did not invalidate the DADT policy. Unlike a facial claim, in which the constitutionality of a statute is evaluated on its face as if it applies to all hypothetical plaintiffs, the Ninth Circuit directed that the constitutional inquiry in Witt be conducted on an "as applied" basis. As a result, the impact of the decision by the district court was limited to Major Witt and did not apply to other plaintiffs. Nevertheless, the ruling may have encouraged an increase in the number of individual challenges filed by service members discharged pursuant to DADT, given that the Ninth Circuit established a more stringent standard for the military to meet. Shortly after the Ninth Circuit issued its opinion in the Witt case, the Court of Appeals for the First Circuit handed down a decision upholding a lower court's dismissal of a challenge to DADT brought by 12 gay and lesbian veterans who had been discharged under the policy. In the case, Cook v. Gates , the First Circuit agreed with much of the Ninth Circuit's reasoning in Witt , although the opinions differed in some important respects. Like the Ninth Circuit, the First Circuit concluded that the Lawrence case "did indeed recognize a protected liberty interest for adults to engage in private, consensual sexual intimacy and applied a balancing of constitutional interests that defies either the strict scrutiny or rational basis label." In contrast to the Ninth Circuit, however, the First Circuit evaluated the claim as a facial challenge and concluded that the plaintiffs' challenge failed. According to the court, the Lawrence decision recognized only a narrowly defined liberty interest in consensual adult sexual activity that excludes other types of sexual conduct, including homosexual conduct by service members. Although the First Circuit noted that an as-applied challenge might involve conduct that does fall within Lawrence 's protected liberty interest—such as homosexual conduct occurring off-base between consenting adults—the court nevertheless concluded that such as-applied challenges fail when balanced against the governmental interest in preserving military effectiveness. As a result, the court dismissed the plaintiffs' as-applied challenge. In contrast to these appellate court decisions, only one federal court—the United States District Court for the Central District of California—has ruled that DADT is unconstitutional on its face. In its 2010 ruling in Log Cabin Republicans v. United States , the court held that DADT violates both the due process clause of the Fifth Amendment and the right to free speech guaranteed by the First Amendment. In reaching its decision, the court applied the standard of review set forth in Witt , which requires that governmental intrusions into the private lives of homosexuals in a manner that implicates the rights identified in Lawrence must "[1] advance an important governmental interest, [2] the intrusion must significantly further that interest, and [3] the intrusion must be necessary to further that interest." Because the Witt court held that DADT does advance an important governmental interest, the district court focused on the second and third prong of this test. After considering a wide range of evidence, including the legislative history of DADT, the testimony of various service members, and expert testimony, the district court determined that DADT did not significantly further the government's interests in military readiness or unit cohesion. Although the government relied exclusively on the legislative history of DADT, the court found that history, much of which lacked empirical evidence regarding the effect of allowing individuals who are gay to serve in the military, failed to prove that DADT advanced military readiness or unit cohesion. In contrast, the court found that the evidence introduced by the plaintiff established that DADT did not significantly further the governmental interest in military readiness or unit cohesion. The court cited several factors in reaching this conclusion, including evidence that (1) the number of service members discharged pursuant to DADT dropped significantly after 2001, indicating that the military was willing to retain gay service members during wartime; (2) the military discharged service members with critically needed skills and training; (3) DADT negatively affected military recruiting; (4) the military was admitting less qualified enlistees due to troop shortages; and (5) the military routinely delayed the discharge of service members suspected of violating DADT until after they had completed their overseas deployments. Therefore, the court held that "the evidence introduced at trial shows that the effect of the Act has been, not to advance the Government's interests of military readiness and unit cohesion, much less to do so significantly, but to harm that interest." Likewise, the court held that DADT was not necessary to advance the government's interests. For example, the court cited several government officials who stated that DADT undermined the governmental interest in military readiness, as well as various witnesses who testified that DADT was unnecessary for the purpose of furthering unit cohesion. As a result, the court concluded that the government had failed to satisfy its burden under the Witt standard because DADT did not significantly further the government's interests, nor was it necessary to achieve those interests. In addition, the court held that DADT violated the plaintiff's First Amendment right to free speech. As a preliminary matter, the court determined that DADT "discriminates based on the content of the speech being regulated" because "[i]t distinguishes between speech regarding sexual orientation, and inevitably, family relationships and daily activities, by and about gay and lesbian servicemembers, which is banned, and speech on those subjects by and about heterosexual servicemembers, which is permitted." Although content-based restrictions on speech are subject to heightened judicial scrutiny, courts traditionally apply a more deferential level of review to military restrictions on speech. Under this standard, "regulations of speech in a military context will survive Constitutional scrutiny if they 'restrict speech no more than is reasonably necessary to protect the substantial government interest.'" Examining the evidentiary record, the court cited examples regarding the scope and effect of DADT restrictions on speech, including (1) witness testimony indicating that DADT prevented gay service members from discussing their personal lives with their colleagues, thereby undermining trust and unit cohesion; (2) testimony regarding the chilling effect that DADT had on the reporting of violations of military codes of conduct; (3) evidence that DADT prevented gay service members from openly joining organizations or lawsuits that challenge DADT, thereby preventing them from exercising their legal rights; and (4) evidence that DADT punished gay service members for engaging in purely private behavior, such as writing letters or e-mails. Therefore, the court concluded that DADT restricted a far greater range of speech than was necessary to protect the government's interests and frequently undermined military readiness and unit cohesion rather than advance these goals. Having concluded that DADT violated both the Fifth and First Amendments, the court ruled that the plaintiff was entitled to a permanent injunction barring the enforcement of DADT. On October 12, 2010, the court issued a nationwide injunction that permanently and immediately enjoined DOD from applying or enforcing DADT against any service member. Although DOD initially complied with the injunction, the government also filed a notice of its intent to appeal the decision to the Ninth Circuit and requested that the district court stay the injunction pending appeal, as well as issue a temporary administrative stay. On October 19, 2010, the district court denied the government's request for an emergency stay of its injunction, and the government subsequently appealed by seeking a stay from the Ninth Circuit. On October 20, 2010, the Ninth Circuit granted the government's request for a temporary stay of the injunction while the court considered whether to issue a stay of the injunction for the duration of the appeals process. On November 1, 2010, the Ninth Circuit ruled in favor of the government and issued a stay of the district court's injunction pending appeal, meaning that DOD was permitted to continue to apply and enforce DADT while awaiting a final ruling from the Ninth Circuit on the merits of the appeal. On July 6, 2011, the Ninth Circuit lifted its stay of the district court's ruling, citing government briefs in a lawsuit involving DOMA as evidence that the Obama Administration no longer intended to defend the constitutionality of laws that contain classifications based on sexual orientation. As a result, the district court's ruling that DADT is unconstitutional was reinstated, as was the injunction barring enforcement. However, the government asked the court to reconsider its order so that DADT repeal could proceed in a more orderly fashion under the process set forth in the repeal legislation. On July 22, 2011, the Ninth Circuit partially granted the government's motion, retaining the stay of the district court's judgment except with regard to certain enforcement activities. Specifically, the court held that the "district court's judgment shall continue in effect insofar as it enjoins the government from investigating, penalizing, or discharging anyone from the military pursuant to the Don't Ask, Don't Tell policy." Ultimately, the Ninth Circuit never ruled on the merits of the lawsuit. In light of the repeal of DADT, the appeals court determined that the challenge was moot, vacated the district court's ruling, and remanded the case to the district court for dismissal.

In 1993, after many months of study, debate, and political controversy, Congress passed and President Clinton signed legislation establishing a revised "[p]olicy concerning homosexuality in the armed forces." The legislation reflected a compromise regarding the U.S. military's policy toward members of the Armed Forces who engage in homosexual conduct. This compromise, colloquially referred to as "Don't Ask, Don't Tell (DADT)," held that "[t]he presence in the armed forces of persons who demonstrate a propensity or intent to engage in homosexual acts would create an unacceptable risk to the high standards of morale, good order and discipline, and unit cohesion which are the essence of military capability." Service members are not to be asked about, nor allowed to discuss, their sexual orientation. This compromise notwithstanding, the issue remained both politically and legally contentious, and Congress ultimately passed legislation to repeal DADT. Under the Don't Ask, Don't Tell Repeal Act of 2010, DADT repeal became effective 60 days after the President, the Secretary of Defense, and the Chairman of the Joint Chiefs of Staff certified that they considered the recommendations contained in a Department of Defense (DOD) report on the effect of repeal; that DOD prepared the necessary policies and regulations to implement the new law; and that the implementation of such policies and regulations "is consistent with the standards of military readiness, military effectiveness, unit cohesion, and recruiting and retention of the Armed Forces." This certification occurred on July 22, 2011, and the repeal took effect on September 20, 2011. In the wake of the 1993 laws and regulations and prior to passage of the 2010 repeal legislation, there were numerous constitutional challenges to DADT. Based on the U.S. Supreme Court ruling in Bowers v. Hardwick that there is no fundamental right to engage in consensual homosexual sodomy, the courts had uniformly held that the military may discharge a service member for overt homosexual conduct. However, the legal picture was complicated by the Court's 2003 decision in Lawrence v. Texas, which overruled Bowers by declaring unconstitutional a Texas law that prohibited sexual acts between same-sex couples. Subsequently, in Log Cabin Republicans v. United States, a federal district court held for the first time that DADT was unconstitutional on its face but later dismissed the case as moot when DADT repeal became effective. Likewise, in Witt v. United States Department of the Air Force, another federal district court held that DADT was unconstitutional as applied to a service member who had been discharged for homosexual conduct and ruled that the service member should be reinstated. More recently, the Court's decision in United States v. Windsor, which struck down a federal law that defined marriage as between one man and one woman, has made military benefits available to same-sex spouses of service members. This report provides a legal analysis of the various constitutional challenges that have been brought against DADT. For policy analyses, see CRS Report R42003, The Repeal of "Don't Ask, Don't Tell": Issues for Congress, by [author name scrubbed], and CRS Report R40782, "Don't Ask, Don't Tell": Military Policy and the Law on Same-Sex Behavior, by [author name scrubbed].

Almost 30 years ago, Congress addressed growing concerns regarding nuclear waste management by calling for the federal collection of spent nuclear fuel (SNF) and high-level waste for safe, permanent disposal. To this end, the Department of Energy (DOE) was authorized by the Nuclear Waste Policy Act (NWPA) to enter into contracts with nuclear power providers to gather and dispose of the provider's SNF in exchange for payments into the statutorily established Nuclear Waste Fund (NWF). Under the terms of the NWPA, these contracts were to require that the federal government begin disposal of the nation's nuclear waste no later than January 31, 1998. Over 10 years ago, DOE breached these nuclear waste contracts by failing to begin the acceptance and disposal of SNF by the statutory deadline established in the NWPA. As a result, nuclear utilities have spent billions of dollars on temporary storage for toxic SNF that DOE was contractually and statutorily required to collect for disposal. The breach has triggered a prolonged series of suits by nuclear power providers, many of which continue unresolved to this day. Approximately 78 breach of contract claims have been filed against DOE since 1998, resulting in over $2 billion in damage awards and settlements thus far. In 2010 alone, the U.S. Court of Federal Claims awarded nuclear utilities approximately $507 million in contract damages. Many of these awards, however, remain on appeal with the U.S. Court of Appeals for the Federal Circuit and are not yet final. Estimates for the total potential liability incurred by DOE as a result of the nuclear waste contract litigation exceed $20 billion. Moreover, after decades of political, legal, administrative, and environmental delays, the Obama Administration has eliminated all funding for the Yucca Mountain repository project, closed the Office of Civilian Radioactive Waste Management, and reemphasized an intention to pursue other alternatives for the disposal of SNF by establishing the Blue Ribbon Commission on America's Nuclear Future. In addition, DOE has attempted to permanently withdraw the Yucca Mountain construction authorization license from consideration before the Nuclear Regulatory Commission (NRC)—an action that triggered two separate lines of litigation before the NRC and the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit). Accordingly, contract damages will continue to build as delays in the disposal of SNF continue. This report analyzes more than 15 years of ongoing litigation over the government's obligations to collect and dispose of SNF under the NWPA. First, the report will provide a brief overview of the NWPA, the statute's subsequent amendments, and its relationship to nuclear waste disposal. Second, the report will provide a survey of key legal issues that have emerged during the protracted waste storage contract litigation, including a discussion of a significant jurisdictional dispute between the D.C. Circuit and the U.S. Court of Federal Claims. Finally, the report will consider the prospects for future liability arising as a result of further delays in the disposal of the nation's high-level nuclear waste. Responding to the serious hazards of nuclear waste, Congress passed the Nuclear Waste Policy Act of 1982 in an effort to centralize the long-term management of nuclear waste by making the federal government responsible for collecting, transporting, storing, and disposing of the nation's SNF. In order to achieve this goal, the NWPA established a statutory system for selecting a site for a geologic repository for the permanent disposal of nuclear waste. DOE was authorized by the statute to carry out the disposal program and develop the permanent nuclear waste repository. Commercial nuclear power owners and operators would fund a large portion of the program through significant annual contributions, or fees, to the newly established Nuclear Waste Fund (NWF). To carry out the statutory scheme created by the NWPA, DOE was also authorized to enter into contracts with private nuclear facilities to allow the federal government to take possession of nuclear waste and ensure its storage and disposal in the prospective permanent repository. Section 302 of the NWPA sets out the critical statutory deadline established in the NWPA and forms the main basis for litigation. This provision mandates: (A) Following commencement of operation of a repository, the Secretary shall take title to the high-level radioactive waste or spent nuclear fuel involved as expeditiously as practicable upon the request of the generator or owner of such waste or spent fuel; and (B) In return for payment of fees established by this section, the Secretary, beginning not later than January 31, 1998, will dispose of the high-level radioactive waste or spent nuclear fuel involved as provided in this subtitle. In an effort to streamline the collection and disposal process, DOE elected to create a single "Standard Contract for Disposal of Spent Nuclear Fuel and/or High Level Radioactive Waste" (Standard Contract) for use with nuclear power providers. DOE chose to develop the Standard Contract through the formal notice-and-comment rulemaking process. The final contract, published in the Federal Register, somewhat modified the language of the NWPA and provides: The services to be provided by DOE under this contract shall begin, after commencement of facility operations, not later than January 31, 1998 and shall continue until such time as all SNF ... has been disposed of. Although the NWPA did not expressly mandate that all nuclear utility providers enter into an agreement with DOE for the disposal of nuclear waste, the utilities were required to enter into the Standard Contract as a condition of renewing or obtaining the required operating license from the Nuclear Regulatory Commission (NRC). All operating nuclear facilities, therefore, became parties to the Standard Contract. By 1987, pursuant to its obligations under the NWPA, DOE had identified three potential sites for the permanent repository: Yucca Mountain, Nevada; Hanford, Washington; and Deaf Smith County, Texas. In 1987, Congress amended the NWPA to name Yucca Mountain as the sole candidate site for the permanent repository. The amendments, strongly lobbied for by the congressional delegations from Washington and Texas, did not, however, end the DOE selection and approval process which continued as outlined under the NWPA. By 1993, DOE had made little progress in preparing to take possession of SNF, and the Yucca Mountain facility was at least a decade or more away from completion. Concerned as to whether DOE would be able to meet its contractual obligations by the end of January 1998, the nuclear utilities, which had been paying into the NWF for 11 years, requested in writing that DOE address its responsibilities under the NWPA and update the signatories of the Standard Contract on DOE's overall preparedness. DOE initially responded to this request with an informal letter, stating that DOE's interpretation of the Standard Contract was that the department's contractual obligations were not triggered until the nation's permanent repository was complete. In response to this interpretive dispute, DOE sought comments from the public on the department's statutory obligations under the NWPA and the Standard Contract. After further review, DOE issued a "Final Interpretation of Nuclear Waste Acceptance Issues" which formally pronounced the department's position that it had no "legal obligation under either the [NWPA] or the Standard Contract to begin disposal of SNF by January 31, 1998, in the absence of a repository or interim storage facility." Pursuant to this interpretation, the department added that it would not begin accepting nuclear waste from nuclear utilities by the date specified in the act, nor did it have authority under the NWPA to provide interim storage for spent nuclear fuel. In the alternative, the DOE notice stated that were Section 302 to create an unconditional obligation on the part of DOE to begin disposing of nuclear waste by January 31, 1998, redress should be governed by the "unavoidable delay" provisions of the Standard Contract which expressly states that "no party shall be liable for damages in the case of unavoidable delay." Nuclear utility companies, having paid billions into the NWF since 1982 in addition to the millions spent for on-site temporary storage, turned to the federal courts to review DOE's interpretation of its own obligations under the NWPA and the Standard Contract. Issues relating to the NWPA have been consistently litigated for the last 15 years, and will continue to be litigated into the immediate future. Many difficult legal questions have arisen during this time period due to the somewhat peculiar relationship between the NWPA and the Standard Contract and the courts' attempts to distinguish between statutory and contractual duties. Although DOE argued early on that the department had no obligations absent a completed permanent repository, the courts have ruled that DOE had a statutory obligation to begin collecting SNF by no later than January 31, 1998. As that statutory obligation was also converted into a contractual obligation through the Standard Contract, the courts have also determined that DOE's delay in collecting the nuclear utilities' SNF has placed the federal government in partial breach of contract. Additionally, overturning a divergent decision by the U.S. Court of Federal Claims, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) has affirmed a D.C. Circuit order that prohibits DOE from concluding that the lack of a permanent repository excuses DOE from liability for the delay in acceptance of SNF. Approximately 78 lawsuits have been filed against DOE related to the department's failure to commence the collection and disposal of SNF. Of the lawsuits, a large majority remain pending. As of the end of 2011, the government's liability—based on settlements, final judgments, and entered judgments under appeal—stands at over $2 billion. The following section will highlight key court decisions that have emerged from the ongoing contractual dispute between DOE and the nuclear power utilities. The first NWPA-related claim against DOE was filed in the D.C. Circuit in 1996. Although DOE had not yet breached the contract, as performance was not required before January 31, 1998, Indiana Michigan Power Company sought a preemptive judicial review of the department's determination that it had no obligation to begin accepting SNF until the completion of the Yucca Mountain facility. In Indiana Michigan Power Co. v. Department of Energy , the D.C. Circuit, applying the Chevron analysis for reviewing an agency's statutory interpretation, invalidated DOE's interpretation as contrary to the plain meaning of the NWPA. The court reasoned that Section 302(A) and Section 302(B) represented independent statutory obligations. While the obligation to "take title to" nuclear waste in section 302(A) may have been conditioned on the construction of a repository, the obligation to "dispose" of nuclear waste under Section 302(B) contained no such limitation. Indeed, DOE's duty to commence disposal of nuclear waste, held the court, was to begin "not later than January 31, 1998 without qualification or condition." The argument put forth by DOE, and rejected by the court, was that Section 302(A) and Section 302(B) "must be read together," since taking title to SNF cannot be separated from disposing of SNF. In construing DOE's "disposal" obligation broadly, the court noted that "it is not unusual, particularly in the nuclear area, to recognize a division between ownership of materials and other obligations relating to such materials." The court concluded that the NWPA and Standard Contract had created a "reciprocal" and binding contractual relationship between DOE and the nuclear utilities, whereby DOE would dispose of the utilities' nuclear waste in return for the payment of fees into the NWF. DOE did not immediately take action in response to the D.C. Circuit's holding in Indiana Michigan . Instead, the department informed the nuclear utilities involved that it would be unable to comply with the January 31, 1998, deadline and was not prepared to begin accepting spent nuclear fuel for disposal. DOE asserted that it was waiting for the results of the Yucca Mountain Project Viability Assessment before proceeding, but predicted that the Yucca Mountain facility could potentially be opened by 2010. In addition to informing the nuclear utilities that it would be unable to comply with the January 31, 1998, deadline, DOE also asserted that the department was not responsible for any monetary damages incurred by the utilities as a result of DOE's delay. The department had determined that the lack of a permanent repository at Yucca Mountain constituted an "unavoidable delay" under article IX of the Standard Contract. The "unavoidable delay" provision of the Standard Contract provides: Neither the Government nor the purchaser shall be liable under this contract for damages caused by failure to perform its obligations hereunder, if such failure arises out of the causes beyond the control and without the fault or negligence of the party failing to perform. As such, argued DOE, the terms of the Standard Contract relieved the department from any obligation to "provide a financial remedy for the delay." The nuclear utilities responded to DOE's communications in 1997 by asking the D.C. Circuit to issue a writ of mandamus, compelling DOE to adhere to the court's earlier decision in Indiana Michigan and begin accepting nuclear waste for disposal. In Northern States Power Co. v. U.S. , the court refused to grant the "drastic" and broad relief the utilities asked for, holding that the terms of the Standard Contract provided for another "potentially adequate remedy." Before the court would consider compelling DOE to act, the utilities would first have to pursue the administrative remedies available under the Standard Contract for delayed performance. However, the court was unwilling to accept DOE's interpretation of its own delays as "unavoidable" under the Standard Contract. The court reiterated, in rejecting DOE's argument that a lack of an operational repository qualified as an unavoidable delay, that DOE's obligation to begin disposal of SNF by January 31, 1998, existed regardless of the existence of an operational storage facility. DOE's "unavoidable delay" defense, noted the court, represented a simple "recycling [of] the arguments [previously] rejected by this court." Based on DOE's "repeated attempts to excuse its delay on the grounds that it lacks an operational repository," the D.C. Circuit, in a significant exercise of authority, issued a writ of mandamus prohibiting DOE from concluding that the lack of an operational permanent repository constituted an "unavoidable delay" under the Standard Contract. The court ordered DOE to "proceed with contractual remedies in a manner consistent with NWPA's command that it undertake an unconditional obligation to begin disposal of the SNF by January 31, 1998." In a preview of the jurisdictional dispute that would develop a decade later, DOE filed a petition for rehearing in response to the Northern States mandamus. DOE challenged the D.C. Circuit's exercise of authority by asserting that the court "lacked jurisdiction to construe the unavoidable delays clause of the Standard Contract," as such an interpretation of a government contract was squarely within the jurisdiction of the U.S. Court of Federal Claims under the Tucker Act. The D.C. Circuit denied the motion for rehearing, holding that the court had not adjudicated a contractual dispute, but rather issued the mandamus in an effort to enforce a statutory duty. Accepting the D.C. Circuit's reasoning, DOE interpreted the Northern States mandamus as prohibiting the department from raising the unavoidable delay clause as a defense in future litigation. After establishing DOE's statutory obligations under the NWPA in the D.C. Circuit, many nuclear utilities awaited the expiration of the January 31, 1998, deadline before seeking monetary damages by filing their claims in the U.S. Court of Federal Claims (CFC). Under the Tucker Act, the CFC has jurisdiction over monetary claims against the United States "founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States." Decisions of the CFC are appealed to the Federal Circuit. In considering the cases, the CFC initially had to answer the threshold question of whether the nuclear utilities were required to exhaust available administrative remedies under the Standard Contract prior to seeking judicial relief. Generally, if administrative remedies can provide adequate relief for a claim, the plaintiff must first exhaust those remedies before seeking redress in another court. Judges on the CFC came to opposite conclusions as to whether the Standard Contract could provide adequate relief to the nuclear utilities, and the issue was left for the Federal Circuit to settle on appeal. In an important 2000 case, Maine Yankee Atomic Power Co. v. U.S., the Federal Circuit concluded that adequate relief was not available to the nuclear utilities under the Standard Contract, a conclusion that would allow breach of contract claims against DOE to go forward in the CFC. DOE, with the "unavoidable delay" clause unavailable, argued that the "avoidable delays" clause of the contract provided the plaintiffs with an avenue for adequate administrative relief. The "avoidable delay" provision of the Standard Contract requires that In the event of any delay in the delivery, acceptance, or transport ... caused by circumstances within the reasonable control of either [party] ... the charges and schedules specified by this contract will be equitably adjusted to reflect any estimated additional costs incurred by the party not responsible for or contributing to the delay. The court disagreed, holding that the "avoidable delay" provision applied only to routine delays occurring after the parties had begun performance of their obligations under the contract, not to breaches of a "critical and central obligation of the contract," such as a failure to begin performance by the statutory deadline. The court added that relief in the form of a "charge or schedule adjustment," as provided under the Standard Contract, was wholly inadequate to compensate the nuclear utilities for damages they had sustained in storing spent nuclear fuel that had been covered by the contract. As a result of the Maine Yankee decision, signatories to the Standard Contract were now free to seek monetary damages against DOE, by filing their breach of contract claims in the CFC, without first exhausting the DOE administrative process. Following the Indiana Michigan Power and Maine Yankee decisions, and the realization that a large number of breach of contract claims were being filed in the CFC, DOE attempted to curtail its potential contract liability by modifying contract terms with individual nuclear utilities. Under the proposed modification, DOE was willing to return a portion of payments made by a utility into the NWF, and suspend any future payments if the utility was willing to relinquish all future claims against DOE. The department entered into one such agreement with Exelon Generation Company in 2002. Other utilities that had also contributed to the NWF, however, challenged this arrangement as an invalid use of NWF funds. The U.S. Court of Appeals for the Eleventh Circuit, in Alabama Power Co. v. U.S. , invalidated the contractual modification reached between DOE and Exelon Generation Company. The agreed upon "offset," the court held, was "tantamount to an expenditure of funds" from the NWF. Under the NWPA, NWF funds were to be used only for the "permanent disposal" of nuclear waste. DOE could not, therefore, allocate NWF funds to individual nuclear utilities to pay for what the court classified as on-site "interim storage." Were DOE allowed to use NWF funds to offset the costs of the department's failure to dispose of SNF, it would be analogous to allowing DOE to "pay for its own breach out of a fund paid for by the utilities." Any arrangement in which the utilities were made to "bear the costs of the [department's] breach" was invalid. Pursuant to the court's stringent interpretation of the statutory purposes of the NWF, DOE is likely prohibited from using NWF funds for any use other than the development and construction of a permanent repository. Although DOE had acknowledged by 2005 its partial breach of the Standard Contract in most cases, significant litigation has been required to determine the level of damages individual nuclear utilities may legally recover as a result of DOE's breach. Generally speaking, when one party to a contract materially breaches the contract, the non-breaching party has the option to sue for damages under either a "full breach" or "partial breach" theory. A successful claim for full breach discharges the contractual obligations of both parties and allows the non-breaching party to sue for all past, present, and future damages. A claim for partial breach, on the other hand, preserves the ongoing contractual relationship between the parties—meaning both parties are still obligated to perform under the terms of the contract. Additionally, a party suing for partial breach may only recover the costs of mitigating the other party's breach that were incurred between the time the party became aware of a potential breach and the date of trial. A party suing for partial breach may not, therefore, recover future damages. Fundamentally, in electing to pursue a claim under a partial or full breach theory, the non-breaching party is choosing between continuing the contract, in the hope that the breaching party will eventually perform, or ending the contract in its entirety. The nuclear utilities have pursued their breach of contract claims under a partial breach theory. Although a party may typically elect whether to sue for partial or full breach in response to a material breach, the CFC and the Federal Circuit have repeatedly and consistently expressed doubt as to whether a full breach claim seeking to discharge the existing contractual obligations would even be available to the nuclear utilities, noting that the utilities have been "compelled" to sue for partial breach by the statutory obligations underlying the Standard Contract. In Indiana Michigan Power Co. v. U.S. , the court stated in dicta that were a nuclear utility to bring an action for total breach "DOE would [be] discharged from further responsibility under the [Standard] contract, a situation apparently not desired by [the utilities] and foreclosed by statute ." The courts have noted three incongruous consequences that could result from a court's decision to discharge the parties' obligation to perform under the Standard Contract. First, Nuclear Regulatory Commission operating permits for all nuclear utilities are currently contingent on entering into the Standard Contract with DOE. As a result, if the contract is discharged, the utility may lose its operating license. Second, the NWPA makes DOE the exclusive collector of SNF, meaning the utilities may not seek alternative means of disposing of their SNF. Third, the NWPA places a statutory duty on the utilities that generate SNF to pay for the waste's disposal. Discharging the utilities contractual obligation to make payments into the NWF would run counter to this statutory duty. Accordingly, the Federal Circuit has repeatedly affirmed the notion that nuclear utilities are foreclosed from suing for a full breach. Even if permitted, it is not clear that the nuclear utilities would wish to pursue a claim for full breach. In 2006, in response to an order by the court to show why the CFC should not simply void the Standard Contract, more than 30 nuclear utilities, through amicus briefs, voiced opposition to the court's proposal. Absent a contract, the utilities would be exposed to "substantial regulatory risks," and likely bear the burden and responsibility of permanently disposing of their own SNF. Although available damages could potentially be higher than what the utilities have been recovering through their numerous claims for partial breach, under a claim for full breach, the utilities would lose the benefit, no matter how remote, of the government collecting and disposing of their SNF. For these reasons, the nuclear utilities have sought to pursue, and courts have been hesitant to depart from, a partial breach scenario. As a result, the nuclear utilities continue to have the obligation to pay into the NWF and DOE continues to have the obligation to collect and dispose of SNF. As the Federal Circuit has stated, the utilities have had "no choice but to hold the government to the terms of the Standard Contract while suing for partial breach." In August of 2008, the Federal Circuit further clarified the method for calculating damages in NWPA breach of contract suits by establishing a rate at which DOE was expected to accept SNF under the Standard Contract. The anticipated rate of acceptance was essential to calculating the total amount of SNF DOE was contractually obligated to accept from the nuclear utilities from the 1998 deadline forward. DOE argued for a lower rate established under a report issued in 1991, as opposed to the initial rate of acceptance established in a 1987 DOE scheduling report. The Federal Circuit, however, rejected this argument, holding instead that damages would be calculated in relation to the higher 1987 acceptance rate, as that rate most closely reflected the intent and expectations of the parties at the time of the contract. The 1991 rate, held the court, was most likely the result of a "litigation strategy," put forth to "minimize DOE's exposure for its impending breach, rather than as a realistic, good faith projection for waste acceptance." Nuclear utilities have thus been successful in recovering all reasonable and foreseeable expenses incurred in mitigation of DOE's breach. Generally, these damages consist of costs associated with developing, implementing, and maintaining on-site interim SNF storage. Damages are limited, however, to the costs incurred from the date at which the utility became aware of DOE's potential breach, a realization often occurring well before the January 31, 1998, deadline, to the date of trial. As damages are limited to those expenses actually incurred at the time of trial, utilities may not recover additional future, or prospective, damages. Nuclear utilities are free, however, to re-file future claims as new damages are incurred. From 1998 forward, the CFC had been entertaining breach of contract suits filed by the nuclear utilities against DOE without any significant discussion of jurisdiction. Then, in 2005, the court, for the first time, dismissed a NWPA breach of contract suit for lack of subject matter jurisdiction. The court reasoned that the Standard Contract, created through the formal administrative process, qualified as a final agency action under the jurisdiction of the U.S. courts of appeals as established pursuant to Section 119 of the NWPA. Section 119 of the NWPA grants the U.S. courts of appeals: original and exclusive jurisdiction over any civil action ... for review of any final decision or action of the Secretary, the President, or the Commission under this subtitle. The dismissal was appealed to the Federal Circuit for review of the jurisdictional question. In PSEG Nuclear v. U.S ., the Federal Circuit reversed the lower court's decision, holding that the NWPA had not stripped the CFC of jurisdiction over contract disputes. The court based its holding on the fact that Section 119 only acted to preclude CFC jurisdiction in instances of official agency action taken under the NWPA. The utilities' claims were for breach of contract and did not challenge any "agency action taken under the agency's statutory mandate," but rather were concerned with "whether DOE breached its contractual obligations, and if so, to what damages, if any, PSEG is entitled for the breach." After PSEG , it was clear that the CFC had the authority to exercise jurisdiction over an NWPA-related breach of contract claim. However, because the court in PSEG limited itself only to whether the exercise of jurisdiction by the CFC was proper, the larger question of whether the D.C. Circuit's previous exercise of jurisdiction over similar contract-related claims impermissibly infringed on the CFC's jurisdiction remained unresolved. Shortly after the PSEG decision, which ensured the CFC's jurisdiction over contract disputes arising under the NWPA, DOE asked the CFC to invalidate the D.C. Circuit's initial exercise of jurisdiction in Indiana Michigan . At oral argument in Nebraska Public Power Dist. v. U.S. , DOE expressed a desire to raise the "unavoidable delay" defense that the D.C. Circuit had specifically prohibited through the writ of mandamus in Northern States . The CFC decided to entertain the question and asked the parties to brief the issue of whether the D.C. Circuit mandamus precluded DOE's assertion of the "unavoidable delay" defense in the CFC. On October 31, 2006, the court handed down a sweeping decision that voided for lack of jurisdiction the longstanding mandamus issued by the D.C. Circuit. In Nebraska Public Power , the CFC held that the D.C. Circuit had exceeded its jurisdiction in issuing the Indiana Michigan decision. Since the mandamus prohibiting DOE's use of the "unavoidable delay" defense issued in Northern States was issued as a means of enforcing the ruling in Indiana Michigan , the mandamus, therefore, was also void and had no preclusive effects in the CFC. The court based its decision on the jurisdictional conclusions underlying PSEG , the limited scope of Section 119 of the NWPA, and the absence of an effective waiver of sovereign immunity. Nebraska Public Power focused on whether the string of claims filed under the NWPA and the Standard Contract should be classified as a review of formal agency action within the direct purview of the U.S. courts of appeals, or as a straightforward breach of contract claim within the exclusive jurisdiction of the CFC (subject to appeal to the Federal Circuit). The opinion made clear the CFC's position that the claims relating to the January 31, 1998, statutory deadline qualified as contract claims within the CFC's exclusive jurisdiction. In considering the jurisdictional role of the two courts, the CFC adopted and applied much of the reasoning behind PSEG , asserting that the case had "rejected many of the key jurisdictional concepts that underlie the relevant D.C. Circuit cases." Although PSEG focused only on whether the CFC could exercise jurisdiction over the contract claims, the CFC in Nebraska Public Power went further to establish that jurisdiction as exclusive in an attempt to resolve the two competing claims to jurisdiction over cases related to the Standard Contract. In issuing the Northern States mandamus, the D.C. Circuit had invoked Section 119, which granted the U.S. courts of appeals exclusive jurisdiction over final agency action under Title I of the NWPA, as the basis for its exercise of jurisdiction. However, the Federal Circuit , reviewing the exercise of jurisdiction by the CFC, had limited the scope of Section 119, based on the provision's plain language, to only those claims relating to the establishment of a permanent repository for spent nuclear fuel. In Nebraska Public Power, the CFC adopted the reasoning in PSEG , and applied it to the D.C. Circuit's initial exercise of jurisdiction in Indiana Michigan . The resulting conclusion was that Indiana Michigan involved "interpretations of contract provisions that have nothing to do with the creation of repositories of spent nuclear fuel," and therefore "plainly exceeded" the grant of jurisdiction to the D.C. Circuit under Section 119. Contrary to the D.C. Circuit's argument that the Northern States mandamus was issued pursuant to a breach of a statutory and regulatory obligation, the court added that the "essential character" of the actions brought by the nuclear utilities was contractual and therefore exclusively within the jurisdiction of the CFC. The mere fact that DOE developed the Standard Contract through formal administrative rulemaking procedures was not sufficient to alter the nature of the claim from an action based on contract to an action based on statutory or regulatory interpretation. In classifying the claims in Indiana Michigan and Northern States as contractual, the court emphasized the utilities' reliance on the Standard Contract, the asserted claim for breach of contract, and the request for monetary damages. As the "mandamus dispute in Northern States could be conceived as entirely contained within the terms of the contract" rather than a "regulation asserted to be in conflict with the NWPA," the D.C. Circuit had engaged in an interpretation of the Standard Contract that intruded on the CFC's exclusive jurisdiction. The CFC also held that the D.C. Circuit's decisions in Indiana Michigan and Northern States were not supported by a waiver of sovereign immunity. Even if Section 119 had granted the D.C. Circuit jurisdiction over the NWPA contract claims, the grant of jurisdiction was not accompanied by any waiver of sovereign immunity that would allow the case to go forward. Federal courts do not infer waivers of sovereign immunity lightly, requiring that any such waiver be "unequivocally expressed" by Congress. The mere grant of jurisdiction to a court, such as the grant found in Section 119, is not sufficient to constitute a waiver of sovereign immunity. The required express waiver is generally characterized by a "specification of the remedy or relief that may be awarded against the U.S." The court could find no express waiver anywhere in the NWPA. With no express waiver in the NWPA, the D.C. Circuit had proceeded in Indiana Michigan as if the waiver derived from Section 702 of the Administrative Procedure Act (APA). Section 702 acts as a general waiver of sovereign immunity for claims against the U.S. that are based on agency action. The CFC determined that any reliance on Section 702 was misplaced, as the APA general waiver applies only where there is "no other adequate remedy in a court." Although the D.C. Circuit had taken the position that the CFC was unable to accord adequate relief to a plaintiff seeking equitable relief, the Federal Circuit concluded that the Section 702 waiver was inapplicable under these circumstances because the nuclear utilities had an adequate remedy in the CFC under the Tucker Act. The Federal Circuit, citing the U.S. Supreme Court, rejected the notion that the limitation on the available remedies made relief in the CFC "inadequate." Any other conclusion, reasoned the court, would allow plaintiffs to circumvent the jurisdiction of the CFC simply by attaching a prayer for equitable relief to what was essentially a damages suit. With an alternate and adequate remedy available in the CFC, the necessary trigger for Section 702 had not been met. The court held, therefore, that absent a waiver of sovereign immunity under either Section 119 of the NWPA or Section 702 of the APA, the D.C. Circuit had improperly granted relief against the United States in Indiana Michigan . The court concluded that since the D.C. Circuit in Indiana Michigan had exceeded its jurisdiction without the support of a valid waiver of sovereign immunity, its decision was therefore void. The mandamus issued in Northern States , which was predicated on the decision in Indiana Michigan , was, therefore, also void and could not preclude DOE from raising the unavoidable delay defense. The court closed by ordering the parties to brief the issue of whether DOE's failure to commence disposal of SNF by the established deadline was excused by the "unavoidable delay" clause of the Standard Contract. Nebraska Power appealed the CFC's decision to the Federal Circuit and the case was argued in December 2007. It was not until June 4, 2009, that the Federal Circuit answered, not with an opinion, but with an order for en banc rehearing before the entire Federal Circuit. The order for en banc hearing included a request that the parties file supplemental briefs addressing whether the mandamus issued by the D.C. Circuit in Northern States precludes DOE from pleading the "unavoidable delay" defense to breach of contract claims currently pending before the CFC. "If so," asked the court, "does the order exceed the jurisdiction of the District of Columbia Circuit?" On January 17, 2010, the Federal Circuit issued an 11-1 decision upholding the D.C. Circuit's exercise of jurisdiction in Indiana Michigan and Northern States , thereby affirming the D.C. Circuit mandamus prohibiting DOE's use of the "unavoidable delay" defense. The Nebraska Public Power decision rejected all of the CFC's major jurisdictional determinations. The court held that (1) Section 119 of the NWPA had properly granted the D.C. Circuit jurisdiction over statutory claims arising under the act; (2) sovereign immunity was validly waived under the APA; and (3) the D.C. Circuit had not "improperly intruded" on the CFC's exclusive jurisdiction over contract interpretation. On appeal, the Federal Circuit interpreted the scope of Section 119 of the NWPA more broadly than had the CFC. Whereas the CFC determined that the provision only granted the federal appellate courts review of claims arising from Title I of the act—the title pertaining to the siting of a permanent repository—the Federal Circuit held that Section 119 also granted federal appellate courts jurisdiction over claims arising from the statutory deadline found in Title III. The court looked to the legislative history of the NWPA to support its conclusion, noting that it was clear that the statutory deadline's "physical separation from the judicial review provision in section 119 [was] pure happenstance and in no way indicate[d] a congressional intent that review under the different subchapters be governed by different standards." Accordingly, claims relating to DOE's failure to begin the acceptance of SNF by the statutory deadline of January 31, 1998, were included within the D.C. Circuit's jurisdiction under Section 119 of the NWPA. The Federal Circuit further held that the APA did indeed constitute a valid waiver of sovereign immunity for claims arising from the statutory deadline of the NWPA. In disagreeing with the CFC's interpretation of Section 704 of the APA, the court noted that the provision created two distinct categories of agency action that were subject to judicial review. The APA waived sovereign immunity and granted judicial review only to "agency action made reviewable by statute" and "final agency action for which there is no other adequate remedy in a court." The court referred to the first category of action as "special statutory review," or agency action made reviewable by a "specific review-authorizing statute." The court referred to the second category of action as "nonstatutory review." There the APA acts as a waiver of sovereign immunity for a limited class of cases where no review of agency action has been granted by statute, but where absent review, the plaintiff can find "no other adequate remedy at law." The court, distinguishing between the two categories, reasoned that the limitation that there be "no other adequate remedy" applied only to nonstatutory review of agency action. The court concluded that because Section 119 of the NWPA made DOE action specifically reviewable by the federal appellate courts, the fact that another adequate remedy may have been available in the CFC did not make the waiver of sovereign immunity invalid. Finally, the Federal Circuit held that the D.C. Circuit's mandamus in Northern States did not encroach upon the CFC's exclusive jurisdiction over the adjudication and interpretation of contract rights. The court characterized the D.C. Circuit's action as an implementation of DOE's statutory duties under the NWPA rather than an interpretation of the language of the Standard Contract. By prohibiting DOE's use of the "unavoidable delay" defense, the D.C. Circuit was utilizing the mandamus as a means to enforce DOE's statutory obligations as established in Indiana Michigan . The Federal Circuit concurred with the D.C. Circuit's view that it had "merely prohibited DOE from implementing an interpretation that would place it in violation of its duty under the NWPA to assume an unconditional obligation to begin disposal by January 31, 1998. The statutory duty ... is independent of any rights under the contract." In short, the Federal Circuit concluded that in issuing its mandamus, the D.C. Circuit had been interpreting the NWPA and not the Standard Contract. In overturning the CFC's decision, the Federal Circuit all but extinguished DOE's attempt to escape liability through the "unavoidable delay" clause of the Standard Contract. In applying the Federal Circuit's decision, the CFC has generally abided by the Northern States mandamus and barred the government from asserting the "unavoidable delay" clause as an affirmative defense to liability. As a result, litigation under the Standard Contract will continue, as it had prior to the CFC's decision in Nebraska Public Power, with a focus on measuring recoverable damages rather than establishing liability The Federal Circuit recently attempted to clarify—while arguably narrowing—the scope of the Northern States mandamus in Southern Nuclear Operating Co. v. U.S . In doing so, however, the court has triggered confusion and contradictory opinions in the CFC. The Federal Circuit held in Southern Nuclear that while the government continues to be prohibited from concluding that the lack of a repository represents an affirmative defense to liability under the Standard Contract, the mandamus does not preclude the government from raising the unavoidable delay clause before the CFC in the damages context. In reaching this conclusion, the court noted that the Nebraska Public Power case "did not suggest that the District of Columbia Circuit's decision in any way foreclosed arguing in favor of the [unavoidable delay] defense in the Claims Court. Indeed, we considered the government's argument and held that … [the mandamus] was entitled to res judicata effect on the issue of liability but that it did not 'direct the implementation of any remedy.'" The Southern Nuclear decision appears to hold that the Northern States mandamus acts only to prevent the government from interpreting the Standard Contract and the unavoidable delay clause in a manner contrary to the agency's clear and unconditional statutory duty to collect nuclear waste as established by the D.C. Circuit. The mandamus does not, however, necessarily prevent the government from raising the unavoidable delay clause as a defense to the imposition of damages or a demand for a specific remedy. This line of reasoning—which attempts to draw a distinction between liability and damages—was drawn from the concurrence in the Federal Circuit's Nebraska Public Power opinion in which the concurring judge stated: "Although I read the majority as establishing government liability, it remains open for the government to argue that the Unavoidable Delays clause bars a damage award (as opposed to some other contractual remedy such as restitution)." While holding that the government could argue unavoidable delay in defense to damages, Southern Nuclear did not establish whether such a defense had merit. The effect of the ruling has been to reopen the debate over unavoidable delays. Application of the Federal Circuit's Southern Nuclear opinion has not been uniform in the CFC. Indeed, various judges have reached contradictory opinions on the government's use of the unavoidable delay clause in defense to damages, and one judge rejected the Southern Nuclear opinion as inconsistent with the Federal Circuit's decision in Nebraska Public Power . In Rochester Gas and Elec. Corp. v. U.S. , for example, the CFC adopted the Southern Nuclear reasoning and held that although the government is "precluded from asserting the unavoidable delays clause as a defense to liability for breach of the standard contract," the government "may, however, assert the unavoidable delays clause in opposition to a demand for damages." Although permitting the argument to be raised, the court did not reach the merits of the defense. In the subsequent case of Portland General Elec. Co. v. U.S ., the CFC appeared to impliedly accept the proposition set forth in Southern Nuclear that the government was not prohibited from raising the unavoidable delay argument in defense to damages, but the opinion ultimately determined that such an argument was without merit as the clause had no "independent application" to the "determination of damages." To the contrary, in Entergy Nuclear Fitzpatrick v. U.S. , Judge Edward Damich rejected the Southern Nuclear decision—determining that the Federal Circuit's decisions in Southern Nuclear and Nebraska Public Power were contradictory. Whereas Nebraska Public Power had foreclosed the use of the unavoidable delay clause "not merely as a defense to liability but as a defense to damages for failing to meet its unconditional obligation," Southern Nuclear had "implicitly held that the government could have raised the unavoidable delays defense." Accordingly, the two decisions could be reconciled only if Southern Nuclear was read "extremely narrowly." The court then concluded that Southern Nuclear could not be read in such a manner, and thus found the "two decisions to be at odds." Although noting its "unenviable position," the court determined Nebraska Public Power to be the "controlling precedent of the Federal Circuit" and held that the Northern States mandamus barred the use of the unavoidable delay clause as a defense to damages. Recognizing the significance of the CFC's inability to reconcile Nebraska Public Power and Southern Nuclear , Judge Damich certified the question for direct appeal to the Federal Circuit. Were the Federal Circuit to affirm the Southern Nuclear court's interpretation of the scope of the Northern States mandamus, it appears the government would be permitted to raise the unavoidable delay clause as a defense to certain damages. However, whether such a defense would be successful in actually deflecting damages remains unclear. The only court to actually consider the merits of the unavoidable delay clause as a defense to damages, rather than merely whether such a defense was barred by the Northern States mandamus and Nebraska Public Power , found the argument to be unsatisfactory. The total costs to taxpayers for delays associated with performing on the Standard Contract are difficult to project, especially given the uncertainty regarding the future of the Yucca Mountain facility or any alternative permanent repository for SNF. However, absent a significant change in the direction of NWPA-related litigation, DOE predicts that damages stemming from partial breach of contract claims will measure close to $20.8 billion if the government is able to begin accepting SNF by 2020—an unlikely occurrence given the Administration's decision to terminate the Yucca Mountain project. Approximately $500 million in additional legal damages will continue to build with each year beyond 2020 that DOE is unable to begin accepting SNF. It is important to note that all paid legal damages are drawn from the DOJ Judgment Fund rather than the DOE budget. In addition, the Department of Justice, which has litigated the contract cases on behalf of DOE, has spent over $192 million on litigation-related expenses. The nuclear utilities reportedly incur $5 million to $7 million in litigation costs in each individual case. In an attempt to curtail damages, DOE and DOJ have sought to reach settlement agreements with a number of individual nuclear utilities. As of December 2011, agreements have been entered into with nuclear utilities that operate 65 of the 118 nuclear facilities covered by the Standard Contract. Under the settlements, contract parties submit annual reimbursement claims to DOE for any delay-related nuclear waste storage costs that they incurred during that year. As the settlement agreements cover continuing damages, the affected nuclear utilities are able to submit annual claims directly to DOE rather than re-litigating ongoing damages in the federal courts. As of July 27, 2010, DOE had paid approximately $725 million pursuant to these settlements. The Department of Justice has also entered into broader discussions with the nuclear industry "to explore the possibility of reaching a standard settlement with a larger segment of the utilities whose claims are currently pending." As most of the contentious legal questions involved with the Standard Contract have been resolved over the last decade, "the ultimate success of many types of claims is now more predictable to both the government and the utilities." Rather than continue to re-litigate substantially similar claims, DOJ has suggested that establishing an administrative claims process would likely lead to a less expensive and more efficient resolution of the ongoing nuclear waste litigation. An administrative claims process would presumably decrease litigation related expenses for both DOJ and the nuclear utilities by allowing qualified plaintiffs to submit claims to an administrative tribunal for approval, rather than force the parties to litigate damages in federal court. The Blue Ribbon Commission on America's Nuclear Future recommended that the government continue to conclude these lawsuits both fairly and quickly "through settlement agreements or through another process, such as mediation or arbitration." Although problems related to the storage of SNF remain unresolved, the Obama Administration has pronounced a commitment to invest in domestic nuclear power. In his 2010 State of the Union address, the President advocated for creating new "clean energy jobs" by "building a new generation of safe, clean nuclear power plants in this country." In a step toward implementing that vision, President Obama announced on February 16, 2010, the government approval of an $8.3 billion conditional loan guarantee to help finance the construction of two new nuclear reactors in the state of Georgia. The proposed reactors would be the first to begin construction in the United States in more than 30 years. Reaffirming his commitment to nuclear power in his 2011 State of the Union address, President Obama called for nuclear power to be included in a national goal of generating 80% of U.S. electricity from "clean energy sources" by 2035. In preparation for any new reactors, DOE has developed a new contract to govern waste disposal. Under the new provisions, DOE "would not be required to complete disposal of [SNF] until 20 years after the expiration of the [new reactor's] operating license and any extension thereto." DOE predicts that any a contractual obligation to collect SNF under the new contracts would not "come into effect until the end of this century." In addition to the projected $20.8 billion in damages as a result of delays in collecting and disposing of commercial nuclear waste, the federal government also faces the prospect of additional liabilities stemming from delays in collecting and disposing of defense-related nuclear waste. The Yucca Mountain facility was envisioned not only as the permanent home for SNF produced by commercial nuclear power plants, but also high-level waste produced as a result of weapons development activities and SNF produced as a result of the operation of nuclear powered submarines. The majority of the nation's defense waste, including high level liquid waste produced by the original Manhattan Project, is currently stored at federal facilities located in the states of Washington, South Carolina, and Idaho. These states have entered into regulatory agreements with DOE detailing requirements for the eventual removal of this defense waste. The Idaho Settlement Agreement, for example, mandates a transition to dry storage by 2023 and a waste removal deadline of 2035. Under the current terms of the court-ordered agreement, if DOE fails to comply with the 2035 deadline, the state may impose penalties of up to $60,000 a day. Accordingly, the federal government faces the prospect of significant future financial penalties, in addition to the estimated $16.2 billion in damages the government will incur as a result of the Standard Contract litigation. Litigation related to the NWPA will undoubtedly continue. Whether defending breach of contract claims brought pursuant to the Standard Contract, or actions seeking equitable relief pursuant to the NWPA, the federal government will continue to encounter substantial legal costs in connection with its delay in disposing of the nation's SNF. In response to the impending litigation, the Department of Justice (DOJ) requested $11.4 million in its FY2011 budget specifically for the purpose of defending against NWPA related suits. DOJ is seeking to add 10 new attorneys to its Civil Division in preparation for an anticipated 12 trials before the end of 2012. As the government makes preparations for future legal disputes, both litigation expenses and damages awards will continue to build as there seems to be no prospect for a completed facility capable of storing SNF anywhere on the horizon.

Almost 30 years ago, Congress addressed growing concerns regarding nuclear waste management by calling for the federal collection of spent nuclear fuel (SNF) and high-level waste for safe, permanent disposal. To this end, the Department of Energy (DOE) was authorized by the Nuclear Waste Policy Act (NWPA) to enter into contracts with nuclear power providers to gather and dispose of the provider's SNF in exchange for payments into the statutorily established Nuclear Waste Fund (NWF). Under the terms of the NWPA, these contracts were to require that the federal government begin disposal of the nation's nuclear waste no later than January 31, 1998. Over 10 years ago, DOE breached these nuclear waste contracts by failing to begin the acceptance and disposal of SNF by the statutory deadline established in the NWPA. As a result, nuclear utilities have spent billions of dollars on temporary storage for toxic SNF that DOE was contractually and statutorily required to collect for disposal. The breach has triggered a prolonged series of suits by nuclear power providers, many of which continue unresolved to this day. Approximately 78 breach of contract claims have been filed against DOE since 1998, resulting in over $2 billion in damage awards and settlements thus far. In 2010 alone, the U.S. Court of Federal Claims awarded nuclear utilities approximately $507 million in contract damages. DOE predicts that damages stemming from partial breach of contract claims will measure close to $20.8 billion if the government is able to begin accepting SNF by 2020. Approximately $500 million in additional legal damages will continue to build with each year beyond 2020 that DOE is unable to begin accepting SNF. All paid legal damages are drawn from the DOJ Judgment Fund rather than the DOE budget. DOE's liability for breach of contract was first established in 1996 by the U.S. Court of Appeals for the District of Columbia in Indiana Michigan Power Co. v. U.S. After DOE hesitated to act on its legal obligations, citing the absence of a completed SNF storage facility (Yucca Mountain), the court issued a writ of mandamus mandating that DOE "proceed with contractual remedies in a manner consistent with NWPA's command that it undertake an unconditional obligation to begin disposal of SNF by January 31, 1998." The mandamus, issued in Northern States Power Co. v. U.S., may prohibit DOE from deflecting liability by arguing that the lack of an existing storage facility constitutes an "unavoidable delay." This report will present a brief overview of the NWPA and its subsequent amendments; provide a survey of key issues that have emerged during the protracted waste storage litigation; and consider the potential for future liability arising from further delays in the storage and disposal of nuclear waste.

This report focuses on the transformation of U.S. naval forces—the Navy and the Marine Corps, which are both contained in the Department of the Navy (DON). For an overview of defense transformation in general, see CRS Report RL32238, Defense Transformation: Background and Oversight Issues for Congress , by [author name scrubbed]. Table 1 summarizes several key elements of U.S. naval transformation. Each of these elements is discussed below. In late 1992, with the publication of a Navy document entitled ...From the Sea , the Navy formally shifted the focus of its planning away from the Cold War scenario of countering Soviet naval forces in mid-ocean waters and toward the post-Cold War scenario of operating in littoral (near-shore) waters to counter the land- and sea-based forces of potential regional aggressors. This shift in planning focus has led to numerous changes for the Navy in concepts of operation, training, and equipment over the last 12 years. Among other things, it moved the focus of Navy planning from a geographic environment where it could expect to operate primarily by itself to one where it would need to be able to operate effectively in a joint manner, alongside other U.S. forces, and in a combined manner, alongside military forces of other countries. It also led to an increased emphasis on amphibious warfare, mine warfare, and defense against diesel-electric submarines and small surface craft. The Littoral Combat Ship (LCS) and the DDG-1000 (formerly DD(X)) destroyer are key current Navy efforts intended to improve the Navy's ability to operate in heavily defended littoral waters. The Navy in mid-2005 began implementing several initiatives intended to increase its ability to participate in what the administration refers to as the global war on terrorism (GWOT). These initiatives include the establishment of the following: a Navy Expeditionary Combat Command (ECC); a riverine force; a reserve civil affairs battalion; a maritime intercept operations (MIO) intelligence exploitation pilot program; an intelligence data-mining capability at the National Maritime Intelligence Center (NMIC); and a Navy Foreign Area Officer (FAO) community consisting of officers with specialized knowledge of foreign countries and regions. The concept of network-centric operations, also called network-centric warfare (NCW), is a key feature of transformation for all U.S. military services. The concept, which emerged in the late 1990s, involves using computer networking technology to tie together personnel, ships, aircraft, and installations in a series of local and wide-area networks capable of rapidly transmitting critical information. Many in DON believe that NCW will lead to changes in naval concepts of operation and significantly increase U.S. naval capabilities and operational efficiency. Key NCW efforts include the Navy's Cooperative Engagement Capability (CEC) network, the Naval Fires Network (NFN), the IT-21 investment strategy, and ForceNet, which is the Navy's overarching concept for combining the various computer networks that U.S. naval forces are now fielding into a master computer network for tying together U.S. naval personnel, ships, aircraft, and installations. A related program is the Navy-Marine Corps Intranet (NMCI). Many analysts believe that unmanned vehicles (UVs) will be another central feature of U.S. military transformation. Perhaps uniquely among the military departments, DON in coming years will likely acquire UVs of every major kind—air, surface, underwater, and ground. Widespread use of UVs could lead to significant changes in the numbers and types of crewed ships and piloted aircraft that the Navy procures in the future, in naval concepts of operation, and in measurements of naval power. The LCS is to deploy various kinds of UVs. Unmanned air vehicles (UAVs) and unmanned combat air vehicles, or UCAVs (which are armed UAVs), if implemented widely, could change the shape naval aviation. Unmanned underwater vehicles (UUVs) and UAVs could significantly expand the capabilities of Navy submarines. Naval forces are inherently sea-based, but the Navy is currently using the term sea basing in a more specific way, to refer a new operational concept under which forces would be staged at sea and then used to conduct expeditionary operations ashore with little or no reliance on a nearby land base. Under the sea basing concept, functions previously conducted from the nearby land base, including command and control, fire support, and logistics support, would be relocated to the sea base, which is to be formed by a combination of amphibious and sealift-type ships. The sea basing concept responds to a central concern of transformation advocates—that fixed overseas land bases in the future will become increasingly vulnerable to enemy anti-access/area-denial weapons such as cruise missiles and theater-range ballistic missiles. Although the sea basing concept originated with the Navy and Marine Corps, the concept can be applied to joint operations involving the Army and Air Force. To implement the sea basing concept, the Navy wants to field a 14-ship squadron, called the Maritime Prepositioning Force (Future), or MPF(F) squadron, that would include three new-construction large-deck amphibious ships, nine new-construction sealift-type ships, and two existing sealift-type ships. Additional "connector" ships would be used to move equipment to the MPF(F) ships, and from the MPF(F) ships to the operational area ashore. Some analysts have questioned the potential affordability and cost effectiveness of the sea basing concept. The Navy in the past relied on carrier battle groups (CVBGs) (now called carrier strike groups, or CSGs) and amphibious ready groups (ARGs) as its standard ship formations. In recent years, the Navy has begun to use new kinds of naval formations—such as expeditionary strike groups, or ESGs (i.e., amphibious ships combined with surface combatants, attack submarines, and land-based P-3 maritime patrol aircraft), surface strike groups (SSGs), and modified Trident SSGN submarines carrying cruise missiles and special operations forces —for forward presence, crisis response, and warfighting operations. A key Navy objective in moving to these new formation is to significantly increase the number of independently deployable, strike-capable naval formations. ESGs, for example, are considered to be formations of this kind, while ARGs generally were not. The Navy in 2006 also proposed establishing what it calls global fleet stations, or GFSs . The Navy says that a GFS is a persistent sea base of operations from which to coordinate and employ adaptive force packages within a regional area of interest. Focusing primarily on Phase 0 (shaping) operations, Theater Security Cooperation, Global Maritime Awareness, and tasks associated specifically with the War on Terror, GFS offers a means to increase regional maritime security through the cooperative efforts of joint, inter-agency, and multinational partners, as well as Non-Governmental Organizations. Like all sea bases, the composition of a GFS depends on Combatant Commander requirements, the operating environment, and the mission. From its sea base, each GFS would serve as a self-contained headquarters for regional operations with the capacity to repair and service all ships, small craft, and aircraft assigned. Additionally, the GFS might provide classroom space, limited medical facilities, an information fusion center, and some combat service support capability. The GFS concept provides a leveraged, high-yield sea based option that achieves a persistent presence in support of national objectives. Additionally, it complements more traditional CSG/ESG training and deployment cycles. The Navy is implementing or experimenting with new ship-deployment approaches that are intended to improve the Navy's ability to respond to emergencies and increase the amount of time that ships spend on station in forward deployment areas. Key efforts in this area include the Fleet Response Plan (FRP) for emergency surge deployments and the Sea Swap concept for long-duration forward deployments with crew rotation. The FRP, Navy officials say, permits the Navy to deploy up to 6 of its 11 planned CSGs within 30 days, and an additional CSG within another 60 days after that (which is called "6+1"). Navy officials believe Sea Swap can reduce the stationkeeping multiplier—the number of ships of a given kind needed to maintain one ship of that kind on continuously station in an overseas operating area—by 20% or more. The Navy is implementing a variety of steps to substantially reduce the number of uniformed Navy personnel required to carry out functions both at sea and ashore. DON officials state that these actions are aimed at moving the Navy away from an outdated "conscript mentality," under which Navy personnel were treated as a free good, and toward a more up-to-date approach under which the high and rising costs of personnel are fully recognized. Under the DOD's proposed FY2008 budget and FY2008-FY2013 Future Years Defense Plan (FYDP), active Navy end strength, which was 365,900 in FY2005, is to decline to less than 325,000 by FY2010. Reductions in personnel requirements ashore are to be accomplished through organizational streamlining and reforms, and the transfer of jobs from uniformed personnel to civilian DON employees. Reductions in personnel requirements at sea are to be accomplished by introducing new-design ships that can be operated with substantially smaller crews—a shift that could lead to significant changes in Navy practices for recruiting, training, and otherwise managing its personnel. Current ship-acquisition programs related to this goal include the LCS, the DDG-1000, and the Ford (CVN-78) class aircraft carrier (also known as the CVN-21 class). DON is pursuing a variety of initiatives to improve its processes and business practices so as to generate savings that can be used to help finance Navy transformation. These efforts are referred to collectively as Sea Enterprise. Many DON transformation activities efforts take place at the Navy Warfare Development Command (NWDC), which is located at the Naval War College at Newport, RI, and the Marine Corps Warfighting Laboratory (MCWL), which is located at the Marine Corps Base at Quantico, VA. These two organizations generate ideas for naval transformation and act as clearinghouses and evaluators of transformation ideas generated in other parts of DON. NWDC and MCWL oversee major exercises, known as Fleet Battle Experiments (FBEs) and Advanced Warfighting Experiments (AWEs), that are intended to explore new naval concepts of operation. The Navy and Marine Corps also participate with the Army and Air Force in joint exercises aimed at testing transformation ideas. Potential oversight questions for Congress include the following: Are current DON transformation efforts inadequate, excessive, or about right? Are DON transformation efforts adequately coordinated with those of the Army and Air Force? Is DON striking the proper balance between transformation initiatives for participating in the global war on terrorism (GWOT) and those for preparing for a potential challenge from improved Chinese maritime military forces? Is DON achieving a proper balance between transformation and maintaining near-term readiness and near-term equipment procurement? How might naval transformation affect Navy force-structure requirements? Will the need to fund Army and Marine Corps reset costs in coming years reduce funding available for Navy transformation?

The Department of the Navy (DON) has several efforts underway to transform U.S. naval forces to prepare them for future military challenges. Key elements of naval transformation include a focus on operating in littoral waters, increasing the Navy's capabilities for participating in the global war on terrorism (GWOT), network-centric operations, use of unmanned vehicles, directly launching and supporting expeditionary operations ashore from sea bases, new kinds of naval formations, new ship-deployment approaches, reducing personnel requirements, and streamlined and reformed business practices. This report will be updated as events warrant.

International Social Security agreements are bilateral agreements primarily intended to eliminate dual Social Security taxation based on the same work and provide benefit protection for workers who divide their careers between the United States and a foreign country. By eliminating dual Social Security taxation, the agreements reduce the cost of doing business abroad. In turn, they can affect the competitiveness and profitability of U.S. companies with foreign operations as well as promote investment in the United States by foreign companies. Social Security agreements also affect the application of certain provisions of the Social Security Act, such as the alien nonpayment provision which places restrictions on the payment of U.S. Social Security benefits to noncitizens residing outside the United States, with broad exceptions. Since 1977, the President has had the authority to negotiate Social Security agreements with foreign countries (pursuant to Section 233 of the Social Security Act). Currently, there are 24 Social Security agreements in force (see Table 2 for a list of U.S. Social Security agreements in force). Another agreement (with Mexico) has been signed, but is not in force. This report provides an overview of the purpose and operation of international Social Security agreements. It also provides a discussion of the effects of agreements on selected provisions of the Social Security Act and concerns raised by some policymakers about the agreements. One of the main purposes of international Social Security agreements is to eliminate dual Social Security taxation. Dual Social Security taxation occurs when a worker from one country is employed or self-employed in another country and both countries require that contributions be paid on the same work. In the United States, Social Security-covered workers and their employers each pay 6.2% of earnings up to $106,800 (in 2010) in Social Security payroll taxes. Workers who are self-employed pay 12.4% of net self-employment income up to $106,800, and they may deduct one-half of payroll taxes from federal income taxes. Most jobs in the United States (whether performed by U.S. citizens or noncitizens) are covered by Social Security. The Social Security Administration (SSA) estimates that 94% of workers in paid employment or self-employment in the United States are covered by Social Security. Workers who are not covered by Social Security include (1) state and local government workers participating in alternative retirement systems; (2) election workers earning less than $1,500 in 2010; (3) ministers who choose not to be covered and certain religious sects; (4) federal government workers hired before 1984 (elected office holders, political appointees and judges are mandatorily covered regardless of when their service began); (5) college students working at their academic institutions; (6) household workers earning less than $1,700 in 2010, or those under age 18 for whom household work is not their principal occupation; (7) self-employed workers with annual net earnings below $400; (8) foreign students and exchange visitors who hold F-1, J-1, M-1, Q1 and Q2 visas if the work is performed in connection with their studies or for the purpose of their visit to the United States (J-1 visa holders who are in the United States for 18 months or longer are required to pay Social Security payroll taxes); and (9) foreign agricultural workers who hold H-2A visas. The Social Security Act also extends Social Security coverage to U.S. citizens and residents who are employed abroad by U.S. companies (such as in a branch office located in a foreign country). As a result, a U.S. worker and his or her employer generally would be required to contribute both to the U.S. Social Security system and the Social Security system of the country where the work is performed. In addition, U.S. citizens and residents who are employed by a foreign affiliate of a U.S. company are subject to dual taxation if the company has entered into an agreement with the U.S. Department of the Treasury, Internal Revenue Service, under Section 3121(l) of the Internal Revenue Code to provide U.S. Social Security coverage for employees of a foreign affiliate. In some cases, a U.S. company that sends an employee to work in a foreign country may agree to pay both the employee's and the employer's shares of the Social Security tax under the foreign system. Payment of the employee's share of the Social Security tax by the employer may be considered taxable compensation to the employee, thereby increasing the employee's income tax liability. The employer may also agree to pay the additional income taxes on behalf of the employee. SSA estimates that, in some countries, an employer's foreign Social Security costs can be as much as 65% to 70% of the employee's salary when foreign Social Security taxes and additional income taxes paid by the employer on behalf of the employee are taken into account. In addition, the Social Security Act extends Social Security coverage to U.S. citizens and residents who are self-employed in a foreign country. As a result, self-employed workers abroad are also affected by dual Social Security taxation. International agreements eliminate dual taxation on the same earnings by requiring workers and their employers to contribute to only one Social Security system based on the coverage provisions of the agreements. Each agreement includes coverage rules that determine whether a person's work is covered under the Social Security system of the sending country or that of the foreign country. Under the agreements, there are basic rules of coverage that apply to workers who are sent by an employer to work abroad as well as self-employed workers (see rules regarding the self-employed). In addition, there are special rules and exceptions that apply allowing for variation in the rules of coverage under each agreement. The basic rule of coverage under international agreements is the territoriality rule , which specifies that a worker is covered under the Social Security system of the country where the work is performed, unless the agreement provides for one or more exceptions. Generally, exceptions are provided to "ensure that a worker is covered under the system of the country to which he or she has the more direct connection." A primary exception to the territoriality rule is the detached worker rule . Under this rule, a person who is sent by an employer to work in a foreign country on a temporary basis (generally five years or less ) would continue to be covered under the sending country's system and would be exempt from coverage under the foreign system. Conversely, a person who is sent by an employer to work in a foreign country for more than five years would be covered under the foreign system and would be exempt from coverage under the sending country's system. The basic rules of coverage are summarized in Table 1 . For example, if a U.S. worker is sent by an employer to work in Canada and the assignment is expected to last five years or less, he or she would remain covered under the U.S. Social Security system. The worker and his or her employer would be required to contribute only to the U.S. system. Alternatively, if a U.S. worker is sent by an employer to work in Canada and the assignment is expected to last for more than five years, he or she would be covered only under the Canadian Social Security system. The worker and his or her employer would be required to contribute only to the Canadian system. Thus, the detached worker rule allows workers and their employers to avoid paying Social Security payroll taxes under two systems based on the same earnings and minimizes disruptions in Social Security coverage for workers who are transferred abroad on temporary assignments. The agreement with Italy is unique in that the primary exception to the territoriality rule is the nationality rule , which specifies that a worker is covered under the Social Security system of his or her country of nationality. For example, if an Italian worker is sent by an employer to work in the United States, he or she would remain covered under the Italian Social Security system, regardless of the period of employment in the United States. Generally, different coverage rules apply to self-employed workers. Under most agreements, the general rule of coverage for self-employed workers is the residence rule , which specifies that a person is covered under the Social Security system of the country in which he or she resides. For example, under the agreement with Switzerland, a Swiss citizen who resides in the United States and is self-employed is covered under the U.S. system and exempt from coverage under the Swiss system. Some agreements, such as those with Belgium, France, Germany, Italy and Japan, use other primary rules of coverage for self-employment. For example, under the agreement with Belgium, a self-employed worker is subject to the territoriality rule if he or she conducts business in only one country and the residence rule if he or she conducts business in both countries. Under the agreement with Germany, the basic rule of coverage for both employees and self-employed workers is the territoriality rule, with exceptions provided, such as those under the detached worker rule. The second main purpose of international Social Security agreements is to allow workers who divide their careers between the United States and a foreign country to fill gaps in Social Security coverage by combining work credits under each country's system to qualify for benefits under one or both systems. In the United States, a worker must have at least 6 quarters of coverage under the U.S. system (the person must have worked in the United States in Social Security-covered employment for at least 1½ years) to combine U.S. and foreign work credits. This feature of international agreements allows workers who do not meet the minimum coverage requirements under either country's system potentially to qualify for partial benefits under one or both systems. If a worker qualifies for benefits based on combined (totalized) work credits, the benefit payable under either system is prorated to take into account the actual period during which the worker was covered by that system. For example, under the U.S. system, a worker generally needs 40 quarters (10 years) of Social Security-covered employment to be eligible for retirement benefits. Because the United States and Canada have entered into an agreement, a U.S. worker who has five years of coverage under the U.S. system and five years of coverage under the Canadian system can meet the minimum coverage requirement for a U.S. Social Security retirement benefit based on combined coverage credits from the U.S. and Canada. The benefit would be prorated to reflect that the worker contributed to the U.S. system for only five years. In the absence of an agreement between the United States and Canada, the worker in this example would not be able to qualify for a retirement benefit under the U.S. system (nor would a U.S. citizen who had worked in Canada be eligible for benefits under the Canadian system). Workers may also qualify for Social Security Disability Insurance (SSDI) benefits based on combined work credits. To qualify for SSDI benefits under the U.S. system, a worker must meet the definition of disability, as well as a recent work test and a duration of work test . Under the recent work test, a worker must have earned a certain number of work credits within a specified period. The requirements vary depending on the age of the worker at the time he or she became disabled. For example, a worker who becomes disabled before the age of 24 must have 1½ years of Social Security-covered employment during the three-year period before the disability began. By comparison, a worker who becomes disabled at the age of 31 or later must have five years of Social Security-covered employment during the 10-year period before the disability began. Under the duration of work test, a worker must have a certain number of total work credits, which may have been earned at any time. The requirements vary depending on the age of the worker at the time he or she became disabled. For example, a worker who becomes disabled before the age of 28 must have a total of 1½ years of Social Security-covered employment, while a worker who becomes disabled at the age of 60 must have a total of 9½ years of Social Security-covered employment. In any case, a worker must have at least 6 work credits (1½ years of Social Security-covered employment) to qualify for SSDI benefits, the same minimum number of credits needed under the U.S. system to combine U.S. and foreign work credits under the terms of an international agreement. The ability to combine coverage credits under the U.S. system and a foreign system provides workers (and their family members) an opportunity to qualify for benefits under one or both systems that would not be payable otherwise because the worker did not work long enough or recently enough to meet the minimum coverage requirements. In this way, a worker's Social Security contributions are not "lost" to the system. By eliminating dual Social Security taxation, international agreements reduce the cost of doing business abroad. In doing so, they can affect the competitiveness and profitability of U.S. companies with foreign operations and promote investment in the United States by foreign companies. In addition, international agreements affect the application of certain provisions of the Social Security Act, including the alien nonpayment provision. The alien nonpayment provision places restrictions on the payment of U.S. Social Security benefits to noncitizens who reside outside the United States, with broad exceptions. These payment restrictions may be waived for beneficiaries who are residents of a country with which the United States has a Social Security agreement. Supporters of international Social Security agreements point out that the waiver of residency requirements increases the portability of Social Security benefits for U.S. citizens and foreign nationals. International Social Security agreements are conducted and approved using the executive agreement method rather than the treaty process. Under U.S. law, there are four types of international agreements: (1) treaties, (2) sole executive agreements, (3) agreements pursuant to treaty, and (4) congressional-executive agreements. Congressional-executive agreements are those that are authorized or approved by Congress, or both. International Social Security agreements fall into the fourth category because they are authorized by Congress in the Social Security Act. In addition, Congress has established in the statute a role for itself in reviewing these agreements. The Congressional Record does not provide a discussion of why Congress chose the congressional-executive method over the treaty method for totalization agreements in 1977. However, some discussion of the approval method for totalization agreements occurred during a 1976 hearing before the House Ways and Means Social Security Subcommittee on H.R. 14429 , the International Social Security Agreements Act, as described in the next section. A discussion of the characteristics of congressional-executive agreements may shed additional light on the matter. One feature of congressional-executive agreements is that they rely on an ex ante authorization by Congress, in which Congress has the opportunity to establish by law certain terms related to such agreements. With respect to Social Security agreements, Section 233 of the Social Security Act authorizes the President to enter into such agreements with foreign countries, establishes the congressional review process for the agreements and specifies reporting requirements. In addition, congressional-executive agreements usually contain an ex post approval mechanism that provides an opportunity for both houses of Congress (not just the Senate) to approve or reject an agreement. With respect to Social Security agreements, Section 233(e)(2) of the Social Security Act specifies that an agreement shall become effective after a period of 60 days during which the House of Representatives or the Senate is in session (i.e., a period of 60 session days) after an agreement is transmitted to Congress unless the House of Representatives or the Senate adopts a resolution of disapproval. According to congressional testimony by the Commissioner of Social Security in 1976, initial efforts in the United States toward totalization agreements with foreign countries can be found in the Supplementary Agreement to the 1948 Treaty of Friendship, Commerce and Navigation between the United States and Italy. In his statement, Commissioner James B. Cardwell indicated: Under the Supplementary Agreement, which became effective in 1961, both countries declared their adherence to a policy of preventing gaps in social security protection by permitting periods of social security coverage in both countries to be counted in determining benefit rights in both countries. The Supplementary Agreement was signed by the United States and Italy in 1951 and ratified by the U.S. Senate in 1953. While the Supplementary Agreement provided for the negotiation of a totalization agreement between the parties (referred to in the Supplementary Agreement as an "arrangement"), the Senate ratified the Supplementary Agreement on the condition that any such agreement would be made by the United States "only in conformity with provisions of statute." In May 1973, a totalization agreement between the United States and Italy was signed by both countries. Later that year, an attempt was made to enact legislation providing the statutory authority for totalization agreements as required by the Senate in 1953. In November 1973, the Senate approved H.R. 3153 (93 rd Congress), a Social Security bill passed by the House in April 1973, adding a provision authorizing the President to enter into totalization agreements with foreign countries and specifying other terms related to such agreements. The version of the bill approved by the House of Representatives did not include a provision relating to totalization agreements. A conference to resolve differences between the House- and Senate-approved versions of the bill was never held and the legislation was not enacted. The provision in H.R. 3153 (93 rd Congress) relating to totalization agreements added by the Senate in 1973 was similar to current law (Section 233 of the Social Security Act), with some notable differences. For example, it provided for a longer period of congressional review. The Senate provision specified that "such an agreement shall become effective on any date provided in the agreement following 90 calendar days of continuous session of the Congress after the date on which the agreement is transmitted ... " In addition, the Senate provision did not specify what action by Congress would be required to stop an agreement from taking effect. In 1976, the House Ways and Means Committee, Subcommittee on Social Security, held a hearing on the International Social Security Agreements Act ( H.R. 14429 , 94 th Congress), which reflected a proposal supported by the Administration. In contrast to the provision added by the Senate to H.R. 3153 in 1973, H.R. 14429 would have required only that Congress be notified of an international Social Security agreement. Under H.R. 14429 , Social Security agreements, like other types of international agreements, would have been reported to Congress after (rather than before) entering into force. During the hearing on H.R. 14429 , the discussion turned to an alternative "report and wait" provision similar to the one added by the Senate to H.R. 3153 in 1973. The Commissioner of Social Security, James B. Cardwell, indicated that the agency had been advised that the Administration would not object to an arrangement in which Congress would be presented with a proposed Social Security agreement and would have 60 days in which to advise the Administration of their position or otherwise the agreement would become effective. Upon questioning by members of the Social Security Subcommittee, Commissioner Cardwell stated that the agency did not have details on how the process would work. However, the Commissioner indicated that it was his opinion that any objection to an agreement would have to come from Congress, and not from a subcommittee or committee or even one House. Commissioner Cardwell offered to seek clarification on the Administration's position with respect to an appropriate process for congressional review of Social Security agreements. In a follow-up letter to Honorable James Burke, the Chairman of the Social Security Subcommittee, Commissioner Cardwell expressed the Administration's support for a provision similar to the one added by the Senate to H.R. 3153 in 1973, except with a shorter period of congressional review. The Commissioner stated that the Administration would not object to an arrangement in which a negotiated totalization agreement could not become effective until after 60 days of continuous session of Congress following transmittal to Congress by the President. Under the Administration's provision, if Congress approved of a proposed agreement, no action by Congress would be needed and the agreement would take effect at the end of the specified review period. If Congress disapproved of a proposed agreement, or wanted to alter any of its provisions, Congress would be required to enact a statute to that effect. In 1977, the statutory authority relating to totalization agreements (Section 233 of the Social Security Act) was established under the Social Security Amendments of 1977 ( P.L. 95-216 ). The provision enacted in 1977 was similar to current law, with some notable differences. For example, under a totalization agreement, an individual may qualify for a benefit from both the United States and the foreign country party to the agreement. The 1977 law specified that, with respect to persons who qualify for benefits under both countries' systems, a totalization agreement could provide that the United States would supplement the total benefit amount (U.S. and foreign benefit combined) payable to a U.S. resident to increase it to the amount he or she would have qualified for under the U.S. system based on the minimum Primary Insurance Amount (PIA) available under current law at the time. In addition, the 1977 law provided for a longer period of congressional review than that supported by the Administration. Specifically, it provided that an agreement would go into effect unless the House of Representatives or the Senate adopted a resolution of disapproval within the period following transmittal to Congress "during which each House of the Congress has been in session on each of 90 days." The House of Representatives and the Senate initially approved different provisions relating to totalization agreements in considering the 1977 legislation. The provision approved by the House of Representatives specified that each agreement would have to be transmitted to Congress and could not go into effect until after at least one House of Congress has been in session for 90 days. During that period, an agreement could be rejected by action of both Houses of Congress enacting legislation. The provision approved by the Senate specified that (1) each agreement must be transmitted to Congress with a report on the estimated cost and number of individuals affected; (2) an agreement must not be inconsistent with the provisions of Title II of the Social Security Act; and (3) an agreement could not go into effect until after each House of Congress has been in session for 90 days, during which period an agreement could be rejected by action of either House of Congress. The conference agreement followed the Senate provision. In 1981, the Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ) struck the provision in Section 233 of the Social Security Act permitting an agreement to provide that the United States would supplement a U.S. resident's total benefit amount (U.S. and foreign benefit combined) under an agreement if the total benefit amount was less than the minimum benefit he or she would have qualified for under the U.S. system. This was a conforming amendment related to the elimination of the minimum benefit provision under the same law ( P.L. 97-35 ). Accordingly, there is no current law providing for any such supplemental benefit under an agreement. In 1983, the period for congressional review of Social Security agreements was shortened under the Social Security Amendments of 1983 ( P.L. 98-21 ). The period of congressional review was changed from the period "during which each House of the Congress has been in session on each of 90 days " to the period "during which at least one House of the Congress has been in session on each of 60 days ." This is the same period of congressional review provided under current law. The Government Accountability Office (GAO), in a study conducted in 2005, found that the countries with which the United States has entered into Social Security agreements have been selected without a formal guideline or protocol. SSA officials have stated that the agency has used the same major criteria for selecting partner countries since 1978. According to SSA officials, the major criteria used in selecting agreement countries include (1) whether the other country has a Social Security system of general application that pays periodic benefits on account of death, old age or disability; (2) costs to the trust funds; (3) the number of and cost savings to U.S. employers and workers who would benefit from the elimination of dual taxes; (4) the interest of the other country in negotiating an agreement; (5) the ability of the other country to administer an agreement; and (6) input from other U.S. government agencies such as the Department of State and the Office of the U.S. Trade Representative. In addition, the 2005 GAO Report indicated that SSA is working on initiatives aimed at determining which countries would be suitable partners for future agreements, taking into account the reliability of a country's data and records. According to SSA officials, the agency has sought input from the Department of State and the Department of Commerce working toward developing a more formalized process for identifying potential agreement countries. GAO also reported that SSA has developed a matrix based on 14 economic and administrative factors that may affect a country's ability to determine an individual's eligibility for benefits under an agreement. The purpose of the matrix is to facilitate comparisons among potential agreement countries and evaluate a country's suitability for a future agreement. The matrix also includes factors that could be used to assess the potential impact of an agreement on the Social Security trust funds. With respect to SSA's initiatives aimed at determining which countries would be suitable partners for future agreements, SSA noted in October 2009: Since 2005, SSA has made significant progress toward formalizing its processes for identifying agreement partner countries and evaluating the reliability of a foreign country's data. These advancements include: (1) developing a standardized questionnaire to elicit information on internal controls and information security policies and procedures in force in a potential partner country to protect the integrity of earnings information and the computer network that stores such information; (2) requiring the completion of the questionnaire and a thorough and successful review by SSA experts in order to enter into formal negotiations on a potential totalization agreement; and (3) expanding the actuarial estimates of potential agreements' impact on the U.S. Social Security Trust Funds from short-range, 5-year estimates of the effect to include both short-range (7 year) and long-range (75 year) estimates. Although there are no statutes or regulations regarding the selection of potential agreement countries, SSA noted that the agency "has for more than 30 years consistently applied the compatible system, costs/benefits, taxation, practicality and consultative criteria described above in considering possible agreement partner countries." In addition, the negotiation and conclusion of international agreements by SSA are governed by the "Circular 175 Procedure." The Circular 175 Procedure refers to regulations developed by the U.S. Department of State to ensure that treaties and other international agreements are carried out within constitutional and other legal limitations, with due consideration of foreign policy implications, and with appropriate involvement of the State Department. The U.S. Department of State Foreign Affairs Manual states that "[n]egotiations of treaties, or other 'significant' international agreements, or for their extension or revision, are not to be undertaken, nor any exploratory discussions undertaken with representatives of another government or international organization, until authorized in writing by the Secretary or an officer specifically authorized by the Secretary for that purpose." After authorization is granted by the State Department, SSA officials may negotiate, but not conclude, a Social Security agreement with a foreign country. When negotiations have been completed, SSA's General Counsel reviews the agreement to ensure that it is consistent with U.S. law. In addition, the State Department reviews the agreement to ensure that it conforms to U.S. policy priorities and treaty protocols and that any translation of the agreement is the same in both languages. Following that process, the agreement is signed by an authorized U.S. representative and an authorized representative of the foreign country. After the agreement has been signed, SSA and the foreign Social Security agency meet and address implementation issues, formulating operations procedures to be used in administering the agreement. When that process has been completed, the agreement is forwarded to the U.S. Secretary of State for review. After review at the State Department has been completed, the agreement is sent to the President for review. Finally, the President is required by law to transmit the agreement to Congress for a period of review (60 session days) before the agreement can go into effect. Upon transmittal to Congress, the agreement must be accompanied by a report showing the estimated number of people who will be affected by the agreement and the estimated financial impact of the agreement on programs established by the Social Security Act. After a Social Security agreement has been entered into with a foreign country, the President is required to transmit the agreement to Congress for a period of review before it can be implemented. There are no rules limiting the amount of time that may elapse between the signing of an agreement and its transmittal to Congress. Although most of the current agreements were transmitted to Congress less than one year after they were signed, there has been some variation. For example, the agreement with Denmark was signed in June 2007 and transmitted to Congress less than a year later in February 2008. The agreement with Canada, which had an additional protocol for Québec, was signed in March 1981 and transmitted to Congress almost three years later in January 1984. The pending agreement with Mexico was signed in June 2004 and has not been transmitted to Congress to date. Section 233(e)(2) of the Social Security Act specifies that a Social Security agreement automatically goes into effect unless the House of Representatives or the Senate adopts a resolution of disapproval within 60 session days of the agreement's transmittal to Congress. It should be noted that Section 233(e)(2), which allows for the rejection of a totalization agreement upon adoption of a resolution of disapproval by either House of Congress is functionally identical to the legislative veto provision that was held unconstitutional in INS v. Chadha . In that case, the Supreme Court struck down a provision in the Immigration and Nationality Act that gave either House of Congress the authority to overrule deportation decisions made by the Attorney General. The Court declared that a legislative veto constitutes an exercise of legislative power, as its use has "the purpose and effect of altering the legal rights, duties, and relations of persons ... outside the legislative branch." Accordingly, the Court invalidated the disapproval mechanism, holding that Congress may exercise its legislative authority only "in accord with a single, finely wrought and exhaustively considered procedure," namely bicameral passage and presentation to the President. In its decision, the Court explicitly acknowledged that its holding was not limited to the provision at issue, but would instead affect other similar laws, stating: "our inquiry is sharpened rather than blunted by the fact that Congressional veto provisions are appearing with increasing frequency in statutes which delegate authority to executive and independent agencies." The Court has emphasized its categorical disapproval of the legislative veto in subsequent cases, noting in Printz v. United States , for instance, that "the legislative veto, though enshrined in perhaps hundreds of federal statutes ... was nonetheless held unconstitutional" in Chadha . The maxim delineated in Chadha , as consistently reaffirmed by the Court, is fully applicable in the current context. Accordingly, given that the disapproval mechanism in Section 233(e)(2) authorizes "congressional invalidation of executive action" outside the strictures of bicameralism and presentment, there is no discernible basis upon which it may be argued successfully that its utilization by Congress would withstand judicial scrutiny. Congress has never rejected a Social Security agreement. As a result, the apparent constitutional infirmity of Section 233(e)(2) has not been an issue. Congressional utilization of the mechanism in Section 233(e)(2) to reject a Social Security agreement could give rise to a judicial challenge, potentially resulting in an invalidation of the disapproval mechanism and a determination that the agreement is effective. Specifically, in considering the effect of the unconstitutional disapproval mechanism, a reviewing court would consider whether the remainder of Section 233 is valid, or whether the entire statute must be nullified. The Supreme Court has held that "[u]nless it is evident that the Legislature would not have enacted those provisions which are within its power, independently of that which is not, the invalid part may be dropped if what is left is a fully operative law." In Westcott v. Califano , the court noted that "the existence of a broad severability clause in the Social Security Act reflects the Congressional wish that judicial interpretation of the act leave as much of the statute intact as possible." The existence of this severability clause, coupled with the fact that the operative provisions of Section 233 would remain fully functional absent the disapproval mechanism in Subsection (e)(2), gives rise to the likelihood that a reviewing court would invalidate any attempt to utilize the disapproval mechanism, while giving effect to an otherwise properly executed Social Security agreement. Before the 1983 Supreme Court Decision of INS v. Chadha , other acts had provisions similar to the legislative veto provision found in Section 233(e)(2) of the Social Security Act. In response to the Court's holding in Chadha , legislative veto provisions in other Acts were replaced with provisions requiring Congress to adopt a joint resolution of approval or disapproval. For example, the Fishery Conservation and Management Act of 1976, as amended, specified that international fisheries agreements would enter into force after a 60-day waiting period unless Congress adopts a joint resolution of disapproval. It is the responsibility of the Social Security Administration to make rules and regulations and to establish procedures necessary to implement and administer international Social Security agreements. Each agreement is accompanied by an Administrative Arrangement for the Implementation of the Agreement on Social Security that may be signed when the agreement is signed or at a later time. The administrative arrangement provides general guidelines for the implementation and administration of the agreement, as well as specific rules regarding cooperation between partner countries. For example, it requires the exchange of statistics on the number of beneficiaries and the total amount of benefits paid. It also provides for the exchange of information needed to adjudicate claims filed under the agreement. International Social Security agreements and their administrative protocols can be amended. The agreements require that the parties involved communicate to each other any changes in their laws that could affect the application of an agreement. When changes are made to a country's Social Security system that affect the application of an agreement, a supplementary agreement (which updates and amends the original agreement) must be signed. For example, the United States and Sweden signed a supplementary agreement in 2004 to take into account a major reform of Sweden's Social Security system in which the defined benefit public pension system was replaced with a new system that includes mandatory individual accounts, among other features. The supplementary agreement updated and clarified several provisions of the original agreement to reflect other changes in U.S. and Swedish laws since the original agreement was signed in 1985. Social Security agreements can be terminated by one of the countries party to the agreement. If an agreement is terminated, it typically remains in effect for a 12-month period following the month in which notification is given by one of the parties. Benefits in payment at the time of termination would be retained. Individuals whose claims are in process, or those who would become entitled to benefits before the end of the 12-month period, would retain entitlement to benefits under the agreement. No agreements have been terminated to date. The United States has Social Security agreements in force with 24 countries (see Table 2 ). In addition, the United States has a pending agreement with Mexico that was signed on June 29, 2004. As noted previously, the agreement with Mexico has not been transmitted to Congress. Reportedly, as of January 2010, the agreement remains under review at SSA (SSA has not forwarded the agreement to the State Department). Although the specific terms of each Social Security agreement may differ given the variation in Social Security systems in each country, the provisions of an agreement must be consistent with the Social Security Act. Section 233(c)(4) of the Social Security Act states "any such agreement may contain other provisions which are not inconsistent with the other provisions of [Title II of the Social Security Act] and which the President deems appropriate to carry out the purposes of this section." A description and the complete text of each agreement are available on the Social Security Administration's website. In December 2007, about $28 million was paid in monthly benefits to about 146,200 recipients under U.S. Social Security agreements (see Table 3 ). Individuals living in the United States may apply for totalization benefits at any one of the approximately 1,300 SSA field offices in the United States. Individuals living outside the United States generally are required to apply for totalization benefits at a Foreign Service Post (FSP) located in a U.S. embassy or consulate, or at the social security agency in their home country. Initial processing of applications for totalization benefits is handled by SSA field office staff or Foreign Service Nationals in the FSP. Among other tasks, these individuals are responsible for reviewing supporting documents, such as birth and marriage certificates. After initial processing, application packages are sent to SSA's Office of International Operations (OIO), which is responsible for final adjudication of claims for U.S. totalization benefits. For claims filed at an SSA field office (rather than a FSP), OIO requests the foreign coverage record from the foreign social security agency. OIO reviews the supporting documents (such as evidence of identity and citizenship), develops additional evidence if needed, and makes a final decision on the claim. If the claim is for U.S. totalization disability benefits, OIO will make the determination of disability, however, Disability Determination Services may be asked to develop the medical evidence in such cases. Although agreements allow for some variation in the application process for totalization benefits, each of the offices involved in the process (SSA field offices, SSA's Office of International Operations, and FSPs) maintain certain responsibilities. For individuals applying in the United States, SSA field offices are responsible for taking claims for U.S. totalization benefits, as well as claims for regular or totalization benefits from foreign countries. OIO is responsible for liaison activities with foreign countries, which include requesting foreign coverage records and providing U.S. coverage records or other information to foreign countries. In addition, OIO is responsible for final adjudication of a claim for U.S. totalization benefits. For individuals applying outside the United States, the FSPs, like the SSA field offices, are responsible for the development of benefit claims. The specific procedures vary depending on the terms of each agreement and whether the claim is filed initially at the FSP or the foreign social security agency. Workers who meet the minimum coverage requirement for a U.S. Social Security benefit based on combined U.S. and foreign work credits can receive a totalization benefit (assuming all other eligibility requirements are met). A totalization benefit is prorated to reflect the number of years the worker was covered by the U.S. system. For regular (non-totalization) benefits, the worker's Primary Insurance Amount (PIA) is computed by applying the Social Security benefit formula to the worker's Average Indexed Monthly Earnings (AIME). The AIME is computed by dividing the worker's 35 highest years of covered earnings, adjusted for the growth in average wages over time, by the computation period (35 years or 420 months). If a worker has fewer than 35 years of covered earnings, years of zero earnings are counted in the computation of the AIME, resulting in a lower initial monthly benefit amount. For workers who reach the age of 62, become disabled, or die in 2010, the benefit formula that is applied to the worker's AIME to compute his or her PIA is: 90% of the first $761 of AIME, plus 32% of AIME over $761 through $4,586, plus 15% of AIME over $4,586. As with regular benefits, the amount of a U.S. totalization benefit depends on the duration of the worker's coverage under the U.S. system and his or her level of earnings. The process for computing a totalization benefit, however, differs from the regular benefit computation process according to the following basic steps: (1) a theoretical full-career earnings record is created based on the worker's actual earnings under the U.S. system relative to the average earnings of all covered workers; (2) a theoretical PIA is computed based on the theoretical earnings record; (3) the theoretical PIA is multiplied by a pro rata fraction to determine the pro rata PIA; and (4) the monthly benefit amount is established based on the pro rata PIA (i.e., any adjustments that apply, such as a reduction for early retirement, are made to the pro rata PIA to determine the monthly benefit amount). Stated simply, a theoretical benefit is computed as though the individual had worked a full career (a coverage lifetime) under the U.S. system at the same level of earnings he or she had during actual periods of covered employment in the United States. The theoretical benefit is prorated to reflect the proportion of the worker's coverage lifetime completed under the U.S. system. By definition, totalization beneficiaries have fewer than 40 quarters (10 years) of Social Security-covered employment in the United States. Because totalization benefits are prorated to reflect the worker's period of coverage under the U.S. system, totalization benefits on average are lower than regular benefits. For example, in December 2007, the average monthly benefit under U.S. totalization agreements for retired workers was $227.54 (see Table 3 ). Among regular beneficiaries, the average monthly benefit for retired workers was $1,079. Based on combined (totalized) work credits, a worker may qualify for Social Security benefits under one or both country's systems, depending on the eligibility requirements in each country. Totalization benefits are paid independently by each country (i.e., a U.S. Social Security benefit payable under a totalization agreement is paid separately from a benefit payable under a foreign system). In addition, a U.S. totalization benefit may be converted to a regular benefit if the beneficiary continues to work in Social Security-covered employment in the United States and obtains enough work credits to become fully insured under the U.S. system without taking into account foreign work credits. The Social Security Administration monitors the continuing eligibility of Social Security beneficiaries (totalized and regular beneficiaries) living in the United States and abroad. With respect to beneficiaries living in the United States, SSA relies on data matching with states and federal agencies to identify circumstances that could affect an individual's continuing eligibility for benefits or the proper benefit amount (such as changes in work activity) and unreported deaths. With respect to beneficiaries living outside the United States (U.S. citizens and noncitizens), SSA relies on personal questionnaires (Foreign Enforcement Questionnaires) and periodic validation surveys (i.e., visits to beneficiaries' homes) to verify an individual's continuing eligibility for benefits. SSA mails Foreign Enforcement Questionnaires (FEQs) to beneficiaries who live outside the United States on an annual or biennial basis, depending on factors such as the beneficiary's country of residence, age, and whether he or she has a representative payee. For example, beneficiaries with a representative payee and those who are aged 97 or older are sent a questionnaire each year. Generally, beneficiaries who receive their own benefits (i.e., those who do not have a representative payee) are sent a questionnaire every other year, unless they live in certain countries to which questionnaires are sent annually. The completed questionnaire must be returned to SSA within 60 days. The questionnaires are intended to provide SSA with information needed to verify the individual's continuing eligibility for benefits and the proper benefit amount (for example, an individual's benefit payments could be affected by changes in work activity or marital status as well as improvement of a disabling condition). The 2005 GAO Report indicated that SSA relies on foreign beneficiaries to accurately self-report the information because the agency does not conduct independent verification of the responses. Among other reasons, GAO indicated that SSA does not have the capability to verify information for foreign beneficiaries using computer database matches (as it does for domestic beneficiaries) and is unable to independently verify the death of foreign beneficiaries. GAO also pointed out, however, that SSA is developing pilot computer match projects with Italy and Germany to establish an independent, third-party mechanism for verifying beneficiaries' continuing eligibility for benefits. With respect to SSA's computer match projects, SSA noted in October 2009 that since 2005: SSA has initiated data matching projects under current totalization agreements to support and expand its stewardship initiatives. SSA has begun automated death data exchanges with a number of totalization partner countries designed to identify deceased beneficiaries and avoid overpayment of benefits. Some of the results of these efforts are as follows: A one-way death data exchange with Germany resulted in overpayment savings of $1,792,546 (U.S. dollars). Since February 2009, SSA has implemented recurring death data exchanges with Australia. These data exchanges have resulted in overpayment savings of $128,878.70 (U.S. dollars). In 2009, SSA is working to expand the death data exchange to five additional totalization partner countries. SSA will pilot two additional automated death data exchanges before the end of 2009. SSA intends to conduct automated death data exchanges with all totalization agreement partner countries. In addition, SSA conducts periodic validation surveys in foreign countries (including countries with which the United States has totalization agreements) where Social Security beneficiaries live. SSA staff (from the Office of Central Operations) and foreign service staff visit beneficiaries' homes to administer the surveys for the purpose of verifying the identity and continuing eligibility of beneficiaries. SSA conducts validation surveys in about three countries each year. The frequency of visits varies by country, depending on factors such as results of past surveys and evidence of data reliability concerns. For example, some countries may be surveyed every five years (such as Portugal) while others may be surveyed every 30 years (such as Sweden). Although validation surveys have helped SSA identify unreported deaths and overpayments, the 2005 GAO Report indicated that, according to SSA officials, the validation surveys conducted since 2000 generally verify only the identity and existence of beneficiaries. They do not verify work activity or other information that could affect an individual's benefit payments. Section 202(y) of the Social Security Act requires noncitizens in the United States to be lawfully present to receive benefits. If a noncitizen is entitled to benefits, but does not meet the lawful presence requirement, his or her benefits are suspended. In such cases, a noncitizen may receive benefits (which may include benefits based on work performed in the United States without authorization) while residing outside the United States if he or she meets one of the exceptions to the alien nonpayment provision under Section 202(t) of the Social Security Act (see Table 4 ). Under the alien nonpayment provision, a noncitizen's benefits are suspended if he or she remains outside the United States for more than six consecutive months, unless one of several broad exceptions is met. For example, an alien may receive benefits outside the United States if he or she is a citizen of a country that has a social insurance or pension system that pays benefits to eligible U.S. citizens residing outside that country (see Appendix B ), or if he or she is a resident of a country with which the United States has a totalization agreement (see Table 2 ). If an alien does not meet one of the exceptions to the alien nonpayment provision, his or her benefits are suspended beginning with the seventh month of absence and are not resumed until he or she returns to the United States lawfully for a full calendar month. In addition, to receive payments outside the United States, alien dependents and survivors must have lived in the United States previously for at least five years (lawfully or unlawfully), and the family relationship to the worker must have existed during that time (see Table 5 ). The law provides several broad exceptions to the five-year U.S. residency requirement for alien dependents and survivors (see Table 6 ). For example, an alien dependent or survivor is exempt from the U.S. residency requirement if he or she is a citizen of a treaty obligation country (i.e., if nonpayment of benefits would be contrary to a treaty between the United States and the individual's country of citizenship; see Appendix B ), or if he or she is a citizen or resident of a country with which the United States has a totalization agreement (see Table 2 ). Tables 4 through 6 summarize the complex rules and exceptions that apply to the payment of benefits to noncitizens living outside the United States (payments to workers and their family members). As shown in the tables, assuming all other eligibility requirements are met, the existence of a totalization agreement between the United States and a foreign country (1) allows workers and their family members who are residents of the foreign country to receive benefits outside the United States indefinitely (i.e., the alien nonpayment provision is waived) and (2) may allow family members (dependents and survivors of the worker) who are citizens or residents of the foreign country to receive benefits outside the United States without having to meet the U.S. residency requirement (i.e., the five-year U.S. residency requirement that applies to alien dependents and survivors outside the United States is waived). These advantages of a totalization agreement are not limited to workers (and their family members) who qualify for U.S. Social Security benefits based on work performed in the United States under a formal arrangement between the United States and a foreign country under the terms of a totalization agreement. Workers (and their family members) who qualify for U.S. Social Security benefits (which may include benefits based on work performed in the United States without authorization) would be exempt from the payment restrictions that apply to noncitizens residing outside the United States (including the five-year U.S. residency requirement for dependents and survivors). This means that, depending on the specific agreement and on whether SSA has determined that the other country reciprocates under the provisions of Section 202(t) of the Social Security Act, dependents and survivors of noncitizen workers who reside outside the United States and who may never have resided in the United States could collect U.S. Social Security benefits on the worker's record. In addition, citizens of third-party countries (countries other than the United States or a totalization agreement country) are exempt from these payment restrictions (including the five-year U.S. residency requirement for dependents and survivors) if they reside in a country with which the United States has a totalization agreement. In addition to the alien nonpayment provision, other restrictions apply to the payment of benefits to individuals residing outside the United States. U.S. Treasury Department regulations and Social Security restrictions prohibit payments from being sent to individuals residing in Cuba, North Korea, Cambodia, Vietnam, or areas that were in the former Soviet Union (excluding Armenia, Estonia, Latvia, Lithuania and Russia); in countries with Social Security restrictions in place, exceptions to the general nonpayment rule can be made for certain eligible beneficiaries. The Social Security Act also prohibits the payment of benefits to most individuals who are removed from the United States (i.e., deported). When the Social Security program began paying benefits in 1940, there were no restrictions on benefit payments to noncitizens. In 1956, amid concerns that noncitizens were working in the United States for relatively short periods and returning to their native countries where they and their family members would collect benefits for many years, Congress enacted restrictions on benefits for alien workers living abroad (restrictions did not apply to alien dependents and survivors). The Social Security Amendments of 1956 (P.L. 84-880) required noncitizens to reside in the United States to receive benefits and, under the alien nonpayment provision, suspended benefits if the recipient remained outside the United States for more than six consecutive months, with broad exceptions (see Table 4 ). In 1983, Congress placed restrictions on benefit payments to alien dependents and survivors living abroad. The Social Security Amendments of 1983 ( P.L. 98-21 ) made alien dependents and survivors outside the United States subject to the same payment restrictions as alien workers. P.L. 98-21 further required that, to receive benefits outside the United States, alien dependents and survivors (or their parents, in the case of a child's benefit) must have lived in the United States previously for at least five years (see Table 5 ), with broad exceptions (see Table 6 ). Several factors led to the enactment of tighter restrictions on benefit payments to alien dependents and survivors living abroad in 1983, including the large number of dependents that were being added to the benefit rolls (in some cases under fraudulent circumstances) after workers had returned to their native country and become entitled to benefits, and difficulties associated with monitoring the continuing eligibility of recipients living abroad. At the time, GAO estimated that, of the 164,000 dependents living abroad in 1981, 56,000 were added to the benefit rolls after the worker became entitled to benefits. Of that number, an estimated 51,000 (or 91%) were noncitizens. Two years earlier, the Commissioner of Social Security stated that SSA investigators had found evidence that some recipients living abroad were faking marriages and adoptions and failing to report deaths in order to "cheat the system." At the time, the Commissioner stated that such problems were particularly acute in Greece, Italy, Mexico and the Philippines where large numbers of beneficiaries were residing. He stated further that, in some countries, "there is a kind of industry built up of so-called claims-fixers who, for a percentage of the benefit, will work to ensure that somebody gets the maximum benefit they can possibly get out of the system." In 1996, Congress enacted tighter restrictions on the payment of Social Security benefits to aliens residing in the United States. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) prohibited the payment of Social Security benefits to aliens in the United States who are not lawfully present, unless nonpayment would be contrary to a totalization agreement or Section 202(t) of the Social Security Act (the alien nonpayment provision). This provision became effective for applications filed on or after September 1, 1996. Subsequently, the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 added Section 202(y) to the Social Security Act. Section 202(y) of the Social Security Act, which became effective for applications filed on or after December 1, 1996, states: Notwithstanding any other provision of law, no monthly benefit under [Title II of the Social Security Act] shall be payable to any alien in the United States for any month during which such alien is not lawfully present in the United States as determined by the Attorney General. Generally, under a provision of the Social Security Act known as the windfall elimination provision (WEP), individuals who receive a pension from work that was not covered by the U.S. Social Security system (a noncovered pension) are subject to a reduction in Social Security retirement and disability benefits if they have fewer than 30 years of Social Security coverage. Under the Social Security Independence and Program Improvements Act of 1994 ( P.L. 103-296 ), the WEP does not apply to U.S. totalization benefits payable beginning January 1995. In addition, a foreign pension based on a totalization agreement with the United States does not trigger the WEP in the computation of a regular (non-totalization) U.S. benefit for benefits payable beginning January 1995 (i.e., a foreign pension may trigger the WEP only if the worker is insured based on U.S. coverage alone and the foreign pension is not based on a totalization agreement with the United States). Social Security beneficiaries who continue to work are subject to a limitation on earnings until they reach the full retirement age (FRA). There are two types of work tests: the Retirement Earnings Test and the Foreign Work Test. The Retirement Earnings Test (RET) applies to work performed by beneficiaries in the United States and to work performed by beneficiaries outside the United States if the work is covered by the U.S. Social Security program. Under the RET, Social Security benefits are subject to a withholding of $1 for every $2 of earnings above $14,160 for beneficiaries who are below the FRA and will not reach the FRA in 2010. For beneficiaries who will reach the FRA in 2010, Social Security benefits are subject to a withholding of $1 for every $3 of earnings above $37,680. The Foreign Work Test applies to work performed by beneficiaries outside the United States if the work is not covered by the U.S. Social Security program. Under the Foreign Work Test, Social Security benefits are withheld for each month a beneficiary below the FRA works more than 45 hours outside the United States in a job that is not subject to U.S. Social Security taxes (regardless of the amount of earnings). The Social Security Act extends U.S. Social Security coverage to U.S. citizens and residents working abroad. However, totalization agreements modify the rules of coverage allowing work performed by U.S. citizens and residents in a foreign country to be covered under either the U.S. system or the foreign system, depending on the terms of the agreement. Therefore, totalization agreements affect whether a Social Security beneficiary working outside the United States is subject to the Retirement Earnings Test or the Foreign Work Test. Medicare is a federal health insurance program for persons aged 65 or older, under the age of 65 with certain disabilities, and any age with End Stage Renal Disease (ESRD). Social Security beneficiaries are eligible for Medicare at the age of 65. Social Security disability beneficiaries are eligible for Medicare at any age after they have been receiving disability benefits for 24 months. ESRD beneficiaries are eligible if they have permanent kidney failure requiring dialysis or a kidney transplant. Totalization agreements do not extend Medicare coverage to totalization beneficiaries. Specifically, Section 233(c)(3) of the Social Security Act prohibits totalization beneficiaries from entitlement to Medicare premium-free Hospital Insurance (HI) benefits. However, a person who is entitled to U.S. totalization benefits may qualify for Medicare premium-free HI, but he or she must meet the requirements independently of an agreement. For example, a totalization beneficiary may be entitled to Medicare premium-free HI if he or she is also entitled to regular benefits on a Social Security Number (SSN) that is different from the SSN on which totalization benefits are paid. In addition, a totalization beneficiary may meet the requirements for a regular benefit that is denied or terminated because the regular benefit would be lower than the totalization benefit. In this case, the beneficiary may maintain his or her status as a totalization beneficiary to receive the higher benefit amount and may be entitled to Medicare premium-free HI. A totalization beneficiary who does not meet the requirements for premium-free Medicare HI may be able to get Medicare HI by paying a monthly premium. Many observers agree that international Social Security agreements can be beneficial for U.S. companies and workers. However, some policymakers have expressed concerns about several aspects of the agreements. Among these concerns are (1) SSA's policies and procedures for assessing the integrity and reliability of foreign data and evidentiary documents to identify potential risks when entering into an agreement; (2) SSA's ability to verify individuals' initial eligibility for benefits under an agreement and to monitor the continuing eligibility of beneficiaries outside the United States; and (3) the role of Congress with respect to the approval process for potential agreements, as well as the need for enhanced reporting requirements and periodic evaluation of agreements once they are in force. In 2005, GAO reported concerns regarding the potential exposure of the Social Security trust funds to improper payments resulting from inaccurate or falsified foreign data and documentation (such as birth, death, marriage and divorce records). GAO reported that "Historically, SSA has conducted only limited reviews, focusing primarily on broad policy issues and systems compatibility, rather than examining the integrity and reliability of earnings data and evidentiary documents." However, GAO also reported that SSA was in the process of developing new initiatives to identify risks associated with totalization agreements. GAO further stated: SSA officials told us that the agency has developed several new initiatives to identify risks associated with totalization agreements. SSA has developed a standardized questionnaire to help the agency identify and assess the reliability of earnings data in countries under consideration for future totalization agreements. In addition, SSA has undertaken two initiatives aimed at determining which countries may be suitable for future agreements. One initiative involves conducting discussions with other U.S. government agencies such as the Department of Commerce to better assess which countries may be suitable for future agreements. SSA is also developing a matrix to compare relevant factors, including data accessibility across countries where agreements could be negotiated in the future. Finally, in an effort to improve existing procedures, SSA is conducting numerous "vulnerability assessments" to detect potential problems with the accuracy of foreign countries' documents. Despite these initiatives, GAO cautioned in 2005: While these tools appear to be a positive first step for helping SSA identify potential risks associated with future totalization agreements, SSA has only recently begun implementing them and has not developed plans to integrate these initiatives into formal procedures. The lack of a formal protocol, coupled with the expected retirement of key management and staff over the next few years, may result in the loss of important institutional knowledge relating to totalization agreements, which may hinder the agency's ability to effectively assess risks associated with future agreements. In 2005, GAO reported concerns regarding SSA's ability (1) to determine individuals' initial eligibility for benefits under an agreement, and (2) to monitor beneficiaries outside the United States with respect to continuing eligibility for benefits once an agreement is in force. GAO reported: Our review also identified potential vulnerabilities in SSA's policies and procedures for verifying individuals' eligibility for benefits once an agreement is in force. When establishing an individual's initial eligibility for benefits, the agency generally accepts critical documentation from foreign countries, such as birth certificates, without independently verifying the accuracy of such information. We also found that SSA's two primary tools for determining an individual's continuing eligibility – validation surveys and personal questionnaires – may be insufficient to ensure that only those still eligible for benefits continue to receive them. In response, SSA pointed out that the process for evaluating foreign evidence in totalization claims is the same as that for regular claims. SSA maintains, therefore, that totalization agreements do not introduce a new element of risk to the Social Security program. SSA further pointed out that detailed procedures and guidelines are used in evaluating foreign evidence, as described in the agency's Program Operations Manual System. Despite the existing procedures and guidelines, GAO cautioned in 2005: Once totalization agreements are in force, verification of individuals' initial and continuing eligibility for benefits is essential to ensure that benefits are paid only to entitled recipients. The relatively limited scope of SSA's current verification procedures may not provide adequate assurance that the trust funds are protected from improper payments. Moreover, because the agency lacks the ability to independently verify the information it receives from foreign beneficiaries on its questionnaires, SSA has little assurance that questionnaire responses are accurate. Thus, SSA may not be aware of changes in beneficiaries' eligibility status, resulting in improper payments for an extended period of time. Given the likely growth in the number of foreign beneficiaries in coming years, including totalized beneficiaries, the trust funds will likely face increased exposure if existing processes are not improved. In an environment of limited staff and budgetary resources, SSA could benefit from a more systematic approach for independently verifying information that can affect individuals' initial and continuing eligibility for benefits, such as computer matches. While SSA has taken some positive steps in this regard such as its negotiations for conducting a death match with Italy, additional challenges remain. In particular, the agency currently lacks the authority to conduct computer matches with foreign countries – a prerequisite for conducting such matches and other forms of independent verification with foreign countries. In 2006, GAO raised similar concerns regarding totalization agreements in testimony before the House Ways and Means Committee, Subcommittee on Social Security. A summary table showing the status of recommendations made in the 2005 GAO Report regarding totalization agreements indicates that, while the recommendations had not been implemented at that time, SSA was making progress toward them. For example, it was reported that SSA had developed a standardized questionnaire to assess the reliability of earnings data in countries that may be considered for future totalization agreements. It was also reported that SSA was exploring a more systematic approach, such as the use of computer matches, to independently verify data from foreign countries. A GAO official testified in 2006: While SSA is making progress in improving the program's integrity by strengthening its procedures for verifying documents and coordinating with other agencies and foreign governments, opportunities remain for additional progress. SSA plans further enhancements to the Enumeration at Entry program in order to protect against errors, fraud and abuse. In addition, a more systematic approach to verifying data from other countries with which we have totalization agreements can help ensure proper payments of benefits and prompt notice of the death of beneficiaries. SSA will, however, continue to face challenges in its dealings with noncitizens. Changes in immigration laws and shortcomings in the enforcement of those laws make it difficult for SSA to identify noncitizens who are eligible for [Social Security Numbers] and for benefit payments. Continued attention to these issues by both SSA and the Congress is essential to ensure that noncitizens receive benefits to which they are entitled and the integrity of the Social Security program is protected. At the hearing, testimony was also given by SSA. In addressing the topic of the integrity of foreign data in totalization agreements, an SSA official testified in 2006: Under some totalization agreements, SSA and the other country's agency have agreed to use each other's verification of certain eligibility factors, such as a claimant's date of birth. However, this is done only in cases where years of pre-agreement experience and an examination of the other country's system of records during implementation meetings has indicated that evidence from that particular country is accurate and reliable. This policy eliminates the duplication of effort that would result if the agencies of both countries were required to verify the same information. However, each agreement includes a provision that makes clear that SSA remains the final judge of the probative value of any evidence it receives from any source. SSA is, therefore, able to verify the accuracy of the other country's certification by obtaining original or certified copies of documents and by contacting the claimant directly. In addition, SSA conducts validation surveys when we become concerned that document fraud may be becoming a problem in a country. Each year we select three countries from a rotating list to conduct "identity and existence" surveys. We train the foreign-service nationals to be vigilant for fraud when examining documents and instruct them to check primary and secondary sources to verify the accuracy of documents. SSA has recently developed a standardized set of protocols that integrate and formalize the various initiatives we have already undertaken for verifying foreign countries' data. These protocols will be used when negotiating future totalization agreements. In October 2009, the Social Security Administration provided information to the Congressional Research Service on the status of key initiatives referenced in the 2005 and 2006 GAO and SSA documents cited in this report. With respect to data exchanges with foreign countries, SSA noted: As a result of the success of the regularly recurring death data exchange with Australia, first held in February 2009, SSA has begun discussions with five additional totalization partner countries. SSA pays Social Security benefits to nearly 110,000 beneficiaries in these countries, resulting in nearly $58 million in monthly payments (U.S. dollars). The potential for improved stewardship and reduction of improper payments is significant. These automated exchanges are only possible in countries with which the United States has entered into an agreement. Two additional automated death data exchanges will be piloted before the end of 2009. SSA intends to expand the death data exchange project to all totalization agreement partner countries. GAO reported that SSA had developed a standardized questionnaire to assess the reliability of earnings data in countries that may be considered for future totalization agreements. Since the agreement with Japan entered into force in October 2005, three totalization agreements have entered into force with Denmark (October 2008), the Czech Republic (January 2009) and Poland (March 2009). SSA indicated that officials in each of these countries provided responses to the standardized questionnaire (SSA's Systems Security and Management Control Environment questionnaire) that were satisfactory to SSA system security reviewers. In addition, SSA indicated that the agency continues to present updated versions of the standardized questionnaire to officials in potential totalization agreement countries when the agency begins exploratory talks on a possible agreement. Foreign officials are informed that SSA can enter into formal negotiations on a totalization agreement only after SSA data security officials "(1) review questionnaire responses, and (2) confirm that they provide sufficient confidence in the reliability and integrity of the foreign nation's system for recording, maintaining, and reporting earnings data in a secure environment, with adequate privacy safeguards for personally identifiable information." Finally, SSA noted that the agency is currently doing an internal review of the standardized questionnaire "to ensure that it continues to elicit the responses necessary for SSA data security authorities to identify and assess the reliability of earnings data in countries under consideration for future [t]otalization agreements." A GAO official testified in 2006 that SSA was planning further enhancements to the Enumeration at Entry (EaE) program to protect against errors, fraud and abuse. SSA indicated that, among measures taken to protect the integrity of the Social Security Number, the agency has expanded the EaE program, effective August 31, 2009, to make it available to all persons entering the country as lawful permanent residents. Previously, the EaE program was available only to persons over the age of 18 entering the country as lawful permanent residents. Currently, a person of any age who applies for an immigrant visa may elect on the visa application to receive an SSN through the EaE program. SSA noted that "EaE improves the integrity of our enumeration process because the information needed to assign the SSN is collected and verified by the [f]ederal agencies responsible for conferring immigrant status. [The Department of] State certifies the identity and age of the person at the time he or she files for the immigrant visa, and [the Department of Homeland Security] admits the person to the United States as a lawful permanent resident, certifying that the person is authorized to work in the United States." Some policymakers have expressed concerns about the role of Congress in the approval process for international Social Security agreements. The Social Security Act specifies that an agreement will become effective unless the House of Representatives or the Senate adopts a resolution of disapproval during a period of 60 session days after the agreement is transmitted to Congress for review. As described in detail above, the congressional review process under current law does not provide an opportunity for Congress to amend the text of an agreement. Moreover, an attempt by Congress to stop an agreement from taking effect using the disapproval mechanism specified in the Social Security Act could give rise to a judicial challenge, potentially resulting in an invalidation of the disapproval mechanism and a determination that the agreement is effective. With respect to reporting requirements, the Social Security Act specifies only that the agreement shall be transmitted by the President to Congress "together with a report on the estimated number of individuals who will be affected by the agreement and the effect of the agreement on the estimated income and expenditures of the programs established by this Act." In 2005, GAO recommended that "reports of proposed agreements be enhanced to make them more consistent and informative and that SSA establish a regular process to reassess the accuracy of its actuarial estimates." In addition, Members of Congress have introduced legislation that would, among other changes, establish new reporting requirements and mandate periodic evaluation of Social Security agreements once they are in force. In recent years, legislation has been introduced that would alter the congressional review process for international Social Security agreements, among other changes. For example, in the 111 th Congress, S. 42 (Social Security Totalization Agreement Reform Act of 2009 or STAR Act) would require both Houses of Congress to approve a totalization agreement before it could go into effect. In addition, the measure would establish new reporting requirements. S. 42 would require the President to submit the "final legal text" of an agreement to Congress, along with a report containing specified information such as "an assessment of the integrity of the retirement data and records (including birth, death, and marriage records) of the other country that is the subject of the agreement" and "an assessment of the ability of such country to track and monitor recipients of benefits under such agreement." In addition, the Commissioner of Social Security would be required to report to Congress and the Comptroller General of the United States (the Government Accountability Office) on the impact of a totalization agreement every two years after it goes into effect. With respect to the initial biennial report by the Commissioner of Social Security, the Comptroller General would be required to conduct an evaluation of the report (including specified information) and submit a report to Congress on the results of the evaluation. Other legislation would make structural changes to international Social Security agreements. For example, in the 111 th Congress, H.R. 132 (Total Overhaul of Totalization Agreements Law of 2009) would provide for the transfer of Social Security contributions between the United States and an agreement country, rather than allowing individuals to establish entitlement to benefits under each country's Social Security system based on combined work credits. Under the measure, if a citizen or national of an agreement country, or an individual lawfully admitted to an agreement country for permanent residence, becomes entitled to benefits under the agreement country's Social Security system and the individual has at least 6 quarters of coverage under the U.S. system, the Secretary of the Treasury would transfer from the Social Security trust funds to the agreement country an amount equal to the contributions paid in connection with the individual's covered employment in the United States. Conversely, if a citizen or national of the United States, or an individual lawfully admitted to the United States for permanent residence, becomes entitled to benefits under the U.S. Social Security system and the individual has the equivalent of 6 quarters of coverage under an agreement country's Social Security system, the agreement country would pay to the United States an amount equal to the contributions paid in connection with the individual's covered employment in the agreement country. In addition, H.R. 132 would exclude from the computation of a worker's Social Security benefits any earnings obtained while the worker was neither a citizen or national of the United States nor lawfully admitted for permanent residence in the United States and was not authorized to work in the United States. The exclusion would apply to all such earnings obtained before, on, or after the date of enactment of the bill. H.R. 132 would require the Commissioner of Social Security to recompute benefits as needed to carry out this provision, which would affect benefits for months after the date of enactment of the bill. Supporters of international Social Security agreements point to the advantages associated with such agreements, including elimination of dual Social Security taxes on the same earnings, protection of benefits for workers who divide their careers between the United States and a foreign country and increased portability of benefits through the waiver of residency requirements. Supporters also maintain that Social Security agreements can foster international commerce and enhance diplomatic relations. With respect to some of the issues and concerns that have been raised about the reliability of foreign data used to administer such agreements, SSA noted in October 2009: [Since 2005], SSA has made significant advances in this area. SSA now requires, as a prerequisite for entering into formal negotiations on a totalization agreement, a thorough review of the integrity and reliability of foreign data. SSA has established a formal procedure for obtaining the information necessary to assess the integrity and reliability of foreign data relied upon by the United States to administer social security agreements. SSA has also established procedures for reviewing the information obtained and determining whether the foreign data is reliable and secure. SSA has implemented these procedures, and has reviewed the foreign data in question for all social security agreements negotiated since 2005. Because the agreements impose a cost to the U.S. Social Security system, some policymakers point to the need for greater assurances that data pertaining to noncitizen workers and beneficiaries (including dependents and survivors) relied upon by the United States to administer the agreements are complete and accurate, a condition necessary to protect the Social Security trust funds from improper payments. In addition, some policymakers point to the need for changes in the congressional review process for totalization agreements, enhanced reporting requirements and ongoing evaluation of agreements after they enter into force as reflected in current legislative proposals. Appendix A. Computation of the Social Security Primary Insurance Amount The Primary Insurance Amount (PIA) is the basic Social Security monthly benefit amount payable to an individual upon entitlement to retirement benefits at the normal retirement age (i.e., the PIA does not reflect any adjustments for early or delayed retirement) or disability benefits. In addition, the PIA is the base amount used to determine monthly benefits payable to family members on the worker's record (such as a spouse or surviving spouse). Under current law, the PIA is determined by applying a benefit formula to the worker's average lifetime covered earnings. In the first step of the benefit computation, the worker's nominal earnings (up to two calendar years prior to the year of eligibility—for example, earnings prior to the age of 60 in the case of a retirement benefit) are indexed to wage growth to reflect the change in average wages over time. (Earnings in subsequent years are counted at nominal value.) For purposes of computing a basic retirement benefit, the 35 highest years of indexed earnings are then averaged and a monthly amount is computed to determine the worker's Average Indexed Monthly Earnings (AIME). If a worker has fewer than 35 years of covered earnings, years of zero earnings are counted in the computation of the AIME. The benefit formula is then applied to the worker's AIME. The benefit formula that applies to individuals who first become eligible for retirement or disability benefits in 2010, or who die in 2010 before becoming eligible for benefits, is 90% of the first $761 of AIME, plus 32% of AIME over $761 through $4,586, plus 15% of AIME over $4,586 For example, the PIA for a worker who reaches the age of 62 in 2010, based on an AIME of $5,000, would be $1,971.00. The PIA would be computed as follows: 90% x $761 = $684.90, plus 32% x $3,825 = $1,224.00, plus 15% x $414 = $62.10 PIA = $1,971.00 The worker's PIA is based on the benefit formula that applies in the year the worker first becomes eligible for benefits (the age of 62 for retired-worker benefits, the year of disability for disabled-worker benefits, or the year of the worker's death for survivor benefits ), rather than the first year of benefit receipt. Beginning with the first year of eligibility, the PIA is increased by the annual Social Security cost-of-living adjustment (COLA) for any intervening years between eligibility and benefit receipt. For example, if an individual who first becomes eligible for retired-worker benefits at the age of 62 in 2010 elects to receive benefits at the normal retirement age (of 66 in 2014), the PIA effective at the normal retirement age would be the PIA calculated using the benefit formula for 2010 (shown above) adjusted annually according to the COLA (if any) effective in December 2010, December 2011, December 2012, and December 2013. The dollar amounts that separate the three brackets of AIME in the benefit formula ($761 and $4,586) are referred to as bend points. Under current law, the bend points are indexed to wage growth on an annual basis to provide stable replacement rates over time for workers with similar earnings patterns. (The replacement rate is based on Social Security benefits in the first year of benefit receipt divided by pre-retirement earnings.) For example, the projected long-range constant replacement rate, based on retirement at the age of 67 in 2030 or later, is 55% for a scaled low earner; 41% for a scaled medium earner; and 27% for a maximum earner. The percentages that apply to each of the three brackets of AIME in the benefit formula (90%, 32% and 15%) are referred to as formula factors (or replacement factors). The formula factors, which are fixed under current law, are structured so that Social Security benefits replace a greater share of pre-retirement earnings for lower-wage workers compared to higher-wage workers. Appendix B. Exception Countries The following lists of countries, which are subject to change periodically, are taken from the Electronic Code of Federal Regulations ( e-CFR ) with data current as of June 1, 2009, and the Social Security Administration's Program Operations Manual System (POMS). The e-CFR is available at http://ecfr.gpoaccess.gov/ . The POMS are available at https://secure.ssa.gov/apps10/poms.nsf/aboutpoms . Social Insurance or Pension System Countries Under the alien nonpayment provision, a noncitizen's benefits are suspended if he or she remains outside the United States for more than 6 consecutive months, unless one of several broad exceptions is met. For example, an alien may receive benefits outside the United States if he or she is a citizen of a country that has a social insurance or pension system that pays benefits to eligible U.S. citizens residing outside that country. The following countries meet the social insurance or pension system exception in Section 202(t)(2) of the Social Security Act: Albania, Antigua and Barbuda, Argentina, Austria, Bahamas, Barbados, Belgium, Belize, Bolivia, Bosnia-Herzegovina, Brazil, Burkina Faso, Canada, Chile, Colombia, Costa Rica, Cote D'Ivoire, Croatia, Cyprus, Czech Republic, Denmark, Dominica, Dominican Republic, Ecuador, El Salvador, Finland, France, Gabon, Grenada, Guatemala, Guyana, Hungary, Iceland, Jamaica, Jordan, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Marshall Islands, Mexico, Federated States of Micronesia, Monaco, Montenegro, Nicaragua, Norway, Palau, Panama, Peru, Philippines, Poland, Portugal, St. Kitts and Nevis, St. Lucia, Samoa, San Marino, Serbia, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, The Netherlands, Trinidad-Tobago, Turkey, United Kingdom, Uruguay, Venezuela (SSA POMS, Section RS 02610.015 (Status of Countries for Applying Exceptions Based on Citizenship), available at https://secure.ssa.gov/apps10/poms.nsf/lnx/0302610015 !opendocument) Treaty Obligation Countries To receive benefits outside the United States, alien dependents and survivors must have lived in the United States previously for at least five years (lawfully or unlawfully), and the family relationship to the worker must have existed during that time. The law provides several broad exceptions to the five-year U.S. residency requirement for alien dependents and survivors. For example, an alien dependent or survivor is exempt from the U.S. residency requirement if he or she is a citizen of a treaty obligation country (i.e., if nonpayment of benefits would be contrary to a treaty between the United States and the individual's country of citizenship). The following countries meet the "treaty obligation" exception in Section 202(t)(3) of the Social Security Act: Germany, Greece, Ireland, Israel, Italy, Japan, Netherlands* (20 C.F.R. § 404.463) *The Treaty of Friendship, Commerce, and Navigation now in force between the United States and the Kingdom of the Netherlands creates treaty obligations precluding the application of the alien nonpayment provision to citizens of that country with respect to monthly survivor benefits only.

International Social Security agreements are bilateral agreements primarily intended to eliminate dual Social Security taxation based on the same work and provide benefit protection for workers who divide their careers between the United States and a foreign country. Most jobs in the United States are covered by Social Security. In addition, the Social Security Act extends Social Security coverage to U.S. citizens and resident aliens who are employed abroad by U.S. companies as well as those who are self-employed in a foreign country. Generally, a U.S. worker abroad and his or her employer would be required to contribute both to the U.S. Social Security system and the Social Security system of the country where the work is performed based on the same work. International agreements eliminate dual Social Security taxation in these circumstances by allowing workers and their employers to contribute to only one Social Security system (either the U.S. or the foreign system depending on the terms of the agreement). In addition, international agreements allow workers who divide their careers between the United States and a foreign country to fill gaps in Social Security coverage by combining work credits under each country's system to qualify for benefits under one or both systems. If a worker qualifies for benefits based on combined (totalized) work credits, the benefit payable under either system is prorated to take into account the actual period during which the worker was covered by that system. By eliminating dual Social Security taxation, international agreements reduce the cost of doing business abroad. As a result, they can affect the competitiveness and profitability of U.S. companies with foreign operations and promote investment in the United States by foreign companies. In addition, international agreements affect the application of certain provisions of the Social Security Act, including the alien nonpayment provision. The alien nonpayment provision places restrictions on the payment of U.S. Social Security benefits to noncitizens who reside outside the United States, with broad exceptions. These payment restrictions may be waived for beneficiaries who are residents of a country with which the United States has an agreement. Since 1977, the President has had the authority to negotiate Social Security agreements with foreign countries. Currently, there are 24 Social Security agreements in force. Another agreement (with Mexico) has been signed, but is not in force. In December 2007, about $28 million was paid in monthly benefits to about 146,200 recipients under U.S. Social Security agreements. Many observers agree that international Social Security agreements can be beneficial for U.S. companies and workers. However, some policymakers have expressed concerns about the agreements. Because the agreements impose a cost to the U.S. Social Security system, some policymakers point to the need for greater assurances that the data relied upon by the United States to administer the agreements are complete and accurate, a condition necessary to protect the Social Security trust funds from improper payments. In addition, they point to concerns about the role of Congress in the approval process for potential agreements, as well as the need for enhanced reporting requirements and periodic evaluation of agreements in force. These and other concerns are reflected in legislative proposals such as S. 42 and H.R. 132 in the 111th Congress. This report provides an overview of the purpose and operation of international Social Security agreements. In addition, it provides a discussion of the effects of agreements on selected provisions of the Social Security Act and concerns raised by some policymakers about the agreements. This report will be updated to reflect legislative activity or other developments.

Around 6:30 p.m. (local time) on May 2, 2008, Cyclone Nargis, a category 3 cyclone, made landfall in the Irrawaddy (Ayeyarwady) Division of Burma, and then moved across the country from southwest to northeast, cutting a huge path of destruction 100 miles wide and 200 miles long, and striking Burma's largest city, Rangoon, with winds of up to 190 kph (120 mph) (see Figure 1 ). It caused major damage in the low-lying agricultural delta region, which also suffered the impact of a storm surge. The disaster struck just a week before the Burmese people were to vote on a proposed new constitution and just the day after President Bush announced an Executive Order tightening trade and economic sanctions. The scale of the disaster requires a major relief effort that has proved to be well beyond the response capacity of the authorities in Burma. Several days after the cyclone, the State Peace and Democracy Council (SPDC) indicated that it would accept offers of assistance from the international community. Despite millions of dollars in aid pledges, many aid agencies and organizations experienced problems in obtaining visas for their relief workers, essentially hampering a full-scale, immediate relief effort. These factors—a devastating natural disaster and lack of access by the international humanitarian community—combined with a controversy over the recent constitutional referendum and the extension of opposition leader Aung San Suu Kyi's house arrest for the sixth consecutive year, have the potential to foster significant political change within Burma. Congress faces several issues with respect to Burma in dealing with both the direct impact of Cyclone Nargis and its potential indirect effects on Burmese politics. Initial reports estimated the death toll at 351 people, but that number quickly rose to 4,000, then 15,000, and then later to over 22,500, with 41,000 people reported as missing. At the end of May the numbers had risen to 77,738 dead and 55,917 missing. Official Burmese figures have now been revised to 84,537 dead and 53,836 missing. Most of the deaths were reportedly due to a 3.5 meter (11.5 feet) storm surge that swept across the affected areas after the eye of the cyclone passed. With extensive damage to the nation's transportation and communications systems, however, information about the disaster has proved difficult to gather and confirm. The numbers of dead, missing, and injured remain fluid and uncertain and a final death toll is unlikely ever to be known. Unofficial estimates have exceeded the government's figures. Early on, Burma's Foreign Minister Nyan Win indicated at a press conference that the death toll could rise as more information became available. An unnamed U.S. envoy in Burma told reporters on May 7, 2008 that the death toll could reach 100,000. The United Nations cited figures closer to 100,000, while the Red Cross suggested that the number of dead might be closer to 128,000. More recently, experts have said the figures are likely to exceed 138,000 with some estimating the total dead and missing at 200,000. Many people who have been displaced, their homes and livelihoods destroyed, remain at risk. The United Nations estimates the number of people affected to be 2.4 million. Apart from Rangoon, sources in Burma reported significant damage to the Bago, Irrawaddy, Karen, and Mon regions of Burma. The State Peace and Development Council (SPDC) quickly announced a state of emergency in the five regions, but on May 6, 2008, lifted the state of emergency for much of the area struck by the cyclone. As of May 7, 2008, only seven townships in the Irrawaddy Division and 40 townships in Yangon Division were declared emergency disaster zones. In addition to loss of life, injury, and massive displacement, the cyclone also caused extensive damage to much of Burma. A significant percentage of the houses, hospitals and other buildings in storm-affected regions were damaged or destroyed. Initial reports from U.N. aid officials indicated that the storm left several hundred thousand people homeless. In the coastal islands along the Irrawaddy River, entire villages were reportedly destroyed. Flooding was widespread. Electricity was knocked out in Rangoon and much of the other four areas struck by the storm. Most of the potable water and water treatment facilities in the affected areas were disrupted or were not operational. Many of the roads and bridges along the cyclone's path were damaged or blocked by felled trees and debris. The nation's telecommunications system—including telephone and internet service—was disrupted. As many as 25 of the Burmese Navy's estimated 144 ships in service were sunk by the cyclone, along with an unknown number of naval personnel lost. There is some speculation that the damage done by the cyclone was worsened by the removal of mangrove forests in the past along Burma's coastal areas. In Burma, mangrove forests have been destroyed to build shrimp and fish farms. According to research by the International Union for the Conservation of Nature (IUCN), the preservation of Sri Lanka's coastal mangrove forests saved many lives when the 2004 tsunami struck. Based on the research in Sri Lanka, some experts maintain that Cyclone Nargis would have done less damage in Burma if the mangrove forests had not been removed. The areas of Burma most severely damaged by the cyclone were also a major source of food for the nation, particularly rice, seafood, pork, and poultry. According to the U.N. Food and Agricultural Organization (FAO) the five states struck by Cyclone Nargis provided Burma with 65% of its rice, 80% of its aquaculture, 50% of its poultry, and 40% of its pigs. In June 2008, the FAO completed a needs assessment for the areas affect by the cyclone an with a focus on crops, livestock, fisheries and forestry. An expert specializing in Burma's economy anticipates "incredible [food] shortages in the next 18 to 24 months." In a break with past practices, several days after the cyclone, the SPDC indicated that it would accept offers of assistance from the international community, though it was also reported that the SPDC did not "officially endorse" international assistance and would prefer bilateral arrangements. The SPDC said it would allocate $5 million for relief activities. Military and police units reportedly began to conduct rescue and recovery operations, deploying helicopters, boats, and trucks, but as the scale of the disaster became more evident, the relief effort required was thought to be well beyond their capacity. The government coordinated national efforts of the response through an Emergency Committee, which put into operation a national disaster management plan, with the Ministry of Social Welfare, Relief, and Resettlement heading up the relief response. In addition, there reportedly was widespread criticism about how the military junta has managed the disaster. According to the Burma Campaign-UK, the SPDC did not issue a warning to the people living along the path of Cyclone Nargis that the storm was approaching. A back page article that appeared in the junta-run newspaper, The New Light of Myanmar , the day the cyclone struck reported that a "severe cyclonic storm" was forecast to reach the coast of Burma within the next 36 hours, and "under the influence of this storm, rain or thunderstorms will be widespread." Meteorologists in India say that they gave Burma 48 hours warning before Cyclone Nargis hit the country, including where and when landfall would occur. However, SPDC-run television issued a statement that, "[t]imely weather reports were announced and aired through television and radio in order to keep the people safe and secure nationwide." Many people in Burma reportedly maintain that the state media notices failed to indicate the severity of the approaching storm or provide instructions on how to prepare for the cyclone's arrival. In the first few days after the cyclone struck, it appeared that the SPDC either underappreciated the extent of the damage caused by the cyclone, or was intentionally underplaying the cyclone's impact. The first edition of The New Light of Myanmar released after the cyclone struck contained a number of articles that implied that life in Rangoon was quickly returning to normal, and that the cyclone's impact in the Bago Division, the Kayin State, and the Mon State were minimal. There were also reports that the SPDC focused its relief and rescue efforts to areas where SPDC officials and military personnel lived and worked, and offered little or no assistance to the general population. In addition, there were allegations that local officials stole relief supplies for their own use or to sell on the black market. There was also criticism of the SPDC's failure to prevent disaster profiteering by merchants of essential items, such as food and fuel. The pro-opposition news magazine, Irrawaddy , reported that "many commodity prices—including vegetables and eggs—instantly increased 100 percent following the aftermath of Cyclone Nargis.... " According to other reports, food prices had reportedly risen three and four times what they were before the cyclone struck by May 6, 2008. The SPDC was also being criticized for delaying the entrance of international relief organizations into Burma. According to an article in the Irrawaddy , the SPDC views international relief agencies as "neocolonialist tools." In April 2008, for instance, the SPDC-run newspapers accused the International Committee of the Red Cross of supporting rebel groups in Burma's Karen state. Burmese political analyst Aung Naing Oo also thinks the military junta did not want large numbers of international aid workers entering Burma so close to the vote on the constitutional referendum. Cyclone Nargis created devastation in its path: resulting challenges include a general lack of transportation, blocked roads, poor communications systems, damaged infrastructure, and the difficulty of reaching remote areas and isolated parts of the country. Lack of electricity and clean water are a major problem. Fuel shortages also have been reported. The combined total population in the affected townships is thought to have been 4.7 million people. The United Nations estimates that up to 2.4 million people may have been affected by the disaster. According to initial assessments, the United Nations Office for the Coordination of Humanitarian Assistance (UNOCHA) reports that up to 2 million may be in need of prioritized assistance. Although the critical need for food, clean water, and shelter remains, until recently in-depth assessments, which are necessary to obtain a more detailed understanding of the situation on the ground, could not be completed. Needs vary by area and impact of the cyclone or tidal surge that followed. Immediate requirements included plastic sheeting, water purification equipment, cooking sets, mosquito nets, emergency health kits, and food. The arrival of supplies has been steady, but onward distribution is often difficult due to access problems in dealing with the Burmese government and because of local destruction from the cyclone and aftermath. According to the United Nations, the relief effort is expected to last at least six months, although it is anticipated that recovery and reconstruction will begin as soon as possible in a parallel effort. Some agencies have already begun to shift their focus towards long term needs. Concerns remain about potential food shortages, particularly given the devastation of the rice plantations in the Irrawaddy Delta. The international relief effort began very quickly, but nearly three weeks after Cyclone Nargis hit Burma, delays on visas, inadequate distribution of aid allowed into Burma, and insufficient access to those most affected were still major obstacles to mounting a full-scale relief operation. The military junta continued to say they could manage the relief effort and did not need experts. Despite pledges of cash, supplies, and assistance from around the world, most aid agencies had still not been granted visas to enter Burma and there was no word on when visas might be issued. During this time, the United Nations and the broader aid community were assembling staff in Bangkok, Thailand, and remained poised for deployment. Immediately following the cyclone, a relatively small number of international aid workers were allowed in to Burma, and within weeks, it was reported that 160 foreign aid workers (mostly from neighboring Asian countries, including Bangladesh, China, India, and Thailand) would be allowed in also, but with little indication on how far outside Rangoon they would be permitted to travel. It is believed aid workers from Western nations that have isolated the SPDC were not being welcomed. Customs clearance of relief materials, a potential problem in initial days, is apparently no longer an issue. The main international airport in Rangoon reopened early on and the junta slowly but increasingly allowed in international aid flights. On May 23, during a visit by Secretary-General Ban Ki Moon, the government of Burma promised to allow some international aid relief staff, regardless of nationality, into the country, including access to the Irrawaddy Delta area. U.S. and British ships with relief supplies on board can enter the port of Rangoon to transfer supplies to small local boats, but military ships are not be permitted. Increased access has enabled a massive international relief effort to move ahead, albeit slowly. According to the United Nations, more than 230 international staff have been granted visas and are now in the country. More than 200 operation U.N. staff have traveled to the affected areas. For those entering the delta, some report that access has not been a problem and that logistical arrangements are improving, while other NGOs indicate that it remains a difficult and frustrating situation. Some are concerned about lack of sustained access and report that the authorities require two days' notice and that access may be granted for only a 24-hour period. Visa procedures were not discussed at the pledging conference on May 25 (discussed later in this report). The role played by the Association of Southeast Asian Nations (ASEAN) as an intermediary has been significant in creating diplomatic links and access to Burma, which is also a member of ASEAN. ASEAN took the lead in coordinating assistance offered by the international community, with full support from the United Nations, and formed the Tripartite Core Group (TCG), which includes high-level representatives from the government of Burma, the United Nations, and ASEAN. ASEAN has been working closely with other international institutions, including the United Nations and World Bank. For the first time, ASEAN deployed an Emergency Rapid Assessment Team (ERAT) on June 1, 2008, to conduct field assessments. An ASEAN field office has been set up in Rangoon to support the humanitarian operation of the ASEAN Humanitarian Task Force for the Victims of Cyclone Nargis (Coalition of Mercy), which includes senior offices as experts from ASEAN countries, and the TCG. Secretary-General of ASEAN, Dr. Surn Pitsuwan is chair of the Task Force. The coordination effort, facilitation, and monitoring of the flow of international assistance into Burma appear to be working. ASEAN also offered aid under the Disaster Management and Emergency Response to provide cash and in-kind aid supplies. In addition, it established the ASEAN cooperation Fund for Disaster Assistance. On June 10, Burma issued new operating guidelines or regulations for U.N. agencies and international NGOs, which outlined procedures that aid agencies had to follow in providing assistance to the cyclone victims. On June 20, the Burmese authorities agreed to revert back to the old operating system under the Ministry of Foreign Affairs and TCG. Travel authorizations will be handled by the Ministry of Social Welfare, Relief, and Resettlement. The backlog of visa and travel authorization requests has now largely been processed. It has also been reported that local authorities in the delta townships of Bogalay and Laputta want to move thousands who have been displaced, either because they are on park land or because of reconstruction efforts. Reports have also surfaced about restrictions on those fleeing survivors who have fled to the Thai border. The TCG is coordinating a multi-sector needs assessment, the most in-depth study of the cyclone affected areas to date. From June 10-19, field surveys were conducted for the Post-Nargis Joint Assessment (PONJA), with 350 personnel visiting approximately 30 townships. The assessment focuses on humanitarian needs and how survivors are coping (Village Tract Assessment or VTA) and damage components, such as economic and physical losses (Damage and Loss Assessment or DaLA.) At a meeting of the ASEAN Roundtable for Response, Recovery and Reconstruction, which convened on June 24, a progress report on the assessment was presented. Initial data confirms that continued relief assistance is required. Food and water shortages, damage to housing and poor shelter, and psychological stress were identified as some of the priority needs. The findings of the PONJA Report are expected to be published in mid-July. The data will be also be used by the United Nations in its revised Humanitarian Flash Appeal. A second pledging conference may be held thereafter. Future discussions are also expected to focus on the most appropriate mechanism to manage the transition to reconstruction. While the operating environment for internationals remains constrained, initial estimates suggest that through the efforts of the government, Myanmar Red Cross Society (MRCS), international and local NGOs, 1.3 million people have been reached, in many cases with a single effort to get something to the largest number of needy people. In severely affected areas, only about one third of the population has been reached. Reports also indicate that many communities have mobilized to support each other. The United Nations Resident/Humanitarian Coordinator and Humanitarian Country Team (which includes U.N. agencies, international NGOs, national NGOs, and the IFRC and ICRC as observers) are working with national counterparts and focusing on sectoral priorities. The United Nations country team continues to work with government ministries, including the Ministry for Foreign Affairs, on how best to provide assistance. The United Nations deployed a Disaster Assessment and Coordination Team (UNDAC). According to UNOCHA, U.N. teams on the ground—including the World Food Program (WFP), the U.N. High Commissioner for Refugees (UNHCR), the U.N. Children's Fund (UNICEF) and the U.N. Development Program (UNDP)—deployed assessment teams and are continuing to provide assistance. The WFP also began to operate helicopters for food distribution. U.N. staff include local Burmese who are not subject to travel restrictions. Initially drawing on stockpiles inside the country, WFP distributed relief supplies and food stored in Rangoon. UNHCR also brought basic supplies and used shelter materials from warehouses in Thailand. Humanitarian relief sectors have been organized in clusters, including: Agriculture (FAO) Child Protection (UNICEF) Early Recovery (UNDP) Emergency Education (UNICEF) Emergency Shelter (IFRC) Emergency Telecommunications (WFP) Food Assistance (WFP) Health (WHO) Logistics (WFP) Nutrition (UNICEF) Water/Sanitation (UNICEF) During the first month following the cyclone, the World Health Organization (WHO) stated that it was particularly concerned about potential health problems—such as malaria and cholera—that could emerge in the aftermath of the cyclone's flooding. The first case of cholera following the cyclone was reported on May 9, 2008. Emergency health kits have been provided as part of a wide-ranging health care response that includes immunization campaigns, and according to the WHO, so far there are no major outbreaks of disease, although the threat remains extremely serious. The VTA component of the Post-Nargis Joint Assessment focused on five areas in the health sector: disease prevalence, availability of drugs, health personnel available, health care requirements, and sanitation. Various international non-governmental organizations (NGOs) that were already operating in Burma before the cyclone continue to respond to the crisis and have had some access to affected areas. Reportedly hundreds of local staff are assisting with the relief effort. The former international airport of Don Muang in Thailand has become the humanitarian staging area to allow for extra warehousing, coordination, and consolidation of relief flights to Rangoon. The International Federation of the Red Cross and Red Crescent Societies (IFRC) is working with the Myanmar Red Cross Society (MRCS) to provide emergency shelter and clean water to the cyclone survivors. Its initial allocation to the MRCS for the relief effort is 200,000 Swiss francs ($189,000) to distribute clean drinking water, plastic sheeting, clothing, bed netting, and kitchen supplies. The IFRC has also launched a revised emergency appeal for Burma for $50.8 million. The IFRC is coordinating efforts with the International Committee of the Red Cross (ICRC) to support the MRCS. As of June 20, 327,500 beneficiaries have received relief assistance. France's foreign minister reportedly suggested that the international community should deliver aid without waiting for approval from Burma and do so under the U.N. resolution on the Responsibility to Protect, which speaks to the obligations of a state to protect its own people and the obligations of all states to do so when that fails. On the one hand, some observers are arguing that the Burmese government is a threat to its own people and that Burma is violating its responsibility to protect its own citizens in the wake of the current disaster. On the other hand, others question whether forcing the Burmese government to accept international assistance should fall under the Responsibility to Protect resolution. From this perspective, as sovereign power, the SPDC, is in charge of the aid efforts and the United Nations (and others in the international aid community) should work to support the SPDC aid effort as much as possible. So far, the United Nations has said that it does not think approaching the Burmese government in what could be seen as a confrontational manner would be helpful and that it might undermine the start of more constructive discussions, particularly as progress, albeit small, has been made in recent days. The U.N. Security Council has reportedly decided not to take up a discussion of the humanitarian crisis for the time being. In recent remarks, the U.N. Secretary-General Ban Ki-Moon said, " ... our immediate challenge is humanitarian ... we must think about people, just now, not politics." According to media reports, on June 19, 2008, activist monks called for the European Union to charge Burma's junta leader, Than Shwe, who they accuse of blocking relief supplies to victims, with committing crimes against humanity and to bring the case before the international criminal court. In May, the European Parliament approved a non-binding resolution that indicated the regime could face charges if it continued to obstruct aid delivery to cyclone victims in Burma. So far, through governments and the private sector, the international community has pledged millions of dollars in aid, materials, and technical support. Some donors have indicated they are concerned about transparency and how the SPDC would use the money, and there have been reports of misuse of relief aid meant for cyclone victims, but these are difficult to substantiate. Under the Consolidated Appeals Process, the U.N. country team issued a Flash Appeal for emergency financial assistance on May 9, 2008, in the amount of $187 million, "to enable international partners (10 U.N. organizations and nine NGOs) to support the Government of Myanmar in addressing the needs of more than1.5 million people affected by the cyclone." This amount was later increased to $202 million, and as of June 16, the appeal is 65% funded, with $131 million in contributions directly to the appeal and $24 million in uncommitted pledges. A total of $241 million has been contributed and $66 million pledged to the overall relief effort. The U.N.'s Central Emergency Response Fund (CERF) initially made available $10 million for projects identified by the country team. This amount has now been increased to 22 million. A revised flash appeal will be released on July 10 and will cover the period May 2008 through April 2009. On May 25, the ASEAN-UN co-sponsored donor conference convened in Rangoon with representatives from 51 countries in attendance. Agreement was reached on the need for a rapid increase in relief efforts, support for the work of ASEAN and the United Nations in coordinating the response, and an assessment of rehabilitation and recovery needs in the long term. The Burmese government said that $11 billion was needed for reconstruction and recovery efforts. The conference was seen as an important step towards cooperation between the international community and government of Burma. The private sector has made significant contributions of assistance. Contributions and in-kind pledges are listed in the table below. The U.S. Embassy in Burma announced on May 5, 2008 that it had issued a disaster declaration and authorized $250,000 in humanitarian assistance. This initial contribution was allocated to implementing partners (UNICEF, WFP and UNHCR) for water and sanitation, emergency food assistance, and shelter. The embassy also issued a travel warning, and authorized the departure of non-emergency U.S. citizen embassy employees and eligible family members. On May 6, White House Press Secretary Dana Perino announced that the Administration would provide an additional $3 million in aid for Burma for a total pledge of $3.25 million, $1 million of which would be allocated to the American Red Cross (ARC). U.S. assistance was later increased by an additional $13 million for a total pledge of $16.25 million. The U.S. Agency for International Development (USAID) reports that total humanitarian funding provided to date is $41.17 million, with funding from USAID's Office of Foreign Disaster Assistance and Food for Peace Program and DOD assistance. The DOD-operated U.S. government airbridge completed 185 airlifts and delivered relief commodities from USAID, DOD, the United Nations, NGOs and the Government of Thailand. The airbridge ceased operations on June 22. It was initially reported that the release of U.S. assistance was conditional on the SPDC allowing a U.S. Disaster Assistance Response Team (DART) into the country. This was later denied by Scott Marciel, U.S. Ambassador for ASEAN Affairs. According to a State Department spokesperson, the funds would be allocated to implementing partners and used for emergency materials (such as shelter, food, water and other basic assistance). President Bush also indicated that the United States was prepared to use U.S. Navy personnel for search and rescue and other logistical assistance. Although an initial U.S. aid flight was cancelled on May 8, since then, as of May 15, U.S. airlifts of relief materials have been flown from Thailand to Rangoon. A ten-person USAID-DART has been assembled in Bangkok and Utapeo, Thailand. For the time being, U.S. personnel and military equipment will remain in Thailand with additional U.S. naval assets on stand by in international waters off the Burmese coast. On May 6, 2008, the Office of Foreign Asset Control of the U.S. Department of the Treasury issued General License No. 14 to allow certain financial transactions in support of humanitarian or religious activities by non-governmental organizations in Burma. Under current U.S. federal law, it is illegal to export financial services, including the transfer of funds, to Burma. Under General License No. 14, the U.S. government and humanitarian organizations may transfer funds legally to Burma to provide cyclone disaster relief. The United States is generally a leader and major contributor to relief efforts in response to humanitarian disasters. The President has broad authority to provide emergency assistance for foreign disasters and the U.S. government provides disaster assistance through several U.S. agencies. The very nature of humanitarian disasters—the need to respond quickly in order to save lives and provide relief—has resulted in a rather unrestricted definition of what this type of assistance consists of at both a policy and an operational level. While humanitarian assistance is assumed to provide for urgent food, shelter, and medical needs, the agencies within the U.S. government providing this support typically expand or contract the definition in response to circumstances. Funds may be used for U.S. agencies to deliver services or to provide grants to international organizations (IOs), international governmental and non-governmental organizations (NGOs), and private or religious voluntary organizations (PVOs). USAID is the U.S. government agency charged with coordinating U.S. government and private sector assistance. It also coordinates with international organizations, the governments of countries suffering disasters, and other governments. The Office of Foreign Disaster Assistance (OFDA) in USAID's Bureau of Humanitarian Response provides immediate relief materials and personnel, many of whom are already abroad on mission. It is responsible for providing non-food humanitarian assistance and can quickly assemble DARTs to assess conditions. OFDA has wide authority to borrow funds, equipment, and personnel from other parts of USAID and other federal agencies. USAID has two other offices that administer U.S. humanitarian aid: Food For Peace (FFP) and the Office of Transition Initiatives (OTI). USAID administers emergency food aid under FFP (Title II of P.L. 480) and provides relief and development food aid that does not have to be repaid. OTI provides post-disaster transition assistance, which includes mainly short-term peace and democratization projects with some attention to humanitarian elements but not emergency relief. The Department of Defense (DoD) Overseas Humanitarian, Disaster and Civic Aid (OHDACA) funds three DoD humanitarian programs: the Humanitarian Assistance Program (HAP), Humanitarian Mine Action (HMA) Program, and Foreign Disaster Relief and Emergency Response (FDR/ER). OHDACA provides humanitarian support to stabilize emergency situations and deals with a range of tasks including providing food, shelter and supplies, and medical evacuations. In addition the President has the authority to draw down defense equipment and direct military personnel to respond to disasters. The President may also use the Denton program to provide space-available transportation on military aircraft and ships to private donors who wish to transport humanitarian goods and equipment in response to a disaster. Generally, OFDA provides emergency assistance for 30 to 90 days after a disaster. The same is true for Department of Defense humanitarian assistance. After the initial emergency is over, assistance is provided through other channels, such as the regular country development programs of USAID. The State Department also administers programs for humanitarian relief with a focus on refugees and the displaced. The Emergency Refugee and Migration Account (ERMA) is a contingency fund that provides wide latitude to the President in responding to refugee emergencies. Assistance to address emergencies lasting more than a year comes out of the regular Migration and Refugee Account (MRA) through the Population, Migration and Refugees (PRM) bureau. PRM assists refugees worldwide, conflict victims, and populations of concern to the United Nations High Commissioner for Refugees (UNHCR), often extended to include internally displaced people (IDPs). Humanitarian assistance includes a range of services from basic needs to community services. The cyclone struck one week before the people of Burma were to vote on a new constitution that potentially is the most significant political development in Burma since the military seized power in 1988. In the first few days following the natural disaster, the SPDC said it would proceed with the vote as scheduled on May 10, 2008. However, on May 6, 2008, the SPDC announced that the vote on the proposed constitution would proceed as planned in most of Burma, but that the vote would be delayed until May 24, 2008 for most of the townships around Rangoon and in seven of the townships in the Irrawaddy region. There are conflicting accounts about the conduct and outcome of the election. The SPDC reported a heavy turnout on both dates, with few voting irregularities. Opposition groups say the turnout was comparatively light, with many reported cases of voting irregularities, such a pre-marked ballots, voter intimidation, and other techniques to influence the outcome of the referendum. On May 29, 2008, the SPDC issued Announcement No. 7/2008, reporting that 98.12% of the 27,288,827 eligible voters had cast votes, and that 92.48% had voted in favor of the adoption of the constitution. On the basis of these official results, the SPDC declared that the new constitution had been ratified. After Cyclone Nargis caused widespread flooding and destruction in Burma, opposition to holding the referendum as scheduled arose from many sources. A May 5 editorial in the Irrawaddy stated, "The response by the Burmese regime to this weekend's cyclone disaster shows that the junta is incapable of running the country, let alone helping the victims." The editorial called for the postponement of the referendum as did other voices within the Burmese opposition movement. A representative of the opposition-run media group, the Democratic Voice of Burma, said, "They [the SPDC] would be very stupid to go ahead with the it. Thousands of people are dying or missing. It is very difficult to get around or get food and water. How can people vote?" On May 7, 2008, one of Burma's leading opposition groups, the National League for Democracy (NLD), issued a statement demanding that "the referendum be held simultaneously in all parts of the country once the conditions in the country have improved." On February 9, 2008, the SPDC issued an announcement stating, "in accordance with the fourth step of the seven-step Road Map, the approval of the Constitution draft will be sought in a National Referendum to be held in May 2008." On the same date, the SPDC released a second announcement, which states, "In accordance with the forthcoming State Constitution, the multi-party democracy [sic] general elections will be held in 2010." In order to pass the new constitution at least 50% of Burma's eligible voters must vote, with a simple majority voting in favor of adoption of the constitution. According to the SPDC, there are over 27 million eligible voters in Burma. On February 26, 2008, the SPDC released a new law governing "the approval of the draft constitutional." Chapter V, Section 11(d) of the law barred the following people from voting: members of religious orders; people of unsound mind; persons in prison or convicted of a crime; people illegally abroad; and foreigners. Chapter VII, section 20(a) allows the postponement or dissolution of a vote "if [a] free and fair referendum may not be held stably due to natural disaster or situation affecting the security, or any other disaster." Chapter XX prohibited "lecturing, distributing papers, using posters, or disturbing the voting in any other manner.... " Some opposition groups were concerned that this provision would be used to suppress the anti-constitution campaign. According to the SPDC Chairman, Senior General Than Shwe, Burma's military did not "crave for power," and that its "ultimate aim is to hand over the state power to the people." As Than explained in his speech on Myanmar's 63 rd Armed Forces Day on March 27, 2008, the military was "compelled" to assume state responsibilities due to "unavoidable circumstances." Than also indicated that the referendum on the draft constitution was consistent with the SPDC's "seven-step roadmap" for the return of civilian rule. Ever since the SPDC announced that a referendum on the proposed constitution would be held, it has run an extensive pro-constitution multi-media campaign. The SPDC has regularly run slogans in its newspapers, such as, "To approve the State Constitution is a national duty of the entire people today. Let us all cast 'Yes' vote in the national interest." The May 5, 2008 edition of the SPDC-run newspaper, the Myanma Ahlin , stated, "It's only a few days left before the coming referendum and people are eager to cast their vote." At the same time, the SPDC has actively tried to suppress the anti-constitution campaign. Human Rights Watch reports, "Political opposition activists face constant harassment, state-sponsored violence, vicious slandering in the state-controlled press (where they are routinely described as the 'internal stooges' of 'external destabilizing elements'), arbitrary arrest and detention, and long-term imprisonment." There have also been reports of "unidentified assailants" assaulting opposition leaders and anti-constitution campaigners in the weeks before the election; the Burmese police reportedly refused to investigate the alleged assaults. Access to the actual text of the draft constitution was at first limited. Photocopies and electronic copies were secretly circulated among journalists, senior government officials, and diplomats. A copy of the draft constitution, in Burmese, was available on the web page of Burma Digest , "a magazine specializing in human rights affairs in Burma." The SPDC began providing copies of the 194-page draft constitution to the public on April 9, 2008 at a cost of 1,000 kyat ($1.50)—two months after announcing that a referendum would take place in May 2008. At the same time, the military junta announced the date for the referendum—May 10, 2008. The draft constitution creates a parliament ( Pyidaungsu Hluttaw ) with two chambers—the Union Assembly ( Pyithu Hluttaw ) and the National Assembly ( Amyotha Hluttaw )—and sets aside a quarter of the seats in each chamber for the military. The draft constitution also permits a military takeover "in the event of an emergency." A provision in the draft constitution also bars a person who has dual citizenship, or has a close relative who is a foreign national from holding public office, effectively preventing opposition leader Aung San Suu Kyi from running for office because she was married to a British citizen and has two sons who are British nationals. Burma's various opposition groups were initially uncertain how to respond to the SPDC's announcement of a referendum on a draft constitution. According to a leader of the 88 Generation Students Group, Tun Myint Aung, "The only real choice is, should we vote 'no' or just boycott?" However, Dr. Nay Win Maung, a member of the "Third Force Group," a group that advocates engagement with the military junta and opposes sanctions, recommends that the opposition groups endorse the draft constitution and focus on the 2010 elections. On April 2, 2008, the main opposition group, the National League for Democracy (NLD), called on the people of Burma to vote "no" on the constitutional referendum. On May 1, 2008, the United Nationalities League for Democracy (UNLD), an umbrella group of political parties representing Burma's ethnic minorities, called for complete boycott of the referendum. There are conflicting accounts coming out of Burma about the conduct and outcome of the May 10 and May 24 votes. According to the junta-operated media, the constitutional referendum was done in a free and fair fashion with international observers. According to various pro-opposition sources and much of the international media, there were a significant number of cases of voting irregularities to bring the validity of the outcome into question. Also, there were varying views of the percentage of voters who actually went to the voting booths. A post-referendum issue of The New Light of Myanmar contained several stories on the voting on May 10, 2008, covering the situation at polling stations in various townships in various districts or states across Burma. In every story, mention was made of the presence of a representative of a foreign embassy or consulate observing the voting process, including officials from Bangladesh, Chad, China, Indonesia, Japan, Malaysia, North Korea, the Philippines, Russia, South Korea, Thailand, the United States, and Vietnam. Although none of the stories included comments or quotes from the foreign officials, the implication was that the vote was monitored by international observers. A story in The New Light of Myanmar the day after the vote stated, "The referendum was held successfully ... with massive turnout of citizens." However, the article provided no estimate of the percentage of voters who participated in the referendum or the results of the May 10 vote. On May 14, 2008, the military junta announced the official results of the May 10 vote (see Table 2 ). The SPDC claimed that "more than 99 percent" of the 22.7 million eligible voters for the May 10 ballot cast their vote, with 92.4% voting in favor of the new constitution. If these figures are correct, over 20 million people voted in favor of the constitution on May 10—enough votes to approve the new constitution, even though there were approximately five million eligible voters scheduled to go to the polls on May 24. The official results were higher than the rumored percentages being circulated in parts of Burma. It was being said before the vote that the SPDC had already determined the results of the referendum, and would announce that 84.6% voted in favor of the new constitution. Page 9 of the May 25 edition of the New Light of Myanmar was devoted to stories covering the vote in the more severely affected townships of Irrawaddy and Rangoon. In contrast to the coverage of the May 10 vote, the stories did not mention the presence of international observers or describe the voter turnout. Instead, the focus was on the number of polling stations and the voting procedures. On May 29, 2008, the SPDC announced the final vote count for the constitutional referendum, which was published the next day in the New Light of Myanmar . According to the official results, between May 14 and May 29, the number of eligible voters had declined by 81,110 people. Of the 27,288,827 eligible voters, a reported 98.12% had cast ballots, of which 92.48% had voted in favor of the new constitution. Burma's various voices of opposition paint a very different image of the conduct and outcome of plebiscite. According to Irrawaddy , turnout on May 10 was "very low." The NLD compiled a list of voting irregularities on the day of the vote that included the following: The distribution of pre-marked ballots, already checked in favor of the constitution, to voters at polling stations; Election officials watching voters as they marked their ballots; Intimidation and threats to voters; The confiscation of identity cards of voters who voted against the constitution; Reports that voters were told that ballots had already been submitted in their name by local government officials; Refusing to allow eligible voters to vote; Pressuring people to vote yes, and to vote yes for relatives not at the polling station; The arrest of people distributing anti-constitution literature at polling stations; and Denying NLD and other opposition members access to the polling stations to observe the referendum. There were also reports that some polling stations closed early and people who tried to vote were told that ballots in favor of the constitution had already been submitted in their name. On the same day the SPDC announced the official results of the May 10 vote, the NLD released a statement condemning the junta's decision to go ahead with the constitutional referendum in the areas of Burma most severely damaged by Cyclone Nargis. According to the NLD's statement, "It is not the right time to hold the referendum in the cyclone-hit region because people are dying and still struggling." The statement called on the SPDC to concentrate its efforts on humanitarian work and postpone the May 24 vote. According to an Irrawaddy news report, the Public International Law & Policy Group (PILPG) published a report, "Burmese Constitutional Referendum: Neither Free nor Fair," on May 26, 2008, sharply criticizing the conduct of the plebiscite. According to the PILPG, "The referendum was not free or fair, as it was not conducted in accordance with international law or basic democratic standards." The Irrawaddy article states that the PILPG report outlines how the conduct of Burma's constitutional referendum violated eight conditions for a free and fair election, including the right to vote; secret ballots; freedom of opinion; freedom from coercion; the right to information; freedom of the media; electoral monitoring; and independent electoral administration. Two days before Cyclone Nargis struck Burma, President Bush issued an executive order expanding U.S. trade and economic sanctions effective May 1, 2008. U.S. foreign policy towards Burma in general is currently delineated by the Burmese Freedom and Democracy Act of 2003 [ P.L. 108-61 , extended by P.L. 108-272 , P.L. 109-39 , and P.L. 110-52 ] and a series of Executive Orders. These laws and Executive Orders: Prohibit the import into the United States products from Burma; Ban the export or re-export of financial services to Burma by U.S. persons; Prohibit a U.S. person or company from approving, aiding, or supporting a foreign party's investment in Burma; Prohibit U.S. persons from purchasing shares in a third-country company if the company's profits are predominantly derived from the company's development of resources in Burma; Authorize the President to impose a freeze on funds or assets in the United States of the Burmese Government and individuals who hold senior positions in that government; Freeze all property and interests in property held in the United States or that come to the United States of the Myanmar Gem Enterprise, the Myanmar Timber Enterprise, the Myanmar Pearl Enterprise, and any person determined by the Secretary of Treasury, after consultation with the Secretary of State, to be either directly or indirectly owned or controlled by the SPDC or supportive of the SPDC; and Require U.S. representatives in international financial institutions to vote against the extension of any financial assistance to Burma. Under the Bush Administration, the U.S. policy has been to minimize contact with the SPDC and to isolate the military junta. The U.S. Embassy in Rangoon has no ambassador. In addition, as indicated above, the United States actively supports the efforts of international organizations (such as the UN) to place pressure on the SPDC to improve human rights in Burma and return the government to civilian rule. The U.S. State Department issued a statement on February 11, 2008, that called the proposed constitutional referendum "evidence of its [the SPDC's] refusal to pursue a meaningful and time-bound dialogue with Burma's democratic and ethnic minority representatives." In its 2008 annual human rights report, the State Department cited Burma for a wide range of human rights abuses including arbitrary or unlawful deprivation of life; torture and other cruel, inhuman, or degrading treatment or punishment; arbitrary arrest or detention; denial of fair public trial; the detention of political prisoners; forced relocations; restriction of the freedom of speech and press; restriction of the freedom of peaceful assembly and association; repression of religion; and human trafficking. On May 7, 2008, the Senate passed by unanimous consent S.Res. 554 expressing the Senate's "deep sympathy to and strong support for the people of Burma, who have endured tremendous hardships over many years and face especially dire humanitarian conditions in the aftermath of Cyclone Nargis." The resolution also expressed the Senate's support for President Bush's decision to provide humanitarian aid and indicated a willingness "to appropriate additional funds, beyond existing emergency international disaster assistance resources, if necessary to help address dire humanitarian conditions throughout Burma in the aftermath of Cyclone Nargis and beyond." On May 13, 2008, the House passed H.Res. 1181 by a vote of 410 yeas to one nay, expressing its sympathy and condolences to the people of Burma, and demanding that "the referendum to entrench military rule be called off, allowing all resources to be focused on disaster relief to ease the pain and suffering of the Burmese people." In December 2007, both the House of Representatives and the Senate passed versions of H.R. 3890 . The bill—"The Block Burmese JADE (Junta's Anti-Democratic Efforts) Act of 2007" in the House and "The Burma Democracy Promotion Act of 2007" in the Senate—would ban both the direct and indirect import of gemstones mined or extracted from Burma. The House version would also prohibit "direct or indirect payments of any tax, cancellation penalty, or any other amount to the Burmese Government, including amounts paid or incurred with respect to any joint production agreement relating to the Yadana or Shwe gas fields or pipeline—an apparent provision to force Chevron to divest from its business activities in Burma. The Senate version does not contain prohibition on tax payments to the Burmese government, but does ban the direct or indirect import of products containing teak or other hardwood timber from Burma. Consultations between the House and Senate have not yet reconciled the differences between the two versions of H.R. 3890 . On March 14, 2008, Representative Rush D. Holt introduced H.Con.Res. 317 "Condemning the Burmese regime's undemocratic constitution and scheduled referendum." The resolution "denounces the one-sided, undemocratic, and illegitimate act by the State Peace and Development Council (SPDC) to legalize military rule with the constitution" and urges the President to work through the UN Security Council and the Association of Southeast Asian Nations (ASEAN) to "end junta political intransigence and promote meaningful political dialogue" in Burma. On May 6, 2008, the House passed the resolution by a vote of 413 yeas and one nay. On November 16, 2007, the Senate agreed by unanimous consent to S.Con.Res. 56 that "encourages ASEAN to take more substantial steps to ensure a peaceful transition to democracy in Burma." On December 4, 2007, the House of Representatives referred the resolution to the House Committee on Foreign Affairs. Legislation was also introduced in both the House of Representatives and the Senate to award the Congressional Gold Medal to Aung San Suu Kyi. The House of Representatives passed its version of the bill on December 17, 2007 by a vote of 400 yeas and zero nays. On April 24, 2008, the Senate passed H.R. 4286 without amendment by unanimous consent. The legislation was presented to the President on May 1, 2008, and signed into law on May 6, 2008. The concurrence of the tightening of U.S. sanctions on Burma and the arrival of Cyclone Nargis just one week before the nation was to vote on a proposed new constitution has compounded the political pressure on the ruling military junta. Many of the people of Burma need humanitarian aid and are dissatisfied with the SPDC's initial response to the crisis. The current situation presents Congress with at least four key issues: humanitarian assistance; the constitutional referendum; a possible long-term food shortage; and potential political instability in Burma. Humanitarian emergencies usually stem from two overall types of disasters: natural or conflict-related. U.S. and international humanitarian assistance have an important impact not only on the relief operation itself, but on broader foreign policy issues. Natural disasters (like the 2004 tsunami in the Indian Ocean, 2005 earthquake in South Asia, and 2007 cyclone in Bangladesh) may affect millions of people each year who require prolonged urgent assistance. Responses are typically multilateral, often have a relief operation end date, and are less likely to be hindered by the politics of the situation. By contrast, in many conflicts—terrorist attacks, war between states, or where groups within a country are fighting and in the absence of a political solution—the response cannot be separated from broader foreign policy developments and the overall strategy (including determining an exit point) may be much less clear. In the case of Burma, the response to the natural disaster is closely linked to political developments both within the country and in its relationships with the international community. The circumstances and difficulties of mobilizing a relief operation were hampered in part by the politics of the situation. Some are saying that the provision of humanitarian assistance and an increase in the international presence in Burma could represent an opportunity to change the authoritarian system in Burma. This may be what the SPDC fears, not only with the constitutional referendum at stake, but in the long term as well, with the result that it has not allowed most offers of international humanitarian experts. Humanitarian assistance generally receives strong bipartisan congressional support and the United States is typically a leader and major contributor to relief efforts in humanitarian disasters. When disasters require immediate emergency relief, the Administration may fund pledges by depleting its disaster accounts intended for worldwide use throughout a fiscal year. In order to respond to future humanitarian crises, however, these resources would need to be replenished or it could curtail U.S. capacity to respond to other emergencies. These accounts are typically restored through supplemental appropriations. Amid efforts to tackle rising budget deficits by, among other measures, slowing or reducing discretionary spending, finding the resources to sustain U.S. aid pledges may present some challenges, depending upon the resources required and competing aid priorities at hand. The Senate passed S.Res. 554 on May 7, 2008, calling for Congress "to stand ready to appropriate additional funds, beyond existing emergency international disaster assistance resources, if necessary to help address dire humanitarian conditions throughout Burma in the aftermath of Cyclone Nargis and beyond." On June 30, 2008, President Bush signed into law P.L. 110-252 , which provides FY2008 and FY2009 supplemental appropriations for overseas military operations, international affairs, and some domestic programs. The law provides funding for urgent humanitarian assistance worldwide, including support for critical needs in Burma. It also states, "As the Peace and Development Council (SPDC) has compounded the humanitarian crisis in Burma by failing to respond to the needs of the Burmese people in the wake of Cyclone Nargis and by refusing offers of assistance from the international community, the Department of State and USAID should seek to avoid providing assistance to or through the SPDC." Prior to the arrival of Cyclone Nargis, several Members of Congress had indicated their opposition to Burma's planned constitutional referendum. After the cyclone struck, on May 6, 2008, the House of Representatives passed H.Con.Res. 317 "condemning" the constitutional referendum and calling on the SPDC to enter into "meaningful political dialogue" with Burma's opposition groups. Since the SPDC announced its plan to hold the plebiscite, the Senate has not passed any legislation relating directly to the constitutional referendum. Even after the immediate post-cyclone emergency has passed, experts expect the country to face a potentially severe food shortage for up to two years. The areas struck by Cyclone Nargis were important sources of rice, seafood, pork, and chicken for Burma; it is unlikely that the rest of the country will be able to step up food production to replace the lost output of the cyclone-devastated regions. It is also uncertain if Burma will be able import enough food to replace its lost domestic output because of damage to its transportation infrastructure and a shortage of foreign exchange. As a result, Burma may require food assistance for many months and possibly years. In addition, in the first few days after Cyclone Nargis, food prices in Burma reportedly increased by 100% or more. While this spike in food prices is likely to subside to some extent in the coming weeks, it is also likely that prices will not return to their pre-cyclone levels. In addition to the challenge of recovering from the destruction caused by the cyclone, the people of Burma will probably face higher—and possibly rising—food prices for many months. Given that most households in Burma were living in poverty before the arrival of Nargis, the higher food prices will place more strain on the Burmese people. It is noteworthy to recall that widespread protests in Burma in September 2007 began as a demonstration against an unannounced increase in fuel prices. Burma's potential long-term need for food assistance presents two possible concerns to Congress. First, Congress may be asked to appropriate funds to provide long-term food and agricultural assistance to Burma. Second, these recent developments may also prompt changes in the current laws governing sanctions on Burma. The possible combined effects of public dissatisfaction with the SPDC's response to the cyclone disaster, a potential rejection of the junta's proposed constitution, and widespread food shortages and food price inflation could combine to pose a threat to the political survival of Burma's ruling military junta. In addition, the announced "official results" of the constitutional plebiscite are widely viewed as obviously fraudulent by Burma's opposition groups and much of the general population. These factors have increased the prospects for public demonstrations against the SPDC. Political tensions—both domestic and international—were also heightened by the SPDC's decision on May 27, 2008, to extend the house arrest of Aung San Suu Kyi for a sixth consecutive year, as well as the arrest of several NLD members. The detention decision was announced just a few days after United Nation Secretary-General Ban Ki-moon had raised the issue with the leaders of the SPDC. It also came on the same day that NLD members rallied at Aung San Suu Kyi's home in remembrance of their election victory in 1990. After the announcement of the detention's extension, Secretary-General Ban expressed his regret about the junta's decision and called for an end to all such "restrictions" of "political figures" in Burma. In an official statement, President Bush indicated that he was "deeply troubled" by the decision and called upon the SPDC "to release all political prisoners in Burma and begin a genuine dialogue with Aung San Suu Kyi, the National League for Democracy, and other democratic and ethnic minority groups on a transition to democracy." One question Congress may move to consider is whether current circumstances warrant a further tightening or easing of political pressure on the SPDC. Given Burma's current and anticipated future need for humanitarian assistance, as well as the apparent heightened dissatisfaction with the SPDC, some are likely to argue that the current situation is an opportune moment to ramp up U.S. sanctions and seek greater action from the United Nations and other multilateral organizations. For example, resolution of the differences between the House and Senate versions of H.R. 3890 and subsequently forwarding the legislation to the President would build upon Executive Order 13464. However, new congressional sanctions would possibly eliminate any possibility of the SPDC admitting U.S. aid or relief workers in the future and could potentially be used by the military junta to rally support based on patriotic or nationalist appeals to opposition to "outside interference." A key factor that will impact the effectiveness of any changes in U.S. sanctions on Burma will be the perceived ability of the SPDC to weather any political storm. One critical element in the post-Nargis period will be the strength of the SPDC's support among rank-and-file soldiers. Burma's military has grown from 180,000 to around 400,000 troops over the last 20 years. The SPDC will also rely on its paramilitary support group, the Union Solidarity and Development Association (USDA), to remain in power. Formed in 1993, the USDA is ostensibly a social organization that claims nearly 23 million members, but has a reputation for violent acts against opposition groups in Burma. In recent years, the USDA has organized "people's militias" that have reportedly been involved in attacks on Aung San Suu Kyi and other opposition leaders in Burma. Burma's soldiers have already demonstrated a readiness to open fire on civilian protests and the USDA have similarly demonstrated a willingness to be a weapon of oppression for the SPDC. Whether of not the soldiers and the USDA members will continue to support the military junta during any post-Nargis civil unrest remains to be seen. There are some indications of significant political changes within the SPDC since Cyclone Nargis and the constitutional referendum. On June 20, 2008, the SPDC released Orders 2/2008 and 3/2008 reassigning Major General Saw Lwin to become the Minister of Immigration and Population, and making Vice Admiral Soe Thien his replacement as Minister for Industry-2. According to one report, unnamed military sources said that Soe Thien's replacement as the navy's commander in chief will be Major General Nyan Tun. Another report claims that five top SPDC lieutenant generals were asked to retire and several junior officers were promoted as part of a restructuring of the SPDC. There are differing interpretations of the significance of the replacement of ministers and retirement of generals. Some observers speculate that there is a power struggle within the SPDC for the successor of Than Shwe between General Shwe Mann and Lieutenant General Myint Swe. While Shwe Mann is purportedly the "number three man in the armed forces," Myint Swe supposedly is very loyal to Than Shwe. Other analysts are interpreting the recent changes in the SPDC as the punishing of people who failed to take action after the cyclone and replace them with loyal and trusted officers. In particular, Soe Thien was allegedly removed from his position as the head of the navy because of his failure to deploy ships to counter the U.S. and French naval vessels of the coast of Burma. Another important issue will be the image of Burma's Buddhist monks and nuns—and their actions—in the weeks ahead. Various accounts indicate that the monks and nuns have been key figures at the local level in organizing and coordinating disaster relief efforts. Although the SPDC has attempted to prevent the monks and nuns from involvement in disaster assistance—and reportedly have tried to take credit for work done by the monks and nuns—Burma's "members of religious orders" may have strengthened their popularity since the arrival of Cyclone Nargis. Having been barred from voting on the constitutional referendum, Burma's Buddhist monks and nuns may choose to leverage their stronger popular support into renewed political action against the Burma's oppressive military junta.

Cyclone Nargis struck the coast of Burma in the evening of May 2, 2008 and cut a path of destruction across the southern portion of the country. The storm left in its wake an official death toll of 84,537 and 53,836 more missing, and extensive damage to the nation's premier agricultural areas. Some have speculated that the final number of dead is actually more than 130,000. Vital infrastructure was destroyed by the storm, severely limiting the ability to assess the loss of life and provide assistance to the survivors for weeks following the cyclone. In addition, much of Burma's most productive agricultural land has been severely damaged; some experts expect that it will take up to two years for Burma's production of rice, seafood, pork and poultry to recover, and that the nation may face chronic food shortages and the need for international assistance for many months. Burma's ruling military junta quickly faced both domestic and international criticism for its response to Cyclone Nargis, including accusations that it failed to provide adequate warning, its slow emergency response, and its reluctance to allow international relief workers into the country. The United States has offered so far contributed $40.17 million in relief aid. Even before Cyclone Nargis struck, the junta was already facing a highly controversial referendum on a proposed constitution scheduled for May 10, 2008, that could shape U.S. and other countries' policies toward Burma. As a consequence, the evolution and implications of the humanitarian crisis became inextricably linked to Burma's political situation and its relations with the international community. In a widely criticized move, the military junta decided go ahead with the vote, holding the constitutional referendum in most of Burma on May 10, 2008, and in the more severely affected areas on May 24, 2008. The SPDC reported a heavy turnout on both days and few voting irregularities. Opposition groups state that the turnout was light, and there were many cases of voting fraud and voter intimidation. On May 29, 2008, the junta announced the promulgation of the new constitution, on the basis of on its approval by 90.7% of the eligible voters. According to the new constitution, elections to form a new government are to be held in 2010. Some experts are speculating that Cyclone Nargis may precipitate major political change in Burma, including the destabilization of Burma's military regime. The junta has already faced domestic and international pressure to cancel the constitutional referendum. Local dissatisfaction with the speed and quality of the junta's provision of emergency assistance may heighten domestic opposition to the junta and its proposed constitution. Also, rising food prices and food shortages may feed popular discontent, much like fuel price increases led to protests in Burma of September 2007. In addition, two days before announcing the official results of the constitutional referendum, the SPDC extended opposition leader Aung San Suu Kyi's house arrest for the sixth consecutive year. This report examines the scope of and response to the disaster, as well as its links to Burma's political situation and U.S. policy. The report will be updates as circumstances warrant.

Federal preemption of state tort law actions brought against drug and medical device manufacturers, which has the legal effect of immunizing manufacturers from tort liability, has been a source of great controversy in recent years. These cases arise when individuals are allegedly harmed by a defective product and sue the manufacturer. The Federal Food, Drug, and Cosmetic Act (FDCA) does not expressly allow these injured individuals to bring such a claim, and, accordingly, someone injured by a medical device or drug may be limited to bringing a suit under state tort law in order to obtain compensation for the resulting injuries. For example, an injured plaintiff may allege that a manufacturer was negligent with respect to the design of the drug or device and seek monetary relief for the injuries suffered. However, because of the doctrine of constitutional preemption, a court may dismiss such a claim because the claim is superseded by federal law. The Supreme Court has evaluated medical device and drug preemption cases on a number of occasions over the past two decades, and the results have been mixed: in some instances a person injured by an allegedly dangerous drug or device is barred from suing a manufacturer, whereas in other cases, the Court has allowed a suit to go forward. In order to explain the major Supreme Court cases in this area of law, this report begins by providing background on three general subject matters. First, the report examines the doctrine of constitutional preemption, the legal basis for determining when a state law must yield to a federal law. From there, the report discusses both the state law and federal laws at issue in the recent Supreme Court FDCA preemption cases. Specifically, the report addresses the types of state-law tort claims that are commonly brought against drug and medical device manufacturers. After discussing preemption and tort liability, the report examines federal law regulating prescription drugs and medical devices. With the background on the general subjects of preemption, tort law, and federal regulation of drugs and devices in mind, the report concludes by examining the major Supreme Court FDCA preemption cases and analyzing possible judicial and legislative developments that may affect this complicated and ever-changing area of law. Because of the Supremacy Clause found in Article VI of the Constitution, the "Laws of the United States" made in pursuance of the Constitution are by definition "the supreme Law of the Land" "notwithstanding" "the Constitution or the Laws of any State to the Contrary." Under the doctrine of federal preemption, state laws are invalid if they "interfere with, or are contrary to federal law." Accordingly, preemption is a necessary product of a specific federal law's reach, and, in that vein, the Court has repeatedly recognized that the intent of Congress is the "'ultimate touch-stone' in every pre-emption case." Another principle that sometimes guides the Supreme Court's jurisprudence in preemption cases is the so-called "presumption against preemption." Specifically, the Court in the past has held that in "all pre-emption cases" an assumption exists that "the historic police powers of the States were not to be superseded by [a] Federal Act unless that was the clear and manifest purpose of Congress." Notwithstanding the Court's previous pronouncements regarding the presumption against preemption, in recent terms, the Court arguably appears to be moving away from embracing the presumption. Following Wyeth v. Levine , the presumption has largely been ignored or distinguished away by a majority of the Court over the past four terms. In PLIVA v. Mensing, three Justices joined a portion of Justice Thomas's opinion that argued that the original meaning of the Supremacy Clause "suggests that federal law should be understood to impliedly repeal conflicting state law," a theory that would conflict with the presumption against preemption. Two years later, in Mutual Pharmaceutical v. Bartlett , a majority of the Court, while acknowledging that the preemptive scope of the federal law in question had posed "difficult ... questions" and "repeatedly vexed the Court," still found a state law unconstitutional without discussing the presumption against preemption. As a consequence, the presumption against preemption, formerly called one of the "cornerstones of ... pre-emption jurisprudence," appears to be no longer consistently applied, if not rejected, by the Court. With these principles in mind, there are two general categories of preemption: express preemption and implied preemption. The first way in which federal law can foreclose the operation of a state law is by express language in a congressional enactment, often called an express preemption clause. In those instances, determining the scope of the preemption clause is a matter of statutory construction. While the existence of an express preemption clause may imply a relatively straightforward resolution of whether a particular state law is preempted by federal law, express preemption cases can be as complex as implied preemption cases. For example, in a case called Cipollone v. Liggett Group, a very divided Supreme Court interpreted a provision in the Public Health Cigarette Smoking Act of 1969 that barred a state from imposing a "requirement or prohibition based on smoking or health ... with respect to advertising or promotion of any cigarettes." The Court issued three different opinions, none of which garnered a majority of the Justices, and ultimately concluded that the express provision in the 1969 law preempted state negligence and strict liability claims, but did not preempt claims for a breach of an express warranty. Nine years later, in Lorillard Tobacco Co. v. Reilly, a 5-4 ruling, the Court concluded that the same language from the Public Health Cigarette Smoking Act of 1969 preempted a state law banning outdoor cigarette advertising near schools. Together Cipollone and Lorillard illustrate that interpreting express preemption clauses in federal statutes can raise complicated and difficult questions for courts to resolve. A federal law can also preempt state law even in the absence of an express preemption clause. Courts have recognized two ways in which a federal law can implicitly displace a state law: field preemption and conflict preemption. The latter form of preemption may be further subdivided into impossibility preemption and obstacle preemption. The Court has struck down state laws when Congress has evidenced a desire to occupy the entire field of regulation, such that there is "no room for the states to supplement it." The classic example of a field preemption case is Rice v. Sante Fe Elevator Corp. , which held that states cannot regulate grain elevators licensed by the federal government because the implicit intent of the underlying federal scheme was to replace a system of dual regulation with a system of exclusive federal licensing. Other examples of where the doctrine of field preemption is implicated include state regulation of the construction of nuclear power plants, the registration of aliens, and foreign affairs. Finally, preemption can occur when a particular state law conflicts with federal law. A conflict exists most obviously when "compliance with both federal and state regulations is a physical impossibility." The quintessential example of impossibility preemption was provided by the Supreme Court in a case called Florida Lime & Avocado Growers v. Paul . Specifically, the Court, in providing a hypothetical example of what impossibility preemption would look like, stated that a federal law forbidding the picking and marketing of any avocado testing more than 7% oil would preempt for reasons of impossibility a state law excluding from the state any avocado measuring less than 8% oil content. Impossibility preemption has rarely been invoked by the Supreme Court, as impossibility has been described as a "demanding defense" when attempting to defeat the effect of a state law. Conflict preemption can also occur when a state law serves as an "obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Obstacle preemption ultimately becomes a question regarding how much conflict is tolerable between the state and federal law. The answer to that question rests in the balancing of interests between the degree of impedance to the national purpose and the value of state autonomy in a given context. A clear example of obstacle preemption occurred in Nash v. Florida Industrial Commission, where the Court held that federal unfair labor practice laws preempted a state law denying unemployment benefits to employees that filed an unfair labor practice charge with the National Labor Relations Board. In Nash, the Court reasoned that the financial burden imposed by the state law impedes resorting to federal law as a means to stop an unfair labor practice. Obstacle preemption is perhaps the most difficult of the preemption doctrines to apply because of the "inherent uncertainty in determining Congress's intent to preempt based on an ex post judicial assessment of congressional objectives." While one might assume the existence of an express preemption clause in a statute eliminates the need for a court to examine whether a statute implicitly preempts a state law, the Supreme Court in Geier v. American Honda Motor Co. rejected such an assumption. In that case, Alexis Geier, after suffering severe injuries in a car crash, sued Honda, arguing that the car company had negligently and defectively designed the car without a driver's side airbag that might have protected her. Honda argued that Geier's claim was preempted by a federal motor vehicle safety regulation that allowed car companies the choice of installing an airbag, an automatic seatbelt, or some other passive restraint system. Justice Breyer, writing for a five-person majority, held that an express preemption clause in the Safety Act containing language that compliance with a federal motor vehicle safety standard did "not exempt any person from liability under the common law" excluded common law tort claims from the statute's preemptive reach. Nonetheless, the Court proceeded to explain that while the savings language removed "tort actions from the scope of the express pre-emption clause," it did not limit the operation of ordinary preemption principles, such as conflict preemption, because to do otherwise would allow states to "impose legal duties that would conflict directly with federal regulatory mandates." In other words, the Court would not apply an overly broad reading of the savings clause to defeat the ordinary operation of a federal regulatory scheme. In examining whether the federal motor vehicle safety standard impliedly preempted state tort law, the Court held Geier's state tort suits preempted on the ground that liability for failing to provide airbags would stand as an obstacle to the purpose of the federal regulation, which was to have a "variety and mix of" passive restraint devices on the market, allowing a gradual phase-in of airbags to the market. In the wake of Geier , the Court has consistently held that implied preemption principles must be applied even in cases where a federal statute contains a savings clause. Beyond the question of "what counts as preemption," an important ancillary question is what federal institutions have the authority to preempt state law. The text of the Supremacy Clause implies that Congress, through laws made in pursuance of the Constitution and through treaties made under the authority of the United States, can act to create law that is supreme to state law. Beyond Congress, the Supreme Court has recognized that federal administrative agencies, exercising authority delegated by Congress, may also preempt state law in certain circumstances. Specifically, executive preemption is dependent upon whether administrative action lies within the agency's statutory authority or whether the agency has acted arbitrarily, which may ultimately be a product of how much deference a court is willing to accord an agency's judgment. Moreover, in the narrow areas of law in which federal courts can fashion federal common law rules, such as admiralty law, the Court has allowed such rules to preempt state law. Having discussed the doctrine of constitutional preemption and the different ways a federal law can negate the effect of a state law, in order to properly understand the Supreme Court's FDCA preemption case law and how state tort law can be negated by federal law, it is important to also examine both the state and federal laws at issue in the High Court's cases. An individual harmed by a product, including a drug or a medical device, can potentially utilize tort law as a means to recover any losses caused by such product. Tort law in the United States is "built on the bedrock of state common law," or judge-created legal norms. While the objectives of tort law are manifold, there are four central principles that underlie the American tort system. First, tort law aims to compensate people for injuries brought about by the wrongdoing of others. Second, beyond compensation, tort law attempts to incentivize safety such that people are deterred from engaging in behaviors that are either intended to harm others or unreasonable enough that they are likely to harm others. Third, tort law rests on the assumption that the payment of monetary damages is the most effective and most efficient way of accomplishing the dual goals of compensation and deterrence. Finally, in cases where an individual's behavior is especially egregious, tort law, through punitive or exemplary damages, allows a person to be punished beyond what is required to compensate a victim. With these basic principles in mind, when suing a drug manufacturer for an injury caused by its product, plaintiffs typically raise products liability claims sounding in negligence, warranty, fraud, and strict liability. Each theory and its application to medical device and prescription drug litigation will be briefly discussed. To establish a traditional prima facie negligence case, plaintiffs must prove four basic elements: (1) a duty of care owed to the plaintiff by the defendant; (2) a breach of that duty by the defendant; (3) the defendant's breach was a "proximate cause" of the plaintiff's damages; and (4) a cognizable injury or harm to the plaintiff. Generally, product manufacturers owe a duty of due care to all foreseeable users or others who may be affected by the products, and this duty extends to "all aspects of the product," including the "design, manufacture, inspection, labeling, marketing, and promotion." The level of care must comport with that of a "prudent manufacturer ... under the circumstances of the particular case." With respect to prescription drug or medical device manufacturers, the duty of due care could be breached in a number of ways. For example, entities that manufacture prescription drugs must ensure that the product contains the appropriate concentration, activity, strength, and purity to prevent injury from the use of such a drug. Likewise, manufacturers of medical devices must exercise reasonable care in the production of their wares to ensure that they are not defective. However, for many adverse incidents resulting from prescription drugs and medical devices, no negligence occurred in crafting the product, as the manufacturer adhered to the standards of care for the industry. Nonetheless, the very nature of the product, even when properly manufactured and distributed, will often entail serious risks, as the product can be misapplied or misused. As a result, with medical devices and prescription drugs, the duty to exercise due care extends to a duty to warn of all possible risks of which the manufacturer knows or should know. Under a well-established rule called the "learned intermediary doctrine," a manufacturer satisfies its duty to warn of dangers associated with the use of a prescription drug or medical device by providing adequate warnings to the medical professional administering the drug or device, and not the ultimate user. Once a plaintiff harmed by a drug or device establishes that the manufacturer of the article breached a duty to exercise due care, the plaintiff must then establish causation. Proof of causation requires a plaintiff to prove both causation in fact (i.e., that "but for" the defendant's breach the plaintiff's injuries would not have occurred) and causation in law (or proximate causation). Proximate causation is the "legal allocation of responsibility for the injury-causing event," such that a defendant is only responsible for those injuries that are direct and reasonably anticipated, and not those injuries that are unforeseeable or remote. In the context of failure-to-warn lawsuits over drugs and medical devices, in the "vast majority" of jurisdictions where a warning is inadequate, the plaintiff is entitled to a rebuttable presumption that "an adequate warning would have been heeded if one had been given." Nonetheless, proximate cause has been referred to as the "plaintiff's Achilles Heel," as the defendant can rebut the presumption through testimony that a different warning would not have made a difference in the actions of the physician, forcing the plaintiff to then present evidence that the physician would have altered his or her behavior and injury would have been avoided with a different warning. This burden can be quite difficult, and, indeed, proximate cause has been the demise of several lawsuits alleging injuries resulting from a failure to warn about the risks of a drug or medical device. A breach of a warranty, a legal theory that is equally associated with contract law and tort law, can also be the basis for a products liability claim against a drug or device manufacturer. Liability for a breach of a warranty is premised on the principle that manufacturers implicitly warrant that their products are "fit for the ordinary purposes for which they are used" and "merchantable," in that they are of a sufficient quality. Both of these implied warranties are found in Article Two of the Uniform Commercial Code (UCC), which has been codified in nearly all jurisdictions. To establish a prima facie case for breach of the implied warranty of merchantability, a plaintiff must prove (1) the existence of the warranty, (2) a breach of that warranty, and (3) damages proximately resulting from that breach. Two central difficulties arise for plaintiffs asserting a breach of an implied warranty in a products liability suit regarding prescription drugs or medical devices. First, warranty law, because of its partial basis in contract law, retains several legal doctrines from contract law that tend to prevent a consumer of a prescription drug or the user of a medical device from recovering damages from the manufacturer. For example, state contract law, and with it warranty law, commonly requires that a contract term, including an implied warranty, run only to a buyer who is in "privity" (or has a direct relationship) with the seller. The privity requirement can undermine drug or medical device breach of warranty lawsuits, as the manufacturer of a drug or device typically does not have a seller-buyer relationship with the end user, barring recovery. Moreover, under the UCC, an implied warranty may be excluded or modified through the use of a disclaimer that "mention[s] merchantability" and is "conspicuous." Finally, another important defense available to manufacturers against claims of a breach of the implied warranty of merchantability is lack of notice or opportunity to cure the defect. The UCC requires that a plaintiff give the seller notice of the breach of the warranty within a reasonable time after he or she has discovered or should have discovered the breach. If the plaintiff fails to provide notice to the seller, the plaintiff is barred from any remedy. Second, assuming that the doctrines of privity, disclaimer, and notice do not derail a consumer's lawsuit against a drug or device manufacturer, a claim based on the manufacturer implicitly warranting that the product is fit for ordinary uses may not be applicable in a drug or device case. For example, physicians frequently prescribe drugs or employ medical devices for conditions for which they are not actually approved ("off label use")—conduct that is perfectly legal under federal law. If an injury results because of an off label use, by definition there cannot be a breach of the implied warranty of merchantability, as the drug or device was not used for its intended purpose. More broadly, some have argued that the nature of prescription drugs and sophisticated medical devices removes them entirely from the realm of warranty law, which is typically applied with respect to the sales of ordinary goods and services. Specifically, some courts have held that because drugs and certain devices are not available to the general public, but may only be obtained through a licensed physician, the very nature of the product precludes the imposition of a warranty for fitness for ordinary purposes. After all, each individual who uses a drug or device presents a unique circumstance that makes warranty law a poor vehicle to assign liability to a manufacturer. Another common basis for a drug or medical device products liability suit is the allegation that the manufacturer engaged in fraud by marketing an unsafe product. For example, a plaintiff could allege fraud exists because a drug manufacturer, through their advertising or package insert, painted an undeservedly favorable picture of their drug and minimized the drug's side effects. To succeed on a fraud claim, the plaintiff must establish six elements: (1) a representation or, where there is a duty to disclose, concealment; (2) which is material; (3) made falsely, with knowledge of its falsity or with reckless disregard for the truth; (4) with the intent to mislead; (5) justifiable reliance upon the representation or concealment; and (6) resulting injury that is proximately caused by the justifiable reliance. These requirements are often difficult for plaintiffs to meet for several reasons. With respect to affirmative misrepresentations, the plaintiff must establish that the manufacturer made a false representation of material fact, as opposed to merely using broad, vague, or commendatory language. For example, a federal court rejected the argument that a drug manufacturer, in its promotion of Actimmune, engaged material misrepresentations by broadly lauding selected medical journals supportive of a drug when the underlying literature was quite mixed on the value of the drug. In regard to fraudulent concealment claims, the case law generally requires that there be a duty of disclosure. Much like the doctrine of privity in the context of warranty claims, a fraudulent concealment claim must rest upon an independent fiduciary duty owed to the plaintiff by the manufacturer or a confidential relationship between the parties, neither of which will typically exist in a case where a consumer is harmed by a drug or medical device. Most importantly, regardless of whether the claim is based on a fraudulent misrepresentation or a fraudulent concealment, claims of fraud require that the manufacturer had an intent to mislead, which is either not the case in the typical products liability suit or will be very difficult for a plaintiff to prove. Given the difficulties in pursuing a theory of negligence, breach of warranty, or fraud in a products liability suit regarding drugs or devices, plaintiffs have frequently relied on a newer theory of liability, strict products liability, as the central basis to recover damages for injuries caused by a drug or device. To establish a prima facie strict liability claim in a products liability lawsuit, like a negligence claim, the plaintiff must show that a product harmed the plaintiff and the defendant's conduct caused the plaintiff's harm. However, in contrast to a negligence claim, a plaintiff need not establish that the defendant acted unreasonably in breach of the duty of due care. Instead, strict liability focuses on the condition of the underlying product itself and on the adequacy of the warning. Specifically, in addition to proving injury and causation, the plaintiff asserting a strict liability claim must establish that a manufacturer or distributor sold a product that contained some sort of "defect" that made it "unreasonably dangerous" causing an injury. The central issue in strict products liability, therefore, is whether a given product is "defective." Generally, a "defect" is a "problem, weakness, omission, or error" that exists in a product and is generally manifested in one of three forms. The first type of defect, a manufacturing defect, arises from a mishap in the manufacturing process, such that the finished product does not conform to the manufacturer's own design specifications. The second type of defect is called a design defect and exists when an entire product line shares a common dangerous characteristic. A design defect can be demonstrated by showing that the risks posed by the product could have been reduced or avoided by a reasonable alternative design. In some cases, the social utility of a product can be so minimal that it is outweighed by the risks it poses, making proof of a reasonable alternative design unnecessary to demonstrate that the product is defective. Finally, the third type of defect, a warning defect, occurs when a manufacturer fails to provide adequate instructions or warnings. With respect to drugs and medical devices, strict products liability litigation over such products primarily focuses on warning defects. Manufacturing defects, such as when a prescription drug contains an impurity or contaminant, are "legally simple" and tend to affect a small number of people, as errors found in the manufacturing process tend to be corrected. Successful design defect claims for drugs and medical devices are also rare for two primary reasons. First, especially with respect to prescription drugs, design defect challenges are "uncommon" because it is difficult for a plaintiff to show that a drug, which often consists of a simple molecule, can be alternatively designed in a manner that removes an undesirable feature. Second, even if a plaintiff can demonstrate that a drug or device can have a reasonably alternative design, the majority of jurisdictions have adopted "comment k " to section 402A of the Second Restatement of Torts, which limits liability for so-called "unavoidably unsafe products." Comment k recognizes that some products "are quite incapable" of ever being made safe for their intended and ordinary use. However, because certain "unavoidably unsafe products," which are "especially common in the field of drugs," prevent and alleviate serious health concerns, their value outweighs any risks posed by the product. Accordingly, comment k "exempts" from typical rules of strict liability "unavoidably unsafe products," such that manufacturers are not held liable as long as the product is "properly prepared" and manufacturers properly warn of the inherent dangers associated with the product. Comment k does not explain how courts should go about determining what products are "unavoidably unsafe," and state courts are split on whether drugs and medical devices are per se "unavoidably unsafe" products or whether the determination should be made on a case-by-case basis. Regardless, a majority of courts agree that comment k applies to drugs and medical devices at least in some contexts, which functionally eliminates a design defect theory in favor of manufacturing and warning defect claims. As a result, drug and device litigation based on a strict products liability theory tends to be premised on an allegation of a defective warning. A warning defect exists when the warnings accompanying a product are insufficient to prevent reasonably foreseeable harm. While a failure-to-warn negligence claim and a strict products liability claim premised on a warning defect stem from distinct legal theories, in practice the two claims are largely assessed under the same standard. In fact, the majority of courts that have interpreted strict products liability defective warning claims have required a consideration of the user's awareness of a danger and the ability of the warning to enlighten the user, factors that underlie whether a manufacturer has a duty to warn a consumer under a traditional negligence claim. Ultimately, the question of whether a manufacturer can be held strictly liable for a warning defect "depends on the standards for determining a duty to warn under a negligence action," which includes the learned intermediary doctrine. As a consequence, regardless of the specific theory asserted, questions of liability stemming from a drug or medical device tend to center on the question of adequacy of the warning attached to the product in question. Having discussed how state tort law attempts to ensure that medical devices and prescription drugs are safe, to understand how these laws can be displaced by federal law it is essential to delve into the underlying federal laws governing the safety of devices and drugs. The FDCA contains a comprehensive statutory scheme designed to ensure that medical devices are safe and effective. As part of this scheme, medical devices must meet certain minimum requirements in order to be marketed in the United States. For example, like other medical products, a device cannot be adulterated or misbranded, and there are registration, good manufacturing practices, and labeling requirements. There are also more specific requirements that a device manufacturer must follow based on the level of risk that a device poses to patients from its use or misuse. Although the FDCA has always expressly required drugs to be reviewed by the FDA in some manner before going on the market, this was not the case with medical devices. Historically, the regulation of devices was primarily left up to the states. But concerns about the safety of these products spurred Congress to enact the Medical Device Amendments of 1976 (MDA), which amended the FDCA to create a detailed regime for the oversight of medical devices. The MDA established three classes of devices based the degree of control needed to provide assurance of the device's safety and effectiveness. Class I devices are subject to the least amount of oversight. These devices "present no unreasonable risk of illness or injury" and are subject to minimal regulation by "general controls." Class II devices pose a moderate risk to patients, and are subject to general controls as well as certain "special controls" to reduce or mitigate risk. Finally, Class III devices are generally considered the devices with the highest risk and are typically at issue in medical device preemption litigation. These devices are used to support or sustain human life, for a use which is of substantial importance in preventing impairment of human health, or which present a potential, unreasonable risk of illness or injury. Class III devices receive the greatest amount of federal oversight and are generally subject to premarket approval by the FDA. As noted above, the premarket approval process, often described as rigorous and time-consuming, is generally used for Class III devices, subject to exception. As part of this process, the FDA determines if these devices have a "reasonable assurance of ... safety and effectiveness." A premarket approval application is lengthy and must include, among other things, information regarding proposed labeling; reports of information "concerning investigations which have been made to show whether or not such device is safe and effective"; a description of the manufacturing and processing methods; samples of the device and its components; and information regarding the components, ingredients, and operating principles of the device. An application will be denied approval if "there is a lack of a showing of reasonable assurance that such device is safe [and effective] under the conditions of use" in the proposed labeling; if the methods of manufacturing, processing, packing, or installing the device do not conform to good manufacturing practices; if the proposed labeling is false or misleading; or if the device does not meet performance standards. After a device has received premarket approval, "the MDA forbids the manufacturer to make, without FDA permission, changes in design specifications, manufacturing processes, labeling, or any other attribute, that would affect safety or effectiveness." All new devices are automatically designated as Class III, and therefore must receive premarket approval unless the device meets one of the exceptions specified under federal law. One common exception to the requirement for premarket approval is for devices that the FDA has determined under the § 510(k) premarket notification process to be "substantially equivalent" to those already on the market. Class III devices generally require a premarket notification as well as premarket approval. However, some Class III devices may be marketed only with a § 510(k) submission—if the device was introduced after the passage of the MDA in 1976 and is substantially equivalent to a pre-1976 device. The majority of new Class III medical devices reach the marketplace after only a § 510(k) submission, as opposed to the receipt of a premarket approval application. Under the § 510(k) process, a new device is considered "substantially equivalent" if the FDA makes such a determination based on a comparison of the new device with a "predicate" device. A device is "substantially equivalent" if it has (1) the same intended use and the same technological characteristics as the predicate device, or (2) the same intended use, different technological characteristics, and information and data that demonstrate safety and effectiveness, and does not "raise different questions of safety and effectiveness than the predicate device." In order for a device to be cleared under the § 510(k) process, a manufacturer must submit a premarket notification submission to the FDA. Information generally required to be provided to the FDA as part of this submission includes, among other things, the name and description of the device; proposed labeling and advertisements for the device and directions for its use; and information comparing the device to predicate devices. It may be noted that medical devices cleared through the § 510(k) pathway tend to receive considerably less scrutiny from the FDA than devices receiving premarket approval. For example, unlike the §510(k) submission, the FDA generally requires clinical data for most premarket approval applications. Other characteristics of the § 510(k) process that make it less rigorous than the premarket approval process include (1) premarket inspections of how devices were manufactured are generally not required by the FDA, and (2) post-market studies are not required by the FDA as a condition of clearance. The Supreme Court has evaluated three medical device preemption cases, and these cases have arisen in both the express and implied preemption context. With respect to express preemption, the Medical Device Amendments of 1976 (MDA) added a provision to FDCA which states, ... no State or political subdivision of a State may establish or continue in effect with respect to a device intended for human use any requirement— (1) which is different from, or in addition to, any requirement applicable under this Act to the device, and (2) which relates to the safety or effectiveness of the device or to any other matter included in a requirement applicable to the device under this Act. The MDA also included an exception to this provision stating that the FDA may, upon application by a state or a political subdivision thereof, exempt state requirements that are "more stringent" than federal ones or state requirements "required by compelling local conditions" if "compliance with the requirement would not cause the device to be in violation of any applicable requirement" under the FDCA. The FDA has also issued regulations that address the scope of the preemption provision. These regulations state, among other things, that the MDA preemption provision "does not extend to "[s]tate or local requirements of general applicability [whose] purpose ... relates either to other products in addition to devices." The Supreme Court has evaluated the scope of the MDA preemption provision on two occasions in Medtronic v Lohr and Riegel v. Medtronic . The Supreme Court has generally found that under the provision, the ability of an individual to bring a state tort lawsuit alleging certain defects with a medical device can hinge on, among other things, how that device received marketing approval from the FDA. Particularly in light of the most recent case, Riegel v. Medtronic , this provision has been generally viewed as severely limiting the ability of individuals to sue after they have been injured by a defective medical device receiving premarket approval. However, as discussed below, the Supreme Court has recognized that this provision is not a complete bar to state-law tort claims. In 1996, the Supreme Court first evaluated the scope of the MDA preemption provision in Medtronic v. Lohr . Plaintiffs brought suit against a pacemaker manufacturer, alleging negligence and strict liability claims after a component of the device failed and the patient suffered a heart block that required emergency surgery. The device maker claimed that the plaintiff's suit was preempted under the express preemption provision of the MDA. The pacemaker in question was a Class III medical device that was deemed substantially similar to a predicate device under § 510(k) and, accordingly, had not gone through the premarket approval process. In a fractured opinion, the Court found that the plaintiff's state-law claims were not preempted by the MDA. While a majority of Justices agreed on the outcome of the case, there was disagreement as to the scope of the MDA preemption provision and, in particular, the extent to which the provision preempts state-law tort actions. The device manufacturer had argued that because the device was cleared under the § 510(k) process, this clearance equates to federally enforceable design requirements that should be immune from the specific state-law claim at issue in these cases. However, the majority of the Court disagreed, opining that the § 510(k) process does not impose requirements regarding the "safety" and "effectiveness" of the device; it merely establishes that the device is equivalent to a device that is already on the market. The Court explained that the FDA did not "'require' Medtronics' pacemaker to take any particular form for any particular reason; the agency simply allowed the pacemaker, as a device substantially equivalent to one that existed [before the MDA] to be marketed without running the gauntlet of the [premarket approval] process." The Court reasoned that the § 510(k) exemption to premarket approval is generally intended to maintain the status quo with respect to marketing medical devices, which included the potential for the manufacturer to be subject to state law negligent design claims. The patient had argued that even if state-law claims were "requirements" under the MDA preemption provision, the claim was not preempted unless it was "different from or in addition to" these federal requirements. The Court's majority agreed, and indicated that nothing in the MDA denies a state the ability to provide a remedy for violations of common law duties "when those duties parallel federal requirements." The Court noted that FDA regulations confirm this view, and given that Congress had authorized the FDA to exempt state law from federal preemption, the Court found this to be a "sound basis" for relying on the agency's interpretation of the statute. Despite the conclusion that the plaintiff's state-law tort claims were not preempted by federal law, the majority of Justices in Lohr , in concurring and dissenting opinions, expressly indicated that some types of these state-law claims could nevertheless be preempted by the MDA. This conclusion caused confusion in the lower courts. For example, it was uncertain whether claims brought by plaintiffs injured by devices receiving premarket approval review were preempted under the MDA. In 2008, the Supreme Court examined the scope of the MDA preemption provision for the second time in Riegel v . Medtronic , holding that state tort law claims for injuries related to a medical device that received premarket approval were preempted by federal law. The device at issue in Riegel was a catheter that had received premarket approval from the FDA to be marketed by Medtronic as a Class III device. Despite the fact that the device's label stated that the device was contraindicated for individuals like the patient, his physician nevertheless used the catheter. After the patient's doctor inflated the catheter beyond the recommended amount, the catheter ruptured and the patient was seriously injured. The patient and his wife filed suit, claiming violations of New York common law. The district court found that these common law claims were preempted by federal law, and the court of appeals affirmed the dismissals. The Supreme Court agreed, and, in an 8-1 decision, held that the MDA expressly preempted the plaintiff's state tort law claims. To reach its holding, the Court examined two questions in light of the MDA preemption provision: (1) whether the federal government established "requirements" applicable to the device; and second, if so, (2) whether the plaintiffs' common law claims are based on state requirements that are "different from, or in addition to" the federal requirements, "and that relate to safety and effectiveness." In evaluating the first question, the Court concluded that the federal government had indeed "established requirements applicable to" the catheter. The fact that the catheter had received premarket approval was central to this finding. The Court distinguished its earlier decision in Lohr , where the device at issue had received substantial equivalence review under § 510(k). Under the § 510(k) process, the Court in Lohr explained, the federal requirements at issue were general in nature, and the process is essentially an exemption from safety review. However, the Court in Riegel explained there is a notable difference: the premarket approval process is safety review, and it imposes "requirements" under the MDA that are specific to particular devices. The Court also observed that unlike the § 510(k) process, premarket approval includes formal FDA review, and devices that receive premarket approval may not deviate from the FDA-approved specifications in the approval application. Second, the Court found that "New York's tort duties constitute 'requirements' under the MDA" and that these requirements were "different from, or in addition to" federal requirements for medical devices. The Court began by noting that five Justices in Lohr concluded that state common law duties could constitute "requirements" that may be preempted by the MDA. It then elaborated on the meaning of the term "requirement" and stated that "[a]bsent other indication, reference to a State's 'requirements' includes its common-law duties." The Court further explained that state liability is "premised on the existence of a legal duty," and that "a tort judgment therefore establishes that the defendant has violated a state-law obligation." While the patient had argued that the state-law claims (e.g., negligence, strict-liability, and implied-warranty claims) are not preempted because these general common-law duties are not maintained "with respect to devices," the Court declined to accept this reasoning. It stated that nothing in the text of the MDA suggests that a preempted state requirement must apply solely to the relevant medical device or to medical devices generally. Notably, however, the Court also expressly recognized that not all state-law claims are preempted by the MDA preemption provision. The Court reaffirmed its holding in Lohr and reasoned that the MDA express preemption provision "does not prevent a State from providing a damages remedy for claims premised on a violation of FDA regulations; the state duties in such a case 'parallel,' rather than add to, federal requirements." The Court provided no further analysis as to what types of state duties it had in mind. It also declined to address whether the patient in Riegel raised parallel claims, as the patient did not make that argument in their briefs to the Second Circuit or in their petition for Supreme Court review. As noted above, the Supreme Court has concluded that implied preemption principles may still apply even in cases where a federal statute contains an express preemption provision. The concept of implied preemption has arisen in medical device preemption cases in light of the fact that the FDCA contains no explicit private right of action authorizing a person to sue based on injuries suffered because of an unlawfully defective medical product. Further, the FDCA provides that subject to an exception for certain actions that may be brought by a state, "all such proceedings for the enforcement, or to restrain violations of [the FDCA] shall be by and in the name of the United States." Thus, when an individual has brought a state tort claim premised on alleged violations of the FDCA, courts have evaluated whether such claims may go forward, or whether they are, in effect, usurping the FDA's role in enforcing federal requirements and are impliedly preempted by federal law. In 2001, the Supreme Court in Buckman v. Plaintiff's Legal Committee examined whether federal law preempted state-law tort claims that alleged fraud on the FDA. In this case, plaintiffs with injuries resulting from the use of orthopedic bone screws sued a consulting company that had assisted the manufacturer of the screws in obtaining FDA approval (under the § 510(k) process) to market the devices. The patients alleged that the manufacturer of these screws committed fraud on the FDA by giving the agency misleading information in order to obtain this approval. Plaintiffs argued that had the proper information been provided to the agency, the devices would not have been approved and the plaintiffs would not have been injured. The Court held that the plaintiffs were barred from bringing an action against the company for noncompliance with federal device requirements. Instead of relying upon the express preemption provision of the MDA to reach this conclusion, the Court found that the state law fraud-on-the-FDA claims were impliedly preempted because they conflicted with the federal scheme for enforcement of the FDCA. The Court opined that federal law authorizes the FDA to address fraud against the agency and allowing this state-law claim to proceed would interfere with federal statutory objectives. The Court observed that the FDCA contains several mechanisms for addressing fraud (e.g., seeking injunctive relief and civil penalties). The High Court further indicated state law fraud-on-the-FDA claims interfere with the FDA's role in policing fraud, and that to force compliance with the agency's regulatory scheme in light of 50 separate state tort law systems would place a burden on applicants that was not envisioned by Congress. The Court also explained that allowing such claims would lead to concern from device applicants that their disclosures to the FDA, while acceptable to the agency, would later be held to be insufficient under state law. Such a finding would incentivize applicants "to submit a deluge of information that the agency neither wants nor needs" and lead to burdens on the agency and delay in the § 510(k) process. The Court also stated that it was expressing no view as to whether the claims were subject to the MDA preemption provision, but did indicate that the existence of the express preemption provision did not interfere with a finding of implied conflict preemption. Finally, the Court distinguished the Buckman case from its decision in Lohr . The Court explained that besides the fact that Lohr did not directly address the question of implied preemption, the patient's claims in Lohr stemmed from the manufacturer's alleged failure to use reasonable care in the production of the medical device, and not solely from the violation of FDCA disclosure requirements. The Court stated that "although [ Lohr ] can be read to allow certain state-law causes of action that parallel federal safety requirements, it does not and cannot stand for the proposition that any violation of the FDCA will support a state-law claim." Following the Lohr , Buckman , and Riegel decisions, the question of whether an individual can bring a state-law tort claim after suffering an injury caused by a medical device can be a complex inquiry with varied results. While the Supreme Court has generally found that under the MDA preemption provision, the ability of an individual to bring a state-law tort suit alleging certain defects with a medical device can turn on how that device received marketing approval from the FDA, (i.e., through either the § 510(k) process or premarket approval), the inquiry is not this straightforward, and questions remain about which state-law tort claims brought against medical device manufacturers are preempted by federal law. For example, following the Riegel case, lower courts have often concluded that consumers of Class III medical devices are prevented from suing device manufacturers on most state common law claims if the device receives premarket approval. However, as recognized in both the Lohr and Riegel decisions, state-law claims that are "parallel" to federal requirements are not expressly preempted by the MDA preemption provision. As noted above, while the Court in Riegel briefly indicated that parallel claims are those that provide for a "damages remedy for claims premised on a violation of FDA regulations," it did not further address which state-law tort claims survive federal preemption. Several lower courts have grappled with this issue. Additionally, when a plaintiff brings a state-law claim that involves a violation of federal medical device requirements, which may survive under the MDA's express preemption provision, courts nevertheless have struggled with determining whether these claims are impliedly preempted under the Court's reasoning in Buckman . One case that illustrates some of these issues is Medtronic v. Stengel . This case addresses whether a person can sue a medical device manufacturer under state law for failing to report information about an adverse event to the FDA. In Stengel , a patient was rendered paraplegic by a pain pump that was a Class III device that had received premarket approval. After the FDA approved the pump, but before the plaintiff's injury, the device manufacturer purportedly learned of the issues with the device, but did not notify the FDA. The patient and his wife filed suit under state law, alleging certain negligence and strict liability claims, including a failure-to-warn claim as part of an amended complaint. The Ninth Circuit unanimously held that where, as here, violations of the MDA occur outside of the premarket approval process, the MDA preemption provision does not preempt the state-law claims, as they "parallel" federal duties. The Ninth Circuit further indicated that the patient's claim was different from the plaintiff's claim in Buckman , as the state-law claim was "independent" of the federal device requirements. Other courts of appeal have addressed this issue and reached varying conclusions. Medtronic has appealed this case to the Supreme Court, but the Court has not yet determined whether it will grant review. Finally, it should be noted that Congress has considered amending the FDCA to clarify the relationship between the federal preemption provision of the MDA and state tort claims. In response to the Supreme Court's decision in Riegel , Representative Pallone and Senator Kennedy introduced H.R. 1346 / S. 540 , the Medical Device Safety Act of 2009. The bill would have effectively overturned Riegel by amending the MDA's express preemption provision to state that "[n]othing in this section shall be construed to modify or otherwise affect any action for damages or the liability of any person under the law of any State." The addition of this clause as included in the bill would have taken effect "as if included in the enactment of the [MDA]," and would have "appl[ied] to any civil action pending or filed on or after the date of enactment of" the legislation. The language in H.R. 1346 / S. 540 was incorporated in H.R. 4816 , the Food and Drug Administration Improvement Act of 2010, in the 111 th Congress, which was referred to committee but did not see further action. It appears that similar legislation has not been introduced in the 112 th or 113 th Congress. Having discussed the various ways the FDCA has been interpreted to preempt state tort claims with respect to medical devices, the report turns to the issue of FDCA preemption and prescription drugs. Since 1938, there has been a federal system of premarket approval for drugs in the United States. The Kefauver-Harris Drug Amendments of 1962 (Drug Amendments), enacted in the wake of the thalidomide crisis of the early 1960s, revamped the preapproval process for drugs to require that a manufacturer demonstrate that a new drug be both safe and effective for its intended use before the product can be marketed. Under current law, in order to market a new drug, a manufacturer must file a New Drug Application (NDA) with the FDA, which must, among other things, include full reports of investigations into the drug's safety and effectiveness; a list of the drug's components; a full statement of the drug's composition; a description of the manufacturing methods, processing and packing; and "specimens of the labeling proposed to be used for such drug." The FDA will not approve the NDA if it finds, for example, that the reports of testing show that the drug is unsafe or ineffective or if the "proposed labeling" does not make the drug "safe for use under the conditions, prescribed, recommended, or suggested." With respect to the proposed labeling for a drug, the FDA must find that the labeling "contain a summary of the essential scientific information needed for the safe and effective use of the drug" and is neither "promotional in tone nor false or misleading ... " For all prescription drugs, the label must include, among other information, details regarding how the drug should be administered, the proper dosage of the drug, and any contraindications, warnings, or adverse reactions related to the drug. A label describing the contraindications would include descriptions of situations where the drug should not be used because the "risk clearly outweighs any possible benefit." Once the FDA has approved a NDA, the agency places the drug at issue on a public list of approved drugs. The drugs on this list are known as "listed drugs," and the list is required to be updated every 30 days. The law requires post-market surveillance of the drug by the government, necessitating the FDA to withdraw approval of a new drug if it finds that the drug is unsafe, or there is a lack of substantial evidence that the drug is effective. Likewise, a manufacturer is not absolved of all responsibility once a drug has been approved by the FDA, as a manufacturer must comply with the FDCA's Good Manufacturing Practices, report any "adverse events" to the FDA, and periodically submit any new information that may affect the FDA's previous conclusions about the safety, effectiveness, or labeling of the drug. Nonetheless, the manufacturer generally may not make changes to the drug, including "[c]hanges in labeling," without first submitting a supplemental application to the FDA and securing the agency's prior approval for the change. Importantly, however, under the FDA's so called "changes being effected" or CBE regulation, a manufacturer can add or strengthen a warning without prior approval by the FDA, a "narrow" exception to the general rule that labeling changes require the FDA's prior approval. Generally, when a drug manufacturer invents a drug, the manufacturer obtains a patent which provides the "pioneer" drug maker with a limited period of time to exclusively manufacture or use the invention. The quid pro quo for the exclusivity period created by patent law is that the manufacturer is required to disclose the invention so that others can one day make and use the underlying product. Normally, when a patent expires, anyone is free to make and use the invention. However, with respect to drugs, the FDCA requires the FDA to grant premarket approval to a particular manufacturer before a drug can be marketed. Following the passage of the Drug Amendments, the only way a drug manufacturer who wanted to market a copy of a drug approved after 1962 whose patent had expired was to submit a NDA and repeat the costly clinical trials that the inventor of the original drug had already undertaken. As a consequence, the FDCA's NDA process could functionally prohibit manufacturers from entering a market and competing with the pioneer manufacturer. To alleviate the problems created by the Drug Amendments, the Drug Price Competition and Patent Term Restoration Act of 1984, or as it is more commonly known, the Hatch-Waxman Act, created the modern generic drug infrastructure. The act created a new type of application for drug marketing approval, the abbreviated new drug application (ANDA), which allows a third party or "generic" manufacturer to show that its drug formulation is a therapeutically equivalent copy of the one being marketed by the originator. An ANDA generally must include "information to show that the new drug is bioequivalent to the listed drug," and "information to show that the labeling proposed for the new drug is the same as the labeling approved for the listed drug." The generic applicant is not required to conduct its own safety and effectiveness testing, but is permitted to rely upon the safety and effectiveness evidence presented in the NDA for the listed drug. The FDA may withdraw approval of an ANDA for a generic drug if it finds that the labeling for the generic drug "is no longer consistent with that for the listed drug." The current NDA holder of a brand-name drug may change a drug's labeling, but a generic drug manufacturer cannot and must ensure that its labeling remains the same as the labeling for the listed drug. In contrast to its provisions on medical devices, the FDCA does not contain an express preemption clause with respect to its prescription drug mandates. Nonetheless, the elaborate premarket approval scheme for drugs created by the FDCA has the potential to clash with state tort law, raising questions as to whether federal drug law preempts state tort law. On one hand, as discussed above, state tort law, depending on the specific theory pursued, could result in a manufacturer paying damages for marketing a prescription drug that has been approved by the FDA on the theory that the underlying product is unreasonably dangerous or has an insufficient warning or was fraudulently marketed. After all, common law tort doctrines typically do not treat compliance with a regulation as a bar to liability. Moreover, the Supreme Court, in both Lohr and Riegel , has acknowledged that a jury's verdict in a tort lawsuit can function just like a law passed by a state legislature or an administrative order issued by a governor in creating obligations that a manufacturer must obey. On the other hand, the FDCA with its premarket approval process generally requires the FDA to approve a drug's chemical makeup and warnings before the product can be marketed to the public, and presumably a drug that has been approved by the FDA is both safe and effective within the meaning of the FDCA and has the appropriate warnings to ensure the product is not misbranded in violation of the FDCA. Accordingly, state tort law has the potential to second guess the determinations made by the FDA, by allowing a jury to impose liability for manufacturing a drug whose composition and warnings have been approved by the federal agency. Despite the potential for conflict between the FDCA's premarket approval process for drugs and state tort law, for much of the FDA's history the issue of federal drug law's preemptive effect on state tort claims was unresolved, and more exacting state tort law standards of care were generally seen by the courts as operating concurrently with federal requirements. However, beginning in 2004, the FDA began arguing that its prescription drug labeling regulations preempted injured plaintiffs' common law tort claims. In 2006, the FDA, in a lengthy preamble to regulations on drug labeling, stated its belief that under "existing preemption principles" product liability claims challenging the safety and efficacy of a FDA-approved label "would be preempted." Specifically, the FDA argued while the FDCA "contains no express preemption provision for drugs," the act, in giving the agency "comprehensive authority over drug safety, effectiveness, and labeling," implicitly preempted tort claims that functionally regulated the field of drug labeling. Moreover, the FDA, in the 2006 preamble, argued that the state tort laws challenging the adequacy of a drug label that had been approved by the agency both stood as "an obstacle to the achievement of the full objectives and purposes" of federal law and made it impossible for manufacturers to simultaneously comply with the FDCA's rules against mislabeling and adjusting a product's label and the duty imposed by state tort law to make the label safer. With the FDA asserting the position that the agency's labeling requirements for drugs established optimal, as opposed to minimal, standards from which state law could not deviate, the position was ripe for a challenge to the Supreme Court. The Court, beginning in 2009, handed down three landmark rulings that clarified when the FDCA's drug requirements preempt state tort law. In 2009, Wyeth v. Levine became the first Supreme Court case to explore whether the FDCA's drug requirements preempted state tort law, ultimately finding the state tort claim at issue not preempted. The underlying facts of Levine were these: Diana Levine—a bass, guitar and piano player and author of children's music—visited a clinic to receive treatment for severe headache-related nausea and was given the brand name drug Phenergan. According to the federally approved label for Phenergan, the drug could be administered in one of three ways: (1) intra-muscularly; (2) through an intravenous (IV) drip, where it is mixed with saline and descends slowly through a catheter into the patient's vein; or (3) through what is called an IV push, where the drug is injected directly into the patient's vein. The latter method of administration poses significant risks in that if the drug is injected into an artery, the corrosive nature of the drug can cause severe chemical irritation and damage to the tissue, risking irreversible gangrene. The FDA was aware of the risks posed by the IV push method of administering Phenergan, but instead of prohibiting the IV push method, the FDA opted to require that the drug's label merely warn of the danger of gangrene and amputation following an inadvertent intra-arterial injection. The IV push method was used to administer Phenergan to Ms. Levine, and an error in administration resulted in the musician developing gangrene, ultimately forcing doctors to amputate her hand and forearm. Ms. Levine, after suing the clinic and the physician's assistant who administered Phenergan, received a $700,000 settlement. Ms. Levine also sued the maker of Phenergan, Wyeth Pharmaceuticals, in a Vermont state court, arguing that the warning labels on the product were insufficient under common law negligence and strict-liability theories. Wyeth defended the suit by arguing that the state tort claims were preempted by federal law. The state courts rejected Wyeth's preemption argument, and after Ms. Levine won a jury verdict of $6.7 million against Wyeth, the pharmaceutical giant appealed. The Supreme Court granted certiorari to hear the case in 2008 and issued its ruling in March 2009. In a 6-3 ruling, the Supreme Court, with Justice Stevens the author, held that none of Ms. Levine's state tort claims were preempted by federal law. At the Supreme Court, Wyeth focused on a conflict preemption argument—that is, that the state tort duty was both (1) impossible to comply with simultaneously with the federal law and (2) an obstacle to the objects and purposes of federal drug law. With respect to Wyeth's first argument, the Supreme Court found that the FDA's CBE regulation precluded any preemption based on impossibility. According to Justice Stevens's opinion, the CBE regulation allowed a brand name drug manufacturer when presented with "newly acquired information" about a drug, including "new analyses of previously submitted data," to make "changes to its label before receiving the agency's approval," including adding to or strengthening a warning. The Levine opinion noted that Wyeth had received evidence of 20 incidents resulting from IV push administration of Phenergan before Ms. Levine's injury, giving them the basis to unilaterally strengthen the warning and making it possible for the drug manufacturer to both comply with the duty imposed by state tort law to strengthen Phenergan's warning and to comply with federal drug law. The Court noted that while the FDA retains the authority to reject any labeling changes made pursuant to the CBE regulation, barring any "clear evidence that the FDA would not have approved a change to Phenergan's label," the Court could not conclude that it was impossible for Wyeth to comply with both federal and state requirements. The Court likewise rejected Wyeth's argument that requiring compliance with a state-law duty to provide a stronger warning about IV push administration would obstruct the "purposes and objectives of federal drug labeling regulation." For Wyeth, Congress's purpose in crafting the federal pre-market approval process for drugs was to "entrust an expert agency to make drug labeling decisions that strike the balance between competing objectives," making the FDCA both the floor and ceiling for drug regulation. Relying on Geier , Wyeth contended that a state tort claim based on the inadequacy of a label served as an obstacle to a federal regime trying to account for various competing interests. The Court rejected this argument, however, concluding that Congress, in crafting the FDCA, recognized that state tort law remedies "further consumer protection by motivating manufacturers to produce safe and effective drugs and to give adequate warnings." Additionally, the majority opinion reasoned that if Congress wanted to preempt state tort claims with the FDCA's drug provisions, it could have done so with an express preemption clause, as Congress had done in the medical device context. Congress's silence on the issue was "powerful evidence" to the Court that Congress did not intend FDA oversight to be "the exclusive means of ensuring drug safety and effectiveness." Moreover, the Court distinguished Geier . Unlike in Geier , where the regulation in question went through formal rulemaking and was a consistent position of the agency, in Levine the only regulatory guidance indicating that federal drug law preempted state tort claims came in the form of the 2006 preamble, a position that not only contradicted earlier statements by the FDA, but also was not subject to notice and comment rulemaking before being issued. In other words, the Court did not find that the FDA's recently adopted position deserved any deference, and the Court affirmed the decision of the lower state courts finding no preemption. Two concurring opinions were issued in Levine, both of which have largely guided the case law in this area. Justice Breyer, following the approach of his majority opinion in Geier , wrote separately to note that it was possible for state tort law to "interfere with the FDA's" objectives, and therefore be preempted. For Justice Breyer, the problem for the defendant in Levine was that the FDA had not issued "lawful specific regulations" describing why labeling requirements serve as both a floor and a ceiling creating a preemptive effect, but instead relied on the 2006 preamble. In other words, Justice Breyer, relying on an obstacle preemption theory, signaled a clear approach for future administrations to, through the issuance of formal administrative rulemaking, bar state tort claims against manufacturers of FDA approved drugs. Justice Thomas, on the other hand, took a far different approach than Justice Breyer. Thomas wrote separately, noting that while he agreed with the majority's conclusion on the issue of impossibility preemption, he did not agree with the premise that there was a constitutional basis for Wyeth's obstacle or "purposes and objectives" preemption argument. For Thomas, under the Supremacy Clause only federal laws "made in pursuance of the Constitution" preempted state laws, meaning that the law must be passed by both houses of Congress and signed by the President. For Justice Thomas, the "purposes and objectives" preemption doctrine invites the Court to broadly look at "federal policy objectives, legislative history, or generalized notions of congressional purposes that are not contained in the text of the federal law" that was passed by Congress and signed by the President. Accordingly, the Court, by trying to divine the "purposes and objectives" of certain legislation to determine the preemptive effect of a law, strayed from text of the Supremacy Clause. In short, Justice Thomas, in his concurrence in Levine , announced that he would not join an opinion that relied on obstacle preemption because of the theory's tendency to "facilitat[e] freewheeling, extratextual, and broad evaluations of the 'purposes and objectives' embodied within federal law." The Court returned to the issue of preemption and prescription drugs two years after Levine in PLIVA v. Mensing. In the wake of Levine , a majority of lower courts reasoned that Levine , which was concerned with a brand name or listed drug, was equally applicable to generic drugs and that failure-to-warn claims were not preempted absent "clear evidence" that the FDA would have rejected a stronger warning. In Mensing, the Supreme Court rejected how the lower courts had interpreted Levine with respect to generic drugs. Mensing involved the consolidation of two cases in which the plaintiffs were prescribed the brand name drug Reglan but were dispensed the generic drug metoclopramide by their pharmacists in order to treat a digestive track disorder. One of the side effects of long-term metoclopramide use is the development of tardive dyskinesia, a severe neurological disorder. In light of this side effect, over the years, the FDA approved several changes to Reglan's labeling to increase the strength of its warnings about tardive dyskinesia, culminating in 2009 with a "black box" warning that "[t]reatment with metoclopramide for longer than 12 weeks should be avoided in all but rare cases." Prior to the development of the stronger labels, the plaintiffs in Mensing were dispensed the metoclopramide and each developed tardive dyskinesia after taking the drug for several years. The plaintiffs sued the manufacturers of the generic drug, arguing that the manufacturer had breached its duty of due care by failing to change its warning label "despite mounting evidence that long term metoclopramide use carries a risk of tardive dyskinesia far greater than that indicated on the label." The manufacturers defended on preemption grounds. Justice Thomas, writing for a majority that included the three Levine dissenters and Justice Kennedy, held that the FDCA's requirements for generic drugs implicitly preempted state failure-to-warn claims for impossibility reasons. Deferring to the FDA's views, the Court held that FDA regulations prevented generic manufacturers from "independently changing" a generic drug's safety label, and accordingly, a state tort duty requiring a generic manufacturer to strengthen the drug's label was impossible to comply with while simultaneously adhering to the federal "sameness" requirement for generic drugs. In so concluding, the majority rejected the argument that the generic manufacturer had to prove that the FDA would have rejected a suggested change to make the generic label safer because imposing such a requirement could theoretically defeat any impossibility claim because Congress could always be petitioned to amend a law that conflicted with a state tort duty. Instead, Mensing concluded that "when a party cannot satisfy its state duties without the Federal Government's special permission and assistance, which is dependent on the exercise of judgment by a federal agency, that party cannot independently satisfy those state duties for pre-emption purposes." Thus, for the five-Justice majority, Mensing was distinguishable from Levine in that federal law permitted manufacturers of brand name drugs to unilaterally strengthen the warning without advance approval from the FDA. Two years after Mensing, the Supreme Court again revisited the topic of preemption and prescription drugs in Mutual Pharmaceutical v. Bartlett. The case involved Karen Bartlett, a 53-year-old New Hampshire woman, who, after taking sulindac, a generic drug non-steroidal anti-inflammatory drug (NSAID), to treat her shoulder pain, developed a hypersensitivity reaction called Stevens-Johnson Syndrome, a rare but known side-effect to taking a NSAID. At the time Ms. Bartlett was prescribed sulindac, the drug's label did not specifically warn about Stevens-Johnson syndrome. Ultimately, Ms. Bartlett suffered severe burns, resulting in permanent near-blindness and extreme damage to her lungs. As a consequence, Ms. Bartlett filed suit against the manufacturer of the generic drug in a New Hampshire court, arguing that the manufacturer failed to properly warn about the dangers of the drug and, under a strict liability theory, the drug was defectively designed. The trial judge dismissed the plaintiff's failure-to-warn claim, but the strict liability claim went to a jury, which ultimately awarded Ms. Bartlett over $21 million in damages. The pharmaceutical company argued on appeal to the Supreme Court that Ms. Bartlett's strict liability claims, just like the failure-to-warn claims in Mensing , were preempted by the federal sameness requirement for generic drugs. The Supreme Court, in another 5-4 ruling, agreed with the generic manufacturer of sulindac and held that the strict liability claim at issue in Bartlett imposed a duty that would conflict with the federal sameness requirements. In so ruling, Justice Alito, writing for the Court, rejected two central arguments made by the plaintiff. First, the Court dismissed the argument that state strict liability law did not impose a duty on the manufacturer, but instead merely reallocated the risks imposed as a result of an "unreasonably dangerous" product from the consumer to the manufacturer. The Court examined the underlying state law from New Hampshire and concluded that the state law did indeed impose a "substantive duty" on the manufacturer not to produce an "unreasonably dangerous" product. Specifically, the Court noted that New Hampshire strict liability law, at least in the context of prescription drugs, ultimately mirrors the failure-to-warn claims at issue in Mensing. The reason for the similarity is because New Hampshire, like many states, employs a "risk utility approach" to determine whether a product is defectively designed and "unreasonably dangerous," an approach that requires an evaluation of the usefulness of the product and risk of danger posed by the product. With respect to prescription drugs, and especially with respect to sulindac, a one-molecule drug, redesigning the drug is impossible. Recognizing this, New Hampshire, like the majority of other states, had adopted comment k to § 402A of the Restatement (Second) of Torts and allows prescription drug manufacturers to avoid liability when the drug was accompanied by an adequate warning. In other words, the underlying claim, despite being described as a strict liability claim, functioned just like an ordinary negligent failure-to-warn claim, making Bartlett indistinguishable from Mensing . Second, the Court rejected the argument that impossibility preemption was inapplicable because a generic drug manufacturer could either "stop selling" its product or pay monetary damages under state law, and by taking either action, comply with both the federal "sameness" requirement and the duty imposed by state tort law. For the Court, the "stop selling" rationale would make impossibility preemption "all but meaningless," because the idea of it being impossible to abide by a state and federal law simultaneously usually presupposes some sort of affirmative conduct, such as selling a product. For example, in the Florida Lime & Avocado Growers hypothetical, if the stop selling rationale governed impossibility claims, it would have been possible for an avocado grower to simultaneously comply with a state's mandate to sell high oil avocados and a federal mandate to produce only low oil avocados by simply not selling avocados in that state. The same stop selling logic would have likewise led to an opposite conclusion in Mensing. Two dissenting opinions were filed in Bartlett , one by Justice Breyer and one by Justice Sotomayor . Having issued three opinions on preemption and prescription drugs in the last five terms, the Supreme Court appears to have limited two routes for federal drug law to impliedly preempt state tort law, while dramatically expanding another avenue for implied preemption. Specifically, Levine foreclosed field preemption as a viable theory for drug manufacturers to defeat state tort claims, as a six-member majority of the Court recognized that state tort law generally serves to complement federal drug law. Moreover, Justice Breyer's concurrence in Levine and dissent in Bartlett signal that there could be a majority on the Court that would find state tort law serves as an "obstacle to the purposes and objectives" of federal drug law only if the FDA issues a regulation worthy of deference. However, in Mensing and Bartlett , the Court appears to have breathed new life into impossibility preemption, a theory previously reserved to hypothetical examples in the High Court's opinions. After Mensing , when an entity cannot independently satisfy both a state law requirement and federal law requirement without receiving "special permission" from the federal government, the state law must yield. Bartlett further expanded the impossibility defense by rejecting a long-time defense to conflict preemption that no conflict exists when a defendant can choose not to act or pay a state law fine—that is, the stop-selling theory. Collectively, after Levine, Mensing, and Bartlett , state failure-to-warn claims against a manufacturer of a brand name prescription drug are not preempted by federal drug law, but state failure-to-warn and strict liability claims premised on complying with a state law duty against a generic drug manufacturer are preempted. This result alone is significant, as generic medicines reportedly account for nearly 80% of all prescriptions dispensed in the United States and are growing at a rapid pace. Additionally, the independence principle enunciated in Mensing and reaffirmed in Bartlett lends to the conclusion that tort claims predicated on the chemical makeup of an approved drug, regardless of whether the drug is generic or brand name, would be preempted by the FDCA. After all, under current law no drug manufacturer can unilaterally change a drug, as the "altered chemical would be a new drug that would require its own NDA to be marketed." Even more broadly, the principles enunciated in Mensing and Bartlett could potentially be applied to other contexts in which the law requires approval by the government before a product can be marketed, including with respect to the § 510(k) approval of medical devices, or conceivably to any other area of federal law that similarly imposes a process where the government evaluates the safety or effectiveness of a product before it can be sold. While the broad principles of Mensing and Bartlett with respect to impossibility preemption may have immense implications to a host of different areas of law, the underlying rationale for impossibility preemption of failure-to-warn claims in the generic drug context—the federal sameness requirement—may be altered in the near future. A few weeks after Bartlett was issued, the FDA indicated that it plans to issue a "Notice of Proposed Rulemaking" with respect to the labeling of generic drugs. Specifically, the FDA states that the proposed revisions, which may be issued as soon as September 2013, will "create parity between NDA holders and ANDA holders with respect to submission of CBE labeling requirements." In other words, the FDA intends to allow generic manufacturers the ability to unilaterally update the labeling of a generic drug, which in theory would eliminate the underlying rationale for Mensing by making it possible to simultaneously comply with state tort duties and federal drug law. Nonetheless, eliminating the federal sameness requirement may be difficult to legally accomplish through a change in regulation given the statutory requirement that proposed labeling for a generic drug generally be the "same as the labeling approved for" a listed drug. That statutory basis can be eliminated by Congress, as some bills have proposed doing, but such legislation may raise policy questions as to the wisdom of requiring generic manufacturers, who by definition are relying on others' safety data in marketing their products, to make unilateral determinations that the FDA's original judgments regarding the labeling of the brand name product should be overridden. Another legislative solution to those who are disappointed with the outcomes of Mensing and Bartlett was hinted at near the end of the majority opinion in Bartlett . Specifically, Justice Alito's opinion lamented the lack of any explicit guidance from Congress with respect to the preemptive effect of the FDCA's prescription drug provisions, going so far as to say the Court "would welcome Congress' 'explicit' resolution of the difficult pre-emption questions that arise in the prescription drug context." The Court cites the explicit preemption clauses found in the FDCA with respect to vaccines and so-called "express non-preemption" clauses found in the FDCA's over-the-counter drugs provisions as examples of explicit language that Congress could add to the statute. However, the addition of language that explicitly states that state tort claims are not preempted by the FDCA may do little to alter the results of Mensing and Bartlett , as the Court has held that the existence of an express preemption clause or a savings clause does not prevent the Court from examining whether a law impliedly preempts state law. Assuming Mensing and Bartlett remain good law, several areas of legal dispute may allow the Court to revisit the issue of preemption and prescription drugs in the near future. For example, a circuit split has developed on whether federal law preempts a tort claim that a generic drug manufacturer has a duty to update a drug's label to match the brand name drug. In the context of Mensing and Bartlett, the generic sameness requirement imposed a requirement of inaction on the manufacturer without prior federal approval of a labeling change, but the same logic requires the generic label to match the pioneer's label at all times. On one hand, state-law tort law could impose an independent duty on a manufacturer to update a generic's label which, unlike in Mensing and Bartlett, would be possible to satisfy while simultaneously obeying the federal sameness requirement. On the other hand, a state duty that mirrors a federal requirement sounds very similar to the claim that was preempted in Buckman , as Congress intended the FDCA and the requirements imposed by the law to be enforced "exclusively by the Federal Government." The specific issue of whether failure to update claims can proceed may ultimately be of little consequence, as a state claim based on a failure to update would have to prove that not updating the generic label during the time the sameness requirement was violated was the proximate cause of a plaintiff's injuries, seemingly a difficult task for any plaintiff injured by a prescription drug. Nonetheless, failure to update claims raises the specter of a broader issue—much like in the medical device context—as to whether state-law claims that are parallel to the duties imposed by the FDCA's drug provisions or FDA drug regulations are implicitly preempted by federal law. Beyond the issue of whether parallel state-law claims are preempted, another issue that the Court may need to resolve is whether state law allowing for punitive damages for a failure-to-warn claim against a brand-name manufacturer are preempted. Courts have also split on whether a tort law claim alleging that a generic manufacturer has a duty to communicate with customers about dangers not on a drug label is preempted. In other words, Bartlett will likely not be the last time the Supreme Court delves into the difficult issues prompted by state tort claims, federal drug law, and constitutional preemption.

The interaction between state tort laws and the federal regulation of medical devices and drugs has been a source of constant litigation in recent years. In the last two decades, the Supreme Court has issued several decisions concerning whether the Federal Food, Drug, and Cosmetic Act (FDCA) preempts state tort law. The results have been mixed: in some cases a person injured by an allegedly defective drug or device is barred from suing a manufacturer, whereas in other cases, the Supreme Court has allowed a lawsuit to proceed. Following these decisions, ambiguities exist concerning the scope of federal preemption in these medical device and drug cases. With respect to medical devices, state-law tort claims brought against device makers are restricted by a provision of the FDCA that expressly preempts state "requirements" that are "different from, or in addition to" federal requirements applicable to a device and that "relate[] to the safety or effectiveness of the device." The Supreme Court has generally found that under this provision, the ability of an individual to bring a state-law tort suit alleging certain defects with a medical device can hinge on, among other things, how that device received marketing approval from the Food and Drug Administration (FDA). In Medtronic v. Lohr, the Court found that state-law claims involving "substantially equivalent" medical devices cleared through the § 510(k) process were not barred by the FDCA's express preemption provision. However, in Riegel v. Medtronic, the Court concluded that if the FDA grants approval to a medical device under its more rigorous premarket approval process, the device manufacturer is immune from certain suits under state tort law. The Court has also found in Buckman v. Plaintiff's Legal Committee that state-law tort claims stemming from violations of the FDCA may be impliedly preempted by federal law. Despite these three decisions, questions remain about what state-law tort claims survive federal preemption. In contrast to its provisions on medical devices, the FDCA does not contain an express preemption clause with respect to its prescription drug mandates. Nonetheless, the elaborate premarket approval scheme for drugs created by the FDCA has the potential to clash with state tort law, raising questions as to whether these laws may be preempted. The Court has recently handed down three landmark rulings that clarify when the FDCA's drug requirements preempt state tort law. In 2009, the Supreme Court, in Wyeth v. Levine, held that a person hurt by a brand name drug could sue the manufacturer under state tort law for a failure to properly warn about the dangers of the drug. However, in a second case, PLIVA v. Mensing, the Supreme Court ruled that a person hurt by a generic drug could not bring the same failure-to-warn claim because changing the labeling of a generic drug would conflict with federal law that requires a generic drug to be the "same" as its branded equivalent in all material respects, including its labeling. Finally, in Mutual Pharmaceutical v. Bartlett, the question for the Court was whether a person harmed by a generic drug could obtain relief on a theory other than a failure-to-warn claim. The Court held that such claims, much like the failure-to-warn claims in Mensing, by imposing heightened duties that would conflict with the "sameness" requirements of federal law regarding generic drugs, were preempted by the FDCA. This report provides background on the doctrine of preemption and the types of state-law tort claims that have been brought against medical device and prescription drug manufacturers. The report also addresses the federal regulation of medical devices and drugs under the FDCA. With that background in mind, the report discusses the major FDCA preemption cases that have been recently issued by the Supreme Court. Finally, the report covers possible judicial and legislative developments that may affect this dynamic area of law.

Congress has passed several laws requiring that goods purchased by federal agencies be produced in the United States. Among these are two separate but closely related laws applying to national security agencies. The Berry Amendment covers direct Department of Defense (DOD) purchases of textiles, apparel, footwear, food, and hand or measuring tools. The Kissell Amendment is more limited, applying to textiles, apparel, and footwear procured by certain Department of Homeland Security (DHS) agencies. Under these two laws, the purchased items must be 100% domestic in origin, unless exemptions laid out in the laws apply. The two laws are controversial. Proponents argue the amendments are important to the U.S. economy by helping to preserve the U.S. industrial base and creating manufacturing jobs for American workers. They also claim domestic preference laws may lessen dependence on foreign sources for certain critical U.S. military and nonmilitary needs, and that these laws encourage some foreign manufacturers to invest within the United States so that their products can be sold to the U.S. government. On the other hand, opponents believe the laws give monopolies to certain companies, raise the government's procurement costs, and fail to fully utilize the international supply chains that many U.S. manufacturers rely on to meet their production needs. The Berry Amendment (10 U.S.C. §2533a) is the popular name of a 1941 statute enacted as part of the Fifth Supplemental National Defense Appropriations Act (P.L. 77-29). It has been amended numerous times. It became a permanent part of the U.S. Code when it was codified by the FY2002 National Defense Authorization Act ( P.L. 107-107 ). Proposals to alter the Berry Amendment typically are advanced during consideration of defense appropriations acts and the National Defense Authorization Act. DOD implements the Berry Amendment through its Defense Federal Acquisition Regulation Supplement (DFARS). The Berry Amendment specifies that affected products purchased directly by DOD must be "entirely grown, reprocessed, reused, or produced in the United States." Unless DOD grants a waiver because domestic firms do not make the product or because other exceptions in the law are met, the entire production process of an affected product, from the production of raw materials to the manufacture of all components to final assembly, must be performed in the United States. As an example, when DOD purchases a military uniform, it must be sewn in the United States using fabric, thread, buttons, and zippers made in the United States from raw materials of U.S. origin. The Berry Amendment mandates a much higher level of domestic content than the Buy American Act of 1933, which generally governs the procurements of other federal agencies. Under the Buy American Act, the final product must be mined, produced, or manufactured in the United States, and if manufactured, either at least 50% of the cost of its components, by value, must be manufactured in the United States, or the end product must be a commercially available off-the-shelf item. The United States has made binding commitments related to the government procurement market under the World Trade Organization Agreement on Government Procurement (WTO GPA). Of the more than 45 countries that are parties to this arrangement, each has agreed to provide producers in other signatory countries access to its national government procurement markets. This can result in certain "foreign" products being treated as "domestic" ones in specific procurements. However, the agreement expressly does not apply to DOD procurements involving textiles, clothing, food, and hand or measuring tools. This Berry Amendment restriction also applies to most U.S. free-trade agreements, including the North American Free Trade Agreement and the Dominican Republic-Central America Free Trade Agreement, as well as to bilateral free-trade agreements with Australia, Morocco, Peru, South Korea, and Colombia. A second law, sometimes referred to as the Kissell Amendment (6 U.S.C. §453b), is modeled on, but not identical to, the Berry Amendment. The Kissell Amendment was enacted as Section 604 of the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). It applies to the Coast Guard and the Transportation Security Administration (TSA), both of which are within DHS. It is implemented through the Homeland Security Acquisition Regulation, which imposes domestic content restrictions on certain clothing, textile, and footwear products acquired by particular DHS agencies when an item is directly related to national security. In introducing the amendment, Representative Lawrence Kissell noted he was particularly interested in supporting the domestic textile industry. Thus, the narrowly defined purpose of the Kissell Amendment is to ensure that DHS purchases of textile, apparel, and footwear products are wholly produced in the United States. The law covers clothi ng (including materials and components), canvas or textile products, natural and synthetic fabrics, individual equipment items, and footwear products. If these items are related to "the national security interests of the United States," they must be "domestically grown, reprocessed, reused, or produced in the United States" to the greatest extent possible. Unlike the Berry Amendment, the Kissell Amendment does not apply to food or to hand or measuring tools. Although the Kissell Amendment as enacted applies to all agencies of DHS, in practice its restrictions apply only to the Coast Guard and TSA. The reason for this is that, prior to the Kissell Amendment's passage, the United States had entered into commitments under various trade agreements to open U.S. government procurement to imported goods. However, the WTO GPA entitles the United States to exempt agencies critical to national security from its international procurement obligations. The United States has applied this exemption to those two agencies, so the Kissell Amendment governs their procurement. Other DHS agencies, such as Customs and Border Protection, Immigration and Customs Enforcement, the Federal Emergency Management Agency, and the Secret Service are not covered by the exemption, and the Kissell Amendment therefore does not apply. Like many other agencies, these agencies' procurement is subject to the less stringent Buy American Act. However, under the Trade Agreements Act of 1979, if a procurement is covered under a trade agreement, then Buy American Act restrictions are waived. Thus, DHS can purchase textile and apparel products from more than 100 countries if certain conditions are met. The United States has also entered into commitments under various free-trade agreements to open U.S. government procurement to imported goods. As a result of these trade agreements, manufacturers in Mexico, Canada, and Chile are treated as "American" sources under the Kissell Amendment. The Berry Amendment includes several exemptions, which may apply at the discretion of DOD. For example, DOD may buy covered items from non-U.S. sources when products are unavailable from American manufacturers at satisfactory quality and in sufficient quantity at market prices; items are used in support of combat operations or contingency operations; products are purchased by vessels in foreign waters (e.g., a Navy ship is docked overseas and the crew needs to purchase textile, clothing, or footwear items); products contain noncompliant fibers, if the value of those fibers is not greater than 10% of the product's total price; items are for emergency acquisitions; products are intended for resale at retail stores such as military commissaries or post exchanges; or the purchase is part of a contract whose value is below the Simplified Acquisition Threshold, generally $150,000, beneath which certain federal procurement regulations do not apply. Kissell Amendment exemptions are often the same as those in the Berry Amendment, such as purchases beneath the Simplified Acquisition Threshold. But there are also some notable differences. For example, the Kissell Amendment has "national security" limiting language that is not included in the Berry Amendment. This restricts Kissell Amendment coverage to purchases intended for or used by DHS to protect against internal or external threats to the United States. Thus, if an item, such as curtains for a DHS office, is not related to activities to protect the United States from internal or external national security threats, its procurement most likely would not be subject to the Kissell Amendment. Appendix A shows the differences between the Berry Amendment, the Kissell Amendment, and the Buy American Act. Sales to DOD in the four Berry-applicable product categories totaled $2.4 billion in FY2016 (see Figure 1 ). DOD expenditures on Berry Amendment products accounted for roughly 1% of the department's spending on products and services in FY2016, according to figures from the Federal Procurement Data System-Next Generation (FPDS-NG). One reason for the drop in spending on Berry-related products in recent years is the decrease in Armed Forces end strength. The number of active-duty personnel fell to 1.38 million in 2016 from 1.51 million in 2010, when the U.S. military was more actively engaged in Iraq and Afghanistan. If there is a higher level of defense spending in coming years, this could result in increased DOD demand for Berry-applicable products. In FY2016, the Coast Guard and TSA combined accounted for more than $30 million in procurement obligations for Kissell items. Most of this amount involves uniforms. TSA provides 14 different uniform items to new hires. Under the Berry and Kissell Amendments, all covered textile and apparel items must be manufactured in the United States from domestic components. This has created niche markets for domestic producers. Figure 2 provides a graphic depiction of the textile and apparel production steps affected by these laws. DOD spent approximately $1.6 billion on Berry-compliant purchases of textiles and apparel in FY2016, and DHS purchases of apparel under the Kissell Amendment came to more than $30 million. Purchases subject to the Berry and Kissell Amendments represented around 2% of the $68 billion of textile and apparel shipments from U.S. factories in 2016. In FY2016, the top apparel products consumed by DOD were special-purpose clothing, personal armor, individual equipment, and footwear. Among the large private contractors benefiting from the Berry Amendment market were American Apparel, a producer of military uniforms, in Alabama; Ceradyne, a major supplier of military body armor, in California; Campbellsville Apparel, a large supplier of undergarments to the military, in Kentucky; and contractors that sell textile fabrics to DOD, such as the International Textile Group's Burlington Industries of North Carolina. Outside the mainland United States, Puerto Rico is the largest source of military apparel items. Several large private suppliers operate Berry-compliant manufacturing facilities there, including Propper International, M&M Manufacturing, and Bluewater Defense. Government supply sources, including those that operate under the AbilityOne program, such as the National Industries for the Blind, the Travis Association of the Blind, and Goodwill Industries, are also significant suppliers of apparel for the military market. Federal Prison Industries (FPI), also known as UNICOR, delivers prison-manufactured apparel compliant with the Berry Act. FPDS reports that action obligations of clothing from UNICOR to the Department of Defense totaled nearly $100 million in FY2016. As of September 30, 2016, 18 U.S. penitentiaries and federal correctional institutions produced clothes and textiles, including facilities in Atlanta, GA; Beaumont, TX; Jesup, GA; Talladega, AL; and Butner, NC. FPI/UNICOR buys raw materials and component parts from private industry. DOD's awarding of clothing contracts to this government-owned supplier has proven controversial in both Congress and the apparel industry. Critics have voiced concern that prison industrial programs hurt private industry and provide jobs for inmates rather than residents who are not incarcerated. Among other issues, critics have challenged FPI/UNICOR's mandatory source provision, which requires DOD to purchase from FPI/UNICOR factories if they can provide the desired product within the required time frame and at a competitive price. The mandatory source requirement is waived when the prison share of federal purchases of a product rises above 5% of total DOD purchases of that product. In FY2016, DOD accounted for more than 90% of FPI/UNICOR's textile and apparel sales. In that year, FPI/UNICOR also sold about $250,000 in apparel to the U.S. Coast Guard. Over the years, Congress has considered various bills to eliminate FPI's mandatory source clause and require FPI/UNICOR to compete for federal contracts. For example, in the 114 th Congress, the Federal Prison Industries Competition in Contracting Act of 2015 ( H.R. 1699 ) would have eliminated FPI's no-bid contract status. TSA's biggest supplier of apparel under the Kissell Amendment in FY2016 was VF Imagewear, a subsidiary of VF Corporation, and owner of brands such as Lee Brand and Wrangler Hero. DHS accounts for around 10% of VF's sales. The company produces clothes in a number of U.S. locations. Congress regularly considers exemptions to the Berry Amendment. For instance, over the years, lawmakers have passed legislation granting permanent waivers for flame-resistant rayon fabrics used in standard ground combat uniforms. A 1999 waiver for para-aramid fibers and yarns used as a principal fiber in antiballistic body armor, taking the form of a grant of authority to DOD to procure articles containing para-aramids from foreign sources, has since been implemented in the DFARS as a Berry Amendment exception. In the commercial market, apparel firms have been outsourcing the labor-intensive manufacturing process to low-wage countries for many years, often constructing elaborate supply chains that allow inputs from multiple countries to be combined into a single finished product. As shown in Figure 3 , direct employment in apparel manufacturing dropped 85% from 1990 to 2016, from about 900,000 jobs to roughly 130,000 jobs. In the more highly automated textile manufacturing industry, employment fell from 700,000 in 1990 to about 230,000 in 2016. Many of the remaining textile industry workers are involved in producing fabrics for industrial applications, such as conveyor belts and automotive floor coverings, rather than for apparel. The Berry and Kissell Amendments require apparel manufacturers to construct supply chains separate from those used in commercial apparel production, relying exclusively on domestic manufacturers of components such as buttons and zippers. Because these producers lack scale and face little competition in the market for 100% U.S.-made products, they may have cost structures that make it difficult to compete in the commercial apparel market. Notwithstanding the protection offered by the Berry Amendment and, more recently, the Kissell Amendment, manufacturers have found it difficult to sustain domestic production of many types of textiles and apparel. For example, six years after opening a $500 million factory, DuPont recently announced plans to shutter its South Carolina Kevlar para-aramid production plant, which manufactures a fiber used in bulletproof vests and combat helmets for the military. DuPont cited uncertainty over DOD orders for para-aramid fibers as one reason for the plant closure, along with a lack of commercial demand. The Bureau of Industry and Security at the Department of Commerce is updating its 2003 assessment of the U.S. textile, apparel, and footwear industries. The updated assessment, which the bureau expects to finish in summer 2017, is expected to address the effectiveness of the Berry and Kissell Amendments and other domestic-source laws. About 99% of all footwear sold in the United States is imported, according to the Footwear Distributors and Retailers of America, the main trade group representing solely the footwear industry. The United States maintains a small number of firms manufacturing nonorthopedic footwear, including boots and other types of footwear for the military. These firms employed about 10,800 workers in 2015. DOD's direct purchases of footwear, such as combat boots and military dress shoes, totaled about $157 million in FY2015. This is equivalent to roughly 9% of the sales of U.S. footwear manufacturers, implying that the domestic-purchase requirement protected approximately 1,000 jobs. Leading DOD footwear contractors include McRae, Rocky Brands, and Wolverine. In the 2017 National Defense Authorization Act, Congress extended the Berry Amendment to require the military services to provide recruits with 100% U.S.-made running shoes. Previously, DOD provided vouchers to recruits to purchase athletic footwear, which did not have to be domestic in origin. The new requirement is to be implemented beginning on October 1, 2018, and may create a new market for athletic shoes manufactured domestically. As with other types of footwear, assembling a running shoe may require more than a dozen parts (see Figure 4 ). New Balance, a maker of running shoes, reportedly manufactures about 25% of its domestically sold products in Massachusetts and Maine, but imports the majority of its inventory from China and Vietnam. Currently, a "Made in the USA" New Balance sneaker can include up to 30% foreign content, which would not meet the 100% U.S.-made requirement of the Berry Amendment. However, the company says it will be able to manufacture a wholly American-made athletic shoe for the military. Wolverine Worldwide, a Michigan-based footwear firm, manufactures some shoes in the United States, including combat boots and military dress shoes, and the rest in Asia. Nike, which sources virtually all of its footwear from independent manufacturers overseas, had opposed a strict American-made athletic shoe purchase policy for the military. Adidas, another major athletic shoe brand, has announced that it plans to open a factory in the United States in 2017 to produce U.S.-made running shoes. Adidas's so-called "speedfactory" would be largely operated by robots. Military food items, also known as subsistence items, are purchased, with few exceptions, through the Defense Logistics Agency (DLA) Troop Support Subsistence Directorate in Philadelphia, PA, which serves as the operational manager for all food operations. Just as with textiles, apparel, and footwear, DLA must buy food items in accordance with the provisions of the Berry Amendment, generally requiring food served to U.S.-based troops be of wholly domestic origin, with certain allowable exemptions and waivers. The Kissell Amendment contains no provisions related to food products. Food products were the second-largest share of DOD's contract obligations subject to Berry Amendment requirements, at more than $655 million in sales in FY2016. These sales represented slightly more than 1% of overall domestic food, beverage, and tobacco manufacturing shipments that year. Most packaged, nonperishable food items are purchased through DLA's subsistence prime vendor program. Current participants include about 50 commercial food distributors, ranging from large companies such as U.S. Foods, Sysco, and Labatt Food Service to much smaller companies. DLA buys U.S.-origin food products from manufacturers such as Kraft Heinz, Nestle, General Mills, Tyson Foods, ConAgra, and Campbell Soup, which then ship the purchases to a prime vendor for delivery to military dining facilities and other locations. DOD also buys some unique and perishable items directly from producers. Meals ready-to-eat (MREs) are a major share of food sourced for DOD under the Berry Amendment. AmeriQual, SoPakCo, and Wornick are the three main companies that supply MREs to the military, with DOD sales of more than $300 million in FY2016. Combined, the three companies employ more than 1,600 people. For AmeriQual, sales of MREs to the U.S. military account for approximately 85% of revenue. Under Berry Amendment requirements, DOD, with certain exceptions, must purchase food and ration kits for the military services from sources that manufacture, grow, or process food in the United States. Meeting this standard is generally easier with food than other manufactured products because there is a large domestic agricultural sector that supplies the overwhelming majority of food purchased by U.S. consumers. The food industry's output contains a larger share of domestic content than the output of any other manufacturing industry. Affecting the purchase of food under the Berry Amendment are certain distinctions between food types and considerations of where the food was grown, caught, and/or harvested. For example, DOD interprets the Berry Amendment to provide that if a food item is processed in the United States, it may contain food grown or harvested in other countries. Thus, DOD may buy corn canned in the United States even if the corn was grown abroad. The same logic applies to many other items, such as potato chips, boxed cereals, and juices; as long as these items are processed in the United States, they are deemed compliant with the Berry Amendment. The Federal Acquisition Regulations provide exemptions for a list of items that are generally not available from U.S. growers, such as bananas, capers, cashew nuts, coffee, cocoa beans, olive oil, bulk spices and herbs, raw sugar, tea in bulk, and vanilla beans. In addition, in 2008, the Under Secretary of Defense for Acquisitions, Technology, and Logistics issued a Domestic Non-Availability Determination affecting seasonal fresh fruits and vegetables, which allows DOD to purchase fruits and vegetables from foreign producers during off-season. Previous Congresses have considered amending the Berry Amendment to permit the purchase of fresh fruits and vegetables from all sources. The most restrictive food-related provisions in the Berry Amendment pertain to fish, shellfish, and seafood. These food items must be taken from the sea in U.S.-flag vessels or caught in U.S. waters, and must be processed in the United States or on a U.S.-flag ship. The rule applies to both fresh and frozen products whether sold whole, in parts, or as fillets. American Samoa's tuna fishing and processing industry, which comprises the majority of private-sector employment in this unincorporated territory of the United States, has benefited from the domestic preference provisions for food items in the Berry Amendment. In recent years, however, tuna companies, such as Chicken of the Sea, have eliminated or cut back operations in American Samoa, reportedly due to an increase in the minimum wage there. Food procurement for places such as Iraq and Afghanistan has been excluded from the Berry Amendment due to operational considerations, but most nonperishable food is still acquired from U.S. manufacturers. Food sold in military commissaries and post exchanges is explicitly excluded from the Berry Amendment requirements by law. Hand or measuring tools such as chisels, files, hammers, pliers, screwdrivers, calipers, and micrometers are specifically indicated as products covered by the Berry Amendment. The amendment requires each individual tool or all the tools within tool sets or kits purchased by DOD be wholly produced in the United States, unless exemptions laid out in the law apply. A hand or measuring tool is defined as wholly U.S.-made if it is assembled in the United States out of components, or otherwise made from raw materials into the finished product. For example, DOD is generally prohibited from buying a wrench not forged in the United States. The Kissell Amendment contains no provision related to hand or measuring tools. Assuring compliance with the Berry mandate may be complicated, as some sets or kits may consist of thousands of tools. Domestic supply of certain hand or measuring tools may be very limited; according to one estimate, in 2016, imports of hand tools accounted for more than 40% of domestic demand. Suppliers to DOD must provide assurance that all items in a tool or measuring set or kit are compliant with the Berry Amendment. Hand or measuring tools account for a relatively small share of DOD's total Berry-applicable contract procurement obligations, worth about $100 million in FY2016. Leading distributors and manufacturers of hand or measuring tools and equipment to DOD are Federal Resources Supply, Snap-On, and Kipper Tool. Because commercial demand for hand or measuring tools far outweighs sales to DOD, the law seemingly does little to encourage manufacturers to produce or assemble tools in the United States, or to move the manufacture of tools produced in a foreign country to the United States. According to the federal government, cutlery and hand tool shipments totaled $10.3 billion in 2015, implying that sales to DOD under the Berry Amendment accounted for about 1% of shipments. Thus Berry Amendment purchases may be responsible for roughly 380 of the 38,000 jobs in cutlery and hand tool manufacturing. Allowable exceptions to the Berry Amendment include a nonavailability waiver if hand or measuring tools are not available domestically. This waiver became a requirement as part of the FY2011 Defense Authorization Act ( P.L. 111-383 ). Proponents of the Berry and Kissell Amendments assert that the laws serve to keep certain U.S. production lines operating. They argue that the U.S. military should not be dependent on foreign sources for critical items, including those covered by the Berry and Kissell Amendments, and that dependence on foreign sources for military and national security items could lead to supply problems during times of war or military mobilization. Critics of the amendments point out that the laws may raise procurement costs and lengthen delivery times by requiring the purchase of domestic products when less expensive imports are available. They claim that the amendments are inconsistent with modern practices in manufacturing, which often involve supply chains that source components and raw materials from multiple countries, and that domestic purchase requirements may alienate foreign trading partners, thereby potentially provoking retaliation and harming foreign sales. This controversy notwithstanding, Congress has not considered repeal of the Berry or Kissell Amendments. Legislative action has centered on the scope of the amendments, the requirements for obtaining waivers, and the use of audits to determine the laws' effectiveness. There have been attempts over the years to reduce the scope of the Berry Amendment. For example, lawmakers have offered bills that would have eliminated FPI/UNICOR's federal contract mandate and made changes to the Simplified Acquisition Threshold, such as raising the Berry and Kissell thresholds to $500,000. The higher limit would reduce the number of purchases covered by the Berry and Kissell Amendments, making foreign suppliers eligible to bid on more DOD and DHS procurement contracts. None of these proposals has passed. In recent Congresses, lawmakers have introduced bills that would have widened the scope of these domestic preference laws. For instance, in the 115 th Congress, the Homeland Production Security Act, H.R. 1811 , would amend the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) to prohibit the use of funds appropriated to DHS for the procurement of uniforms not manufactured in the United States. Such a change would expand the Kissell Amendment to the Customs and Border Patrol, the Secret Service, and Federal Emergency Management Agency (FEMA) of DHS. According to DLA Troop Support, more than a dozen domestic nonavailability determinations were approved between 2005 and 2015 (see Appendix B for more information about selected determinations). These waivers of Berry Act requirements generally apply only for a specific time period. In some cases, waivers remain in force until a domestic source or a substitute material can be found. On April 18, 2017, President Donald Trump issued an executive order directing executive branch agencies "to maximize, consistent with law ... the use of goods, products, and materials produced in the United States" and directing them to "minimize the use of waivers, consistent with applicable law." An explicit reference to the Berry Amendment was mentioned in a White House background briefing on the executive order. It is unclear how the executive order will affect DOD and DHS interpretations of waiver requirements under the Berry and Kissell Amendments, respectively. Pursuant to the FY2014 National Defense Authorization Act ( P.L. 113-66 ), Congress directed DOD's Office of Inspector General to conduct periodic audits to ensure compliance by the military services with the Berry Amendment and the Buy American Act. Three recent audits found the Navy fully complied with the Berry law in 12 of 23 contracts, the Air Force in 15 of 21 contracts, and the Army in 29 of 33 contracts. In addition, Senator Christopher Murphy has requested the Government Accountability Office (GAO) to investigate U.S. government compliance with the Berry Amendment and the Buy American Act. The committee report on the Senate-reported 2016 DHS appropriations bill ( S. 1619 ) requested that GAO audit DHS's compliance with the Kissell Amendment. This legislation was incorporated in the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ). GAO expects to complete its study in 2017. Appendix A. Comparison of Berry Amendment, Kissell Amendment, and Buy American Act Appendix B. Selected Berry Amendment Domestic Nonavailability Waivers (DNAD) Since 2005

The Berry and Kissell Amendments are two separate but closely related laws requiring that certain goods purchased by national security agencies be produced in the United States. The Berry Amendment (10 U.S.C. §2533a) is the popular name for a law requiring textiles, clothing, food, and hand or measuring tools purchased by the Department of Defense (DOD) to be grown, reprocessed, reused, or produced wholly in the United States. Congress over the decades has varied the list of products covered by the law. Under the Kissell Amendment (6 U.S.C. §453b), textile, apparel, and footwear products purchased by certain Department of Homeland Security (DHS) agencies—namely, the Transportation Security Administration (TSA) and the U.S. Coast Guard—must be manufactured in the United States with 100% U.S. inputs. The Berry and Kissell Amendments have created niche markets for domestic producers. DOD's Defense Logistics Agency purchased about $2.4 billion of Berry-applicable products in FY2016. DOD's annual Berry Act purchases equal approximately 2% of domestic textile and apparel shipments and around 1% of domestic production of footwear, food, and hand or measuring tools. Annual purchases of textiles, clothing, and shoes by the TSA and the Coast Guard pursuant to the Kissell Amendment are approximately $30 million. Proponents of the Berry and Kissell Amendments assert the laws serve to keep certain U.S. production lines operating, provide jobs to American factory workers, and shield the U.S. military from dependence on foreign sources for critical items that could lead to supply problems during times of war or military mobilization. Critics of the amendments point out the laws may undercut free-market competition and can result in higher costs to DOD and DHS because they must pay more for protected products than the free market requires. They also argue the laws are inconsistent with modern practices in manufacturing, which often rely on supply chains that source components and raw materials from multiple countries. Another concern is that these requirements can potentially provoke retaliation and harm foreign sales. In recent Congresses, legislative action has centered on the scope of the Berry and Kissell Amendments. For example, in the 2017 National Defense Authorization Act (NDAA), Congress extended the Berry Amendment to athletic footwear, ending a voucher program that had allowed new recruits to purchase foreign-made running shoes. Beginning on October 1, 2018, DOD is scheduled to provide 100% U.S.-made running shoes to recruits. In the 115th Congress, H.R. 1811 has been introduced to widen the scope of the Kissell Amendment to all DHS agencies. A related issue for Congress is the use of prison labor to manufacture Berry-compliant apparel by DOD. A mandatory source provision in law gives an advantage to prison factories if they can provide the desired product within the required time frame at a competitive price. In the 114th Congress, the Federal Prison Industries Competition in Contracting Act of 2015 (H.R. 1699) would have eliminated Federal Prison Industries' no-bid contract status. Requirements for obtaining waivers are another congressional concern. The Government Accountability Office (GAO) is currently auditing DHS's compliance with the Kissell Amendment. The audit is expected to be finished in summer 2017. Congress is also considering the effectiveness of the laws. To address this issue, the Bureau of Industry and Security (BIS) at the U.S. Department of Commerce (DOC) is conducting an assessment of the defense industrial base for textiles, apparel, and footwear, which will include a review of the usefulness of the Berry and Kissell Amendments. That review is scheduled to be released in 2017.

Since the 1960s, emission standards for motor vehicles, coupled with standards for the fuels they burn, have reduced emissions from new cars and trucks by at least 95%. Nevertheless, because there are more vehicles on the road, because they are being driven more miles, and because the average useful life of a car exceeds the statutorily defined "useful life" over which emission standards must be met, emissions from motor vehicles continue to be a major component of the nation's air pollution problems. For these reasons, Congress, through the Clean Air Act (CAA) has required emission standards for new automobiles since 1965, and has amended these requirements on several occasions. Further, over the last five decades, the scientific understanding of the effects of air pollutants has led to a tightening of air quality standards. The CAA, as amended, requires the U.S. Environmental Protection Agency (EPA) to set National Ambient Air Quality Standards (NAAQS) for common pollutants from numerous and diverse sources, which may reasonably be anticipated to endanger public health and welfare. EPA has set standards for six principal pollutants: ozone, particulate matter, nitrogen oxides, sulfur dioxide, carbon monoxide, and lead. The agency reports that in 2013 on-road vehicles accounted for about 34% of carbon monoxide emissions in the United States, 38% of nitrogen oxides, 12% of volatile organic compounds, and 3% of particulate matter. Despite nationwide reductions in each of these major air pollutants by over 50% since 1970, air quality still fails to meet ambient standards in areas where about one-third of the nation's population lives. Emission requirements for new motor vehicles have been strengthened numerous times since the first federal rulemaking took effect in 1968. The most recent revision, referred to as the "Tier 2" standards, was promulgated in February 2000. Tier 2 required vehicle manufacturers to reduce tailpipe emissions of several common pollutants, including carbon monoxide (CO), formaldehyde (HCHO), nitrogen oxides (NO x ), non-methane organic gases (NMOG, a class of volatile organic compounds (VOCs)), and particulate matter (PM). The standards significantly targeted emissions of NMOG and NO x to help control the formation of ground-level ozone pollution. Relative to the prior Tier 1 standards, the fleet-average standard for NO x required vehicle manufacturers to reduce overall tailpipe emissions by 88% to 95% (based upon the vehicle type). However, manufacturers had the flexibility to average the NO x emissions of their vehicle fleets to demonstrate compliance with the standards instead of certifying each vehicle according to the same stringency. The Tier 2 standards also required at least an 80% reduction in PM emissions and a less stringent reduction in CO emissions. Tier 2 was phased in beginning in model year (MY) 2004 and required all new passenger cars and light trucks up to 8,500 pounds, and all new heavier passenger vehicles up to 10,000 pounds (including large sport-utility vehicles), to demonstrate full compliance by MY2009. To further the vehicle emissions requirements, standards were also set on the level of pollutants (or compounds that may lead to pollution) in the vehicles' fuels. Most prominently, oil refiners were required to limit sulfur levels in gasoline to an average of 30 parts per million (ppm) nationwide beginning in 2005, roughly 90% less than the previous national average of 340 ppm. Reducing sulfur in gasoline prevents the fouling of catalytic converters, restoring or preserving their effectiveness in reducing NMOG, NO x , and CO emissions. Vehicle fuel economy has been regulated by the National Highway Traffic Safety Administration (NHTSA) since 1975. Under the Obama Administration, EPA has begun regulating emissions of greenhouse gases (GHGs) from motor vehicles. Because fuel consumption and GHG emissions are closely linked, EPA has coordinated with NHTSA since 2010 to issue a series of joint rulemakings. Most recently, on August 28, 2012, NHTSA and EPA issued final rules to tighten passenger corporate average fuel economy (CAFE) and GHG standards for MY2017-2025. The agencies expect that combined new passenger car and light truck fuel economy standards will be nearly 41.0 miles per gallon (mpg) in MY2021 and 49.7 mpg in MY2025, up from 34.1 mpg in MY2016. GHG emissions from new vehicles will decline by about 50% as a result of the standards. While the joint CAFE/GHG standards are not directly associated with the Tier 2/Tier 3 standards, requirements in the latter would assist vehicle manufacturers in advancing technology that would help meet the requirements of the former. This relationship is discussed further in the next sections. In February 2011, EPA began scoping new emissions standards for conventional pollutants from cars and light trucks as mandated by a May 2010 memorandum from the White House. The memorandum directed EPA to "review for adequacy the current non-greenhouse gas emissions regulations for new motor vehicles, new motor vehicle engines, and motor vehicle fuels, including tailpipe emissions standards for nitrogen oxides and air toxics, and sulfur standards for gasoline," and to promulgate regulations as required. Through its investigation, EPA found that Over 149 million Americans are currently experiencing unhealthy levels of air pollution, which are linked with respiratory and cardiovascular problems and other adverse health impacts that lead to increased medication use, hospital admissions, emergency department visits, and premature mortality. Motor vehicles are a particularly important source of exposure to air pollution, especially in urban areas. By 2018, we project that in many areas that are not attaining health-based ambient air quality standards (i.e., "nonattainment areas"), passenger cars and light trucks will contribute 10-25 percent of total nitrogen oxides (NO x ) emissions, 15-30 percent of total volatile organic compound (VOC) emissions, and 5-10 percent of total direct particulate matter (PM 2.5 ) emissions. As a result of these findings, EPA proposed Tier 3 standards on May 21, 2013, released the final version on March 3, 2014, and published it in the Federal Register on April 28, 2014. The final rule is effective on June 27, 2014. As with Tier 2, the Tier 3 standards consider the vehicle and its fuel as an integrated system and include changes to both vehicle emission limits and fuel formulation rules, lowering the allowable sulfur content of gasoline. The Tier 3 standards have been controversial since at least a year prior to their proposal, with dueling studies from auto manufacturers, EPA, and the petroleum refining industry having been prepared in advance of their release. The proposed standards were reported to be nearly ready in the spring of 2012, but the controversy over their presumed content delayed the proposal for a year. Numerous Members of Congress weighed in on the standards during their development, with many expressing their concern over the potential cost, and urging delay to permit further study. As finalized, the Tier 3 standards set requirements on tailpipe emissions for the sum of non-methane organic gases (NMOG) and nitrogen oxides (NO x ), presented as NMOG+NO x , and for particulate matter (PM). They apply to all light-duty passenger cars and trucks as well as some medium and heavy-duty vehicles. Compared to current standards, the NMOG and NO x tailpipe standards for light-duty vehicles represent approximately an 80% reduction from Tier 2's fleet average and a 70% reduction in per-vehicle PM standards. Heavy-duty vehicle tailpipe standards represent about a 60% reduction in both fleet-average NMOG+NO x and per-vehicle PM standards. Consistent with the Tier 2 principle of vehicle and fuel neutrality, the Tier 3 standards apply to all light-duty vehicles and trucks, regardless of the fuel they use. That is, vehicles certified to operate on any fuel (e.g., gasoline, diesel fuel, ethanol blends, compressed natural gas, liquefied natural gas, hydrogen, and methanol) are all subject to the same standards. EPA is also extending the regulatory useful life period during which the standards apply from 120,000 miles to 150,000 miles. The tailpipe standards include different phase-in schedules that vary by vehicle class, but generally become effective between MY2017 and MY2025. In addition to the gradual phase-in schedules, several other provisions are designed to further ease manufacturers' paths to compliance. These flexibilities include credits for early compliance and the ability to offset some higher-emitting vehicles with extra-clean models. EPA is also finalizing more lead time for small businesses and small volume manufacturers as well as a hardship provision that allows for additional time to comply if a manufacturer cannot meet requirements after a good faith effort. The standards for NMOG+NO x are fleet-average standards, meaning that a manufacturer calculates the weighted average emissions of the vehicles it produces in each model year and compares that average to the applicable standard for that model year. The standards differ by vehicle class and test procedures (see Table A-1 for more detail). The PM standards are expressed on a per-vehicle basis, meaning the standards apply to each vehicle separately (i.e., not as a fleet average). PM standards also differ by vehicle class and test cycle (see Table A-2 for more detail). Tier 3 also sets standards designed to eliminate fuel vapor-related evaporative emissions from the vehicle's fuel system. The evaporative emissions program represents about a 50% reduction from current standards and applies to all light-duty and on-road gasoline-powered heavy-duty vehicles. As with the tailpipe standards, the evaporative emissions standards include phase-in flexibilities, credit and allowance programs, and more lead time and a hardship provision for small businesses and small volume manufacturers. EPA is also extending the regulatory useful life period during which the standards apply from 120,000 miles to 150,000 miles. See Table A-3 for more detail. As with Tier 2, the Tier 3 standards treat vehicles and fuels as a system to reduce both vehicle emissions and fuel pollutants. Under the Tier 3 fuel program, gasoline is required to contain no more than 10 parts per million (ppm) sulfur on an annual average basis beginning January 1, 2017, down from 30 ppm under the Tier 2 program (similar reductions have already been phased in for highway diesel fuels beginning in 2006). The new gasoline sulfur standards aim to make emission control systems more effective for both existing and new vehicles, and thus enable more stringent vehicle emissions and fuel economy standards (i.e., since removing sulfur allows the vehicle's catalytic converter to work more efficiently and facilitates the development of lower cost technologies to improve fuel economy and reduce GHG emissions). There is an averaging, banking, and trading (ABT) program that allows refiners and importers to spread out their investments through an early credit program and rely on ongoing nationwide averaging to meet the standard. Further, there is a three-year delay for small refiners and "small volume refineries" (refiners processing less than or equal to 75,000 barrels per calendar day). Tier 3 also updates the federal emissions test fuel specifications to better match current in-use gasoline and look forward to future ethanol and sulfur content. The new fuel specifications apply to new vehicle certification, assembly line, and in-use testing. Key changes include moving to a test fuel containing 10% ethanol by volume, lowering octane, and lowering the existing sulfur specification to be consistent with Tier 3 requirements. EPA anticipates that the implementation of the Tier 3 vehicle and fuel standards will reduce emissions of NO x , VOC, PM 2.5 , and air toxics. The fuel standards alone, which would take effect in 2017, are projected to provide an immediate 56% reduction in sulfur dioxide (SO 2 ) emissions as the ultra-low sulfur gasoline is deployed in existing vehicles and engines. Further, EPA projects that NO x emissions will be reduced by about 260,000 tons by 2018 (about 10% of the current emissions from on-highway vehicles), and by about 330,000 tons by 2030 (about 25% of the current emissions from on-highway vehicles) as covered vehicles become a larger percentage of the fleet. VOC and CO emissions are projected to be reduced by about 170,000 tons and 3.5 million tons respectively by 2030 (16% and 24% of the current emissions from on-highway vehicles). Emissions of many air toxics, including benzene, 1,3-butadiene, acetaldehyde, formaldehyde, acrolein, and ethanol, are projected to be reduced in the range of 10% to 30%. These projected reductions would immediately reduce ozone levels in 2017 when the sulfur controls take effect, and would lead to significant decreases in ambient concentrations of ozone, PM 2.5 and air toxics by 2030 as the vehicle fleets become updated. EPA has reported that exposure to ambient concentrations of ozone, PM 2.5 , and air toxics is linked to adverse human health impacts such as premature deaths and other public health and environmental effects. EPA expects the final Tier 3 standards to reduce these adverse impacts and yield significant benefits, including the annual prevention of between 660 and 1,500 PM-related premature deaths, between 110 and 500 ozone-related premature deaths, about 2,200 asthma-related hospital admissions, 81,000 work days lost, 210,000 school absence days, and approximately 1.1 million minor restricted-activity days. The agency estimates that the annual monetized health benefits of the Tier 3 standards in 2030 (2011$) would be between $7.4 billion and $19 billion, assuming a 3% discount rate (or between $6.7 billion and $18 billion assuming a 7% discount rate). Further, EPA anticipates the Tier 3 tailpipe emission and gasoline sulfur standards would improve the performance of existing emission controls and facilitate the use of new technology. Auto manufacturers have been generally supportive of the standards, which they view as allowing the adoption of new technology necessary to meet the separate GHG standards already promulgated, and which would harmonize the U.S. fuel requirements with those of foreign fuels. The Tier 3 gasoline sulfur standards are similar to levels already achieved in Europe, Japan, and South Korea, as well as those proposed in China and some other countries. For companies that operate in world markets—as the major auto manufacturers do—harmonizing fuel and emission standards is a major concern. In the U.S. context, auto manufacturers already face more stringent requirements for both tailpipe emissions and fuel requirements in California and the Section 177 states, and many individual vehicle manufacturers and their trade organizations have emphasized the importance of a nationwide program to enable streamlined production and decreased compliance costs. For these reasons, the EPA proposal has been supported by various Members of Congress, many industry, environmental and public health groups, and by a number of governors and other state and local officials. Many state and local stakeholders have also noted that without the tighter standards set on vehicles and gasoline, nonattainment areas in about half the states would need to impose more controls on stationary sources of ozone precursors and particulates (e.g., power plants and factories). Some trade organizations, however, contend that the Tier 3 standards would have negligible effects on air quality in comparison to reductions that have been realized by previous rulemaking. Two separate studies prepared by the Environ International Corporation for the American Petroleum Institute (API) present findings which show significant improvements in both summertime ambient ground-level ozone and ground-level PM 2.5 concentrations as a result of the switch from Tier 1 to Tier 2 standards. However, the studies project relatively small additional reductions in 2022 levels of these pollutants as a result of the proposed Tier 3, even when considering emissions reductions due to a lower gasoline sulfur content. As a result, API has argued that the Tier 3 proposal ignores the results of earlier sulfur standards that had led to "significant reduction in ambient ozone levels and will lead to further ozone reductions for the next decade," adding that Tier 3 rules would add no substantial benefit while imposing "significant costs on making gasoline." Further, API notes that any benefit-cost analysis of the rule would need to be considered along with EPA's other mandates for the refinery sector, including the prospects for strengthening fuel volatility requirements for gasoline, greenhouse gas rules for the sector, and forthcoming stricter ozone ambient air standards. As a point of comparison, EPA's Final Regulatory Impact Analysis for the Tier 3 standards returns estimates similar to the Environ studies for reductions in ozone and fine particulate levels in the near term (2018). Further, EPA estimates that by 2030—when it is projected that many of the vehicles on the road would be covered under the Tier 3 standards—ozone and fine particulate levels would decrease an additional 50% on average. EPA bases its health impact estimates on the 2030 modeling. The economic cost imposed by the Tier 3 standards will affect two sectors directly: vehicle manufacturing and petroleum refining. For the former, changes in vehicle design are expected to increase manufacturers' costs of production. EPA estimates that these costs differ across years and range from $46 to $65 for cars, $73 to $88 for trucks, and $33 to $75 for medium- and heavy-duty vehicles covered by the rule. This increase in price is expected to lower the quantity of vehicles sold, although given that vehicle prices likely would not change by more than the cost increase, the decrease in vehicle sales is projected to be negligible. More controversial has been the potential impact on the cost of gasoline. In letters to the President before the standards' proposal, several Senators of both parties asked that the Administration delay the EPA rulemaking over concerns that the new fuel standards would raise the price of gasoline; similar concerns have been expressed in the wake of the final rule. Refiners argue that it will be difficult and costly overall to meet the standards and that some independent and/or smaller refineries will find it more difficult than others to comply. The American Petroleum Institute contends that the tighter sulfur controls would impose almost $10 billion in refinery capital expenditures, create an annual compliance cost of $2.4 billion, increase gasoline manufacturing costs from 6 to 9 cents per gallon, and increase refinery GHG emissions by 1%. EPA has asserted that the rule as proposed would add less than a penny to the price of a gallon of gasoline (0.65 cents according to the final rule's Regulatory Impact Analysis). EPA contends that many variables determine the retail price of gasoline, including the price of crude oil on the global market, taxes, transportation costs, and distribution and marketing costs, as well as refinery costs. According to analysis by the U.S. Energy Information Administration, refinery costs averaged 10.6% of the retail cost of gasoline in 2013; and thus, the gasoline sulfur control for Tier 3 would add just 0.2 percentage points to this refining component. EPA's evaluation of gasoline sulfur control costs is corroborated by several studies, including one prepared for the International Council for Clean Transportation and another for the Emissions Control Technology Association. (See text box for further discussion of the cost estimates). In sum, EPA estimates the annual compliance cost of the overall program in 2030 would be approximately $1.5 billion ($760 million for the vehicle program and $700 million for the fuel program), and the 2030 benefits would be between $6.7 billion and $19 billion, or 4.5 to 13 times greater than the costs of the program. To address industry concerns, the final rule would allow a three-year delay in compliance for small refiners. It also includes averaging, banking, and trading programs that would give the refining industry flexibility in meeting the standards.

On March 3, 2014, the Environmental Protection Agency finalized new ("Tier 3") emission standards for light duty (and some larger) motor vehicles. Light duty vehicles include cars, SUVs, vans, and most pickup trucks. Phase-in of the standards will begin with Model Year 2017. By the time Tier 3 is fully implemented in Model Year 2025, the standards for light duty vehicles will require reductions of about 80% in tailpipe emissions of non-methane organic gases and nitrogen oxides (both of which contribute to the formation of ground-level ozone) and of about 70% in tailpipe emissions of particulates. Ozone and particulates are the most widespread air pollutants in the United States. Both contribute to respiratory illness and premature mortality. EPA estimates that implementation of the standards will reduce premature mortality by 770 to 2,000 persons annually, as well as providing reductions in hospital admissions, lost work days, school absences, and restricted activity days for persons with respiratory illness. Assigning monetary values to these benefits, EPA estimates the annual benefits at between $6.7 billion and $19 billion in 2030. Like the current "Tier 2" standards, which were promulgated in 2000 and phased in between Model Years 2004 and 2009, the Tier 3 standards treat vehicles and fuels as a system: reductions in vehicle emissions are easier to achieve if the fuel used contains less sulfur. The Tier 3 standards will require that gasoline contain no more than 10 parts per million (ppm) sulfur on an annual average basis beginning January 1, 2017, down from 30 ppm under the Tier 2 program. The fuel standards will match limits already attained in California and in much of the world, including the European Union, Japan, and Korea, and proposed for adoption in China. Further, the rule extends the required useful life of emission control equipment from 120,000 miles to 150,000 miles, and sets standards for heavier duty gasoline-powered vehicles. The standards will also require about a 50% reduction in evaporative emissions (some of which also contribute to ozone formation and/or cause health problems directly). EPA estimates the cost of the rules at $1.1 billion annually in 2017 to $1.5 billion annually in 2030. The agency estimates that the rule will add $33 to $88 to the cost of a new vehicle, and less than one cent to the price of a gallon of gasoline. The effect on gasoline prices has been the most controversial issue: the American Petroleum Institute contends that the tighter sulfur controls will impose almost $10 billion in refinery capital expenditures and increase gasoline manufacturing costs by 6 to 9 cents per gallon. But, in addition to EPA, at least two studies by third-party consultants conclude that the costs will be far less than API's estimate. To address refining industry concerns, the final rule will allow a three-year delay in compliance for small refiners. It also includes averaging, banking, and trading programs that will give the refining industry some flexibility in meeting the standards. The auto industry is generally supportive of the rule—five auto companies, five trade groups, and the United Auto Workers union have issued statements of support, and a GM executive joined the EPA Administrator as she announced the standards. The standards facilitate the adoption of new technologies necessary to meet greenhouse gas standards already promulgated by EPA. In addition, California and 12 other states have already adopted tailpipe standards similar to Tier 3. Proponents contend that the harmonization of national standards eliminates the threat of a patchwork of state requirements and decreases compliance costs by preserving a unified national market. Many in Congress have expressed concern about the potential impacts of the rule. As a result, Congress can be expected to continue oversight as the rule is implemented.

Reports by congressional commissions, the mention of bioterrorism in President Obama's 2010 State of the Union address, and the issuance of executive orders have increased congressional attention to the threat of bioterrorism. Federal efforts to combat the threat of bioterrorism predate the anthrax attacks of 2001 but have significantly increased since then. The U.S. government has developed these efforts as part of and in parallel with other defenses against conventional terrorism. Continued attempts by terrorist groups to launch attacks targeted at U.S. citizens, including those in transit to U.S. soil, have increased concerns that federal counterterrorism activities, and the investments that underlie them, insufficiently address the threat. Experts differ in their assessments of the threat posed by bioterrorism. Some claim the threat is dire and imminent. The congressionally mandated Commission on the Prevention of WMD Proliferation and Terrorism concluded that unless the world community acts decisively and with great urgency, it is more likely than not that a weapon of mass destruction will be used in a terrorist attack somewhere in the world by the end of 2013. The Commission further believes that terrorists are more likely to be able to obtain and use a biological weapon than a nuclear weapon. In contrast, other experts assert that the bioterrorism threat is less severe or pressing than that posed by more conventional terrorism or other issues facing the United States. The Scientists Working Group on Biological and Chemical Weapons concluded that public health in the United States faces many challenges; bioterrorism is just one. Policies need to be crafted to respond to the full range of infectious disease threats and critical public health challenges rather than be disproportionately weighted in favor of defense against an exaggerated threat of bioterrorism. Stakeholders often measure federal efforts against the perceived magnitude of the threat. Thus, those who believe that bioterrorism poses a relatively low threat tend to conclude that the government has done too much. In contrast, those who perceive a greater threat conclude that the federal government needs to do more, whether under existing programs or new ones. Many experts come to mixed conclusions: they regard some programs as effective but identify others as insufficient. The federal government's biodefense efforts span many agencies and vary widely in their resources, scope, and approach. For example, the Departments of State and Defense have cooperated with foreign governments and nongovernmental organizations to engage in nonproliferation, counterproliferation, and foreign disease outbreak detection efforts. The Departments of State and Commerce have strengthened export controls of materials that could be used for bioterrorism. The Department of Health and Human Services (HHS) has made investments in public health preparedness; response planning; foreign disease outbreak detection; and research, development, and procurement of medical countermeasures against biological terrorism agents (see " Medical Countermeasures " below). The intelligence community has engaged in intelligence gathering and sharing regarding bioterrorism. The Department of Justice performs background checks on people who want to possess certain dangerous pathogens. The Department of Homeland Security (DHS) has engaged in preparedness, response, and recovery-related activities, developed increased capabilities in environmental biosurveillance (see " Biosurveillance " below), and invested in expanding domestic bioforensics capabilities. The Environmental Protection Agency (EPA) has explored post-event infrastructure decontamination. Many agencies, jointly or separately, have invested in expanded biodefense infrastructure, including public and private high-containment laboratories for research, diagnostic, and forensics purposes. Lastly, the Executive Office of the President and other executive branch coordinating groups have engaged in risk assessment and strategic planning exercises to coordinate and optimize federal investment against bioterrorism and response capabilities. Conflicting views of the bioterrorism threat and the breadth of the federal biodefense effort, which crosses congressional committee jurisdictions, complicate congressional oversight of the overall biodefense enterprise. Providing oversight and direction for individual biodefense agencies or programs is easier than addressing the entirety of the biodefense enterprise at once, but such an approach may focus too narrowly to improve the overall effort. An alternative approach identifies key areas or activities that shape federal agency efforts. The Bush Administration identified four such "pillars" as organizing principles for the federal biodefense efforts: threat awareness; prevention and protection; surveillance and detection; and response and recovery. Each of these pillars may have several agencies performing critical parts of the activity. Congressional oversight and direction of biodefense efforts has followed a similar but not identical path. Congress has provided oversight and direction on the basis of both individual agency biodefense activity and on those cross-agency themes and policies deemed most important by congressional policymakers. Because of the diversity of federal biodefense efforts, this report cannot address all aspects and associated programs related to this issue. Instead, this report focuses on four areas under congressional consideration deemed critical to the success of the biodefense enterprise: strategic planning; risk assessment; surveillance; and the development, procurement, and distribution of medical countermeasures. This report also focuses on the effectiveness and sufficiency of programs implementing these aspects of the federal biodefense efforts, outside analysts' suggestions for improving the government's efforts, and current issues under congressional consideration. This report does not attempt to address all biodefense issues of potential congressional interest. Although outside the scope of this report, state and local governments, private industry, and our international partners play key roles in defending against the threat of bioterrorism. Although the federal government had previously undertaken efforts to address the bioterrorism threat, the events of September 11, 2001, and the subsequent anthrax mailings led to an increased focus on terrorism in general and especially on biological weapons of mass destruction (WMDs). The Bush Administration established a homeland security apparatus within the White House. Congress and the Bush Administration created the DHS as a focal point in the federal preparedness, response, and recovery to terrorism and imbued it with a variety of new authorities. In addition, the Bush Administration developed a series of national strategies and other guidance documents for homeland security generally and biodefense in specific. Beyond these cross-governmental strategy documents, many agencies developed more focused strategic plans for their individual operations against bioterrorism. The Obama Administration has continued this focus on bioterrorism by issuing additional guidance and directives. Congress has acted to require federal strategic planning activities through provisions of the Homeland Security Act of 2002 ( P.L. 107-296 ), the Pandemic and All-Hazards Preparedness Act ( P.L. 109-417 ), and other legislation. In addition to establishing DHS, Congress has created offices and agencies within other Cabinet departments and assigned them specific planning activities. Finally, Congress established an office within the Executive Office of the President charged with preventing WMD proliferation and terrorism. Policymakers, analysts, and other experts have criticized federal efforts at strategic planning. Some experts have criticized White House led cross-agency planning as lacking metrics and measures, failing to encompass the full range of threats, and insufficiently meeting stated goals. Policymakers have critiqued efforts by federal agencies to develop multi-agency plans as lacking metrics. Even when considering efforts within individual agencies, experts have levied criticisms of research plans, stating that the correspondence between strategic goals, operational outcomes, and program investments has not been made clear. Agency implementation, translating strategic goals into effective programs and policies, will remain a key component of successful federal biodefense activities. Given these criticisms, Congress could choose to recommend changes in the strategic planning process, either government-wide or at the agency level, to address specific deficiencies. For example, Congress, as a body, could enact legislation to require a more robust and transparent government-wide strategic plan that articulates clear goals, metrics and priorities; a periodic comprehensive report detailing biodefense activities government-wide; or the development of a national framework to organize and prioritize biodefense investments. Alternatively, Congress might require the Administration to perform internal or external reviews of policies and activities to determine their sufficiency and then direct the Administration to formulate new or revised policies as recommended by the reviews. Congress could also require the creation of implementation plans, linking agency activities with meeting the required, desired strategic goals. Congress might mandate the augmentation of government-wide planning documents, such as the National Response Framework, or the development of a forward-looking planning document, similar to the Quadrennial Homeland Security Review or the National Strategy for Pandemic Influenza and its implementation guide, for cross-agency federal biodefense activities. Through oversight activities, congressional committees of jurisdiction have a key role in assessing the completeness of ongoing planning. Because of the broad oversight responsibilities of congressional committees, congressional policymakers may identify synergies and duplications between agency efforts more easily than decision-makers within individual agencies. Congress, through its oversight activities, may also identify areas where executive branch resource allocation does not reflect need or congressional intent. A congressional perspective may highlight unnecessary duplication or gaps in federal planning for the various necessary stages of response to a bioterrorism event. Congress may also be able to assess whether current plans appropriately factor in the roles of private industry, states, and our international partners. Some experts have suggested that Congress might optimize oversight of federal homeland security efforts if fewer committees and subcommittees maintained jurisdiction over homeland security. Proponents with this perspective argue that congressional oversight would become more focused and holistic because of the centralization of oversight authority. Additionally, this might reduce the amount of time homeland security officials spend testifying before Congress. On the other hand, such consolidation might decrease the level of congressional scrutiny, since fewer committees with broader homeland security mandates might have less time and fewer resources to focus on individual agencies and activities. Ideally, a full understanding of the risk posed by bioterrorism would underpin the government's biodefense efforts. By understanding the bioterrorism risk, the federal government could determine the appropriate level of federal response and investment against this risk. The Government Accountability Office (GAO) has called for increased risk assessment activities in biodefense for many years. Unfortunately, the nature of the bioterrorism threat, with its high consequences and low frequency, makes determining the bioterrorism risk difficult. Additionally, the presence of an intelligent adversary who can adapt to the presence of successful countermeasures complicates the use of standard risk assessment techniques. Despite these challenges, risk assessment activities can help agencies use risk-informed decision-making processes to plan, prioritize, and invest wisely. In contrast, investment based on uninformed hypotheses or on an ad hoc basis may allow improperly identified or assessed risks to go unmitigated or result in overinvestment against low-risk events. The Bush Administration identified bioterrorism risk assessment as a key component of its biodefense strategy. As a consequence, DHS engages in a bioterrorism risk assessment process on a two-year cycle. Other agencies also engage in risk assessment activities, but they vary from DHS's efforts in approach, assumptions, emphasis, and purpose. Risk assessment processes depend heavily on the information used as input, the quantitative and qualitative factors used to interpret that information, and the robustness of the assessment process. These factors complicate comparisons between bioterrorism risk assessments performed for different purposes or among assessments of other threats. The DHS has begun this comparison on a limited scale, but its use of these risk assessments for planning purposes has been strongly criticized by outside experts. These experts assert that the DHS risk assessments do not adequately address the decision-making process of an intelligent adversary. Regardless of the complexity of the risk assessment methodology, the inherent uncertainties associated with assessing risk in a counterterrorism context likely necessitate retaining some level of flexibility in managing risk. A key question for congressional policymakers is: to what extent should bioterrorism and other risk assessments inform agency and government-wide priorities and policies? Congress could mandate risk-informed decision making based on the intelligence community's assessment of current and future bioterrorism-related threats, endorse a particular risk assessment method, or require the establishment of measures of robustness. It could require agencies to harmonize their risk assessment methodologies or mandate the development of a government-wide risk assessment process rather than individual agency-level assessments. Alternatively, Congress could direct agencies to rely less on the risk assessment process and instead set priorities based on other factors, such as expert judgment. Unlike most other terrorist attacks, a biological attack could infect victims without their knowledge. Days or weeks might pass before victims develop symptoms. Health practitioners treating infected, symptomatic individuals might be the first to identify that a bioterrorism attack had occurred. The Bush Administration prioritized the development and deployment of biosurveillance technologies in an attempt to identify a bioterrorism attack as soon after an attack as possible. The sooner officials identify an attack, the sooner treatment of the exposed individuals could begin. Earlier treatment generally increases the likelihood of individual survival and recovery. The Bush Administration implemented a number of different detection approaches, including environmental detection, syndromic surveillance, and information sharing. Through these efforts, the federal government aims to identify bioterrorism events at various scales, ranging from large, aerially disseminated releases to smaller releases infecting only a few individuals. The federal government, in collaboration with state and local jurisdictions, enhanced the existing network of public health laboratories to ensure that diagnostic laboratories could correctly handle and analyze clinical samples related to potential bioterrorism events. Similarly, the federal government has continued to invest in some global health activities partly to help identify when an emerging disease might pose a threat to the United States. Government and outside experts have both criticized and supported these efforts. Widespread deployment of environmental biosurveillance technologies by the federal government began after the anthrax mailings, and federal efforts to further develop these technologies have also increased. Questions remain regarding the effectiveness of their detection ability, especially in comparison to the innate detection ability of the medical system through astute physicians. A repeated criticism of biosurveillance activities is that the detection system may lack sufficient sensitivity and dependability to allow for a federal response following detection of a bioterrorism event. Technical difficulties persist in making a detection system sufficiently sensitive to detect very low levels of pathogens while maintaining a very low number of false alarms. Frequent false alarms pose a high cost in terms of resource consumption and responder opportunity costs. Additionally, frequent false alarms may lead responders and the public to assume that all alarms are likely false, and thus they may not take alarms seriously. Other widely discussed issues include the extent to which the federal government should protect the population of the United States with such systems, through environmental sensing or other methods, and how the federal government should deploy the limited number of available systems. Congress may remain interested in these programs. The DHS has developed and deployed the next generation of environmental detectors more slowly than it originally predicted. Congress may seek to determine whether the current plans for capabilities and coverage of surveillance sufficiently protect the population. Appropriators could provide additional funds and authorizing committees could provide additional oversight or guidance to encourage the completion of the deployment of these detectors. Alternatively, the appropriation committees and the authorizing committees could determine that potential decreases in risk provided by this program does not support continued investment. Congress may also address concerns about the interactions between DHS and local jurisdictions. Local jurisdictions have identified fiscal burdens from this federal program, and questions remain about their proper role in the response to positive test results. Congress could attempt to alleviate these concerns by providing additional resources to local jurisdictions or by providing additional guidance to DHS regarding its relationships with local jurisdictions. Effective medical countermeasures could significantly decrease the impact of a bioterrorist attack. Several federal agencies, described below, have devoted many resources to the development, procurement, and distribution of medical countermeasures that could help respond to a bioterrorist attack. Since 2001, the federal government has often reexamined programs in these areas. Outside observers, Congress, and the executive branch have scrutinized, suggested improvements to, and further refined these policies. Many potential bioterrorism agents lack available medical countermeasures. To help address this, the federal government invested billions of dollars in research and development that might lead to effective medical countermeasures. The Department of Health and Human Services (HHS) has played a key role in supporting the development of medical countermeasures, mainly through the National Institutes of Health (NIH) and the Biomedical Advanced Research and Development Authority (BARDA). Additionally, efforts undertaken by the Department of Defense (DOD) to protect warfighters may also contribute to civilian biodefense. As a result of the 2010 Public Health Emergency Medical Countermeasures Enterprise review, HHS has called for the creation of dedicated centers to improve advanced development of medical countermeasures in both HHS and DOD and the establishment of a venture capital entity to spur private sector biodefense research investment. Some scientists have criticized the federal investment in biodefense countermeasures. They claim that the relative threat of bioterrorism does not justify the large investment in biodefense and that these efforts would provide greater benefits if directed to other areas of research and development, such as more conventional public health threats. Additionally, Congress has questioned the balance of investment among the various stages of research and development, identifying funding gaps that may pose barriers to the conversion of research results into deployable countermeasures. Congress also identified deficiencies in executive branch management of the countermeasure development process. These observations led Congress to establish BARDA to fund and coordinate the conversion of promising research results into deployable products. Policymakers often face the challenge of determining the optimal balance of funding between competing stages of the research and development process. While Congress, as a body, has supported a historic increase in biodefense-related basic research funding at NIH, critics have suggested that the federal government has underfunded the critical next stages of research and development that convert promising research results into usable products. Current fiscal pressures will likely exacerbate the difficult decisions regarding appropriate funding levels. Congress may consider whether the federal government appropriately leverages efforts by other stakeholders including state government, academia, and the private sector. Policymakers may also consider whether the federal government should reduce its dominant role in countermeasure research and development in favor of a greater role for investment by industry. Congress may again consider incentive-based approaches, such as tax cuts and credits or patent protections, or demand-based approaches, such as increased funding to support larger contract awards. Alternatively, Congress might conclude that the government needs to take a larger role in developing countermeasures in areas where the private sector has failed to produce desired countermeasures. As a single entity, the federal government is by far the largest procurer of bioterrorism medical countermeasures. It stockpiles countermeasures and keeps them ready for deployment to respond to a bioterrorism event. The relatively small market for most bioterrorism countermeasures provides little incentive for companies to invest in developing a countermeasure when compared with the larger potential market of other products of the same industry, such as anti-cholesterol drugs. The federal government has experienced difficulties in obtaining desired countermeasures because of this relatively small market. The executive branch and Congress have taken several steps to encourage companies to enter the medical countermeasure field. These activities include providing liability protection to companies developing medical countermeasures, guaranteeing a government market for countermeasures, and more clearly communicating the government's countermeasure needs and priorities. These efforts have met with mixed success. In the face of a need for medical countermeasures against emerging natural threats, such as pandemic influenza, HHS has also invested in medical countermeasure infrastructure to provide a more rapid response. The HHS has also planned a public-private partnership that would create flexible manufacturing infrastructure to lower barriers to desired countermeasure manufacture. A variety of experts, commissions, and policymakers have characterized the federal government's efforts to partner with private sector countermeasure developers as underfunded, unclear, or insufficient. Given the large costs of bringing a product to market, government assurances of a planned purchase seem insufficient to entice companies into this field. Private companies faced with the potential for liability following adverse reactions to a fielded medical countermeasure expressed reluctance to develop countermeasures. This led Congress to enact measures to protect companies from such liability. Companies and think tanks continue to state that the government should better communicate to developers the countermeasures it would like to procure. Think tanks and industry have also criticized actions they interpret as weakening the government's commitment to guaranteeing a government market by diverting funds designated for that program to other uses. They assert such actions reinforce industry's perception of the government as an unreliable partner in the development enterprise. In addition, GAO has cautioned against the federal government failing to have and make clear expectations regarding countermeasure and company performance. Congress may choose, as it has in some previous years, to use money advance appropriated for countermeasure procurement to support countermeasure development. In addition, policymakers may assess whether previously enacted programs draw new investors into countermeasure manufacturing or whether the federal government must consider other, more novel manufacturing incentives. Congress may also examine whether the procurement prioritization matches the risk assessments and the strategic plans developed by the executive branch. Finally, Congress may provide additional appropriations or create new authorities for HHS, supporting recommendations formed by various assessments of HHS's countermeasure enterprise. Even when effective medical countermeasures against potential bioterrorism pathogens exist, their distribution to individuals affected by an attack remains a challenge. The federal government has attempted to address this need through programs that stockpile and distribute stores of medical countermeasures, the development of alternative distribution mechanisms outside the normal health care setting, and the consideration of other options, such as pre-event distribution or prophylaxis. The Food and Drug Administration (FDA), the Centers for Disease Control and Prevention (CDC), state and local governments, and industry partners play key roles in distributing emergency medical countermeasures. The FDA regulates distribution of pharmaceuticals and biological products and has certain authorities to permit the emergency use of unapproved products. The CDC maintains the Strategic National Stockpile (SNS) and when requested delivers it to state and local governments for distribution. State and local governments are responsible for developing and exercising distribution plans. In addition to producing emergency medical countermeasures, industrial partners store some of the SNS and may play a role in state and local distribution plans. Experts have especially focused on the ability of the federal and state governments to distribute medical countermeasures to those infected in a timely way so as to minimize casualties and fatalities. Much of a successful bioterrorism response relies on providing effective medical countermeasures to the exposed. Experts question whether the federal government can distribute federal stockpiles to states and localities in the midst of an emergency, whether state governments have sufficient manpower or organization to receive federal stockpiles and effectively disseminate them, and whether federal and state governments have sufficiently conceptualized and practiced alternative mechanisms of distribution. Congress may face decisions regarding the acceptable ways to disseminate medical countermeasures in an emergency situation, whether the advantages of alternative distribution mechanisms outweigh the potential drawbacks of lowered oversight and control of countermeasure use, and whether the federal government has effectively leveraged private sector resources to improve distribution. Some experts have suggested the FDA should have new legal authorities and should develop new policy and regulatory frameworks to improve the distribution process during an emergency. Congress may consider whether current FDA authorities are adequate to address medical countermeasure emergency distribution issues and if not whether deficiencies should be addressed through new legislative activity or through solely executive branch action. While no mass-casualty bioterrorism event has yet occurred in the United States, some experts and policymakers assert that terrorist organizations are attempting to develop such a capability. The federal government has been preparing for a bioterrorism event for many years. Multiple programs in many agencies attempt to prepare for and respond to a bioterrorism event. Whether these programs are sufficient, redundant, excessive, or need improvement has been a topic of much debate. Congress, through oversight activities as well as authorizing and appropriations legislation, continues to influence the federal response to the bioterrorism threat. Congressional policymakers may be faced with many difficult choices about the priority of maintaining, shrinking, or expanding existing programs versus creating new programs to address identified deficiencies. Augmenting such programs may incur additional costs in a time of fiscal challenges while maintaining or shrinking such programs may be deemed as incurring unacceptable risks, given the potential for significant casualties and economic effects from a large-scale bioterror attack.

Reports by congressional commissions, the mention of bioterrorism in President Obama's 2010 State of the Union address, and issuance of executive orders have increased congressional attention to the threat of bioterrorism. Federal efforts to combat the threat of bioterrorism predate the anthrax attacks of 2001 but have significantly increased since then. The U.S. government has developed these efforts as part of and in parallel with other defenses against conventional terrorism. Continued attempts by terrorist groups to launch attacks targeted at U.S. citizens have increased concerns that federal counterterrorism activities insufficiently address the threat. Key questions face congressional policymakers: How adequately do the efforts already under way address the threat of bioterrorism? Have the federal investments to date met the expectations of Congress and other stakeholders? Should Congress alter, augment, or terminate these existing programs in the current environment of fiscal challenge? What is the appropriate federal role in response to the threat of bioterrorism, and what mechanisms are most appropriate for involving other stakeholders, including state and local jurisdictions, industry, and others? Several strategy and planning documents direct the federal government's biodefense efforts. Many different agencies have a role. These agencies have implemented numerous disparate actions and programs in their statutory areas to address the threat. Despite these efforts, congressional commissions, nongovernmental organizations, industry representatives, and other experts have highlighted weaknesses or flaws in the federal government's biodefense activities. Reports by congressional commissions have stated that the federal government could significantly improve its efforts to address the bioterrorism threat. Congressional oversight of bioterrorism crosses the jurisdiction of many congressional committees. As a result, congressional oversight is often issue-based. Because of the diversity of federal biodefense efforts, this report does not provide a complete view of the federal bioterrorism effort. Instead, this report focuses on four areas under congressional consideration deemed critical to the success of the biodefense enterprise: strategic planning; risk assessment; surveillance; and the development, procurement, and distribution of medical countermeasures. Congress, through authorizing and appropriations legislation and oversight activities, continues to influence the federal response to the bioterrorism threat. Congressional policymakers may face many difficult choices about the priority of maintaining, shrinking, or expanding existing programs or creating new programs to address identified deficiencies. Augmenting or creating programs may result in additional costs in a time of fiscal challenges. Maintaining or shrinking programs may pose unacceptable risks, given the potential for significant casualties and economic effects from a large-scale bioterror attack.

Coal combustion residuals (CCRs) are the inorganic material that remains after pulverized coal is burned. To establish consistent national standards to address potential threats to human health and the environment associated with improper management of CCRs destined for disposal, on June 21, 2010, the Environmental Protection Agency (EPA) proposed for public comment two regulatory options applicable to the material. Under the first proposal, EPA would reverse previous regulatory determinations to exempt CCRs from regulation as a hazardous waste and list the material as a "special waste" pursuant to its authorities under Subtitle C of the Resource Conservation and Recovery Act (RCRA; 42 U.S.C. §6901 et seq.). Under Subtitle C, EPA has broad authority to regulate wastes it identifies as "hazardous," from its generation to its ultimate disposal (i.e., from "cradle to grave"). Under its Subtitle C option, EPA would require CCRs destined for disposal in a landfill or surface impoundment to be managed in accordance with requirements or standards applicable to hazardous waste generators; owners and operators of hazardous waste treatment, storage, and disposal facilities (TSDF); and TSDF permit programs. The Subtitle C option would create federal standards enforceable by EPA, but likely adopted and implemented (and ultimately enforced) by individual states. Under the second proposal, EPA would promulgate national standards applicable to landfills and surface impoundments that receive CCRs, in accordance with its authority regarding the management of non-hazardous solid waste under Subtitle D of RCRA. If this option were selected, the standards would be similar to those applicable to municipal solid waste (MSW) landfills, but would take into consideration issues specific to the management of CCRs, particularly controls necessary to address the accumulation of liquid wastes in surface impoundments. In contrast to its Subtitle C option, EPA has no authority to enforce the standards it proposes under the Subtitle D option. EPA is authorized to promulgate federally enforceable waste management criteria only for MSW landfills and no other facilities that may receive non-hazardous solid wastes. Instead, EPA could finalize the proposed Subtitle D standards, but they would be enforced by states that choose to adopt and apply them to owners and operators of CCR landfills and surface impoundments. EPA's proposal drew comments from industry groups, environmental and citizen groups, state agency representatives, individual citizens, and some Members of Congress. Concerns over the Subtitle C proposal relate to its ultimate impact in terms of implementation costs to both industry and states, energy prices, and CCR recycling opportunities. With regard to the Subtitle D proposal, the primary concerns stem from EPA's lack of authority to enforce them. Given the argument by many states that the material is being managed sufficiently under current state regulatory programs, environmental and citizen groups have expressed doubts over the degree to which all states would adopt them, resulting in the promulgation but not implementation of any new requirements necessary to ensure protection of human health and the environment. Commenters have proposed various legislative options in response to the varied concerns over EPA's proposed regulatory options. Possible legislative options that have been debated include an explicit directive to EPA to regulate or prohibit CCR regulation under Subtitle C or Subtitle D. Another legislative option, the Coal Residuals Reuse and Management Act ( H.R. 2273 ), was passed by the House on October 14, 2011, and introduced in the Senate ( S. 1751 ) on October 20, 2011. The proposal would amend Subtitle D of RCRA by adding Section 4011, Management and Disposal of Coal Combustion Residuals. That amendment would create a coal combustion residuals permit program, defined as "a permit program or other system of prior approval and conditions that is adopted by or for a state for the management and disposal of coal combustion residuals to the extent such activities occur in structures in such state." Legislative provisions largely identical to those in the Coal Residuals Reuse and Management Act are included in legislation that would extend the authorization of federal funding for surface transportation programs administered by the Department of Transportation (DOT). Specifically, Title V of H.R. 4348 (passed in the House on April 18, 2012) includes language identical to H.R. 2273 and S. 1751 . On April 24, 2012, the Senate agreed by unanimous consent to an amendment that struck the House-passed language from H.R. 4348 and substituted the language of the Senate-passed bill to reauthorize DOT programs ( S. 1813 , the Moving Ahead for Progress in the 21 st Century Act, or MAP-21). The Senate subsequently asked for a conference and appointed conferees. As a result, provisions of the proposed Coal Residuals Reuse and Management Act are being debated in the conference over the transportation reauthorization legislation. This report provides background information concerning the provisions in the proposed Section 4011 of RCRA in H.R. 2273 , S. 1751 , and Title V of H.R. 4348 . In particular, it identifies issues associated with potential state adoption and implementation of the proposed CCR permit program. Unique to the proposal would be the creation of a permit program in federal statute, absent the promulgation of related federally enforceable standards. Requirements applicable to the program's adoption and implementation would be those created within the amendment to RCRA. It would not authorize the agency with jurisdiction over RCRA's implementation (EPA) to promulgate regulations detailing permit program requirements or regulations applicable to facilities that may be expected to obtain a permit pursuant to the program. Instead, requirements applicable to the proposed statutory CCR permit program would draw upon selected existing regulations promulgated pursuant to Subtitle D applicable to the management of municipal solid waste (MSW). It would also draw from selected elements of EPA's June 2010 Subtitle D proposal to regulate CCR landfills and surface impoundments. Considering their influence on the potential adoption and implementation of a CCR permit program, this report identifies relevant elements of proposed and existing regulatory requirements under Subtitle D. In particular, the report distinguishes between EPA and state agency authorities in regulating nonhazardous solid wastes under Subtitle D, including EPA's role in developing and individual state roles in enforcing those requirements. The report also summarizes selected MSW landfill regulations and standards proposed by EPA in June 2010 under Subtitle D. Finally, with regard to the legislative proposals that would amend Subtitle D, the report summarizes provisions in the proposed Section 4011 of RCRA; identifies potential issues associated with implementing a statutory permit program; and compares details of the regulatory requirements applicable to MSW landfills, on which the legislative proposal is based, to comparable elements of the proposed CCR permit program. As noted above, the focus of this report is the legislative proposal to amend Subtitle D of RCRA and the CCR permit program that would be created pursuant to the proposed amendment. Analysis specific to EPA's June 2010 proposal and details regarding the options it proposed under Subtitles C and D of RCRA are discussed separately in CRS Report R41341, EPA's Proposal to Regulate Coal Combustion Waste Disposal: Issues for Congress , by [author name scrubbed]. In 2010, 45% of the electricity generated in the United States used coal as its source of fuel. Pulverized coal burned for electricity production generates a tremendous amount of residual inorganic material. In 2010, industry estimates that as much as 130 million tons of CCRs were generated, making it one of the largest waste streams in the United States. Disposal of CCRs on-site at individual power plants may involve decades-long accumulation of waste—with hundreds of thousands, if not millions, of tons of dry ash (in a landfill) or wet ash slurry (in a surface impoundment pond) deposited at the site. On December 22, 2008, national attention was turned to risks associated with managing such large volumes of CCRs when a breach in a surface impoundment pond at the Tennessee Valley Authority's (TVA's) Kingston, TN, plant released 1.1 billion gallons of coal fly ash slurry, covering more than 300 acres, damaging or destroying homes and property. TVA estimates that cleanup will continue into 2014 and will cost $1.2 billion. The incident at Kingston, as well as smaller incidents that resulted from improper CCR management, drew attention to the potential for a sudden, catastrophic release related to the structural failure of a surface impoundment. However, EPA has determined that a more common threat associated with CCR management is the leaching of contaminants likely present in the waste, primarily heavy metals, resulting in surface or groundwater contamination. The Kingston release also brought attention to the fact that the management of CCRs is essentially unregulated at the federal level. CCRs are the inorganic residues that remain after pulverized coal is burned. The chemical composition of CCRs generated at a given plant depends on the type and source of the coal burned, as well as the combustion technology and air pollution control technology used at the plant. In data maintained by EPA, the agency has identified more than 40 toxic constituents that may be present in CCRs, including antimony, arsenic, barium, beryllium, cadmium, chromium, lead, mercury, and selenium. The fact that toxic constituents are present in a waste does not in itself mean that it poses a risk to humans or the environment. The degree to which there is actual risk depends on whether those constituents can find a pathway of human exposure and whether the resulting level of exposure is likely to be high enough to cause harm. Human exposure to contaminants has been demonstrated through the direct discharge or release of liquid waste to surface water (accidentally, as in Kingston, or on purpose, generally pursuant to the provisions of a permit, or as a result of improper run-on/run-off control during rain/flood events) or through fugitive dust emissions (when fine particulates associated with the dried ash become airborne). However, the most common pathway of exposure has occurred through contaminant leaching when the waste was deposited in an unlined landfill or surface impoundment. In 1980, EPA was statutorily required to provide an analysis of both potential risks and actual documented damages to human health and the environment from CCR disposal and use. Since then, EPA has gathered and released data, analysis, and studies that have identified potential risks and damages associated with CCR management. Most notably, in March 2000, EPA submitted a draft "Regulatory Determination on Wastes from Fossil Fuel Combustion" to the White House Office of Management and Budget (OMB). In it, EPA stated that CCRs warranted regulation as a hazardous waste under Subtitle C of RCRA when CCRs were land disposed (e.g., disposed of in a landfill or accumulated in a surface impoundment). Further, EPA stated that it was considering developing national standards that would include a contingent hazardous waste listing of CCRs under Subtitle C. That is, EPA would not classify CCRs as a hazardous waste contingent upon CCR management in accordance with certain standards. However, when improperly managed (such as through disposal or accumulation in an unlined landfill or surface impoundment), CCRs would become a listed hazardous waste subject to tailored Subtitle C standards. In its draft regulatory determination, EPA recognized that its March 2000 proposal was a departure from its previous opinions regarding the management of CCRs. However, EPA stated that its determination that CCRs warranted regulation as hazardous waste was based, in part, on data from damage cases that showed the potential threat to human health and the environment when the waste was managed in a way that lacked basic controls (e.g., disposal in units with no liner or groundwater monitoring). Additionally, EPA cited new data that identified significant risks for the waste to leach arsenic. In May 2000, after review by OMB, EPA issued a revised regulatory determination stating that it would continue to exclude CCRs from regulation as hazardous waste under Subtitle C. However, similar to statements in its March 2000 draft proposal, EPA stated that it was convinced that national regulations under Subtitle D were warranted for CCR disposal in landfills and surface impoundments because the composition of the waste had the potential to present danger to human health and the environment in certain circumstances; EPA had identified proven cases of damages to human health and the environment through improper waste management; while industry management practices had improved measurably, there was sufficient evidence the wastes were being managed in a significant number of landfills and surface impoundments without proper controls in place, particularly in the area of groundwater monitoring; and while there had been substantive improvements in state regulatory programs, EPA identified significant gaps either in states' regulatory authorities or in their exercise of existing authorities. Further, citing its concern regarding the potential mismanagement and inconsistent state regulation of CCRs, EPA stated that it would revise its determination if it found that a need for regulation under Subtitle C was warranted. In the wake of events at Kingston, after 10 years of additional study, debate, and controversy over the appropriate method of regulating CCRs, EPA did propose to revise its May 2000 determination. On October 16, 2009, EPA again submitted a draft proposal to revise its regulatory determination and list the material as hazardous waste under Subtitle C of RCRA. EPA sent the draft to OMB's Office of Information and Regulatory Affairs (OIRA). As in March 2000, EPA proposed to draw on its existing authority to identify and list a waste as "hazardous" and regulate it as such pursuant to Subtitle C of RCRA. In EPA's reexamination of its 2000 regulatory determination proposal, the following findings are among the most significant: Revised risk assessment findings. EPA determined that there is a high risk of human exposure to carcinogens, such as lead, selenium, and arsenic, when CCRs are deposited into unlined landfills and surface impoundments. Higher risks were observed for surface impoundments compared to landfills due to higher waste leachate concentrations and the higher hydraulic pressure from impounded liquid waste. The risk assessment showed that CCRs can be managed safely with the use of composite liners, but called into question the reliability of clay liners, especially in surface impoundments. Additional evidence of actual damages/contamination. EPA updated its list of damages to include 27 cases of proven damages to surface and groundwater and 40 cases of potential damage associated with the improper management of CCRs. In addition to impacts on human health from surface and groundwater contamination, EPA's damage cases document adverse effects to plants and wildlife. The threat of a catastrophic release. Recent damage cases, such as the Kingston release and a similar, smaller incident in 2005 in Martins Creek, PA, were considered evidence that current management practices can pose additional risks that EPA had not previously studied—that is, from catastrophic releases due to the structural failure of surface impoundments. Continued inconsistencies among state requirements. According to 2009 survey data, among responding states, 36% did not have minimum liner requirements for landfills, 67% did not have liner requirements for surface impoundments, 19% did not have minimum groundwater monitoring for landfills, and 61% did not have minimum groundwater monitoring for surface impoundments. EPA noted that the survey results are "particularly significant as groundwater monitoring for these kinds of units is a minimum for any credible regulatory regime." Further, while the states seem to be regulating landfills to a greater extent, given the significant risks associated with surface impoundments, survey results suggest that there continue to be significant gaps in state regulatory programs for the disposal of CCRs. The number of CCR units likely operating without protections EPA has identified as necessary. While new CCR facilities are likely to be built with liners and groundwater monitoring systems, the majority of facilities currently in use are not new. For example, EPA determined that 75% of surface impoundments in use today are more than 25 years old, with 10% being more than 50 years old. Such units are unlikely to have a liner or groundwater monitoring, and are more likely to leach contaminants. Further, in 2004, EPA determined that 31% of the CCR landfills and 62% of the CCR surface impoundments lacked liners, and 10% of the CCR landfills and 58% of the CCR surface impoundments lacked groundwater monitoring. EPA estimated that with an average life expectancy of approximately 31 years, those older disposal facilities would likely continue to operate without necessary protections in place well into the future. After OMB's review, EPA's draft proposal underwent substantial changes. Its final proposal was published on June 21, 2010. In that proposal, EPA stated that the decision to revise the May 2000 regulatory determination had not yet been made, and proposed an additional regulatory option for consideration. That second regulatory option would continue to exclude CCRs from regulation as hazardous waste under Subtitle C, and establish national criteria applicable to landfills and surface impoundments under RCRA's Subtitle D nonhazardous solid waste requirements. The primary reason EPA cited for including the option to regulate CCRs under Subtitle D's solid waste requirements was industry's argument that the "hazardous waste" label would stigmatize beneficial uses of the material and ultimately increase the amount that must be disposed. In the wake of EPA's June 2010 proposal to regulate the management of CCRs, debate over the regulatory option EPA should select has focused on existing state and federal authorities under RCRA to implement or enforce either option. Broadly, EPA currently has the authority to implement and directly enforce its Subtitle C option, but could only encourage states to implement and enforce its Subtitle D option. Under both regulatory options, owners and operators of CCR landfills and surface impoundments would be required to implement protective measures that are largely similar (e.g., under both options facilities would be required to install composite liners and groundwater monitoring). A significant difference between the two options would be in EPA's authority to enforce the standards directly or to require states to enforce them, summarized as follows: Under the Subtitle C option —individual facility compliance with the regulations must be demonstrated in accordance with a federal or EPA-authorized state permit program. EPA would have direct enforcement authority with regard to waste management requirements, including those applicable to CCR generators, transporters, and treatment, storage, and disposal facilities, and mechanisms for corrective action and financial responsibility. Before the rules would become effective, states authorized to implement Subtitle C programs would need to adopt the rule, a process that could take several years. Under the Subtitle D option —individual regulated facilities (e.g., power plants that dispose of/accumulate CCRs on-site) would be required to implement the standards within approximately six months of promulgation. EPA would have no direct enforcement authority to ensure facility compliance or to require states to adopt a permit program to ensure facility compliance. Instead, the standards could be enforced by states or citizens, pursuant to RCRA citizen suit authority. EPA could not require states to enforce the standards, but would encourage them to do so. EPA's Subtitle D approach to regulating CCR disposal facilities is generally supported by state regulatory agencies and industry groups. Included among their arguments in favor of this approach are: there is not enough evidence that the material poses a significant threat to human health or the environment to warrant regulation as hazardous waste; regulating it as hazardous would be unnecessarily costly and burdensome to both industry and state regulators; and current state regulation of CCRs is sufficiently protective of human health and the environment. Also, industry groups argue that labeling the material as "hazardous" or regulating it under Subtitle C requirements would stigmatize the material, thus limiting potential options for reuse and ultimately increasing the amount of waste sent for disposal. Environmental and citizen groups opposed to the Subtitle D approach have argued, in part, that EPA's recent waste characterization studies have sufficiently demonstrated the toxicity of CCRs. Further, given EPA's lack of authority to enforce it, a Subtitle D approach would not address issues identified in EPA's risk and damage case assessments. In particular, under the Subtitle D option, CCRs would likely continue to be managed in accordance with inconsistently applied state requirements. Additionally, it has been argued that reliance on citizen suits to enforce EPA's Subtitle D standards would be burdensome on the public and an unreliable method of implementing national disposal standards. Finally, under the Subtitle D proposal, EPA would have no authority to require financial assurance to insure cleanup if contamination is discovered. The proposed CCR permit program would draw from certain waste management standards promulgated or proposed by EPA pursuant to Subtitle D: specifically, existing regulatory standards applicable to the management of municipal solid waste (MSW) and selected proposed standards applicable to CCR landfills and surface impoundments. To understand the provisions in the proposed amendment to RCRA, it is useful to understand the requirements from which the legislative proposal would be drawn. Under Subtitle D, states have the primary authority to implement and enforce standards applicable to facilities that receive nonhazardous solid waste for disposal. However, for a narrow category of waste, EPA has limited authority to promulgate and ensure state enforcement of Subtitle D standards. That authority derives from directives included under Section 4005 of RCRA that required 1. EPA to promulgate regulatory criteria applicable to facilities that receive MSW; 2. states to adopt and implement a permit program to ensure facility compliance with the MSW criteria; 3. EPA to determine the adequacy of each state MSW permit program; and 4. EPA to enforce its MSW criteria in states determined to have an inadequate MSW permit program. As a result of these directives, EPA promulgated two separate but related federal standards: "Criteria for Municipal Solid Waste Landfills" in 40 C.F.R. Part 258, applicable to owners and operators of MSW landfills; and "Requirements for State Permit Program Determination of Adequacy" in 40 C.F.R. Part 239, applicable to states, to ensure facility compliance with the MSW landfills criteria. Under Section 4010 of RCRA, Congress specified a legal standard of protection that EPA was required to meet in promulgating the MSW landfill criteria—that criteria be "those necessary to protect human health and the environment and may take into account the practicable capability of such facilities." At a minimum, they were to include criteria for groundwater monitoring, necessary to detect contamination; criteria for the acceptable location of new or existing facilities; and corrective action provisions, as appropriate. EPA's resulting criteria for MSW landfills include detailed, national technical standards under the following Subparts of 40 C.F.R. Part 258: Location Restrictions, Operating Criteria, Design Criteria, Groundwater Monitoring and Corrective Action Requirements, Closure/Post-Closure Care, and Financial Assurance Criteria. Required elements of each Subpart are listed in Table A -1 in Appendix A . The regulations define a "municipal solid waste landfill," in part, as a discrete area of land or an excavation that receives household waste, and that is not a land application unit, surface impoundment, injection well, or waste pile. In accordance with this definition, facilities regulated under these criteria receive predominantly dry wastes. That is, the MSW landfill criteria are not intended to establish standards applicable to facilities that accumulate liquid wastes (i.e., surface impoundments). MSW landfill units failing to satisfy MSW landfill criteria constitute "open dumps," prohibited under Section 4005 of RCRA. However, in contrast to EPA's limited authority to enforce that prohibition (i.e., to enforce standards applicable to sanitary landfills in 40 C.F.R. Part 257 that are enforceable largely by states), EPA was authorized to enforce its MSW landfill criteria in states that did not have an approved permit program (described below). Within 18 months of EPA promulgating the MSW criteria, each state was required to adopt and implement a permit program or "other system or prior approval and conditions" to assure that each solid waste management facility within the state that may receive MSW will comply with the MSW landfill criteria. As defined in EPA's regulations, a state solid waste permit program refers to all the authorities, activities, and procedures that comprise the state's system of prior approval and conditions for regulating all solid waste disposal facilities subject to the MSW landfill criteria in 40 C.F.R. Part 258. The "permit program" itself represents the body of requirements and procedures that a state must have in place in order to adequately demonstrate to EPA that it will apply the MSW landfill criteria to the owners and operators of those facilities and ensure enforcement of facility compliance. EPA requirements in 40 C.F.R. Part 239 applicable to its MSW permit program adequacy determination include Required components of a permit program application. Details the information that must be included in a state's permit application, including a narrative description and legal certification of the program. State requirements necessary to demonstrate the adequacy of permit programs. Details the state laws/procedures that must be in place to assure facility compliance with applicable MSW landfill criteria, including appropriate state compliance monitoring and enforcement authorities and procedures applicable to state intervention in civil enforcement proceedings. EPA procedures for making its adequacy determination. Specifies procedures and deadlines that EPA will adhere to in determining the adequacy of a state MSW permit program, including criteria under which EPA may withdraw its determination that a state has an adequate permit program. Individual requirements applicable to EPA's determination of state permit program adequacy, particularly as they may be compared to legislative proposals to amend Subtitle D of RCRA, are summarized in Table B -1 in Appendix B . In states determined to have an inadequate permit program or that fail to maintain an adequate program, EPA is allowed to exercise its authorities regarding facility inspection and federal enforcement as necessary to enforce applicable MSW landfill criteria. That is, the MSW landfill criteria are federally enforceable, directly by EPA, insofar as it is authorized to enforce the standards at facilities in states that it determines do not have an adequate permit program. Once a permit program is approved by EPA, a state is responsible for enforcing the federal MSW landfill standards and issuing permits to individual owners and operators of MSW landfills. The permit itself provides documentation to demonstrate the facility's compliance with the federal and any state (if applicable) MSW landfill criteria. The manner in which the MSW regulations must be adopted, implemented, and enforced by states illustrates the limitations to EPA's authority under Subtitle D to require states to adopt, implement, and enforce federal standards applicable to wastes other than MSW. That is, EPA was explicitly authorized in RCRA to develop criteria applicable to facilities that receive "hazardous household waste" (i.e., MSW), and to determine the adequacy of state permit programs intended to ensure facility compliance with those criteria. Beyond its authority to regulate MSW, for any other type of nonhazardous solid waste (such as CCRs), EPA may only expand upon requirements applicable to the state-enforced prohibition of open dumping. Further, EPA has no authority to require or approve/disapprove of state solid waste permit programs applicable to facilities receiving any other type of solid waste regulated under Subtitle D. In its June 2010 proposal, EPA would promulgate the Subtitle D standards pursuant to its existing authority to promulgate regulations specifying criteria applicable to sanitary landfills. Pursuant to Section 4004 of RCRA, the criteria would be those necessary to ensure that ''no reasonable probability of adverse effects on health or the environment'' will result from disposal facilities or practices. The proposal would amend existing Criteria for Classification of Solid Waste Disposal Facilities and Practices in 40 C.F.R. Part 257 to add "Standards for the Receipt of Coal Combustion Residuals in Landfills and Surface Impoundments." The standards would apply to owners and operators of CCR landfills and surface impoundments, defined as: CCR landfill —a disposal facility or part of a facility where CCRs are placed in or on land and which is not a land treatment facility, a surface impoundment, an underground injection well, a salt dome formation, a salt bed formation, an underground mine, a cave, or a corrective action management unit. Landfills also include piles, sand and gravel pits, quarries, and/or large-scale fill operations. Sites that are excavated so that more coal ash can be used as fill are also considered CCR landfills. CCR surface impoundment —a facility or part of a facility that is a natural topographic depression, man-made excavation, or diked area formed primarily of earthen materials (although it may be lined with man-made materials), which is designed to hold an accumulation of CCRs containing free liquids, and which is not an injection well (e.g., holding, storage, settling, and aeration pits, ponds, and lagoons). Such units are used to receive CCRs that have been sluiced (flushed or mixed with water to facilitate movement), or wastes from wet air pollution control devices, often in addition to other solid wastes. Although included under the Part 257 standards applicable to sanitary landfills, EPA's regulatory proposal more closely resembles its criteria applicable to MSW landfills in 40 C.F.R. Part 258. For example, similar to the MSW landfill criteria, it would specify location restrictions, operating and design criteria, groundwater monitoring, and corrective action requirements. However, when compared to the MSW landfill criteria, the significant difference in the proposed CCR standards relates to requirements EPA has identified as those necessary to ensure protection from CCR disposal, particularly the disposal of liquids (prohibited in MSW landfills). For example, requirements intended to address conditions or issues unique to disposal facilities that receive CCRs include the following: New disposal facilities (landfills and surface impoundments) would be required to be placed above the natural water table and could not be located in wetlands, within 200 feet of a fault zone, or in a seismic impact zone. New or existing disposal facilities could not be located in an unstable area (e.g., a location susceptible to natural or human-induced events or forces capable of impairing the integrity of the unit). Existing facilities in an unstable area would be subject to closure. New disposal facilities would be required to be constructed with a composite liner. Within five years, existing surface impoundments would be required to have solids removed and be retrofitted with a composite liner. To insure structural integrity, surface impoundments would be required to operate in accordance with regulations similar to those promulgated under the Mine Safety and Health Administration (MSHA) at 30 C.F.R. §77.216. Facilities would be subject to fugitive dust controls and liquid run-off/run-on control specific to CCR disposal facilities. (Differences between the existing MSW landfill criteria and EPA's proposed Subtitle D standards can be seen in a comparison of both sets of standards, listed in Table A -1 in Appendix A .) If implemented, CCR facilities that fail to satisfy the Subtitle D standards would be operating in violation of RCRA's prohibition of open dumping. EPA would have no authority to directly enforce the requirements at individual facilitates. Under Subtitle D's open dumping prohibition, EPA could promulgate the criteria, but could only encourage states to adopt and apply them to owners and operators of CCR disposal facilities. EPA would have no authority to require states to enforce them. Further, EPA would have no authority to develop federal approval procedures for state adoption of the criteria similar to its authority to determine the adequacy of a state MSW permit program. However, states could develop their own regulations and/or permitting programs using their solid waste laws or other state authorities. In its proposal, EPA notes that if states do not adopt the proposed CCR management standards, facilities would still have to comply with the proposed Subtitle D criteria, if finalized. For that reason, EPA has proposed its requirements in a way that would be self-implementing. That is, facilities could implement them without interaction with state regulatory officials. Still, if facilities choose not to self-implement the proposed criteria (particularly in a state that chooses not to adopt them), there are limited enforcement mechanisms to require facilities to do so. EPA argues that the requirement to make facility compliance information available to the public would allow citizens to enforce the requirements, if a state chooses not to. However, the ability of citizens to gather necessary information to move forward with a citizen suit could be complicated if a facility does not disclose the specified information. Again, there are limited enforcement options to compel a facility to produce that information. For example, in its proposal, EPA requires owners and operators of CCR landfills and surface impoundments to make certain facility records available to the public. However, absent state enforcement of those reporting requirements, it is uncertain whether such records would be made readily available to the public. The legislative proposal to amend Subtitle D of RCRA would add a Section 4011, Management and Disposal of Coal Combustion Residuals. Under that section, a permit program for the management and disposal of CCRs would be created. Under the proposed amendment to RCRA, states would have the option of adopting a CCR permit program, and EPA would be required to implement the program in states that decline to do so (EPA has stated that, if enacted, all states with coal-fired power plants would likely choose to adopt the CCR permit program). Following are the key subsections of the proposed Section 4011 of RCRA: "S tate Actions." Within six months of enactment, states would be required to notify EPA whether they intend to implement a CCR permit program. Within 36 months of enactment, states choosing to implement the program would be required to submit a certification to EPA regarding their permit program (required elements of that certification are similar to the required components of state MSW permit program applications in 40 C.F.R. Part 239). To adopt or implement the program, a state would be required to maintain an approved MSW landfill permit program or be authorized to implement the federal hazardous waste management program under Subtitle C of RCRA. " Permit P rogram S pecifications ." Instead of a directive to EPA to promulgate criteria specific to owners and operators of CCR structures, states would be directed to apply "Minimum Requirements" to their permit programs. Included among those requirements are selected elements of EPA's June 2010 proposal. Primarily, however, the specifications would apply certain "revised criteria," defined essentially as the regulations in 40 C.F.R. Part 258, to a state permit program. (For a list of criteria applicable to the permit program included under the proposed Permit Program Specifications, compared to EPA's detailed MSW landfill criteria and EPA's June 2010 proposed standards, see Table A-1 in Appendix A .) Each state could determine that one or more of the revised criteria are not necessary to manage CCR structures in the state and decline to apply them to its permit program. " Written N otice and Opportunity to Remedy." Under this subparagraph, at any time, EPA would be required to identify and provide the state with written notice of deficiencies it identifies in certain elements of its permit program. EPA could identify deficiencies with regard to a state—complying with provisions required under "State Actions" and in meeting the permit program specifications, including its decision to decline to apply certain MSW landfill criteria to its permit program. EPA would be required to collaborate with the state to identify a reasonable deadline for the state to remedy the deficiencies. That deadline could not be sooner than six months after the state receives the deficiency notice. " Implementation by Administrator ." Specifies that EPA would be authorized to implement a CCR permit program if a state declines to do so, notifies EPA that it will no longer implement the program, or fails to remedy program deficiencies by the agreed-upon deadline and after any judicial review brought by the state pursuant to Section 7006 of RCRA. "Authority." Specifies that states may adopt or enforce any regulation or requirement applicable to CCRs that is more stringent or broader in scope than those in the proposed amendment. Specifies that EPA shall, with respect to the regulation of CCRs, "defer" to the states with respect to the proposed amendment to RCRA. Further, as used in the proposed Section 4011, the following terms would be defined: Coal Combustion Residuals —materials defined under Section 3001 of RCRA (i.e., fly ash waste, bottom ash waste, slag waste, and flue gas emission control waste generated primarily from the combustion of coal or other fossil fuels as specified under 42 U.S.C. §6921(b)(3)(A)(i)), including recoverable materials from such wastes, as well as descriptions of CCRs used in previous EPA regulatory determinations regarding its management (e.g., coal combustion wastes that are co-managed with wastes produced in conjunction with the combustion of coal, provided that such wastes are not segregated and disposed of separately from the coal combustion wastes and comprise a relatively small proportion of the total wastes being disposed in the structure). Coal Combustion Residuals Permit Program— a permit program or other system of prior approval and conditions that is adopted by or for a state for the management and disposal of coal combustion residuals to the extent such activities occur in structures in such state. Structure —a landfill, surface impoundment, or other land-based unit which may receive coal combustion residuals. Revised criteria —the criteria promulgated for MSW landfill units under Section 4004(a) and Section 1008(a)(3), as revised under Section 4010(c) in accordance with the requirement of such section that the criteria protect human health and the environment (i.e., the MSW landfill criteria in 40 C.F.R. Part 258). The proposed amendment to RCRA would create a state-based permit program under Subtitle D that uses the MSW landfill requirements as its basis, but does not direct EPA to develop standards applicable to its adoption or implementation. By creating such a program entirely within the proposed statute, Congress would create a permit program unique among environmental laws. Generally, for other environmental laws, Congress has specified a legal standard of protection, then directed EPA to develop criteria necessary to meet that standard. More simply, Congress would likely declare, either generally or in specific detail, why or what standards are needed, then direct EPA to promulgate regulations detailing how those standards should be met. Generally, regulatory standards would apply to an entity explicitly identified in statute (e.g., facilities that receive MSW for disposal). Before it could promulgate final federal agency standards, EPA would be required to allow the public an opportunity to comment on its regulatory proposal and to respond to those comments. Once finalized, depending on the statutory directive, the standards may or may not be federally enforceable. That is, Congress may give EPA express authority to both promulgate certain standards and enforce them, or to just promulgate standards and require states to enforce them. Generally, most federal environmental standards are enforced by states, pursuant to some EPA authorization or approval (also, as explicitly required in statute). Congressional directives regarding some environmental standards have been broad and subject to a certain degree of discretion or interpretation by EPA. For example, in its directive to EPA to develop MSW landfill criteria, Congress broadly required the criteria to be those "necessary to protect human health and the environment," but specified the need for minimum requirements applicable to groundwater monitoring, location restrictions, and corrective action. Over the past several years, some industry groups and state regulatory agencies, as well as some Members of Congress, have charged that EPA has overreached its authority in promulgating certain environmental regulations. Particular focus has been directed at EPA efforts to develop federal standards to address greenhouse gas emissions, as well as emissions of other conventional pollutants, pursuant to the Clean Air Act. (See CRS Report R41561, EPA Regulations: Too Much, Too Little, or On Track? , by [author name scrubbed] and [author name scrubbed].) Charges of overreaching its regulatory authority have also been cited by certain opponents to EPA's proposal to identify and regulate CCRs as a hazardous waste under Subtitle C. Creation of a CCR permit program in the proposed amendment to RCRA could be seen as an effort to create a mechanism to manage CCRs that would allow states wide discretion in adopting and implementing the program, while limiting the potential involvement of EPA. However, given the limits to EPA's role in program development or implementation, it is unclear whether a CCR permit program implemented under the proposed Section 4011 would result in a state applying regulatory standards to CCR landfills or surface impoundments that would differ appreciably from those it currently applies. As a statutory permit program, requirements that would serve as "regulations" applicable to the permit program are those contained within the proposed Section 4011. How such a permit program may ultimately be implemented, when compared to the MSW management program on which it is based, is difficult to determine. To recognize the similarities and distinct differences between the two, it is useful to compare provisions in the proposed CCR permit program to existing requirements applicable to MSW landfills, as well as elements of EPA's June 2010 proposal to regulate CCR disposal facilities under Subtitle D. As detailed in the discussion of " Existing Municipal Solid Waste Management Requirements ," above, the federal regulatory framework applicable to MSW management was developed as a result of four distinct yet interrelated directives in Subtitle D that required (1) EPA to promulgate national criteria applicable to MSW landfills; (2) states to adopt a permit program to assure facility compliance with those criteria; (3) EPA to determine the adequacy of state permit programs; and (4) EPA to enforce the MSW landfill criteria in states with an inadequate permit program. In contrast, EPA's June 2010 Subtitle D proposal and the proposed Section 4011 of RCRA would each include only a single element of the four directives that resulted in a federally enforceable program to manage MSW. That is: EPA's Subtitle D proposal would promulgate standards applicable to owners and operators of CCR landfills and surface impoundments. P roposals to amend RCRA would create a permit program applicable to states. Absent an explicit directive or authorities comparable to those applicable to MSW management, neither EPA's Subtitle D proposal nor the legislative proposals to amend RCRA involve the creation of federally enforceable standards applicable to owners and operators of CCR landfills or surface impoundments. Under EPA's Subtitle D proposal, federal standards applicable to owners and operators would be promulgated, but not federally enforceable. Under the proposed Section 4011, selected elements of the MSW landfill requirements and EPA's June 2010 proposal would apply to a CCR permit program, but no federal standards would be applied directly to owners and operators of CCR structures or provide for conditions under which any national standards may be federally enforceable. There are certain key directives missing from the proposed Section 4011 that would need to be included to explicitly require states to apply standards, similar to those applicable to MSW landfills, directly to CCR structures. This can be seen when the regulatory criteria applicable to the management of MSW are compared to the statutory requirements that would apply to a CCR permit program, as detailed in the proposed Section 4011. Instead of applying regulatory criteria to CCR structures (the entities that may be expected to obtain a CCR permit under the proposed program), Permit Program Specifications in the proposed Section 4011 apply certain requirements to the CCR permit program . The proposed subsection includes three provisions specifying: 1. "Minimum R equirements " applicable to a CCR permit program —described as the "revised criteria" included under provision 2, except as provided in provision 3, as well as certain additional specifications for surface impoundments. 2. "R evised C riteri a" applicable to the program —lists the MSW landfill criteria, including specific location restrictions, design criteria, groundwater monitoring and corrective action requirements, closure, and post-closure for existing, new, and lateral expansions of existing, or all (new and existing), structures receiving CCRs after the date of enactment of Section 4011. 3. Program limitations —specifies that a state may determine that one or more of the requirements of the revised criteria (listed in provision 2) are not needed for CCR management in that state, and may decline to apply them as part of its CCR permit program. Pursuant to those provisions, the minimum program specifications, including any revised criteria/MSW landfill regulations, would apply to the CCR permit program , generally as a state deems necessary. As such, those requirements are not explicitly applicable to owners and operators of CCR structures. Additionally, the program proposed under Section 4011 is not defined as one that is intended to assure facility compliance with certain standards (i.e., the revised criteria listed under the permit program specifications). Instead, it is described as being for the management and disposal of CCRs to the extent that it occurs in structures in the state. By specifying that the MSW landfill criteria would apply to a CCR permit program or that the listed criteria are "for" structures, it may be assumed that Congress intended states to apply the listed MSW criteria to owners and operators of CCR structures. The program specification's "Minimum Requirements" includes the following provision that appears intended to apply certain criteria specifically to CCR surface impoundments: The coal combustion residuals permit program shall apply the revised criteria promulgated pursuant to section 4010(c) for location, design, groundwater monitoring, corrective action, financial assurance, closure, and post-closure described [as the Revised Criteria] in paragraph (2) and the specifications described in this paragraph to surface impoundments. Those surface impoundment specifications that appear to be drawn in part from EPA's June 2010 proposal, would be: Each structure shall be designed, constructed, and maintained to provide for containment of the maximum volumes of CCRs appropriate for the structure "in accordance with generally accepted engineering standards for the structural integrity of such structures." If the agency implementing the CCR permit program determines that a structure classified as "a high hazard" (pursuant to certain Federal Emergency Management Agency guidelines) is deficient with regard to its structural integrity, that agency is authorized (but not explicitly directed) to require action to correct the deficiency, according to a schedule determined by the agency, and close the structure if the deficiency is not corrected within that time frame. New structures first receiving CCRs after enactment of Section 4011 shall be constructed with a base located a minimum of 2 feet above the upper limit of the natural water table. Still, by describing the program specification "Minimum Requirements," including those above, as specifications "for a CCR permit program," it is unclear whether states would be required to apply them to owners and operators of CCR structures. With no directive explicitly included in the proposed legislation, it cannot be assumed that states would choose to do so. If a state did choose to apply the permit program specifications to CCR landfills and surface impoundments, the provisions included under the Minimum Requirements and Revised Criteria would be significantly different from those identified by EPA as necessary to address the risks associated with improper CCR disposal. For example, in contrast to EPA's June 2010 proposal, the CCR permit program specifications do not include requirements that owners and operators of CCR structures construct new landfills and surface impoundments using a composite liner or retrofit existing surface impoundments with a composite liner; close structures that did not meet certain location restrictions; inspect surface impoundments weekly for structural weaknesses; or apply groundwater monitoring requirements before CCRs could be placed in a new unit and within a year of enactment for all existing CCR units. Additionally, absent from the proposed Section 4011 are requirements comparable to those applicable to MSW landfills that would specify time frames for facility compliance. For example, compliance deadlines applicable to MSW landfill owners/operators were explicitly listed under 40 C.F.R. Part 25 (depending on various factors, but generally not later than 1994). For the CCR permit program, a state would only be required, within three years of enactment of Section 4011, to certify that it has a program in place. It does not specify a time frame for states to ensure facility compliance with the standards applicable to the permit program. Also, if a state did choose to apply the criteria similar to those applicable to MSW landfills to CCR structures, it is uncertain to which structures states may apply those criteria. Under Section 4011, the term "structures" would be broadly defined as a "landfill, surface impoundment, or other land-based unit which may receive coal combustion residuals." The terms "landfill" and "surface impoundment" have been defined by EPA in existing regulations and specifically to CCR accumulation units in its June 2010 proposal (see " Proposed Standards Applicable to CCR Landfills and Surface Impoundments ," above). A state may incorporate details in those proposed/existing definitions. However, absent a more detailed definition in statute, it would appear that states would have discretion to define "structures" more broadly or narrowly. For example, a state may choose to define a CCR surface impoundment similarly to EPA's proposed definition, with the addition that it include units designed to hold an accumulation of a specific amount of free liquids or that a CCR landfill be one that covers a certain discrete land area. The term "other land-based unit" is not defined in RCRA or in any proposed or existing RCRA standards. Taken with the definition of the CCR permit program as one for the "management and disposal" of CCRs, it would appear that other land-based units that may receive CCRs could include land applications of the material, such as sites where it is used as structural or embankment fill or as road bed material. Given the issues discussed above, it is unclear whether or when a state may adopt or implement a CCR permit program that would apply compliance standards to owners and operators of CCR structures. If states did, it is difficult to speculate whether states would apply standards that would vary substantially from current state practices. To allow for a comparison of potential protection that may result if the criteria listed under the Permit Program Specifications were applied directly to owners and operators, both the Minimum Requirements and specifically identified Revised Criteria are listed in Table A -1 , a "Comparison of Waste Disposal Unit Criteria," in Appendix A . Since the Permit Program Specifications broadly apply the MSW landfill criteria to a CCR permit program, but allow states to apply them as they deem necessary, Table A -1 does not necessarily list each potentially applicable requirement included under the MSW landfill criteria. Instead, it highlights requirements that would differ substantially from the standards applicable to owners and operators of CCR landfills and surface impoundments, identified by EPA as those necessary to achieve necessary protection associated with the accumulation and disposal of CCRs. An MSW permit program, both as its purpose is delineated in statute and as it is implemented in accordance with EPA regulations, is substantially different from the CCR permit program in the proposed amendment to RCRA. Pursuant to the existing Section 4005 of RCRA, not later than 18 months after the promulgation of MSW landfill criteria, each state was required to adopt and implement "a permit program or other system or prior approval and conditions" to assure that each MSW facility in the state that may receive hazardous household waste (i.e., MSW) will comply with the criteria. In contrast, a CCR permit program would be a program adopted by a state "for the management and disposal of coal combustion residuals to the extent such activities occur in structures in such state." Under that definition, it would appear that a state could use the program broadly, but not necessarily as a mechanism to assure facility compliance with certain standards. Also under Section 4005 of RCRA, EPA was directed to approve state MSW permit programs. Pursuant to that directive, in 40 C.F.R. Part 239, EPA detailed (1) the required components of a state permit program application; (2) required state authorities and processes necessary to assure that the state would both implement and enforce facility compliance with the MSW landfill criteria; and (3) its responsibilities in approving a state's permit program, including conditions under which EPA approval may be withdrawn (resulting in the potential EPA enforcement of MSW landfill criteria at facilities in that state). Within 36 months of enactment of the proposed Section 4011, pursuant to provisions applicable to "State Actions," the state agency responsible for implementing the CCR permit program would be required to certify to EPA that its program meets the Permit Program Specifications. Required elements of that certification are similar to the required components of a state MSW permit program. Beyond those requirements, the proposed Section 4011 includes few provisions comparable to the regulatory requirements in Part 239. Absent their inclusion, it would appear that directives or requirements similar to those applicable to an adequate MSW permit program would not apply to the adoption or implementation of a CCR permit program. For example, in contrast to requirements explicitly required of an EPA-approved MSW permit program, Section 4011 includes no comparable provisions that explicitly require a state to demonstrate or ensure that its CCR permit program has authorities and procedures in place to ensure that CCR structures comply with the relevant criteria; will uniformly apply permit program conditions to all CCR structures within the state's jurisdiction; will require owners and operators of all new CCR structures to obtain a permit before the facility begins operation and operate that structure in accordance with permit conditions; or will require owners and operators of all existing CCR structures to obtain a permit and operate in accordance with permit conditions by a certain deadline. Absent such explicit directive, a state implementing a CCR permit would not necessarily have to require owners and operators of all CCR structures to either obtain a permit or to operate its facility in accordance with specific criteria. In order to adopt or implement a CCR permit program, a state would be required to maintain a permit program approved pursuant to requirements in Part 239 or be authorized to implement hazardous waste program requirements established under Subtitle C of RCRA. As a result, a state adopting a CCR permit program would have enacted laws and implemented procedures as required under Part 239. It is unclear, however, the degree to which a state having an approved MSW permit program intended to ensure compliance with the MSW landfill regulations would amend state laws or adapt its procedures as necessary to apply those requirements to the management and disposal of CCRs in structures in that state. It is also unclear whether a state would be required to apply its permit program to all or some CCR structures in the state. Compared to its responsibilities regarding the MSW permit program, EPA's role in state adoption and implementation of a CCR permit program would also be significantly different. For MSW landfill permit programs, EPA may approve, disapprove, or partially approve a state program pursuant to criteria it developed under Part 239. EPA's role in state adoption of the proposed CCR permit program is specified largely in provisions regarding "Written Notice and Opportunity to Remedy." In that capacity, EPA would be required to provide a state with notice and an opportunity to remedy deficiencies, if at any time the state does not satisfy provisions applicable to State Actions with regard to its notification to EPA regarding its intent to implement a program, certification to EPA regarding its permit program, and maintenance of an approved MSW landfill permit program or an authorized hazardous waste management program; is not implementing a CCR permit program that meets the permit program specification minimum requirements (including a state's decision to not apply certain revised criteria to its permit program). The time frame for a state to address deficiencies identified by EPA would be uncertain. If a state is notified of a deficiency, it would be required to work with EPA to establish a "reasonable deadline," but one not sooner than six months after receiving EPA's notice identifying the deficiencies. EPA would be required to implement a CCR permit program if it determines the state program has deficiencies (within the limits specified above), but only after the state fails to remedy the deficiencies by the agreed-upon deadline and any judicial review brought by the state under section 7006 of RCRA is resolved. Beyond these criteria, EPA would not be directed to determine whether other elements of a state CCR permit program are deficient or whether state regulatory programs are adequate to minimize risks associated with improper accumulation and disposal of CCRs. In contrast, pursuant to requirements in Part 239, EPA must both approve a state's MSW permit program and could have a role in its future implementation, including the ability to withd raw its adequacy determination. To illustrate the differences between an MSW permit program and the proposed CCR permit program, Table B -1 in Appendix B lists the required elements in Part 239 and identifies relevant requirements included or excluded in the proposed Section 4011 of RCRA. Among its reasons for proposing national standards applicable to CCR accumulation and disposal facilities, EPA identified the need to ensure that both new and existing facilities would operate in a way that minimized potential contaminant leaching (primarily through the use of composite liners) and that would monitor groundwater to determine if such leaching has occurred. EPA has determined that states do not consistently require such protective measures, particularly at existing CCR surface impoundments. To address those concerns, when considering EPA's proposal under Subtitle D and legislative proposals to amend RCRA, the most relevant question may be "Would either approach change current state practices?" The answer is not clear. Neither proposal would apply federally enforceable standards to owners and operators of CCR landfills or surface impoundments. EPA's proposal would apply national standards to those facilities, but they would not be directly enforceable by EPA. Instead, it would be up to individual states to determine the degree to which they may adopt, implement, and enforce the standards. For example, a state may choose to apply EPA's standards to new CCR disposal facilities, but not necessarily to existing facilities—those that EPA has identified as being more likely to operate without necessary protections. The legislative proposal to amend RCRA would create a CCR permit program that would give states broad discretion in determining how, when, and to which facilities they may apply new regulatory standards. In comments submitted by state agencies in the wake of EPA's June 2010 proposal, most state agency officials argued that their own regulatory programs sufficiently address CCR management. It would seem unlikely that, absent an explicit federal directive to do so, a state would choose to implement a CCR permit program that would vary significantly from its current waste management program. Appendix A. Comparison of Existing and Proposed Disposal Facility Criteria The first and second columns in Table A -1 list existing regulatory criteria applicable to MSW landfills in 40 C.F.R. 258 and comparable standards, proposed by EPA to be added under 40 C.F.R. Part 257, applicable to CCR landfills and surface impoundments. Listed under each column are individual requirements specifying location restrictions, operating criteria, design criteria, groundwater monitoring and corrective action, closure and post-closure care, and financial assurance. Table cells with an asterisk indicate the lack of a corresponding requirement between the two standards. When individual requirements are largely similar, only the regulatory heading is included. When there is a significant difference between two requirements, additional information is provided to clarify that difference. Broadly, the most significant differences pertain to the potential regulation of surface impoundments. For example, requirements that would provide protections specific to the disposal of liquids are not included in Part 258 because bulk disposal of liquids is prohibited in MSW landfills. In comparison, EPA's June 2010 Subtitle D proposal includes various requirements intended to address issues unique to the management of CCRs, particularly the accumulation of liquids in surface impoundments—with regard to both the higher potential risk of a catastrophic release associated with a structural failure and contaminant leaching from those units. The third column lists CCR Permit Program Specifications included under the "Minimum Requirements" and "Revised Criteria" that would apply to the permit program in the proposed Section 4011 of RCRA. As discussed previously, by creating a permit program, the proposed amendment to RCRA does not attempt to create standards applicable to owners and operators of CCR landfills and surface impoundments. For example, the following provision is included under the program Minimum Requirements: "The specifications described in this subsection for a coal combustion residuals permit program are as follows: (A) The revised criteria described in [proposed Section 4011(c)(2)] shall apply to a coal combustion residuals permit program ." Further, those revised criteria/MSW landfill criteria would apply to a CCR permit program except as a state may determine that one or more are not needed for the management of CCR in that state and decline to apply it. Information included under the third column in Table A -1 is intended to identify Permit Program Specifications that, if a state chose to apply them to owner/operators of CCR structures, would be similar to or distinctly different from EPA's June 2010 proposal applicable to CCR landfills and surface impoundments. Appendix B. An "Adequate" MSW Permit Program Compared to the Proposed CCR Permit Program Given the discretion allowed to states to apply the proposed Section 4011 Permit Program Specifications directly to CCR structures, it is unclear whether or to what degree a state's CCR permit program would be comparable to an approved MSW permit program (as defined under current law). If a state did choose to apply those criteria to owners and operators of CCR structures, implementation of a CCR permit program would still likely be significantly different compared to an MSW permit program. State adoption and implementation of a CCR permit program would also likely differ from an MSW permit program as a result of the significantly different roles and responsibilities allowed for EPA. Key differences between the existing MSW and proposed CCR permit programs can be seen by comparing "Requirements for State Permit Program Determination of Adequacy" to provisions applicable to a CCR permit program in the proposed Section 4011 amendment to RCRA. Table B -1 lists selected, relevant requirements in 40 C.F.R. Part 239 and comparable elements of the proposed CCR permit program. Broadly, few requirements included under Part 239 are included in the proposed Section 4011. As a result, the identification of comparable provisions that are not included among the requirements applicable to the permit program proposed in statute would likely not apply to a state's program or may be applied at its discretion.

On April 24, 2012, the House and Senate began the conference process to reconcile legislation passed in both houses that would extend authorization for Department of Transportation programs. Title V in the House-passed legislation (H.R. 4348), Highway and Infrastructure Safety Through the Protection of Coal Combustion Residual Recycling, would amend the Resource Conservation and Recovery Act (RCRA) to add Section 4011. Largely identical to the Coal Residuals Reuse and Management Act passed in the House (H.R. 2273) and introduced in the Senate (S. 1751), the proposed Section 4011 would create a state-based permit program for the management and disposal of coal combustion residuals (CCRs, also known as coal ash). Concern over CCR Management CCRs are the inorganic materials that remain after pulverized coal is burned for power production. Generally, more than 100 million tons of CCRs are generated annually in the United States, the majority of which is accumulated in landfills or surface impoundment ponds at individual power plants. The Environmental Protection Agency (EPA) has determined that accumulation in unlined units, particularly surface impoundments, poses a substantial risk of contaminant leaching (particularly selenium and arsenic) to surface and groundwater. EPA found that use of a composite liner largely eliminated that risk. While new units are likely to be built with liners, EPA has determined that the majority in use today are older and unlikely to have liners. Administration and Congressional Proposals to Manage CCRs CCR management is regulated by individual states, which EPA has found to be inconsistent in its requirements for protective measures (e.g., liners and groundwater monitoring systems). Concerns regarding the risks of improper management and inconsistent state regulations led EPA to propose national standards for CCR disposal. In June 2010, EPA released for public comment two regulatory options—one proposed under its existing authority to regulate hazardous wastes, under Subtitle C of RCRA, the other under its authority to promulgate standards applicable to "sanitary landfills," under Subtitle D of RCRA. EPA is authorized to enforce its proposed Subtitle C standards, but could only encourage states to adopt and enforce the Subtitle D standards. In contrast to EPA's proposals, the proposed amendment to RCRA would create a state-based permit program for the management and disposal of CCRs. Established entirely in statute, Congress would create a program unique among environmental laws. That is, the permit program would be created with no directive to EPA to promulgate regulations applicable to the program or to CCR landfills and surface impoundments. Instead, existing regulations applicable to municipal solid waste (MSW) landfills and elements of EPA's June 2010 proposal would apply to the program. Stakeholders in favor of the legislative approach include industry groups concerned that implementing EPA's Subtitle C option would stigmatize CCRs by labeling the materials "hazardous waste," potentially reducing markets for reuse and recycling (e.g., as a component in concrete or roadbed materials). States support this approach, as it would allow them to regulate CCRs as they deem necessary. Stakeholders opposed to this approach argue that the flexibility allowed to states in deciding whether or when facilities may be required to obtain a permit, as well as the proposed amendment's lack of federally enforceable standards applicable to CCR landfills and surface impoundments, would likely result in few changes to current state programs. Scope and Purpose of This Report This report provides background to understand the legislative proposals to amend Subtitle D of RCRA and identifies potential challenges to implementing the proposed permit program. Considering their influence on program implementation, the report discusses the regulatory standards on which the permit program would be based. In particular, it summarizes EPA's existing (MSW) and proposed (CCR) standards relevant to the proposed CCR permit program. This report also summarizes provisions in the proposed Section 4011 of RCRA; identifies potential challenges to implementing a statutory permit program; and compares regulations applicable to MSW landfills to comparable elements of the proposed CCR permit program.

For most of the history of the U.S. military, young, single males were favored for recruitment and induction to the military by various laws and policy. Following the end of the draft and the beginning of the all-volunteer force (AVF) in 1973, DOD was required to compete for manpower with civilian employers. As DOD continually expanded its recruiting efforts, the proportion of women in the active component of the military grew from about 2.5% in 1973 to 16% in 2018. In addition there are almost twice as many dual-military married couples and single parents serving on active duty than in 1985 (see Figure 1 ).Thus, family-oriented benefits and programs have become an increasingly important component of DOD's total servicemember compensation package. DOD's child development program (CDP) is one of these family-oriented initiatives and is part of a broader set of community and family support programs. This report traces the development of DOD-sponsored childcare services and discusses these issues in greater depth in order to support Members of Congress in their oversight role. The next section gives an overview of DOD's justification for the CDP program and demand for services. Next is a discussion of current CDP components, policies, and funding. This is followed by the legislative history of DOD-sponsored childcare in the military. The final section discusses issues and options for Congress related to oversight and funding of military childcare programs. Other family or youth recreation and enrichment programs are beyond the scope of this report. DOD considers childcare services a quality-of-life benefit and DOD officials have indicated that the primary reason for providing childcare services is to enhance force readiness. DOD's stated policy is to ensure that childcare services [s]upport the mission readiness, retention, and morale of the total force during peacetime, overseas contingency operations, periods of force structure change, relocation of military units, base realignment and closure, and other emergency situations. DOD credits the availability of quality childcare on or near installations with reducing lost duty time (e.g., absenteeism and tardiness) and parental distractions that could harm servicemembers' productivity. For example, in 1987, the Army reported survey data showing that 20% of enlisted and 22% of officers had lost job and duty time due to lack of adequate childcare. Some within DOD and military family advocacy groups have tied childcare benefits to improved recruitment, morale, and retention of military personnel. A 2017 survey of active duty servicemembers found that 16% of members listed childcare as one of the top five stressors related to military life and 33% listed other worries about the impact of military life (e.g., time away) on their children. With an all-volunteer force (AVF), DOD must compete for talent with civilian employers who have begun to offer more family-friendly policies and benefits over the past few decades. This means that the compensation and benefits packages offered to servicemembers may need to be as good as or better than available civilian compensation packages to recruit and retain talent. Research on the links between employer-sponsored childcare and employee performance, morale, job satisfaction, and recruitment and retention have had mixed results. In general, some studies suggest positive links between these benefits, employee satisfaction, and organizational commitment. In particular, childcare benefits are seen as more important to those employees lacking support from immediate or extended family. In addition, a 2011 study of family-friendly benefits at federal agencies found positive relationships between childcare subsidy programs, agency performance, and reduced employee turnover. Nevertheless, other research has found little empirical evidence that employee-sponsored childcare in the private or public sector has significant positive effects on individual performance, productivity, or job satisfaction. Research on military families has shown that the readiness impact of childcare concerns varies by family type, with single parents and dual military couples reporting more missed duty time after the birth of a new child or when moving to a new installation. There is also some evidence that childcare challenges may impact retention decisions. Military families have reported that it is "likely or very likely" that child care issues would lead them to leave the military and those with pre-school age children have reported that they are more likely to leave the military than their counterparts with school-age children. On the other hand, some human resource professionals have also warned that family- friendly benefits may lead to perceived inequities and could have negative effects on the morale of childless workers or parents who are unable to use the benefit (e.g., those who are wait-listed for childcare spots and/or lower on the priority list). Nevertheless, while researchers have found some evidence of negative employee attitudes towards specific family-friendly benefits, they have not found a relationship with overall attitudes and behaviors towards the organization. Military families may have different childcare needs than their civilian counterparts. Servicemembers typically make a number of permanent change-of-station (PCS) moves throughout a career, making it difficult to maintain consistent full-time childcare arrangements or draw upon support from extended family members and friends. In addition, servicemembers may be required to work extended hours or shift work during times when normal day care providers are not in operation—a problem that may be exacerbated with single-parent servicemembers or in families where both parents are in the service. Even in cases of married couples where the spouse is a civilian, long deployments (typically six months or more) can create childcare challenges for both working and non-working spouses of military servicemembers who essentially become single parents for the duration of the deployment. DOD tracks Demand Accommodation Rate as a metric for whether it is meeting the childcare needs of military families. For FY2015, DOD reported that it was accommodating 78% of demand. Wait list data is one way to measure this demand, which is affected by demographic, geographic, and structural factors. The wait lists for CDCs are managed locally by priority and are based on the date that the request for care was filed, priority criteria, and other mission-related factors at the installation commander's discretion (see Table 2 ). The Military Compensation and Retirement Modernization Commission (MCRMC) found that in 2014 there were 10,979 total children on waiting lists for childcare, with a disproportionate number of children (73%) ages 3 and under on waiting lists. Although waiting lists numbers are one indicator of demand, they may not accurately represent the total number of additional childcare slots needed. Families that want military childcare services may decide that the waiting list is too long and may seek childcare through other sources. Waiting list numbers might also overestimate demand, if families remain on waiting lists after a PCS move or after military childcare is no longer needed. Demand can also fluctuate based on parental preferences for care, the availability of other community-based childcare options, unit deployment schedules, and changes to mission requirements. In 2017, the total share of married-couple families in the U.S. with children under 18 where both parents were employed outside the home was 61.1%. Military servicemembers are, on average, younger than the civilian population, and have fewer children. Although civilian spouses of active duty military members are, on average, more educated than other working age civilians, they are more likely to be unemployed or underemployed and have lower earnings than their civilian counterparts. Approximately 41% of military servicemembers across the total force have dependent children; approximately 2% are in dual-service marriages, 6% are single parents, and 32% are in marriages with a civilian spouse (see Figure 2 ). The total military child population (active and reserve components) under the age of 13 is approximately 1.2 million, with 34% aged 3 and under (see Figure 3 ). A 2017 survey of military spouses found that among the survey group, approximately 47% of active duty spouses were employed either full time or part time, and 51% of those who are not employed would like to be. Of those not employed, 53% reported childcare challenges were one of the top three reasons for not working. The survey also found that 67% of military family respondents were not always able to find childcare that fit their current situation. DOD offers childcare development programs on and off military installations for children from birth through 12 years, including care on full-day, part-day, short-term, and intermittent bases. The Military and Community Family Policy Office in DOD's Office of the Under Secretary for Personnel and Readiness oversees child and youth programs. DOD's policy states that childcare "is not an entitlement." Servicemembers are not guaranteed childcare support from DOD and they are required to have adequate care plans in place for their dependents. The following are among the childcare services available as part of DOD's child development programs. Child Development Centers (CDCs) . DOD-operated, facility-based care primarily for children from six weeks to five years, Family Child Care (FCC) . Certified home-based childcare services (maximum six children per home at any time) for children from four weeks through 12 years. S chool-age C are (SAC) . Facility-based or home-based care for children ages 6-12, or those attending kindergarten, who require supervision before and after school, or during duty hours, school holidays, or school closures. S upplemental C hild C are . Childcare programs and services that augment and support CDC and FCC programs to increase the availability of childcare for military and DOD civilian employees. These may include, but are not limited to, resource and referral services, fee assistance/subsidy programs, contract-provided services, short-term/respite care, hourly childcare at alternative locations, and interagency initiatives. In FY2017 the services operated more than 628 CDCs of varying sizes and had certified nearly 2,600 FCC homes (See Table 1 ). The Navy reports a significantly larger number of certified FCC homes than the other services. This is largely due to a push by the Navy in the earlier years of the program towards the FCCs, which proved to be a lower-cost childcare option than the CDCs. The following sections will focus mainly on facility-based care at the CDCs. Military service members, surviving spouses, and DOD civilians are generally eligible for CDC services; while DOD contractors, military retirees, and other federal agency are eligible on a space-available basis. However, eligibility for CDC benefits does not guarantee access to care. DOD determines the priority categories for care. Currently, priority depends on the employment status of the child's sponsor and the sponsor's spouse or same-sex domestic partner on the date of the application for services. Military rank, paygrade, occupational specialty, General Schedule (GS) rating, or financial need are not official criteria for determining priority. See Table 2 for a list of DOD's priority categories and eligibility. Among DOD's quality of life programs, the CDP is the second largest appropriated-fund program, with the military commissary program having the highest annual expenditures. Appropriations for DOD's Child Development Program are made from different accounts. Funds for the construction of care facilities come from military construction (MILCON) funds, while other operational funds come from Operation and Maintenance (O&M) and Morale, Welfare, and Recreation (MWR) accounts. Across the services and DOD, approximately $843 million in FY2017 appropriated O&M funds went to CDPs (see Figure 4 ), $17 million of which were designated as Overseas Contingency Operations (OCO) funds for "Emergency Child Care Support". DOD reports that OCO funds are used, in part, to provide emergency and respite childcare services for servicemembers (Active, Guard and Reserve) to enable families to manage lengthy separations and, in some cases, extensions to deployments. MILCON funding for the construction or modification of CDC facilities varies from year to year depending on need. FCCs that are operated in military family housing are essentially subsidized by appropriated funds to the extent that funding goes towards construction and maintenance of such housing. However, the number of FCCs typically varies from year to year and therefore CRS cannot determine the percentage of military housing funds that support childcare services. CDCs are funded by a combination of appropriated and non-appropriated funds (APF and NAF). Statute also allows appropriated funds to be used to subsidize FCCs at costs comparable to those at the CDCs, with the parental fees paid directly to the FCC provider. By statute the amount of APF used to operate CDC cannot be less than the estimated amount of childcare fee receipts. Appropriated funds are used to pay for operation and maintenance of childcare centers while NAF are used to pay mainly for staff salaries Non-appropriated funds for the CDCs come from the parent fees discussed below and are sometimes subsidized by other fee-generating MWR activities (e.g., military exchange store revenues). The installation commander typically has the discretion to direct additional MWR-generated revenues towards childcare services or other installation activities and services. Using these funds could help augment the quality of childcare services or provide additional resources to the centers' resources. However, over-reliance on MWR subsidies to support childcare operations could be problematic, since those revenue streams are less reliable and are more subject to economic downturns. Also, use of too much MWR revenue for family-related benefits may raise concern about inequity for servicemembers who do not require childcare services and might prefer subsidies for other MWR activities (e.g., clubs, golf courses). Finally, due to the decentralized nature MWR funds distribution, there is less accountability for how funds are spent and whether spending is effective in achieving program goals. Military childcare programs generate approximately $400 million in non-appropriated funds annually through parent-usage fees. Statute requires the Secretary of Defense to establish CDC fees and these are adjusted annually to reflect cost of living increases. Statute also authorizes the Secretary of Defense to use appropriated funds to subsidize family home day care providers at rates comparable to those at the CDCs. DOD's guidance specifies that "childcare is not an entitlement" and that each family is required to pay their share of the cost of childcare. The amount that each family pays is on a sliding scale based on total family income . In the lowest income category, at 2017-2018 rates (including market adjustments), a family might pay as little as $222 per month per child and in the highest category would pay a maximum of $944 per month per child (See Table 4 ). The services have some discretion to offer fee reductions, for example, for families with multiple children, injured or deployed servicemembers, or those experiencing financial hardship. The U.S. Department of Health and Human Services has established a benchmark for affordable childcare at 7% of family income for low-income families. To put the military childcare fees in context, the average basic pay and allowances for an E-5 is $57,661 annually, using the 2017 enlisted pay scale. This pay rate would place the E-5 (with no spousal or other source of income) in income category IV. Therefore, an E-5 would be paying approximately 9.7% of his or her income for childcare fees for one child under the standard fee structure. A mid-level officer, O-4, would have average pay and allowances of $118,080 annually and would be eligible for income category VIII. This servicemember (with no spousal or other source of income) would be paying approximately 6% of his or her income in childcare fees for one child. Military childcare fees are generally lower than fees for civilian center-based care (see Table 5 ). The U.S. Census Bureau has reported that out-of-pocket childcare costs have risen over the past three decades, nearly doubling between 1985 and 2011. The cost of civilian childcare varies widely depending on the age of the child, quality of care, and the geographic location. A 2017 study of childcare costs across the nation found that the average annual care cost for center-based childcare for one infant in a high-cost state like California is $23,077, and $12,393 for a lower-cost state like South Carolina. DOD centers do not have variable fees for infants. Typically, civilian centers offer a flat fee for care, rather than a sliding income scale. However, low-income families may be eligible for supplemental state or federal childcare assistance. Childcare decisions can be complex and military parents or guardians often have to make care choices under time constraints while transferring to a new duty station. They may have limited information about provider options and quality of care at the new locale. DOD's regulations for military childcare centers generally have stricter operational, safety, and performance standards than many civilian centers and have been ranked highest among all states in national assessments. DOD uses accreditation and certification rates as its primary metric for monitoring childcare program quality (see Table 6 ). Because attaining accreditation and maintaining quality standards can be expensive high-quality civilian childcare centers may be out of reach for some military servicemembers, particularly for junior enlisted members; in the absence of DOD-subsidized options, these military families may rely on an informal or unregulated system of childcare. Accreditation is one mechanism used to achieve quality assurance for childcare. National childcare accreditation organizations evaluate providers on standards related to, for example, curriculum, teaching, health, staff competencies, leadership and management, physical environment, and relationships between teachers, children, parents, and communities. Costs for initial accreditation and maintenance of accreditation typically vary by the number of children and accreditation is often awarded for a five-year term. The accreditation can serve two key purposes. First, the process of becoming accredited and accreditation renewal requires an organization to self-assess and can be a mechanism for improved operations and staff development. Second, accreditation can serve as a signaling mechanism to parents who typically do not have the information to individually assess the level of childcare center quality. Critics of accreditation have argued that the requirements impose unnecessary time and resource burdens on childcare staff. However, others have noted that accreditation can improve staff morale and pride in their work. Congress first required accreditation of CDCs as a demonstration program in 1991. By 1994, a report on the impact of accreditation found that it improved quality of care for both low-quality and high-quality centers at minimal incremental cost. The National Defense Authorization Act for Fiscal Year 1996 required all eligible military centers meet standards necessary for accreditation. By 1998, all of the military departments had implemented universal accreditation for their CDCs. As of 2015, DOD reported that 97% of its CDCs were nationally accredited, just shy of its goal of 98% accreditation. In comparison, the civilian rate of accreditation is estimated to be between 8% and 10%. DOD FCCs are not required by law to be accredited; however, DOD policy encourages providers to seek national accreditation. CDC and SAC facilities are required to meet certain minimum operational standards to receive a DOD Certificate to Operate. These include DOD's Unified Facilities Criteria (UFC) as well as Occupational Safety and Health Administration (OSHA) standards. By law, CDCs are subject to unannounced inspections a minimum of four times per year. One of these inspections must be carried out by an installation representative and one must be carried out by a representative of the major command under which the facility operates. The law also states that, (1) Except as provided in paragraph (2), any violation of a safety, health, or child welfare law or regulation (discovered at an inspection or otherwise) at a military child development center shall be remedied immediately. (2) In the case of a violation that is not life threatening, the commander of the major command under which the installation concerned operates may waive the requirement that the violation be remedied immediately for a period of up to 90 days beginning on the date of the discovery of the violation. If the violation is not remedied as of the end of that 90-day period, the military child development center shall be closed until the violation is remedied. The Secretary of the military department concerned may waive the preceding sentence and authorize the center to remain open in a case in which the violation cannot reasonably be remedied within that 90-day period or in which major facility reconstruction is required. FCC homes must meet the same standards as CDCs and are subject to inspections by FCC staff, as well as requirements to meet Fire, Safety, USDA Food Program, and Public Health Program requirements. DOD reported that it met its 100% certification rate goal for FY2015. Childcare employees are required by statute to meet certain training requirements that include at least the following. Early childhood development. Activities and disciplinary techniques appropriate to children of different ages. Child abuse prevention and detection. Cardiopulmonary resuscitation and other emergency medical procedures. At least one employee at each CDC is required to be a specialist in training and curriculum development. Finally, to ensure the ability to recruit "a qualified and stable civilian workforce," the law requires that CDC employees are paid at rates of pay that are competitive or substantially equivalent to rates of pay for other employees at the respective installation. Besides competitive salaries, CDC employees are eligible to receive other federal employee benefits (e.g., medical, dental, and retirement benefits), as well as access to some of the amenities on military installations (e.g., fitness centers and recreation activities). FCC providers receive training, resources, and support through the CDC program but operate as independent contractors. DOD regulations require that background checks be conducted on all individuals who regularly interact with children and youth. This includes CDC employees and FCC operators. In FCC homes all residents over the age of 12 are subject to background checks. Following a highly publicized incident at a CDC in Fort Myer, VA in 2012 where two daycare workers were charged with assault, DOD took action to review and strengthen background check procedures. DOD's new policy, effective in 2015, requires DOD components to ensure that background checks have been completed and to address delays in results in a manner that does not presume a favorable background check. Another statutory element of oversight is the requirement that each CDC establish a board of parents of the children attending the center. The board is charged with meeting periodically with the staff and coordinating parent participation programs. The federal government first took a significant role in childcare during the Great Depression when it set up day care centers to provide jobs for women through the Works Progress Administration. In 1941, in response to the need for women to work outside the home while the men were away at war, the government passed the Lanham Act of 1940. The act provided grant funding to communities based on demonstrated need, for care for children ages 0-12. Funds were used for the construction of childcare facilities, teacher training and pay, and meal services. Over 550,000 children nation-wide are estimated to have received care from Lanham Act programs. By 1946, the funds were withdrawn with the expectation that most women would return to childcare duties within the home following the end of the war. In the U.S. military, demand for childcare was low throughout much of the early 20 th century. This was due to the demographic composition of the force and prevailing social norms. In the 1950s approximately 70% of servicemembers in the Army were single males. Today over 50% of the total active duty force is married and females account for approximately 16% of the force. In the 1950s and 1960s, non-working spouses mainly provided care for children of military servicemembers at home. During this era, if childcare was needed outside the home, relatives, private groups, parents' cooperatives, or wives' clubs provided it. Some of these wives' clubs also sponsored part-day preschools that provided education and development programs for toddlers aged 3-5 years old. This childcare system was loosely structured and had few regulations. Between 1970 and 1980 a number of developments increased demand for military childcare services. With the advent of the all-volunteer force in 1973, new recruits increasingly included women and career-oriented personnel with dependents. Between 1973 and 1978 the proportion of women in the military climbed from 2.5% to over 6% and the number of dual military marriages increased. In 1975, DOD directed the services to discontinue involuntary discharges for pregnant or custodial mothers, in favor of a voluntary separation policy. Meanwhile, between 1970 and 1980 the proportion of women participating in the U.S. labor force jumped from 40% to 50% , and civilian employer-sponsored childcare initiatives began to gain popularity. An increase in civilian spouses of military members working outside the home meant both an increased demand for childcare services and fewer participants in the informal caregiver support networks that had been providing these services. Around the same time the quality of childcare services on DOD installations came under scrutiny. In 1976, a nation-wide survey of military centers operating as non-appropriated fund programs, found that there was a wide variance in the services and standards of military facilities relative to civilian facilities. The study also noted a lack of specialized training for teachers and aides. It wasn't until 1978 that DOD issued a directive formalizing government responsibility for installation childcare centers as part of the military's morale, welfare, and recreation (MWR) program. This directive held the individual services responsible for developing their own policies and standards and allowed installations to establish their own operating procedures. Congress first appropriated funds for the construction of new childcare facilities in the Department of Defense Appropriation Act for Fiscal Year 1982. During that year GAO reported that the majority of existing childcare facilities needed enhancements to meet fire, safety, and sanitation standards and to accommodate demand for services. (See Table 7 for the total number of facilities and children served in 1982.) Some of the deficiencies noted in the centers were lack of emergency evacuation access, lead-based paint peeling from the walls, and leaking roofs. The GAO also noted that user fees and other existing revenue streams might not be sufficient for the military services to conduct necessary upgrades. Finally, the report recommended that DOD establish department-wide minimum standards for total group size, caregiver-to-child-ratios, educational activities, staff training, and food services. In 1985 Congress passed the Military Family Act establishing an Office of Family Policy within the Office of the Secretary of Defense. The office was designed to coordinate all DOD programs and activities relating to military families. The specified duties of the office were to coordinate programs and activities of the military departments to the extent that they relate to military families; and make recommendations to the Secretaries of the military departments with respect to programs and policies regarding military families. The act also established the authority of the Secretary of Defense to survey military family members on the effectiveness of existing federal military family support programs. In 1988, the Office of Family policy was instrumental in formulating the Defense Department's Instruction for Family Policy. The Instruction laid the groundwork for implementing the current military childcare programs. In the late 1980s, military childcare services came under intense scrutiny after allegations of child abuse at a number of military installations emerged. Widespread publicity of allegations, particularly those involving Army CDCs at the United States Military Academy in West Point New York, and the Presidio Army Base in San Francisco, California, led DOD to establish a special investigative team in 1987. Many felt that the military was not doing enough to address the allegations, and a congressional inquiry was launched in 1988 with a series of hearings and testimony by military officials, childcare specialists, legal experts, and military parents. In the hearings, issues were raised about the staff-to-child ratios, the lack of employee background investigations, and inadequate procedures for deterring, preventing, identifying and responding to child abuse. Some of the other issues that were raised were the exemption of on-base childcare centers from federal and state licensing standards and other jurisdictional issues, lack of quality programming within the centers, and low wages for childcare employees. Some suggested that the reliance on non-appropriated funds limited the centers ability to attract and retain quality personnel and to make necessary repairs and upgrades to facilities and equipment. Other concerns were the lack of capacity to meet demand and unsuitable civilian alternatives at certain military installations. In 1989, Congress passed the Military Child Care Act (MCCA) as part of the National Defense Authorization Act for 1990 and 1991. The goals of the MCCA were to improve the quality, safety, availability, and affordability of military childcare. To achieve these goals the law called for standardizing requirements for health and safety inspections and training requirements. It also included provisions for increasing salaries of caregivers, parental participation, and DOD oversight. To improve affordability, Congress authorized the use of appropriated funds to subsidize family home day care providers and required a subsidized CDC fee structure that was based on family income. To improve employee quality, the law required that at least one employee at each CDC be credentialed as a specialist in training and curriculum development and that all employees undergo mandatory training within six months of employment on four topics. Another quality initiative in the MCCA was a provision requiring accreditation of at least 50 military childcare development centers (CDCs) by June 1, 1991, as a demonstration program. These 50 centers were intended to then serve as "model" centers for other CDCs and FCCs. In response to concerns about child abuse, the act required the establishment of a national hotline to report suspected child abuse or safety violations. It also directed DOD to establish regulations compelling installation commanders to coordinate with local child protective authorities in cases of child abuse allegations. Finally, the act required DOD to establish a child abuse task force to respond to abuse allegations and to assist parents and installation commanders in dealing with allegations. Section 658 of the National Defense Authorization Act for Fiscal Year 1996 amended and codified the Military Family Act and MCCA under Chapter 88 of title 10, United States Code, "Military Family Programs and Military Child Care." As part of the FY2000 NDAA, Congress, for the first time, authorized DOD to subsidize civilian childcare programs outside of military installations. To receive subsidies, these programs are required to comply with DOD regulations, standards and policies. Provider eligibility determinations are based on factors such as frequency of inspections, employee qualifications, and center accreditation. The Senate Committee report to accompany the bill noted, The committee believes that the recommended financial assistance is necessary to supplement and expand essential quality of life services for children of military personnel and eligible federal employees at an affordable cost. The statute authorizes DOD to use Operation and Maintenance (O&M) funds for financial assistance under this program. The program provides a subsidy in the amount of the difference between what an eligible servicemember would pay for installation-based care (in CDCs) and the community-based care provider's rate up to a certain cap. Fee assistance subsidy services are administered by Childcare Aware of America, a national nonprofit organization. In 2016, this organization reported that it provided childcare subsidies to more than 15,000 military families, while processing more than $52.4 million in payments. Section 1008(b) of Title 37, United States Code requires the President to conduct a review of the military compensation system every four years. The 10 th QMRC, which was released in September 2008 had a specific mandate to address military quality of life programs. The authors of the report raised concerns that DOD was not managing the childcare program as an element of a comprehensive compensation package. They noted that services were only available to a fraction of the force, wait list policies did not give priority based on highest need, and centers had limited hours. The authors question whether the investment in childcare (estimated to be $530 million at the time) had any impact on DOD's force management goals, noting that servicemembers "significantly underestimate the program's value," and it was unclear whether the program had a "significant or cost-effective impact on … recruitment, retention, or readiness." Given these concerns the QRMC made three recommendations intended to improve equity, efficiency, and access to the childcare benefit. (1) The Services should prioritize allocation of child care slots based on force management needs, with priority to families of deployed soldiers in wartime and to servicemembers in critical/high demand occupations in peacetime. (2) DOD should implement a pilot voucher program to help servicemembers pay for child care costs. (3) DOD should increase its investment in family child care. In particular, the authors argued that a cash voucher system would offer a more tangible benefit for military families. DOD policies currently specify priority levels; however, DOD has not adopted the recommendation that priority be given to deployed soldiers or critical/high demand occupation. Congress included a provision in the FY2011 NDAA requiring DOD to submit biennial reports to the Armed Services Committees with information on CDCs and financial assistance for childcare (see box below for required elements). In January 2011, then-President Barack Obama launched an initiative to support military families. Two of the four strategic priorities under this initiative are related to childcare and child development: Ensure excellence in military children's education and their development. Increase childcare availability and quality for the Armed Forces. The final report to the President found that the military needed 37,000 more childcare slots to meet demand. To help meet the needs identified in this report, the administration established the Military Family Federal Interagency Collaboration between DOD and the Department of Health and Human Services. This effort focused on increasing the availability and quality of child care in 20 states for military families, especially those not living near military bases or lacking easy access to other military supports. The Collaboration has identified and is working toward the strategic goals of improving: (1) access to quality child care by increasing the level of quality; (2) the awareness of quality indicators and their importance for creating and maintaining safe and health environments for children; (3) the communication between various partners and agencies to ensure limited resources are used effectively. The National Defense Authorization Act (NDAA) for FY2013 established a Military Compensation and Retirement Modernization Commission (MCRMC) to provide the President and Congress with specific recommendations to modernize pay and benefits for the armed services. In 2015, the Military Compensation and Retirement Commission (MCRMC) submitted its final report. Pertinent recommendations of the report include the following: Establish standardized reporting of childcare wait times. Exempt childcare personnel from future departmental hiring freezes and furloughs. Support current DOD efforts to streamline CDP position descriptions and background checks. Reestablish authority to use operating funds for minor construction projects when building, expanding, or modifying CDP facilities. One of the Commission's recommendations was to improve access to childcare on military installations by ensuring DOD has the information and budgeting tools to provide childcare within 90 days of need. Section 564 of the Senate version of the FY2016 NDAA would have required a biennial survey of military families to include, "adequacy and availability of childcare for dependents of members of the Armed Forces." The House bill did not include a similar provision and this requirement was not adopted. The National Defense Authorization Act for Fiscal Year 2006 ( P.L. 109-163 §2810) authorized use of O&M funds for minor military construction for the purpose of constructing CDCs. The services used this authority to add over 9,000 childcare spaces through additions and renovations to existing facilities. The original authority was set to expire in 2007, but was extended thru 2009, in the FY2008 NDAA ( P.L. 110-181 §2809), when it lapsed. The MCRMC recommended reauthorization of this provision and allowing the Secretary concerned to spend up to $7.5 million from appropriations available for O&M on a minor military construction project that creates, expands, or modifies a CDC. The MCRMC also proposed an amendment to 10 U.S.C. §2805 that would raise the statutory threshold for a minor military construction project to $15 million for CDC-related construction projects. These provisions have not been adopted. On January 28, 2016, then-Secretary of Defense Ashton Carter announced enhancements to the military childcare program as part of a broader "Force of the Future" military personnel reform initiative. DOD's proposed changes would extend the hours of military childcare centers from 12 hours to a minimum of 14 hours per day to ensure that hours of operation are consistent with servicemember work hours at various installations. For example, for a normal workday of 7:00 a.m. to 5:00 p.m., the center would be open from 5:00 a.m. to 7:00 p.m. Military servicemembers would be eligible to receive 12 hours of subsidized care and for any time over 12 hours the member would have to pay the full cost of care out of pocket. According to a DOD spokesman, the additional childcare hours were expected to cost DOD $230 million over a five-year period. Congressional concerns about reductions in military childcare services arose early in 2017 in response to an executive branch hiring freeze executed by the Trump administration. While certain childcare positions received exemptions, implementation of the hiring freeze highlighted some preexisting recruitment and hiring issues for CDC positions. In particular, military officials noted substantial lag times for vetting new employees due to background check requirements. In the FY2018 NDAA ( P.L. 115-91 ), Congress took action to enhance military childcare programs by modifying hiring authorities for military childcare employees. Section 558 of the bill required Secretary-level consideration of the "demands and circumstances" of the active and reserve component patrons of CDCs when setting and maintaining CDC hours of operation. This legislation also authorized the Secretaries of military departments to provide childcare coordinators at installations with "significant numbers" of military personnel and dependents. Section 559 of the bill provides the Secretary of Defense with direct hire authority to recruit and appoint qualified childcare services providers to positions within DOD CDCs if the Secretary determines that (1) there is a critical hiring need, and (2) there is a shortage of providers. Section 576 of bill also requires a review of the General Schedule pay grades for DOD childcare services provider positions to ensure that, in the words of the Senate committee report, "the department is offering a fair and competitive wage" for those positions. Potential issues for Congress regarding military childcare services include the following: Should DOD provide childcare support? What are the pros and cons of different types of childcare support? Are there other oversight concerns for DOD's CDP? These issues are discussed in more detail in the following sections. Debates about the provision of publicly-funded childcare programs often arise from philosophical differences regarding the role of government. Those who oppose government support of childcare programs typically express social, fiscal, or equity concerns. Some contend that childcare should be a parental responsibility rather than a social good to be provided by the government. Some believe that it is best for a mother to stay home with her children and that when the government provides economic incentives for work outside the home it expresses a societal preference for out-of-home care. Some carry this argument further and contend that subsidized childcare endorses and incentivizes single-parenthood or unstable family arrangements, which they contend may have negative economic and social consequences. Research from a Canadian effort to introduce universal subsidized childcare in one province found some evidence suggesting that in the short run, children and families experienced some undesirable outcomes, including negative behaviors among children (e.g., hyperactivity, aggressiveness) and reduction in parental relationship quality. On the other hand, those who advocate for publicly-funded childcare programs often argue that childcare provides societal benefits and should be a community resource in the same manner as schools, libraries, and parks. In 2017, the birthrate in the U.S. was the lowest in 30 years. Falling birthrates can have some societal consequences, such as diminished economic growth and increased strain on entitlement programs such as Social Security. Some studies have shown that accessible and affordable childcare helps to improve fertility rates as well as labor-force outcomes for women, who are often the default caregivers, allowing them to pursue a career and earnings outside of the home. For children, center-based childcare is associated with both positive and negative social and behavioral outcomes relative to those who receive home-based or parental care. Effects are generally small, and depend on factors such as the length of time per day spent in care and the child's temperament and home environment. On the other hand, h igh-quality center-based care is generally correlated with slighter better cognitive, social, academic, and language skills. Benefits are more pronounced for children from low-income households, and gains are sustained through adulthood. Pointing to these potential positive outcomes for children and parents, some contend that it is in the government's best interest to regulate and/or subsidize childcare services to ensure broad access to high-quality care as a societal good. In the military, this means that junior enlisted members, who generally have lower earnings, may have access to higher quality care than they would be able to otherwise afford. This could have first order effects of better financial security for junior enlisted and single-parent military families through greater opportunities for spousal employment and lower childcare fees. Some advocacy groups and researchers have gone further and argue that the federal government has a national security interest in the provision of high-quality childcare for members, since it can improve the quality of the eventual recruiting pool for the military. Some studies have found that youth with a military family member are more likely to serve, and approximately one-third of new military recruits have a parent who served. This suggests that early investments in children of military families may provide indirect long-term benefits to the military services. Other arguments against government sponsorship of childcare suggest that use of taxpayer dollars to subsidize single-parent families or those with two working parents is inherently inequitable or discriminatory against those without children or families with one parent who stays at home to care for children. Others suggest that the federal government should play a smaller role in the provision of social welfare programs such as subsidized childcare, and that these programs are better funded by state and local governments, or through private/nonprofit groups where there may be more accountability for the allocation of funds. In terms of DOD-funded childcare programs, military leaders and other experts have raised concerns about rising personnel costs and the resulting pressure on defense budgets, particularly during times of fiscal austerity or growth in the size of the force. Some argue that with limited resources, the Department should put a priority on war-fighting capabilities rather than expanding personnel benefits. Those who advocate specifically for DOD-sponsored childcare services point to expansion of family-friendly benefits among private sector employers and suggest that these benefits help to make DOD a more attractive employer. DOD's ability to offer competitive benefits becomes increasingly important in order to attract and retain talent during periods of force growth and times when the economy is strong and there is low civilian unemployment. While some may debate whether DOD should provide childcare services at all, another consideration for Congress is whether certain childcare activities should be funded or incentivized over others. Currently DOD's CDP includes a mix of direct provision of on-installation care, training, support and oversight of privatized care (FCCs), government employees in government-owned facilities (CDCs), subsidies to military families for off-installation privatized care (e.g., fee assistance programs), and provision of localized information about private childcare providers and resources. Factors to take into account when considering the pros and cons of different childcare support programs include cost, accountability, and parental preferences. The Navy has historically had a large number of certified FCCs relative to the other services (see Table 1 ). Proponents of FCCs note that they are lower cost to the services. A 2002 RAND study found that the average annual cost per infant (age 6 weeks -12 months) in a CDC was more than twice as much as the average annual cost per infant in an FCC. In general, while DOD subsidizes FCC fees, they have lower overhead costs. Care is provided in private residences, and operational costs are typically the responsibility of the FCC provider. One FCC home coordinator may be assigned to multiple homes or work on a part-time basis, whereas CDC administrative staff members are likely to be full-time employees. Another purported benefit of the FCCs is that they provide an opportunity for military spouses to own and operate a business while caring for their own children. In 2015, the Navy reported that 94% of FCC providers were military spouses. This may let FCCs provide employment opportunities to military spouses while also freeing space at a CDC for other children (e.g., children of dual-military couples or single parents). In-home centers may have more flexibility for drop-in/respite services, care for sick children, and care outside "normal" working hours. An Air Force survey of FCC providers found that just over half were willing to offer extended duty and weekend care, while 24% were willing to offer overnight care. In addition, FCC care is available for infants from four weeks old while CDC care eligibility starts at six weeks. The number of children in FCCs is capped at six children at any one time. Some parents may prefer a smaller, in-home setting to the day care environment. Other parents may prefer FCCs because they can allow parents to exercise more discretion over the care setting and the caregivers that are most suitable to their child's needs. Nevertheless, there are some limitations to in-home care. In many cases, in-home care is operated by military spouses who may be subject to frequent or short-notice permanent change of station (PCS) orders. In addition, if the FCC operator falls ill or takes leave time, there may not be available back-up caregiving options. These factors could affect continuity of care for FCC patrons. The potential for frequent moves may also deter some military spouses from establishing an FCC if the time and resources needed to start up and certify home-based care in a new location are overly burdensome. The services have estimated that the amount of time it takes to certify a new FCC (including background checks, home inspections, and training and orientation) is anywhere from two to nine months. In addition, while FCC homes are certified and inspected, there is the potential for less oversight of safety and quality of care than in government-operated facilities. While CDCs may be more expensive for DOD to operate, they may be more preferable to servicemembers in terms of stability, convenience, continuity of care, and oversight. Like FCCs, CDCs also provide employment, training, and development opportunities for military spouses. CDCs are sometimes housed in purpose-built facilities, have a larger staff component, and can handle more children than FCCs. In addition, CDCs are typically located on the military installation where the servicemember is assigned, providing convenience (FCCs may be located on or off the installation). On the other hand, some research has found that children in center-based care are ill more often than children in home-based care, which could lead to more time off from work for military parents. From the DOD perspective, the cost of building, operating, and maintaining CDC facilities may be significant. DOD has noted that there is "a continued need for repairing and replacing aging facilities in addition to building new facilities." At the same time, 2016 data show that 70% of married servicemembers live off the military installation. While some members may favor care on the installation because it is closer to their workplace, it may be more convenient or preferable for the member and his or her spouse to have care located near the family's residence—in the civilian community. A 2006 study found that the propensity to use CDC care decreases the farther a family lives from the installation. There are some potential benefits to the fee assistance program in comparison to the DOD-run care facilities. First, within DOD's certification requirements for the fee assistance programs, parents may have a broader range of choice over the model of care and developmental curriculum (e.g., Montessori, parochial, home-based, etc.). Second, by participating in community-based childcare, military families may have more opportunities to build social networks and connections with non-military families in their neighborhoods. A recent survey of military families found that approximately half of the families "feel like they don't belong in their local civilian community," and would like more opportunities to build local networks. In addition, survey respondents indicated school and childcare as one of the top opportunities to increase local connections. Some evidence suggests that fee assistance programs may also be a better fit for families that do not live on military installations. A 2006 study found that, "Across the board, families living off base are more likely to choose formal civilian child-care options over the DoD CDC, and propensity to use civilian child care increases as the distance from an installation grows." Fee assistance programs may be particularly beneficial for reservists, who often live farther from military installations and do not have access to CDCs or FCCs. Finally, subsidizing private childcare programs could have broader spill-over effects. DOD's high standards and criteria for private provider eligibility could serve to improve the quality of childcare services within the community for both military and civilian families. A potential limitation of the fee assistance programs for non-DOD affiliated providers is that these private providers may be less likely to offer services that cover extended or unusual duty hours (e.g., nights, weekends, or shift work). Some in the Congress have expressed concern about the privatization of quality of life services such as childcare and its potential impact on quality of care. In addition, GAO found that some families using fee assistance off-installation care still had higher costs than those offered by on-installation care. Some military families have also expressed frustration that under the current fee assistance program their preferred private childcare providers do not meet the DOD standards and thus are ineligible for fee assistance subsidies. DOD's fee assistance program makes payments directly to childcare providers. Another option would be to supply fixed stipends to military parents to subsidize childcare. Currently, military personnel receive basic allowances for housing (BAH) as cash payments and those with dependents receive more BAH than those without. This type of system would have similar benefits to the current fee assistance program, but could offer parents even more choice and flexibility in selecting childcare providers. Supporters of such a system argue that cash benefits are generally more efficient than in-kind benefits, since members can more easily assess the value of the benefit. Past focus groups with military families have revealed that among parents who used the CDC's, many were unaware that they were receiving a subsidy from DOD and some even believed DOD was profiting from the CDCs. Nevertheless, an unrelated survey of military personnel found that a substantial majority "would rather maintain access to existing quality of life benefits than exchange those benefits for cash vouchers." In addition, depending on how the benefit system was designed, oversight, accountability, and management may be more challenging. Questions that would need to be addressed with such a program include the following: Would military sponsors be required to show proof of care (e.g., receipts) to receive cash benefits? Would cash benefits be provided on a per-child basis? Would it vary by the child's age? Would families with non-working spouses be eligible to receive a stipend? Would childcare stipends be a flat rate (similar to basic allowance for subsistence) or vary by geographic location and prevailing market rates (similar to BAH)? A cash stipend system that would allow parents to choose any childcare provider, regardless of certifications, could result in the purchase of lower-quality childcare than what could be provided through the current DOD system. In terms non-DOD financial support for childcare, there are a number of state and federal programs that offer financial assistance in the form grants, subsidies, and/or tax credits. Localized information on these services may be provided by installation referral and resource centers to military members as part of welcome packets following a permanent change of station (PCS). Some private childcare centers also offer their own forms of assistance such as discounts for military-connected children, multiple children, negotiable rates, scholarships, and sliding-scale fees based on income. Beyond the mix of childcare services that Congress chooses to fund through annual appropriations, there are also oversight issues related to access, equity, and quality. In general, military families have high satisfaction with DOD-sponsored programs, and experts have pointed to the military childcare system as a model that other private employers or government agencies may look to emulate. Military families express frustration over such matters as lack of awareness of the range of non-CDC support available, CDC wait-list management issues, a desire for longer or more flexible CDC hours and other supplemental care options, and the need for more spots for infants. There are multiple avenues through which DOD and the military services conduct outreach to members about childcare services, including handouts and posters on installations, newcomer or pre-deployment briefings, or other referral offices and websites (e.g., MilitaryOneSource.mil). Nevertheless, a 2012 GAO study found that some members, particularly those in the Guard and Reserves, have noted that they are not aware of all of the services available to them, and in particular, subsidized services that are available in local communities. Others were unaware of eligibility requirements, or of the need to apply early for waiting lists upon learning that they were expecting a child or being transferred to a new installation. Some of the actions that the services have taken to address these issues are assigning dedicated resource and referral staff, providing targeted information for expectant parents, and developing sponsorship programs for those transferring to a new installation. In 2015, DOD launched MilitaryChildCare.com as an online portal with helpdesk support for members to find information about childcare services, to submit requests for care, and to be placed on waiting lists for military CDCs. The implementation of this initiative was rolled out in phases, and was completed in June 2017. For members looking for off-installation care under the fee assistance or respite programs, Child Care Aware of America, operates an online portal that assists military families in finding accredited care centers, determining eligibility, and applying for subsidies. The full implementation of these online resources is fairly recent, and potential measures for evaluating effectiveness include member satisfaction with the online portal and processes and statistics on usage and site views. DOD's MilitaryChildCare.com initiative was intended, in part, to address member grievances about wait list management by integrating individual installation wait list processes into one DOD-wide system and providing more visibility into members' standing on such lists. Concerns still remain about the length of waiting lists, particularly on large bases or in high-demand areas, and how wait list priority is determined. DOD's target for the amount of time that a family spends on a wait list is 90 days. However, in 2014 the Services have estimated average wait list times to be three to nine months. Some family advocacy groups have argued for higher wait list priority for certain active servicemembers over DOD civilian employees. They have noted that frequent PCS moves for military families—sometimes on short notice or with last minute extensions or delays—preclude military families from obtaining favorable spots on waiting lists, whereas civilian personnel move less frequently and generally have more notice prior to moves. Others have argued for income-based placement on wait-lists, which would prioritize CDC placement for families who could least afford quality, off-installation care. Current law requires DOD to set fees based on family income, but does not establish priority categories for military childcare wait-lists. The amount of time a military family spends on a wait list is a function of both geographic demand and CDC capacity. This capacity, in turn, depends on the size of the facility and the number of CDC employees. Options to expand capacity on high-demand installations would be to build new CDC facilities and to expand or refit existing space. Potential barriers to this include lack of available or appropriate physical space on certain installations and lack of the military construction funding that would be required. In addition, construction projects often have long lead times (to account for appropriating funds, the contracting process, and the design and build) and may not be able to accommodate short-term surges in demand. If physical space is available, one other limitation is the availability and ease of recruiting and hiring childcare workers to maintain required caregiver-to-child ratios. In the past, issues such as federal hiring freezes and pace of background checks has slowed the pace of hiring for CDCs. Some of these staffing issues were addressed in the FY2018 NDAA as discussed in a previous section (see " Recent Initiatives: CDC Hours of Operation and Hiring Authorities ").

The Department of Defense (DOD) operates the largest employer-sponsored childcare program in the United States, serving approximately 200,000 children of uniformed servicemembers and DOD civilians, and employing over 23,000 childcare workers, at an annual cost of over $800 million. DOD's child development program (CDP) includes a combination of accredited, installation-based, government-run, full-time pre-school and school-aged care in Child Development Centers (CDCs) and subsidized care in Family Care Centers (FCCs) or through private providers under the Fee Assistance program. Childcare services are part of a broader set of quality of life benefits that make up the total compensation package for military personnel and certain DOD civilians. The Department has argued that these childcare benefits help support their recruiting, retention, and readiness goals and that there is generally a high level of satisfaction among servicemembers who use DOD childcare services. Moreover, military family advocacy groups have largely supported existing childcare benefits and have also called for expanding awareness of, access to, operating hours for, and improving or enhancing other aspects of military childcare services. While there has been broad support for DOD's CDP since its inception, the questions of what benefits should be provided to military servicemembers and their families, how these benefits should be structured, and what resources should be directed to these benefits are issues for Congress when considering the annual defense budget authorization and appropriation.

"Risk adjustment is the process of adjusting payments to organizations (usually health insurance plans) based on differences in the risk characteristics of people enrolled in each plan." In the simplest case, assume that on average the costs of providing a package of health care benefits to women are $100 more than the cost of providing the same set of benefits to men. In this hypothetical situation, if a payer, such as Medicare, paid the same amount to insurers for covering both men and women, insurers would have a strong financial incentive to enroll men and avoid enrolling women. One mechanism for leveling the playing field , could be to risk adjust the payment to insurers by paying them $100 more for women than for men. Conversely, a risk-adjusted payment for men would be $100 less than that for women to reflect their relatively lower level of expected health expenditures. In either of these situations, all other things being the same, insurers should be indifferent between enrolling men or women into their plan. Health care costs vary by more than just gender, and sophisticated risk adjustment models are designed to take into account additional factors that can include age, geography, health status, tobacco use, family size, and other factors. But even the most sophisticated risk adjustment models do not explain a substantial proportion of the differences in expected health care spending. Immediately below, this report describes how the Centers for Medicare & Medicaid Services (CMS) pays private health plans under Medicare Advantage (MA or Medicare Part C) and how these payments are risk adjusted. Subsequent sections describe how risk scores for MA enrollees are initially generated and change over time. The report concludes with a discussion of how CMS audits risk-adjusted MA payments and some potential issues associated with risk adjustment and the audits. Medicare Advantage provides private plan options, such as managed care, for Medicare beneficiaries who are enrolled in both Medicare Parts A and B. By contract with CMS, a health plan agrees to provide all required Medicare benefits (except hospice) to a group of Medicare beneficiaries enrolled in the plan in return for a capitated monthly payment adjusted for the demographics and health status of the beneficiaries who actually enroll in the plan. The same monthly payment is made regardless of how many or few services a beneficiary actually uses. The plan is at-risk if costs, in the aggregate, exceed program payments; conversely, the plan can retain savings if costs are less than payments. Payments to MA plans are based on a comparison of each plan's estimated cost of providing Medicare covered benefits (a bid) relative to the maximum amount the federal government will pay for providing those benefits in the plan's service area (a benchmark). Bids reflect each plan's estimate of how much it requires to cover an average, or standard, beneficiary. "The bid includes plan administrative costs and profit. CMS also sets a benchmark, or bidding target, and if a plan's standard bid is above the benchmark, the plan receives a base rate equal to the benchmark; if the plan's bid is below the benchmark, the plan receives a base rate equal to its bid." In addition, CMS adjusts the payment to private plans, in part, on the characteristics of the Medicare beneficiaries actually enrolled in each plan. For instance, a plan may, on average, enroll healthier or sicker Medicare beneficiaries than the average or standard beneficiary. Part of CMS's payment to plans, as described below, reflects the age, gender, and other characteristics of plan enrollees. The current MA risk adjustment methodology relies on demographic, health history, and other factors to adjust payments to plans. These factors are identified in a base year, and used to adjust payments to plans in the following year. In other words, since MA payments are based on a prospective payment system, CMS is attempting to estimate next year's health care expenditures as a function of beneficiary demographic, health, and other factors identifiable in the current year. This section describes how CMS determines the risk adjustment to be applied to MA plan payments. It is well established that health care expenditures vary by age (increasing with age), gender, Medicaid eligibility, and disability; incorporating these variables into payments is fairly straightforward. Also taken into account is how a beneficiary original ly became eligible for Medicare—either due to age or permanent disability. CMS has these data from administrative sources and while there can be error in these administrative data, they tend to be accurate and somewhat stable over time. Incorporating health status into payments is somewhat more complicated. The process begins with a diagnosis using the International Classification of Disease, Ninth Revision, Clinical Modification—an ICD-9-CM code. ICD-9-CM codes are used to denote signs, symptoms, injuries, diseases, and conditions. Physicians have been required by law to submit ICD-9-CM diagnosis codes for Medicare reimbursement since the passage of the Medicare Catastrophic Coverage Act of 1988. Currently, there are more than 13,000 ICD-9-CM codes. The ICD-9-CM codes are first mapped into diagnostic groups and then into condition categories (see Figure 1 ). Ultimately, as discussed below, the condition categories have a hierarchy imposed on them. The codes are hierarchical such that only the most significant manifestation of a disease is coded for payment purposes. For example: [All] ICD-9-CM Ischemic Heart Disease codes are organized into the Coronary Artery Disease hierarchy, consisting of four CCs [condition categories] arranged in descending order of clinical severity and cost, from CC 81 Acute Myocardial Infarction to CC 84 Coronary Atherosclerosis/Other Chronic Ischemic Heart Disease . A person with an ICD-9-CM code in CC 81 is excluded from being coded in CCs 82, 83, or 84 even if codes that group into those categories were also present. Similarly, a person with ICD-9-CM codes that group into both CC 82 Unstable Angina and Other Acute Ischemic Heart Disease and CC 83 Angina Pectoris/Old Myocardial Infarction is coded for CC 82 and not CC 83. Hierarchical coding ensures that the most costly form of the disease dictates the basis for reimbursement. While there are 189 hierarchical condition codes (HCCs), only 70 HCCs are incorporated into the current CMS model. These 70 HCC codes are chronic codes that empirically have been shown to best predict the following year's Medicare Part A and Part B expenditures. Beginning in 2012, 87 HCC codes will be incorporated into the model (see Table B -1 for these 87 HCC codes and their relative factors). Figure 2 depicts an example of how ICD-9-CM codes are converted into HCC codes. More specifically, Figure 2 depicts the ICD-9-CM codes of a hypothetical 76-year-old female with a variety of diagnosed conditions, including acute myocardial infarction, angina pectoris, chronic bronchitis/emphysema, renal failure, chronic renal failure, chest pain, and an ankle sprain. As can be seen in Figure 2 , not all diagnoses result in an HCC. For instance, this woman's HCC code for acute myocardial infarction (81), near the top right of the figure, implies that she is not coded with HCC 83 even though she has also been diagnosed with some form of unspecified angina pectoris since both codes are in the same disease category and the acute myocardial infarction (HCC 81) is higher in the hierarchy. Similarly, as can be seen at the bottom of Figure 2 , some conditions (chest pain and ankle sprain) map to one of the 189 HCCs but are excluded from the CMS model since they are not chronic. In addition, short-term illnesses, even if expensive, are not captured. As noted above, these models are seeking to explain next year's expenditures and many of these conditions are either fleeting or not good predictors of future expenditures. While only the highest code in a related disease category is used, codes across unrelated disease categories are used such that the model is additive. Therefore, using the earlier example of a 76-year-old female from Figure 2 , Table 1 depicts the risk factors estimated for each condition. This beneficiary's hypothetical total risk score (1.583) is the sum of the individual risk factors, taking into account the disease hierarchy. The risk score would be multiplied by the MA plan's base rate to determine the risk-adjusted base payment. In this example, a monthly base rate of approximately $621.67 would result in a total estimated annual payment of $11,810, or [approximately $621.67 x 12 months x 1.583 risk score = $11,810 yearly risk-adjusted base payment]. Empirical study has also shown that the presence of two or more conditions sometimes can result in greater costs than just their additive effects. These are referred to as interaction effects. For instance, the health care costs for an individual with both diabetes and congestive heart failure are higher than one would predict from just adding the costs of diabetes and the costs of congestive heart failure. In addition, empirical investigation has shown that there are interaction effects between certain diseases and disability such that the health care costs for an individual with a disability and diabetes are higher than one would predict from just adding the additional costs associated with being disabled to the costs of having diabetes. CMS has incorporated both types of interactions into the CMS-HCC model (see Appendix B , Table B -1 ). The previous section explained how payments to MA plans are adjusted to account for the relatively higher or lower cost of enrolling Medicare beneficiaries with certain demographic characteristics or diagnoses. The size of the adjustments is determined by a mathematical model briefly described below. The CMS-HCC model is a linear regression model with expenditures predicted by diagnoses (CMS-HCCs) and demographic variables. Variables that represent certain interactions are also included—such as the interactions between certain diseases and between certain diseases and permanent disability. The expenditure data are based on actual claims data for original Medicare Parts A and B. The CMS-HCC model has been refined over the years and the relative risk factors for each health care or demographic variable used as the basis of payment (i.e., coefficients) are periodically recalculated using more current Parts A and B claims data. The results derived from the model can be standardized such that an individual with a risk score of 1 equates to a Medicare fee-for-service beneficiary with average costs, while individuals with risk scores of less than 1 equate to Medicare beneficiaries with below average costs and individuals with risk scores of more than 1 equate to Medicare beneficiaries with above average costs. Moreover, the risk scores can be further standardized such that a risk score of 1.2 reflects an individual with 20% higher costs than an average Medicare beneficiary, for example, or that an individual with a risk score of .8 reflects a beneficiary with 20% lower costs. Therefore, CMS can use these risk scores to adjust payments to plans such that the payments are individualized to reflect health status and demographics and reflective of the likely costs that a plan, on average, should incur in treating a similarly situated Medicare beneficiary (see Table 1 ). Again, the goal is not to accurately predict any particular individual's expenditures for the following year but predict how expenditures on average vary. The above discussion describes how CMS estimates adjustments to payments for each Medicare beneficiary enrolled in a Medicare Advantage plan. This section describes how risk scores are attributed to MA enrollees for purposes of payment. "For new enrollees [who are new to Medicare Advantage and new to the Medicare program in general], who did not have 12 months of Part B eligibility in the preceding calendar year, rates are based on age, sex, Medicaid status, and original reason for Medicare entitlement (disability or age), not on diagnoses", since CMS does not have historical diagnostic data for these enrollees. Non-new enrollees would include those beneficiaries who are switching MA plans, continuing in the same MA plan, or otherwise have at least 12 months of Part B eligibility in the preceding calendar year. CMS collects information from Medicare Advantage plans (previously using the RAPS (risk adjustment processing system) and now the Encounter Data Processing System (EDPS)), that allows CMS to periodically update the risk score of each beneficiary enrolled in MA. Historically, under RAPS, about 80% of the diagnostic information was provided by physician claims. CMS is in the process of moving to encounter level data that include dates of service and ICD-9-CM codes, thus allowing CMS to retain diagnostic information for updating risk scores and payments directly from plan data. In addition to physician supplied information, data from inpatient hospital or outpatient hospital facilities are acceptable. Risk scores can be adjusted twice each year on January 1 and July 1. Table 2 shows a typical schedule for data submission and payment updates. The data that form the basis of the risk-adjusted payment are always from a prior 12-month period; no diagnosis data reported in the service year are used to adjust payments during the service year. There are only a few sources of error that can enter into the calculation of risk adjusted Medicare Advantage payments: error with respect to age, gender, disability status, Medicaid eligibility, or disease. As noted above, the demographic data, disability status, and Medicaid eligibility generally come from administrative files. The health status information comes from plans submitting diagnoses to CMS. Therefore, error in the health status information provided to CMS by a plan to justify a risk-adjusted payment are the only data that plans are responsible for and that are auditable. Since there can be error in the information that plans provide to CMS to justify risk-adjusted payments as well as error in the updating process, CMS audits Medicare Advantage plans to ensure that the risk-adjusted payments plans are claiming and being paid for are in fact supported by the medical record (referred to as RADV audits). While audits have been conducted for several years, previously CMS only sought to recover the error in payments associated with sampled enrollees. In February 2011, the President's FY2011 budget proposed to extrapolate the RADV error rate to the entire plan contract for the year, resulting in estimated savings of $2.27 billion over the five-year budget window. In December 2010, CMS released for comment its proposed methodology for auditing the data submitted by Medicare Advantage plans and extrapolating a contract level error in payments. In February 2012, CMS released the final notice of payment error calculation methodology, which states that for payment year 2011 audits, CMS will extrapolate audit findings to derive the payment error estimate for the entire contract. Going forward, as CMS seeks to potentially recover larger dollar amounts from plans, the plans are likely to push back more aggressively. These audits, and the potential recoveries, are likely to be problematic for some Part C plans. Audits are conducted at the contract level, and several plans can be under a single contract. Having selected a contract to audit, CMS engages in a three-step process: sampling, medical record review, and error rate calculation/payment adjustment (see Figure 3 ). CMS uses samples, rather than an audit of all eligible enrollees, so as to reduce the burden on plans to provide data. CMS has determined that 201 enrollees is a sufficient sample size. Each of these steps is discussed below. The enrollee sample is drawn from the cohort of eligible Medicare beneficiaries who were enrolled in the contract in January of the payment year. In addition, the enrollees also had to be 1. Enrolled in an MA contract in January of the payment year. 2. Continuously enrolled in the same MA contract for all 12 months of the data collection year. 3. Non-End Stage Renal Disease (non-ESRD) status in or prior to the payment year. 4. Non-hospice between January of the data collection year and January of the payment year, with less than 12 months of hospice during the payment year. 5. In Medicare Part B coverage for all 12 months during the data collection period (i.e., defined as full risk enrollees for risk-adjusted payment). 6. Diagnosed with at least one risk adjustment diagnosis (ICD-9-CM code) submitted during the data collection period that led to at least one CMS-HCC assignment. These HCCs were present for risk-adjusted payments, based on plan-submitted risk adjustment data, and are referred to as the validation HCCs for the sampled enrollees. Eligible enrollees are divided into three equal groups based on the total number of eligible enrollees. Since the goal is to sample 201 eligible enrollees, the first group consists of 67 eligible enrollees randomly drawn from the one-third of enrollees with the highest risk scores. The second group consists of 67 enrollees randomly drawn from the one-third group of eligible enrollees with the lowest risk scores. The final group consists of 67 enrollees randomly drawn from the one-third remaining eligible enrollees. Sampling weights are constructed so each sample of eligible enrollees represents the group from which they were drawn. For example: if a contract has 3,000 RADV-eligible enrollees, the enrollees would be ranked by risk score, then divided into three equal groups of 1,000 enrollees each (to represent high, medium, and low strata). An equal number of enrollees will be randomly selected from each group. The weight for each sampled enrollee will equal 14.925 (i.e., 1,000/67). …The enrollee sampling weights will be used as multipliers to scale-up (or extrapolate) the sample payment error findings to the population it represents. Having drawn the sample of eligible enrollees to be audited, the MA plan is informed of the enrollees being audited and their HCC codes. The plan is directed to reproduce and deliver to the CMS contractor evidence from the medical records that substantiates each HCC code the plan was paid for. Plans have 12 weeks to assemble and deliver the medical records for the sampled 201 enrollees. The medical records, once received by the CMS contractor, are reviewed to establish whether a particular diagnosis which gave rise to a risk-adjusted payment can be substantiated. If the record confirms the underlying diagnosis, the payment was considered justified. If the medical record does not confirm the underlying diagnosis, the payments based on the diagnosis were considered in error. If the plan disagrees with the findings of the initial CMS contractor, it may appeal to have CMS examine the previously submitted one best medical record and attestation. This final decision is binding unless the plan requests a review by the CMS Administrator. CMS notes that "the payment error for each enrollee will be either positive—representing a net overpayment, or negative—representing a net underpayment." Since the review is based on the first medical record that validates the audited CMS-HCC, any evidence of underpayment would have to be found in that same record, because underpayments, in general, cannot be supported in the audit by a plan submitting additional medical records to justify additional CMS-HCC codes. The risk scores for each sampled enrollee are corrected based on the HCCs that are supported by the RADV medical record review and payments are calculated for each sampled enrollee using the corrected risk scores. Enrollee-level payment errors are defined as the difference between the original payment and the corrected payment. The payment error can be either positive—representing a net overpayment, or negative—representing a net underpayment. A payment error is calculated for each sampled enrollee based on the number of months the person was enrolled in the MA selected contract (and was not ESRD or hospice) during the payment year. To derive the estimated payment error for each MA contract —as opposed to the error calculated for the sample—the total payment error for each sampled enrollee will be multiplied by the enrollee's sampling weight (computed during the sampling phase and described above). The weighted enrollee payment errors will be summed across all enrollees in the sample to determine an estimated payment error for the MA contract. The payment recovery amount for each audited MA contract will be determined by the lower bound of the 99% confidence interval around the payment error estimate, modified by a fee-for-service (FFS) adjuster. The FFS adjuster accounts for the fact that the documentation standards used in RADV audits are different from the documentation standards used to develop the risk adjustment model; this adjuster may address a methodological concern raised by the American Academy of Actuaries, as discussed in the " Concerns with CMS Audit Process " section of this report. Figure 4 depicts the payment error calculation. As described above, 201 eligible enrollees per contract will be selected for review. A total error in payment will be established for each enrollee based on all of the errors identified during the audit. The impact of each enrollee will then be extrapolated to the contract by weighting the enrollee relative to the plan and adjusting for the time that the enrollee was in the plan. The error for each of the 201 sampled enrollees, both overpayments and underpayments, will then be summed. In the hypothetical example in Figure 4 , the estimated plan level error across all enrollees is $1,187.50. A 99% confidence interval for this estimate is then calculated for the estimated plan error—that is, there is a 99% certainty that the actual error in payment will fall within the estimated confidence interval. In the purely hypothetical example generated in Figure 4 , the confidence interval is from $1,037.50 to $1,337.50. This means that with a certainty of greater than 99%, the error in payment to this hypothetical plan is at least $1,037.50. If the 99% confidence interval includes $0 or is below $0, then the recovery amount would be constrained to $0. If the 99% confidence interval does not include $0, then the lower bound of the confidence interval is modified by a fee-for-service adjuster to establish the amount the plan would be required to reimburse the government. The recovery amount is, again, constrained at $0 if application of the FFS adjuster would otherwise result in a negative recovery. In other words, the results of the RADV audit will not result in an additional payment to MA plans. Recent academic study of risk adjustment and some preliminary research by the Medicare Payment Advisory Commission (MedPAC) have raised some concern with risk adjustment under Medicare Advantage. As seen in Figure 5 , there is a distribution of actual costs associated with any set of beneficiaries with the same HCC code or set of codes. Medicare reimburses a plan based on the average associated cost of treating such beneficiaries (Point A). Brown et al. (p. 33) suggest that plans may "decrease their efforts to screen enrollees along dimensions included in the model, while increasing their efforts along dimensions excluded from the model." To the extent that plans can do this, they can disproportionately enroll beneficiaries who on average are below average cost (across HCCs) into their plan and experience below average expenses while being reimbursed at rates established for average beneficiaries; beneficiaries with below average costs are represented by Point B in Figure 5 . MedPAC is similarly concerned that some Medicare Advantage plans, specifically special needs plans and PACE plans, may disproportionately enroll high cost individuals but be reimbursed for average cost enrollees (Point C). While MedPAC suggests exploring improvements to the CMS risk adjustment model, Brown et al. are more skeptical of the prospects of improving the risk adjustment model. A number of stakeholders have also expressed concerns regarding the audit process. The American Academy of Actuaries (AAA) responded to a CMS Request for Comments on CMS's proposed RADV sampling and error calculation methodology. While the crux of the AAA's position is presented below in full, their position can be summarized as concern that: the Medicare fee-for-service data used to estimate risk adjustments were never validated and therefore may also contain errors, and the methodology was designed to estimate payment errors not adjust premiums and the resulting premiums may not reflect the risk profiles of actual enrollees: Our primary concern with the proposed audit process is that it creates an inconsistency between how the risk adjustment factors were developed and how they now would be applied. An underlying principle of risk adjustment systems is that there needs to be consistency in the way the model was developed and how it is used. The CMS-HCC risk adjustment factors were developed with FFS data that, to the best of our knowledge, were not validated or audited for accuracy. The proposed audit process, however, effectively would apply those factors only to MA data that are validated. In other words, the data used in the RADV audit to determine a plan's payment error are fundamentally and materially different from the data used to develop the risk adjustment model. If, as a result of the RADV audit, for example, certain lower-cost enrollees no longer are considered diabetic but would have been considered diabetic in the FFS data used to develop the risk scores, then the payment for diabetic members in the payment year could be inadequate. In this example, the risk score factor associated with diabetes would be understated relative to the factor that would have resulted from using only substantiated diagnoses, because the lower-cost patients would have lowered the average spending amounts among those identified as diabetics in the FFS data. When that factor is applied to similarly non-validated data, the total payments for those with diabetes would be adequate. When that same factor is applied only to those with substantiated data, however, the total payments could be too low. This type of data inconsistency not only creates uncertainty, it also may create systematic underpayment, undermining the purpose of the risk adjustment system and potentially resulting in payment inequities. In addition, the uncertainty related to a plan's ultimate post-audit risk score could make it difficult for actuaries to estimate the plan's risk score and certify the plan bid. Extrapolating RADV payment-error calculations to adjust premium payments to MA plans represents a significant change in the risk adjustment methodology. The Health Practice Council is concerned that the resulting modified payment methodology may not appropriately reflect the relative risk profile of enrollees in the affected MA plans. The notice of final calculation methodology added a fee-for-service adjustment to the final recovery amount, which may address these concerns. More information about the fee-for-service adjuster is forthcoming. Risk adjustment is intended to compensate MA plans for the higher (or lower) cost of enrolling sicker (or healthier) Medicare beneficiaries, yet, as described in this report, plans that disproportionately enroll sicker (or to the extent possible, healthier) beneficiaries may be systematically under (or over) compensated. Others have raised concerns about using Medicare fee-for-services data—which have not been audited for accuracy—to generate the risk adjustment coefficients for Medicare Advantage plans. Some plans have expressed concern that recoveries from RADV audits may place them at substantial financial risk. It remains to be seen how the Secretary will account for methodological concerns as she implements risk adjustment. Appendix A. History of Part C Risk Adjustment Payments to private plans under Medicare are risk adjusted to account for the variation in the cost of providing health care among Medicare beneficiaries. Several different models have been used to calculate risk adjustment, each successive model gaining in complexity and explanatory power. This appendix briefly describes the risk adjustment models that are not otherwise discussed in the text of this report. Below, Table A -1 shows the risk adjustment models that have been used to adjust Medicare private plan payments, the year each model was in use, and the percentage of variation in individual expenditures predicted by each model (R 2 ). The R 2 is one measure of how well a model explains why a specified outcome varies—in this case beneficiary expenditures. The range of spending by individual Medicare beneficiaries can be from $0 per year for a very healthy beneficiary who did not use any medical care, items, or medications, to hundreds of thousands of dollars, or more, for a very ill beneficiary. The models attempt to predict beneficiary spending based on beneficiary characteristics. Sicker beneficiaries may have higher expenditures—but how much more? The R 2 quantifies that measure for the model as a whole—from 0 (which means the model does not explain any of the variation) to 1, which means the model perfectly predicts expenditures. Looking at the first model listed in Table A -1 , the Average Adjusted Per Capita Cost (AAPCC) model has an R 2 of 0.0077, which means that the model explains 0.77% of the variation in beneficiary expenditures. Each subsequent model used by CMS has increased the percent of variation in beneficiary expenditures explained. The most recent (proposed) model is able to explain approximately 12.5% of the variation in expenditures. Adjusted Average Per Capita Cost (AAPCC) Prior to payment year 2000, private plan payments under the Medicare+Choice (M+C) and TEFRA risk programs—both predecessors to the Medicare Advantage program—were risk adjusted to account for the effect of certain demographic characteristics. The demographic variables in the AAPCC model were age, sex, Medicaid enrollment, institutionalized status for nursing home residents, and working aged status representing those Medicare beneficiaries 65 years of age and over with employer sponsored insurance as their primary source of coverage. Taken together, these demographic data explain less than 1% of the variation in Medicare beneficiary expenditures (see Table A -1 ). This model did not account for the costs associated with beneficiary health. Payments to individual plans were not adjusted for enrolling very ill beneficiaries. However, in the aggregate, private plan enrollees were healthier than enrollees in original Medicare, leading to higher payments than if beneficiary health had been taken into account. Principal In-Patient Diagnostic Cost Group (PIP-DCG) The Balanced Budget Act of 1997 required CMS to implement a risk adjustment methodology that took into account beneficiary health status by no later than January 1, 2000. From payment year 2000 through 2003, CMS used the Principal Inpatient Diagnostic Cost Group (PIP-DCG) model. In addition to demographic variables, this model took into account, "the worst principal inpatient diagnosis (principal reason for inpatient stay) associated with any hospital admission." Though, as shown in Table A -1 , the PIP-DCG model explained more of the variation in Medicare expenditures than the AAPCC (demographic only) model, it had several limitations. First, illnesses that resulted in higher expenditures but did not result in a hospital admission were not counted in the model. Second, any attempt to reduce hospital admissions through, for example, better management of chronic disease, could potentially result in lower risk-adjusted payments. Though the PIP-DCG model was to be phased-in, subsequent legislation held the phase-in schedule at 90% demographic-only method/10% PIP-DCG method through 2003, in part to "soften the financial impact of risk adjustment on M+C organizations." CMS–Hierarchical Condition Category (CMS-HCC) Starting in 2004, Medicare plan payments were adjusted by the CMS-HCC model—a model that includes information from hospital inpatient and outpatient settings, physicians visits, and visits with clinically trained non-physicians such as psychologists and podiatrists. The CMS-HCC takes into account the severity of a beneficiary's illness (and only compensating for the most severe manifestation reported), the accumulated effect of multiple (unrelated) diseases, as well as interactive effects—instances where having two or more specified diseases or characteristics results in expected health care expenditures that are larger than the simple sum of the effects. The CMS-HCC model explains nearly 10% of the variation in beneficiary expenditures and is described in detail in the "Risk Adjustment Under Medicare Advantage" section of this report. Updates to the CMS-HCC retain the basic structure of the model. Version 12 CMS-HCC Each year the model is updated to account for changes in the ICD-9-CM diagnosis codes. In addition, Version 12 was recalibrated with more recent diagnosis and expenditure data. The update increased the percentage of the variation in Medicare expenditures which were explained by the model from just under 10% to nearly 11%. Version 21 CMS-HCC Version 21 includes updates to the ICD-9CM diagnosis codes, and recalibration with more recent diagnosis and expenditure data. In addition, version 21 "underwent a major clinical revision in 2009 to adjust for changes in disease patterns, treatment methods, and coding practices, as well as compositional changes within the Medicare population." These updates again increased the predictive power of the model to approximately 12.5%. Version 21 is slated to be implemented in 2012 for PACE plans. Appendix B. CMS-HCC Risk Adjustment Model

According to the American Academy of Actuaries, "[h]ealth risk adjustment is the process of adjusting payments to organizations (usually health insurance plans) based on differences in the risk characteristics of people enrolled in each plan." By adjusting payments to compensate organizations for the relatively higher medical costs associated with an ill individual, plans should, all other things being equal, be indifferent between enrolling the sicker person or the relatively healthier one. Medicare Advantage (MA) is an alternative way for Medicare beneficiaries to receive covered benefits. Under MA, private health plans are paid a per-person amount to provide all Medicare-covered benefits (except hospice) to beneficiaries who enroll in their plan. The Centers for Medicare & Medicaid Services (CMS) risk adjusts the payments to MA plans. The size of the adjustment depends on the demographic and health history of each plan enrollee. The payment adjustment takes into account the severity of a beneficiary's illness, the accumulated effect of multiple diseases, as well as interactive effects—instances where having two or more specified diseases or characteristics results in expected health care expenditures that are larger than the simple sum of the effects. The payments are not adjusted for short-term illnesses because they are assumed to be poor predictors of future health spending. MA plans provide information to CMS to justify the risk-adjusted payments; CMS therefore audits the plans to ensure that the risk-adjusted payments that the plans are claiming are in fact supported by the medical record. Based on the audit findings, plans may have to pay back money when the medical record does not provide evidence for the risk-adjusted payment they had received. Alternatively, the audit may reveal additional illnesses that had not previously been taken into account. Previously, MA plans were only required to pay back money (or receive money) based on the findings from the audited enrollee records. CMS has proposed extrapolating the audit findings to apply to all enrollees in the audited plan. Some concerns have been raised about risk adjustment under Medicare Advantage and the MA plan audits. First, risk adjustment compensates plans for the average predicted cost of any particular diagnosis. To the extent that MA plans could enroll beneficiaries with below-average expenditures relative to the average for their disease, those plans would be over-compensated by risk adjustment. Second, according to the American Academy of Actuaries, the Medicare fee-for-service data used in the MA risk adjustment model were not audited for accuracy and may contain errors. The audits under MA, however, would apply the risk adjustment factors to data that were validated. The inconsistency of using audited data in one circumstance and non-audited data in another could create uncertainty; however, a for-for-service adjustment factor added by CMS in the final notice of payment methodology may remedy this concern. Third, some plans have expressed concern that recoveries from the audits may place them at substantial financial risk. This report describes how CMS pays providers under Medicare Advantage and how these payments are risk adjusted. In addition, it describes how risk scores for individual Medicare Advantage enrollees are initially generated and change over time, and it discusses how CMS audits risk-adjusted MA payments. It concludes with a short discussion of several concerns raised with risk adjustment and the audit process.

S ecuring the international borders of the United States has been an issue of perennial interest and importance to the federal government. Federal law authorizes the Department of Homeland Security (DHS) to construct barriers along the U.S. borders to deter illegal crossings. DHS is also required to construct reinforced fencing along at least 700 miles of the land border with Mexico, though fencing is not required to be deployed at any "particular location" alon g that border. Responsibility for carrying out these functions, and more generally securing the U.S. land borders between ports of entry, primarily falls to U.S. Border Patrol within DHS's Customs and Border Protection (CBP). Although congressional interest in the legal framework governing fence deployment has, in recent years, tended to focus on the stringency of the statutory mandate to deploy fencing along at least 700 miles of the southern border, attention has now shifted to those provisions in current law which allow, but do not require, the deployment of fencing and other barriers along additional portions of the U.S. land borders. Within days of taking office, President Donald J. Trump issued an executive order instructing the Secretary of Homeland Security, acting under existing legal authorities, to "take all appropriate steps to immediately plan, design, and construct a physical wall along the southern border ... to most effectively achieve complete operational control" of the U.S.-Mexico border. The order defines a "wall" to mean "a contiguous, physical wall or other similarly secure, contiguous, and impassable physical barrier." The order does not identify the contemplated mileage of the wall to be constructed. The primary statute authorizing DHS to deploy barriers along the international borders is Section 102 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA). Congress made significant amendments to IIRIRA Section 102 through three enactments—the REAL ID Act of 2005, the Secure Fence Act of 2006, and the Consolidated Appropriations Act, 2008. These amendments established a mandate upon DHS to construct hundreds of miles of new fencing along the U.S.-Mexico border, and also provided the Secretary of Homeland Security with broad authority to waive "all legal requirements" that may impede construction of barriers and roads under IIRIRA Section 102. These statutory modifications, along with increased funding for border projects, resulted in the deployment of several hundred miles of fencing and other barriers along the southwest land border between 2005 and 2011. A portion of this infrastructure is fencing that is primarily intended to prevent illegal border crossings by foot (referred to by DHS as "pedestrian fencing"). Other types of barriers have been installed to impede vehicles from smuggling persons or contraband into the United States (referred to by DHS as "vehicle fencing" ), but do not stop crossings by persons traveling on foot. In some instances, an additional layer of fencing (secondary fencing) may also be installed behind primary pedestrian fencing to further impede illegal crossings. The efficacy of deploying additional fencing along the border has been the subject of debate among many policymakers, particularly regarding the cost, environmental impact, and effectiveness of border fencing in comparison to alternative means of deterring illegal crossings. Largely on account of changes in DHS's border enforcement strategy and prioritization of resources during the Obama Administration, the construction of additional fencing along the land border with Mexico has largely halted. In October 2014, DHS indicated that it had constructed a total of 352.7 miles of pedestrian fence (in addition 36.3 miles of secondary fencing), and 299 miles of vehicle fencing along the southwest border. The total amount of pedestrian and vehicle fencing identified by DHS was slightly less than the 653 miles that U.S. Border Patrol had reportedly identified as appropriate for fencing and other barriers. However, it appears that further fencing would need to be deployed in order for DHS to satisfy the statutory requirement that the agency construct fencing "along not less than 700 miles of the southwest border." Proposals were introduced or considered by Congress in recent years to modify statutory authorities governing DHS's deployment of fencing and other infrastructure along or near the border, including by calling for the deployment of additional fencing, but such legislation has not been enacted. DHS's policy not to deploy a substantial amount of additional fencing, beyond what is expressly required by law, appeared to be premised primarily on policy considerations and funding constraints, rather than significant legal impediments. Indeed, nothing in current statute would appear to bar DHS from installing hundreds of miles of additional physical barriers along the U.S.-Mexico border, even beyond the 700 miles required by law, so long as the action was determined appropriate to deter illegal crossings in areas of high illegal entry or was deemed warranted to achieve "operational control" of the southern border. This report provides an overview of the key statutory authorities and requirements governing DHS's construction of barriers along the international borders of the United States. It also includes appendixes listing federal laws that have been waived by DHS in furtherance of border construction projects. The report, however, does not discuss proposals to modify this framework or fund an expansion of border fencing. Prior to 1996, federal immigration statutes did not expressly authorize or require the construction of barriers along the U.S. international borders. In the preceding years, authority to deploy any such barriers appears to have primarily derived from the general statutory responsibility of the Attorney General (and now the Secretary of Homeland Security) to "guard the boundaries and borders of the United States against the illegal entry of aliens." Perhaps the most prominent example of this general authority being employed to construct barriers occurred in the early 1990s, when the U.S. Border Patrol (with the assistance of the Department of Defense's Army Corps of Engineers) installed 10-foot-high, welded-steel fencing along roughly 14 miles of the border near San Diego. In 1996, Congress passed IIRIRA, which expressly instructed immigration authorities to construct barriers along the international land borders to deter unauthorized migration. This requirement, contained in IIRIRA Section 102, has been amended on three occasions, and its current language can be viewed at Appendix A . Among other things, IIRIRA Section 102 in its current form generally authorizes DHS to construct barriers and roads along the international borders in order to deter illegal crossings at locations of high illegal entry; requires the construction of reinforced fencing covering at least 700 miles along the southwest border, though the Secretary is not required to install fencing at any particular location; authorizes for the installation of additional physical barriers and infrastructure to gain operational control of the southwest border; requires a specified amount of fencing in priority areas along the southwest border, which DHS was instructed to have completed by December 31, 2008; and provides the Secretary of Homeland Security with authority to waive any legal requirements which may impede construction of barriers and roads under Section 102. The following sections discuss each of these requirements, including how they have been modified over the years. Section 102(a) of IIRIRA provides that the Secretary of Homeland Security "shall take such actions as may be necessary to install additional physical barriers and roads ... in the vicinity of the United States border to deter illegal crossings in areas of high illegal entry into the United States." Although this provision is fashioned as a statutory command, providing that the Secretary "shall" take action, this command is qualified by the language that follows, which affords the Secretary the discretion to determine the appropriate amount of "additional" barriers to deploy, as well as the most appropriate locations to install such barriers "to deter illegal crossings." To the extent that IIRIRA Section 102(a) constitutes a discrete, judicially reviewable command for the Secretary to construct "additional" fencing, immigration authorities seem to have satisfied this mandate by deploying hundreds of miles of additional barriers and roads along the border since IIRIRA was enacted in 1996. Accordingly, this provision perhaps most reasonably could be construed as conferring general authority to the Secretary of Homeland Security to construct barriers and roads along the international borders, so as to deter crossings in areas of "high illegal entry" (a term not defined by the statute). As discussed later in this report, more specific requirements are imposed upon the Secretary by IIRIRA Section 102(b), which requires the Secretary, in exercising the authority conferred under Section 102(a), to ensure that fencing and other barriers are deployed along specified mileage of the southwest border. Section 102(a) generally authorizes the construction of roads and physical barriers, without specifying any particular form that such barriers may take (e.g., reinforced fencing, multilayered fencing, or concrete barriers). Barriers and roads are authorized to be installed along any of the international borders of the United States, at least so long as DHS determines their installation is appropriate to deter unauthorized crossings in areas of high illegal entry. The provision's authorization for the installation of barriers and roads only applies to areas "in the vicinity of the United States border." The phrase "vicinity of the United States border" is not defined under IIRIRA, nor is it described in other federal immigration statutes. As a result, there may be some ambiguity as to the authorized distance from the border where roads and barriers may be constructed. The sole federal court to consider the usage of "vicinity" in IIRIRA Section 102 interpreted the term as including land "situated near the border," rather than only land directly adjacent to the border. Some DHS regulations unrelated to the border fence have described distances up to 25 miles from a location as being within its "vicinity." The Supreme Court, in non-binding dicta, also once characterized a search occurring 25 miles from the border as being within the "general vicinity of the border," though it does not appear that the Court ascribed legal significance to that phrase. There is also no indication in the legislative history of IIRIRA, however, that Congress contemplated the term "vicinity of the United States border" as referring to a specific distance. IIRIRA Section 102(b) imposes specific requirements upon the Secretary of Homeland Security to construct reinforced fencing along the southwest border. The nature of these requirements has changed over the years, including to expand the mileage along the border where fencing must be installed, and to afford the Secretary greater discretion in determining the type of fencing that may be employed and the particular location where fencing shall be installed. In addition to minimum fencing requirements, IIRIRA Section 102(b) authorizes the deployment of "additional physical barriers, roads, lighting, cameras, and sensors to gain operational control of the southwest border." IIRIRA Section 102(b) directed immigration authorities to supplement the already existing 14-mile primary border fence near San Diego with two additional layers of fencing. Environmental concerns and litigation resulted in significant delays in fulfilling this requirement. Over eight years after IIRIRA was enacted, DHS had not completed the fencing project. As discussed later in this report, subsequent expansion of the Secretary of Homeland Security's authority to waive legal requirements that impeded construction of fencing projects, facilitated DHS's efforts to complete a second layer of fencing along the San Diego border. Other amendments made to IIRIRA, discussed below, removed the statutory requirement that DHS complete the San Diego fencing project that had been authorized by IIRIRA when it was originally enacted in 1996. IIRIRA Section 102(b) was substantially revised by the Secure Fence Act of 2006. Section 102(b)'s original requirement concerning fencing in the San Diego area was replaced with a much more expansive instruction to deploy "at least 2 layers of reinforced fencing, [and] the installation of additional physical barriers, roads, lighting, cameras, and sensors" along five specified stretches of the southwest border. CBP estimated that this mandate covered roughly 850 miles. The fencing mandate imposed by the Secure Fence Act was somewhat limited by a specification that "other means" could be used to secure an area where "the topography ... has an elevation grade that exceeds 10 percent.... " In addition to this general mandate, the Secure Fence Act also provided deadlines for the completion of certain border projects. In particular, the act amended IIRIRA Section 102(b) to designate a stretch of border between Calexico, CA, and Douglas, AZ, as a priority area. It directed DHS to ensure that "an interlocking surveillance camera system" would be installed along this area by May 30, 2007, and to provide for the completion of fencing along this stretch by May 30, 2008. A separate 30-mile stretch of fencing near Laredo, TX, was required to be deployed by December 31, 2008. No timetable was specified, however, for DHS to complete double-layered fencing in the remaining stretches of the border. The most recent revisions to IIRIRA Section 102 were enacted slightly more than a year after Congress passed the Secure Fence Act (and prior to the statutory deadlines for the deployment of double-layered fencing under the earlier act). The Consolidated Appropriations Act, 2008 (2008 Appropriations Act) amended IIRIRA Section 102(b) to significantly increase the Secretary of Homeland Security's discretion as to where to construct fencing along the southwest border. In particular, the 2008 Appropriations Act modified IIRIRA Section 102(b) in four ways: Eliminated earlier requirement of double-layered fencing— Whereas the prior language of IIRIRA Section 102(b), as amended by the Secure Fence Act, had generally required "at least 2 layers of reinforced fencing" be deployed in specified areas, Section 102(b) now mandates only a single layer of reinforced fencing (while not precluding additional layers from being deployed, if deemed appropriate). Provided more flexible requirements concerning location of fencing and other border infrastructure— While the Secure Fence Act required fencing to be installed along specific stretches of the southwest border, potentially totaling roughly 850 miles, the 2008 Appropriations Act replaced this specification with a more general requirement that fencing be deployed "along not less than 700 miles of the southwest border where fencing would be most practical and effective." DHS was also instructed to construct "additional physical barriers, roads, lighting, cameras, and sensors to gain operational control of the southwest border." The Appropriations Act also amended IIRIRA Section 102(b) to provide that the Secretary was not obligated to deploy fencing or other border security infrastructure "in a particular location along an international border of the United States, if the Secretary determines that the use or placement of such resources is not the most appropriate means to achieve and maintain operational control over the international border at such location." New deadline for construction of fencing in "priority areas" —The earlier version of IIRIRA Section 102(b) required the construction of fencing along specified stretches of the border, totaling roughly 370 miles, by May 2008, and fencing along another 30-mile section by December 2008. This was replaced with a new requirement that the Secretary of Homeland Security identify 370 miles "or other mileage" along the southwest border where fencing would be "most practical and effective," and complete construction of such fencing by December 31, 2008. New consultation requirements— As amended, Section 102(b) of IIRIRA now requires the Secretary to consult with the Secretaries of the Interior and Agriculture, state and local governments, Indian tribes, and property owners "to minimize the impact on the environment, culture, commerce, and quality of life" in areas near where fencing is to be constructed. The provision further provides that this consultation requirement does not create or negate any right to legal action by an affected person or entity. As noted above, the 2008 Appropriations Act substantially modified IIRIRA Section 102(b) just over a year after the Secure Fence Act had done the same. These revisions, along with sometimes conflicting statements made by DHS officials to Congress concerning the agency's interpretation of its duties under Section 102(b), have potentially contributed to some disagreement regarding the nature of DHS's obligations under IIRIRA Section 102(b). The following paragraphs detail the legislative history of the most recent revisions to IIRIRA Section 102(b), the key elements of the requirements it imposes, and potential constraints on judicial review of implementation of the statute's fencing requirements. The legislative history behind the 2008 Appropriations Act's amendment to IIRIRA Section 102(b) is convoluted, and the explanatory materials for the enacted omnibus do not elaborate upon the amendment's purpose. Nonetheless, materials in the Congressional Record may shed some light as to the sponsors' intended purpose, along with the context in which the proposed amendment was being considered. The modifications to IIRIRA Section 102(b) appear to derive from language originally contained in a floor amendment offered during Senate consideration of the FY2008 homeland security appropriations bill. The floor amendment, offered by Senator Lindsey Graham and co-sponsored by a number of other Senators, would have added a new division entitled the "Border Security First Act of 2007" to the appropriations legislation. In addition to modifying the fencing requirements contained in IIRIRA Section 102(b), the amendment would have required the deployment of 300 miles of vehicle barriers and 700 linear miles of fencing along the U.S.-Mexico border within two years; provided additional resources and requirements for DHS immigration enforcement programs at the border and within the interior of the United States; and made several substantive changes to the Immigration and Nationality Act and the U.S. Criminal Code. Senator Graham and a number of co-sponsors thereafter spoke in favor of the amendment, with three Senators specifically commenting upon the amendment's fencing provisions. Both Senator Graham and Senator Jeff Sessions, an amendment co-sponsor, characterized the amendment as providing for 700 miles of border fencing. Senator John Cornyn, another co-sponsor, highlighted the amendment's proposed change to IIRIRA Section 102(b) as ensuring that DHS consulted with local officials and property owners regarding proposed fencing in a given area. The proposed amendment was later ruled by the Senate chair to be out of order, because some topics of the amendment were deemed non-germane to the appropriations bill being considered. The following day, Senator Graham offered a new amendment that was more limited in scope. The new amendment did not include the original amendment's proposed modification of IIRIRA Section 102(b), or those provisions of the earlier amendment that would have substantively modified federal immigration and criminal statutes. However, the new amendment contained the earlier version's provision requiring DHS to deploy 300 miles of vehicle barriers and 700 linear miles of fencing along the southwest border within two years, along with a related provision appropriating funds for the completion of this project. The amendment to the homeland security appropriations bill was adopted by a vote of 89-1. Separately, Senator Patty Murray offered an amendment on behalf of Senator Kay Bailey Hutchison to revise IIRIRA Section 102(b). The revisions proposed in the Hutchison amendment were for the most part identical to those found in the amendment offered by Senator Graham the previous day. The Hutchison amendment was approved by a voice vote, and both it and the second Graham amendment (which Senator Hutchison also co-sponsored) were included in the Senate-passed version of the homeland security appropriations bill. Later in the year, 11 regular appropriations measures for FY2008, including appropriations for homeland security, were combined into an omnibus bill that became the 2008 Appropriations Act. The omnibus legislation reconciled differences between the competing House- and Senate-passed homeland security appropriations bills. The final act included the provision in the Senate-passed bill that revised IIRIRA Section 102(b), which had been added by the Hutchison amendment. However, the final act did not retain the Senate-passed bill's provisions that had been added by the Graham amendment, which would have separately imposed a two-year deadline for the completion of 700 linear miles of fencing and 300 miles of vehicle barriers, and provided appropriations to ensure that these deadlines were met. The 2008 Appropriations Act amended IIRIRA in a manner that provides DHS with significant discretion as to the manner in which to install fencing—undoing some of the more specific requirements that had previously been imposed. Whereas the Secure Fence Act had amended IIRIRA Section 102(b) to provide that "at least 2 layers of reinforced fencing" were to be installed along specified stretches of the border, the 2008 Appropriations Act replaced this with a more general requirement that "reinforced fencing" be installed along the southwest border. In other words, IIRIRA Section 102(b) no longer requires DHS to install two or more layers of reinforced fencing at any location along the border—a single layer of reinforced fencing appears sufficient to satisfy the statutory mandate. DHS would appear to have discretion to construct additional layers of fencing pursuant to its general authority under IIRIRA Section 102(a), however, if it deems such fencing to be appropriate. Some disagreement has arisen over DHS's use of "vehicle fencing" to satisfy IIRIRA's fencing requirements. Vehicle fencing is a type of barrier designed to inhibit the illegal crossing of vehicles into the United States, but not pedestrians. Some Members of Congress have argued that the "fencing" referred to in IIRIRA Section 102 should be limited to the type that is effective at preventing all illegal entrants, whether traveling by vehicle or by foot. On the other hand, IIRIRA Section 102(b) does not mandate that any particular type of fencing must be deployed, beyond providing that such fencing be "reinforced." The statute does not specify, for example, that deployed fencing must be of a particular height, or be constructed in a particular style (e.g., using bollard, wire mesh, or chain link). In the absence of language specifying the use of a particular kind of fencing, it would appear that DHS enjoys broad discretion to assess the appropriate type of fencing to deploy in order to achieve operational control of the southwest border. The January 25, 2017 executive order issued by President Trump instructs the Secretary of Homeland Security to construct a "physical wall" along the U.S.-Mexico border. The term is defined to refer to a "contiguous, physical wall or other similarly secure, contiguous, and impassable physical barrier ." This definition seems broad enough to include at least some types of fencing, at least so long as such fencing was considered by DHS to be significantly " secure " and " impassable " to be deemed a wall . While IIRIRA Section 102(b) is sometimes characterized as requiring DHS to deploy "700 miles of fencing," the express language of the text seems to impose a slightly different mandate. Section 102(b) requires DHS to deploy fencing "along not less than 700 miles of the southwest border." This seems to be a somewhat different requirement, which prioritizes the actual mileage of the border covered by fencing, rather than just the number of miles of fencing deployed. For example, if DHS hypothetically deployed 30 miles of fencing, but did so through the construction of a 10-layered, 3-mile-long fence, it would have only installed fencing along 3 miles of the border. On the other hand, if DHS deployed such fencing in a single layer of fencing, it would have deployed fencing along 30 miles of the border. Likely because of the phraseology of IIRIRA Section 102(b), DHS seems to only count the mileage of primary layers of fencing deployed along the southwest border when discussing its efforts to satisfy its statutory mandate, and not the total amount of fencing that it has deployed (i.e., including secondary and tertiary layers of fencing that run behind some stretches of primary fencings). As amended by the 2008 Appropriations Act, IIRIRA 102(b) contains two distinct but related mandates. One of the mandates, which can be referred to as the priority fencing mandate , required DHS to identify and complete construction of fencing in priority areas of the southwest border by December 31, 2008. The second mandate, which can be referred to as the general fencing mandate , requires reinforced fencing to be deployed along "not less than 700 miles" of the southwest border, but contains no deadline for deployment. The general fencing mandate is subject to a proviso that DHS is not required to install fencing or other infrastructure "at any particular location" along the border, if the use or placement of fencing at that location is not deemed by the Secretary of Homeland Security to be the most appropriate means to achieve and maintain control. Section 102(b)'s priority fencing mandate required DHS, before December 31, 2008, to identify either 370 miles "or other mileage" along the southwest border where fencing would be most appropriate to deter unlawful migration and smuggling activities. Construction of the identified fencing was required to have also been completed by the end of 2008. Although DHS initially planned to deploy 670 miles of fencing pursuant to this mandate, it subsequently revised these plans prior to the reaching the deadline for priority fence construction. According to a 2010 report by the Government Accountability Office (GAO), DHS opted to comply with the priority fencing mandate by ensuring that reinforced fencing had been deployed along 370 miles of the southwest border. Although the priority fencing mandate of IIRIRA Section 102(b) has been satisfied, the general fencing mandate has not yet been fulfilled. DHS has thus far deployed reinforced fencing along roughly 653 miles of the border. At least on first look, it would appear that the agency would need to install additional fencing along nearly 50 miles of the southwest border to meet the requirements of Section 102(b). In recent years, however, there have been conflicting views among some policymakers as to the firmness of the general fencing mandate . The following section discusses these views. However, any dispute regarding the inflexibility of the 700-mile requirement may be rendered moot if the Trump Administration goes forward with plans to deploy a physical barrier along a greater portion of the U.S.-Mexico border. The rigidity of the requirement that DHS deploy fencing along at least 700 miles of the border turns on the relationship between two clauses in IIRIRA Section 102. Although one clause of IIRIRA Section 102(b) requires fencing "along not less than 700 miles" of the border, another clause in that subsection provides: Notwithstanding [the general fencing mandate of this section] nothing in this paragraph shall require the Secretary of Homeland Security to install fencing, physical barriers, roads, lighting, cameras, and sensors in a particular location along an international border of the United States, if the Secretary determines that the use or placement of such resources is not the most appropriate means to achieve and maintain operational control over the international border at such location. The meaning and effect of this proviso is arguably open to interpretation. One way to read the clause is simply to reflect the discretion that Congress intended to afford DHS in determining where to deploy at least 700 miles of fencing along the southwest border. As discussed previously, prior to amendments made by the 2008 Appropriations Act, the subsection had required DHS to deploy fencing along specific stretches of the southwest border that were identified within the statutory command. The new proviso could be interpreted to emphasize the discretion that DHS was afforded as a result of the revisions made by the 2008 Appropriations Act. While DHS is required to construct fencing along at least 700 miles of the border, the agency retains discretion to determine the most appropriate stretches along the 1,933 mile-land border where the fencing should be deployed. Relatedly, the "notwithstanding" proviso to the general fencing mandate affords a potential response to claims that DHS did not place fencing at a location where it would be "most practical and effective." DHS is not required to install fencing at a location if "the Secretary determines that the placement of such resources is not the most appropriate means to achieve and maintain operational control ... at such location." This is phrased in a manner that suggests that the Secretary's determination not to place fencing at a location would be afforded a very high degree of deference by a reviewing court. In other words, the "notwithstanding" clause enables DHS to readily answer claims by parties seeking to compel some portion of the required border fencing at a location where the fencing would allegedly be "most practical and effective." Arguably, however, the proviso could be interpreted more broadly, to signify something other than simply the discretion that DHS possesses in determining the stretches of the border along which to construct fencing. Although the proviso is not crafted as an express waiver, the clause's usage of "notwithstanding" could be construed to supersede any conflicting requirements imposed by the general fencing mandate . Under a broad interpretation of the "notwithstanding" proviso, it might be argued that the Secretary is not necessarily required to deploy fencing along 700 miles of the border, if the Secretary concludes that fencing is the appropriate means of achieving operational control along a lesser mileage of the border. There are difficulties, however, with interpreting the "notwithstanding" proviso so broadly. As an initial matter, the proviso does not expressly state that DHS may opt to construct a lesser amount of fencing than is specified elsewhere in Section 102(b). Rather, the proviso states that DHS is not required to construct fencing "at a particular location," if the Secretary of Homeland Security determines that the installation of that infrastructure is not appropriate for "such location." As noted above, this provision could reasonably be construed to mean that, in carrying out its general fencing mandate to deploy fencing along 700 miles of the southwest border, DHS is not legally required to install any portion of this required fencing at "any particular location." The ability to construe the proviso in more than one way may be significant. Courts typically follow the interpretive principle that a "statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant.... " If Section 102(b)'s proviso is construed to mean that DHS is only required to deploy the amount of fencing along the border that it deems appropriate, the clause would render Section 102(b)'s mandate that fencing be deployed "along at least 700 miles of the border" superfluous. On the other hand, if the proviso is interpreted to mean that, in carrying out its mandate to construct fencing along at least 700 miles of the border the border, DHS is not legally required to install the required fencing at any particular location, every provision of IIRIRA Section 102(b) can be given effect. The legislative history behind IIRIRA Section 102(b)'s fencing requirements also seems to support a narrow construction of Section 102(b)'s "notwithstanding" clause. As discussed previously, the amendments made to IIRIRA Section 102(b) by the 2008 Appropriations Act were originally part of a package of amendments, approved by the Senate as part of a homeland security appropriations bill, which were intended to ensure that fencing along 700 miles of the border would be constructed expeditiously. The legislative history of these amendments' consideration, along with their plain text, seems to indicate that the amendments' purpose was to ensure that fencing was deployed along 700 miles of the border within two years. Indeed, the Senator who offered the amendment to IIRIRA Section 102(b) also co-sponsored these related amendments. While Congress ultimately opted to enact one of these amendments into law but not the other, presumably the Senate would not have originally approved both amendments if they were understood to be conflicting. To date, it appears that every federal court which has discussed IIRIRA Section 102(b) has described the provision in mandatory terms: DHS is required to deploy fencing along 700 miles of the southwest border, but it retains discretion to determine the appropriate locations in which to deploy the required fencing. It should be noted, however, that no court has definitively ruled that an alternative interpretation is not permissible, or closely examined the interplay between the "notwithstanding" proviso and the general fencing requirement. But the uniform interpretation may suggest that, as a matter of first impression, Section 102(b) may be most reasonably construed as establishing a mandate to deploy fencing along at least 700 miles of the border. For its part, DHS has appeared to take conflicting views regarding the firmness of IIRIRA Section 102(b)'s general fencing mandate . Initially, DHS appeared to construe the 700-mile specification as a firm requirement. In notices issued in the Federal Register in 2008 describing border fencing projects undertaken under IIRIRA Section 102(b), Secretary of Homeland Security Michael Chertoff stated that "Congress has called for the installation of fencing, barriers, roads, lighting, cameras, and sensors on not less than 700 miles of the southwest border …." In March 2009, Secretary of Homeland Security Janet Napolitano wrote to the House Homeland Security Committee in response to questions regarding DHS's obligations to deploy fencing along the southwest border. Secretary Napolitano described IIRIRA as mandating that DHS construct at least 700 miles of fencing, but at least for the immediate future, DHS would focus on fence deployment in priority areas: As amended, the Act mandates the completion of 700 total miles of fence. It also mandates that the Secretary identify priority areas "where fencing would be the most practical and effective in deterring smugglers and aliens attempting to gain illegal entry into the United States." As of March 6, 2009, DHS has completed approximately 611 of the 661 miles of fence identified by the Border Patrol as priority areas. While fencing remains an important tool in achieving effective control, it is only one element of our overall border security strategy that incorporates the proper mix of technology, personnel, and tactical infrastructure. Currently, there are no immediate funded plans to construct additional fencing. DHS later appeared to modify its interpretation of the IIRIRA Section 102(b), and began to describe the "notwithstanding" proviso as permitting it to deploy fencing along less than 700 miles of the border, if the agency deemed a lesser amount of fencing to be appropriate to achieve operational control. Indeed, four years after describing IIRIRA Section 102(b) as imposing a firm mandate, Secretary Napolitano gave testimony before the Senate Judiciary Committee in which she appeared to take the view that DHS was legally permitted to construct a lesser amount of fencing. To date, DHS has not publicly released a formal legal opinion describing its interpretation of the fencing mandate established by IIRIRA Section 102(b), or announced whether or how its opinion has changed over the years. In defending DHS against a legal challenge by the state of Arizona in 2011, in which Arizona sought to compel DHS to complete construction of fencing along 700 miles of the border (and undertake other immigration enforcement actions), the Department of Justice did not dispute the existence of this mandate, but instead argued that DHS decisions as to where to locate such fencing and the speed by which fencing was to deployed were committed to agency discretion. It should be noted that, in assessing the permissibility of an agency's interpretation of the laws it administers, reviewing courts typically accord the agency's interpretation of these statutes with some degree of deference, so long as the construction is reasonable. In determining whether an agency's construction of a statute is reasonable, legislative intent is a touchstone for a reviewing court's analysis—an agency's interpretation might be entitled to deference when congressional intent is ambiguous and the agency's construction of the statute is reasonable. Moreover, agency interpretations of statutory requirements are usually afforded a lesser degree of deference when the agency interpretation is not the result of a notice-and-comment rulemaking process or formal adjudication. In such circumstances, the level of deference given to the agency's interpretation "will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control." The appropriate degree of deference to which DHS's interpretation of the statutory requirements imposed by IIRIRA should be afforded may be subject to differing views. Assuming that DHS's interpretation of the requirements under IIRIRA Section 102(b) is subject to legal challenge, the degree of deference that a reviewing court gives to the agency's interpretation may be informed by a number of factors, including whether (1) the plain text of the statute is ambiguous, and DHS's interpretation is reasonable; (2) other indicia of legislative intent favor a particular interpretation; and (3) the agency's apparent modification of its interpretation of IIRIRA Section 102(b) entitles its current interpretation to a lesser degree of deference. Regardless of the appropriate interpretation of Section 102(b)'s general fencing mandate and the "notwithstanding" proviso, the statute imposes no clear deadline for when the contemplated fencing must be deployed. In the 2011 litigation in which Arizona sought to compel DHS to complete construction of fencing required under IIRIRA Section 102(b), the reviewing federal district court dismissed Arizona's motion, in part because "no deadline mandates completion of the fencing and infrastructure developments or any required discrete action by a specified time." The court further observed that, although "the construction of the fencing and infrastructure improvements may be phrased in mandatory language," IIRIRA affords DHS "a great deal of discretion in deciding how, when, and where to complete the construction." The absence of a deadline for the completion of the fencing requirements of IIRIRA Section 102(b) does not necessarily mean that DHS has no judicially enforceable legal obligation to complete any remaining fencing that is statutorily required. The Administrative Procedure Act (APA), for example, provides courts with the authority to compel agency action, when such action has been "unlawfully withheld or unreasonably delayed." Determining whether an agency has unreasonably delayed undertaking a required action is a fact-specific determination made on a case-by-case basis, with reviewing courts typically showing more deference to an agency when there is not a statutory deadline for agency action. If a court determined that DHS had unreasonably delayed fulfillment of its obligations under IIRIRA Section 102(b), it might deem the completion of at least 700 miles of fence along the southwest border to constitute "a discrete agency action" that it would potentially have the power to compel. The district court in the Arizona case found that completion of the border fence was not a "discrete agency action" that it could compel DHS to take, but it did not explain the basis for this conclusion. Moreover, even assuming that a court might have jurisdiction to review a claim that DHS has unreasonably delayed fence construction, it is not clear who would have standing to make such a claim. To demonstrate standing, a plaintiff must (1) show a concrete and particularized, actual or imminent injury; (2) demonstrate a fairly traceable, causal connection between the injury and the defendant's conduct; and (3) demonstrate that it is likely that the injury will be redressed by a favorable court decision. It may be difficult for a plaintiff to identify a concrete, particularized injury that would be effectively remedied if DHS deployed fencing along an additional 50 miles of the border. In the Arizona case, the district court presumed without deciding that Arizona had standing but dismissed its claims. Section 102(c) of IIRIRA confers the Secretary of Homeland Security with broad authority to waive legal requirements that may impede the construction of barriers and roads along the border. The nature and scope of this waiver authority changed significantly pursuant to modifications made by the REAL ID Act of 2005. In the years following, the Secretary of Homeland Security employed this waiver authority to facilitate the construction of hundreds of miles of fencing and other infrastructure along several sections of the southwest border. More recently, however, this waiver authority has not been employed to facilitate further large-scale border projects. President Trump's executive order calling for immediate construction of additional physical barriers along the U.S.-Mexico border did not directly call for the invocation of this waiver authority by the Secretary, but such authority could be employed at a later date to facilitate the deployment of a border wall. When initially enacted in 1996, IIRIRA Section 102(c) expressly authorized the waiver the Endangered Species Act (ESA) and the National Environmental Policy Act (NEPA), to the extent that such waivers were determined necessary by the Attorney General to expeditiously construct barriers and roads under Section 102. Other federal laws, however, remained applicable to border construction projects. Federal immigration authorities appear to have not employed IIRIRA Section 102(c), as originally enacted, to waive NEPA and ESA requirements. In 2004, eight years after IIRIRA mandated completion of a second and third layer of fencing along the San Diego border, fencing was still not completed due to litigation and concerns related to environmental statutes other than NEPA and the ESA. The California Coastal Commission essentially halted the San Diego fencing project after determining that DHS had not demonstrated, among other things, that the project was "consistent to the maximum extent practicable" with the policies of the California Coastal Management Program—a state program approved under the federal Coastal Zone Management Act, 16 U.S.C. §§1451, et seq . In part due to delays in the construction of fencing near San Diego, Congress amended IIRIRA Section 102(c) via the REAL ID Act of 2005. As amended, IIRIRA Section 102(c) permits the Secretary of Homeland Security to waive "all legal requirements" necessary to ensure expeditious construction of these security barriers. Such waivers are effective upon publication in the Federal Register . Federal district courts are provided with exclusive jurisdiction to review claims alleging that the actions or decisions of the Secretary violate the U.S. Constitution, and district court rulings may be reviewed only by the Supreme Court, whose review is discretionary. The scope of this waiver authority is substantial—with some observers describing it as possibly having greater reach than any other waiver authority conferred by statute —leading some to express concern over its breadth and the limited scope of judicial review available for waiver decisions. Although IIRIRA Section 102(c), as amended by the REAL ID Act, could not properly be construed to permit the Secretary to waive application of the Constitution to fencing projects, the waiver potentially could be employed with respect to any other existing legal requirement—provided that the Secretary of Homeland Security concluded that compliance with the requirement would impede expeditious construction of barriers and roads. Waivers issued under IIRIRA Section 102(c) have not only targeted federal and state statutes, but also any regulations and requirements deriving from or relating to such laws. Nonetheless, the waiver authority conferred by IIRIRA Section 102(c) is not absolute. The Secretary may only waive those legal requirements that, in effect, would impede the construction of barriers and roads under Section 102. The authority does not appear to permit the Secretary to waive legal requirements that only tangentially relate to, or do not necessarily interfere with, the construction of roads and barriers. The decision of whether to waive a legal requirement is the responsibility of the Secretary of Homeland Security, and authority may be exercised in his discretion. Until such time as the Secretary waives an applicable law, however, DHS must generally follow all legal requirements normally imposed on federal agencies. To date, the Secretary of Homeland Security has provided notice in the Federal Register on five occasions that he was invoking the waiver authority conferred under IIRIRA Section 102(c): San Diego Border Sector— On September 22, 2005, a notice was issued in the Federal Register indicating that waiver authority had been exercised over various legal requirements in order to ensure the expeditious construction of the San Diego border fence. The waiver applies to "all federal, state, or other laws, regulations and legal requirements of, deriving from, or related to the subject," of various federal statutes listed in Appendix B . Barry M. Goldwater Range (BMGR) in Southwestern Arizona— A Federal Register notice was published on January 19, 2007, indicating that the Secretary was waiving various legal requirements in order to ensure the expeditious construction of physical barriers and roads in the vicinity of the BMGR in southwestern Arizona. The waiver applies to all "[f]ederal, [s]tate, or other laws, regulations and legal requirements of, deriving from, or related to the subject" of several federal statutes listed in Appendix C . San Pedro Riparian National Conservation Area in Southeastern Arizona —On October 5, 2007, Defenders of Wildlife and the Sierra Club brought suit seeking a temporary restraining order (TRO) enjoining DHS from border fence and road-building activities in the San Pedro Riparian National Conservation Area, located in the vicinity of the U.S. border in southeastern Arizona. On October 10, 2007, the presiding district court judge issued a TRO halting fence construction activities in the Conservation Area, finding the relevant federal agencies had failed to carry out an environmental assessment as legally required under NEPA. On October 26, 2007, a notice was published in the Federal Register indicating that the Secretary of Homeland Security had exercised waiver authority over various legal requirements in order to ensure the expeditious construction of physical barriers or roads through the San Pedro Riparian National Conservation Area (including any and all lands covered by the TRO), thereby enabling DHS to resume fence construction. The waiver applies to "all federal, state, or other laws, regulations and legal requirements of, deriving from, or related to the subject" of a collection of federal statutes listed in Appendix D . Hidalgo County, Texas— On April 3, 2008, notice was given in the Federal Register that the Secretary of Homeland Security had exercised his waiver authority under IIRIRA Section 102(c) to ensure the construction of barriers and roads in Hidalgo County, Texas. The waiver applies to "all federal, state, or other laws, regulations and legal requirements of, deriving from, or related to the subject" of various federal statutes listed in Appendix E . Border Projects in California, Arizona, New Mexico, and Texas— On April 3, 2008, the Secretary of Homeland Security gave notice in the Federal Register of the waiver of various laws in relation to border construction projects in California, Arizona, New Mexico, and Texas. The waiver applies to "all federal, state, or other laws, regulations and legal requirements of, deriving from, or related to the subject" of various federal statutes listed in Appendix F . In multiple instances, lawsuits were brought challenging the constitutionality of an issued waiver. Constitutional claims raised in these collective cases included arguments that the waiver authority was an impermissible delegation of Congress's lawmaking authority; the waiver provision violated the Presentment Clause by effectively enabling the executive branch to "repeal" or "amend" existing laws to exempt border infrastructure projects from their coverage; and the waiver authority's application to state and local laws violated federalism and anti-commandeering principles. In each case, the reviewing federal district court upheld the exercise of waiver authority as constitutionally valid. Parties in two of the cases sought Supreme Court review, but the Court declined to grant certiorari in either case. Pursuant to IIRIRA Section 102, Congress has conferred DHS with clear authority to construct barriers and roads along the international land borders to deter illegal crossings in areas of high illegal entry. More specifically, it has required fencing to be constructed along specified mileage of the southwest border. In recent years, legislative attention has primarily focused upon the fencing requirements contained in IIRIRA Section 102(b). Prior versions of Section 102(b) imposed specific requirements as to the location where fencing was to be installed and the layers of fencing to be constructed. The current provision affords DHS with significantly greater discretion to determine the appropriate location, layers, and types of fencing to be installed along the southwest border. Whether DHS has discretion to construct less fencing than the amount specified under IIRIRA Section 102(b), on account of a proviso that posits that the agency is not required to construct fencing at any "particular location" where it deems fencing to be inappropriate, has been the subject of disagreement (and apparently inconsistent views by DHS itself). While there appears to be stronger support for construing Section 102(b) to establish a firm mandate for the deployment of fencing along 700 miles of the border, with the agency retaining discretion as to the locations along the border where fencing should be installed, it is not clear whether a court would have the ability to compel DHS to install additional fencing (or that a plaintiff would have standing to bring such a claim). If Congress disagrees with DHS's implementation of the fencing mandate under Section 102(b), it would likely need to enact legislation to modify or clarify the fencing requirements found in current statute. But even assuming that DHS satisfies the fencing requirements under Section 102(b), the general authority conferred to the agency under Section 102(a) permits it to construct additional fencing or other barriers along the U.S. land borders. Moreover, Section 102(b) authorizes DHS to deploy additional physical barriers—beyond the mandated fencing along 700 miles of the southwest border—in order to obtain operational control of the southwest border. There is nothing in current statute that would appear to bar DHS from potentially installing hundreds of miles of additional fencing or other physical barriers along the border, at least so long as the action was determined appropriate to deter illegal crossings in areas of high illegal entry. In addition, IIRIRA Section 102(c) grants DHS authority to waive any legal requirement that would impede the expeditious construction of additional barriers and roads. DHS's decision not to deploy a substantial amount of additional fencing, beyond what is required under IIRIRA Section 102(b), appears primarily premised on policy considerations and funding constraints, rather than significant legal impediments. Accordingly, policymakers may deem it appropriate to review and assess the scope of DHS's authority to construct barriers, and the manner in which such authority is exercised, even after any requirements under IIRIRA Section 102(b) are satisfied. Appendix A. IIRIRA Section 102, as Amended (Text) Sec. 102 - Improvement of Barriers at Border (a) In General.-The Secretary of Homeland Security shall take such actions as may be necessary to install additional physical barriers and roads (including the removal of obstacles to detection of illegal entrants) in the vicinity of the United States border to deter illegal crossings in areas of high illegal entry into the United States. (b) Construction of Fencing and Road Improvements Along the Border.- (1) Additional fencing along southwest border.- (A) Reinforced fencing.-In carrying out subsection (a), the Secretary of Homeland Security shall construct reinforced fencing along not less than 700 miles of the southwest border where fencing would be most practical and effective and provide for the installation of additional physical barriers, roads, lighting, cameras, and sensors to gain operational control of the southwest border. (B) Priority areas.-In carrying out this section [amending this section], the Secretary of Homeland Security shall- (i) identify the 370 miles, or other mileage determined by the Secretary, whose authority to determine other mileage shall expire on December 31, 2008, along the southwest border where fencing would be most practical and effective in deterring smugglers and aliens attempting to gain illegal entry into the United States; and (ii) not later than December 31, 2008, complete construction of reinforced fencing along the miles identified under clause (i). (C) Consultation.- (i) In general.-In carrying out this section, the Secretary of Homeland Security shall consult with the Secretary of the Interior, the Secretary of Agriculture, States, local governments, Indian tribes, and property owners in the United States to minimize the impact on the environment, culture, commerce, and quality of life for the communities and residents located near the sites at which such fencing is to be constructed. (ii) Savings provision.-Nothing in this subparagraph may be construed to- (I) create or negate any right of action for a State, local government, or other person or entity affected by this subsection; or (II) affect the eminent domain laws of the United States or of any State. (D) Limitation on requirements.-Notwithstanding subparagraph (A), nothing in this paragraph shall require the Secretary of Homeland Security to install fencing, physical barriers, roads, lighting, cameras, and sensors in a particular location along an international border of the United States, if the Secretary determines that the use or placement of such resources is not the most appropriate means to achieve and maintain operational control over the international border at such location. (2) Prompt acquisition of necessary easements.-The Attorney General, acting under the authority conferred in section 103(b) of the Immigration and Nationality Act [8 U.S.C. 1103(b)] (as inserted by subsection (d)), shall promptly acquire such easements as may be necessary to carry out this subsection and shall commence construction of fences immediately following such acquisition (or conclusion of portions thereof). (3) Safety features.-The Attorney General, while constructing the additional fencing under this subsection, shall incorporate such safety features into the design of the fence system as are necessary to ensure the well-being of border patrol agents deployed within or in near proximity to the system. (4) Authorization of appropriations.-There are authorized to be appropriated such sums as may be necessary to carry out this subsection. Amounts appropriated under this paragraph are authorized to remain available until expended. (c) Waiver.- (1) In general.-Notwithstanding any other provision of law, the Secretary of Homeland Security shall have the authority to waive all legal requirements such Secretary, in such Secretary's sole discretion, determines necessary to ensure expeditious construction of the barriers and roads under this section [amending this section]. Any such decision by the Secretary shall be effective upon being published in the Federal Register. (2) Federal court review.- (A) In general.-The district courts of the United States shall have exclusive jurisdiction to hear all causes or claims arising from any action undertaken, or any decision made, by the Secretary of Homeland Security pursuant to paragraph (1). A cause of action or claim may only be brought alleging a violation of the Constitution of the United States. The court shall not have jurisdiction to hear any claim not specified in this subparagraph. (B) Time for filing of complaint.-Any cause or claim brought pursuant to subparagraph (A) shall be filed not later than 60 days after the date of the action or decision made by the Secretary of Homeland Security. A claim shall be barred unless it is filed within the time specified. (C) Ability to seek appellate review.-An interlocutory or final judgment, decree, or order of the district court may be reviewed only upon petition for a writ of certiorari to the Supreme Court of the United States. Appendix B. Legal Requirements Waived by DHS for the Construction of the San Diego Border Fence Appendix C. Legal Requirements Waived by DHS for the Construction of Physical Barriers and Roads in the Vicinity of the Barry M. Goldwater Range in Southwest Arizona Appendix D. Legal Requirements Waived by DHS for the Construction of Physical Barriers and Roads in the Vicinity of the San Pedro Riparian National Conservation Area in Southeast Arizona Appendix E. Legal Requirements Waived by DHS for the Construction of Physical Barriers and Roads in Hidalgo County, Texas Appendix F. Legal Requirements Waived by DHS for the Construction of Physical Barriers and Roads at Various Project Areas Located in California, Arizona, New Mexico, and Texas

Federal law authorizes the Department of Homeland Security (DHS) to construct barriers along the U.S. borders to deter illegal crossings. DHS is also required to construct reinforced fencing along at least 700 miles of the land border with Mexico (a border that stretches 1,933 miles). Congress has not provided a deadline for DHS to meet this 700-mile requirement, and as of the date of this report, fencing would need to be deployed along nearly 50 additional miles to satisfy the 700-mile requirement. Nor has Congress provided guidelines regarding the specific characteristics of fencing or other physical barriers (e.g., their height or material composition) deployed along the border, beyond specifying that required fencing must be reinforced. The primary statute authorizing the deployment of fencing and other barriers along the international borders is Section 102 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA; P.L. 104-208, div. C). Congress made significant amendments to IIRIRA Section 102 through three enactments—the REAL ID Act of 2005 (P.L. 109-13, div. B), the Secure Fence Act of 2006 (P.L. 109-367), and the Consolidated Appropriations Act, 2008 (P.L. 110-161, div. E). These amendments required DHS to construct hundreds of miles of new fencing along the U.S.-Mexico border, and they also gave the Secretary of DHS broad authority to waive "all legal requirements" that may impede construction of barriers and roads under IIRIRA Section 102. These statutory modifications, along with increased funding for border projects, resulted in the deployment of several hundred miles of new barriers along the southwest border between 2005 and 2011. But in the years following, DHS largely stopped deploying additional fencing, as the agency altered its enforcement strategy in a manner that places less priority upon barrier construction. On January 25, 2017, President Donald J. Trump issued an executive order that, among other things, instructs the Secretary of Homeland Security to "take all appropriate steps to immediately plan, design, and construct a physical wall along the southern border ... to most effectively achieve complete operational control" of the U.S.-Mexico border. The order defines a "wall" to mean "a contiguous, physical wall or other similarly secure, contiguous, and impassable physical barrier." The order does not identify the contemplated mileage of the wall to be constructed. Until recently, interest in the framework governing the deployment of barriers along the international border typically focused on the stringency of the statutory mandate to deploy fencing along at least 700 miles of the U.S.-Mexico border. But attention has now shifted to those provisions of law that permit deployment of fencing or other physical barriers along additional mileage. IIRIRA Section 102 authorizes DHS to construct additional fencing or other barriers along the U.S. land borders beyond the 700 miles specified in statute. Indeed, nothing in current law would appear to bar DHS from installing hundreds of miles of additional physical barriers, at least so long as this action was determined appropriate to deter illegal crossings in areas of high illegal entry or was deemed warranted to achieve "operational control" of the southern border. DHS's policy not to deploy a substantial amount of additional fencing, beyond what is expressly required by law, appeared primarily premised on policy considerations and funding constraints, rather than significant legal impediments. This report discusses the statutory framework governing the deployment of fencing and other barriers along the U.S. international borders. For more extensive discussion of ongoing activities and operations along the border between ports of entry, see CRS Report R42138, Border Security: Immigration Enforcement Between Ports of Entry, by [author name scrubbed].

This report analyzes U.S.-Malaysia relations as well as Malaysia's domestic politics, economy, environment, external relations, and geopolitical context within Southeast Asia. Congress has expressed interest in a variety of issues with regard to Malaysia which are explored below. The report also provides background information on current events and policy debates related to Malaysia to assist Congressional decision-makers. The relationship between the United States and Malaysia is a complex one. Bilateral ties are considerably closer than they may appear to some observers, but political sensitivities in Malaysia as well as concerns related to allegations of corruption and mistrust lingering from less amicable periods constrain the establishment of a deeper strategic relationship. Malaysia, a majority Muslim nation of 31 million people, is a partner in numerous U.S. security and economic initiatives in Southeast Asia. It is a major U.S. trading partner and a site of substantial U.S. investment. Malaysia, for many years one of the leading voices behind building "Asia-only" regional institutions, more recently has been an advocate of a strong U.S. presence in the Asia-Pacific region. Some experts believe that Malaysian concerns about China's assertiveness in the South China Sea have been a primary driver behind closer U.S.-Malaysia strategic ties. Yet, some issues have proven contentious over recent years—particularly Malaysia's human rights record and U.S. counter-terrorism strategy and policy in the Middle East—and many observers still perceive a ceiling on the degree to which the two countries can deepen their relationship. Like many Southeast Asian nations, Malaysia has long maintained a foreign policy that hedges between the United States, China, and other powers—a policy that continues under Prime Minister Najib Razak. The former Obama Administration's strategic "rebalancing" of foreign policy priorities to Asia placed increased attention on the nations of Southeast Asia, including Malaysia. Although the rebalancing did not feature high-profile bilateral initiatives with Malaysia, some observers say U.S.-Malaysia relations warmed considerably. Malaysia is one of the 12 nations that signed the proposed Trans-Pacific Partnership (TPP) from which the Trump administration decided to withdraw. Malaysia had placed high priority on being part of the U.S.-led initiative. The United States and Malaysia also conduct numerous military exchanges, training exercises, and port visits and cooperate in counter-terrorism and maritime domain awareness. Malaysia harbors a strong self-image as a moderate leader within the Islamic world, and plays an active role in the Organization of Islamic Cooperation (OIC). Malaysia has criticized U.S. military interventions in the Middle East and U.S. support for Israel, maintaining that these policies created a perception that the United States is "anti-Islam," and that U.S. rhetoric generated broader support for Islamic militancy. Malaysian statements along these lines have moderated in recent years, especially under Prime Minister Najib. Some observers, however, point to stronger voices among some conservative Islamist Malaysians as a sign of rising tension among some of Malaysia's Muslim leaders. The United States' withdrawal from the TPP agreement, and other actions taken by the Trump Administration, such as seeking to block arrivals to the United States from select Muslim nations, has created uncertainty in Malaysia about the United States' approach and commitment to the region, and has contributed to perceptions that the U.S. may turn inward or may become anti-Islamic. Such ambiguity and uncertainty regarding U.S. policy shifts towards the region may influence how states in the region calibrate their relationships with both the United States and China. The Asia rebalance was welcomed by many in Asia, including Malaysia, as a reassuring sign of the United States' commitment to the region. Questions about whether that commitment may wane under the new administration are emerging. For most of its early history, the territory that comprises the modern state of Malaysia was a collection of small, separate kingdoms or sultanates. After Islam was introduced to Southeast Asia by Muslim traders in the 14 th century, most of the indigenous population adopted the religion. Chinese Admiral Cheng Ho, who reached Malacca in 1405, was followed by the Portuguese in 1511. The Portuguese in Malaya were followed by the Dutch in 1641. In the late 18 th through mid-19 th centuries various principalities on the Malaysian Peninsula and northern Borneo fell under the British sphere of influence. Britain administered these resource-rich states through local leaders and eventually knit together these territories into the Federated Malay States in 1895. Japan briefly ousted the European powers from Southeast Asia during World War II, but Britain restored its governance of the Malaysian territories after 1945, inaugurating the Federation of Malaya in 1948. While indigenous political groups, including the United Malays National Organization (UMNO), agitated for independence during the postwar period, the Malayan Communist Party waged a prolonged guerrilla campaign against British rule. The British and their anti-Communist allies in Malaysia defeated the Communist campaign, sometimes employing brutal tactics; this period is known as "the Emergency." Peninsular Malaya gained its independence as a constitutional monarchy in 1957, and the colonies of Singapore, Sabah, and Sarawak were relinquished by Britain in 1963 into the new Federation of Malaysia. Indonesian ruler Sukarno opposed this union and instigated low-level military conflict (known as konfrontasi ) with newly enlarged Malaysia until 1965. Singapore was forced out of the federation and became independent in 1965 amid a series of political disagreements between Malaysian and Singaporean leaders. Race riots between Malays and Chinese that erupted in May 1969 in Kuala Lumpur shook the social foundations of Malaysia and catalyzed reform of the political system. A major consequence of the race riots was the New Economic Policy (NEP), which sought to remedy socioeconomic disparities by favoring bumiputra —ethnic Malays and other indigenous groups—over minority groups, including the economically preeminent ethnic Chinese minority. The Malaysian government promoted agricultural improvements, natural resource exploitation, and export-oriented industrialization (reserving opportunities for bumiputra ) that led to consistent economic growth through the 1970s and 1980s. In the political sphere, the UMNO-led Barisan National (BN) coalition of ethnically-based parties (including parties representing Malaysia's Chinese and Indian minorities) has maintained its preeminence since independence and delivered a measure of stability to Malaysia despite internal diversity and a volatile external security environment. A central figure in Malaysian politics is Mahathir Mohamad, who was Prime Minister from 1981 until 2003 and remains politically active. Mahathir helped to shape a more secular Malaysia by limiting the political strength of religious leaders and curtailing the privileges of Malaysia's royalty. He also aggressively sought to rein in critical voices in the political arena, the media, and civil society. Many aspects of Malaysia's current political landscape were shaped by the Mahathir era, as both prime ministers who followed him, as well as opposition leader Anwar Ibrahim, were at one time his protégés within UMNO. Mahathir remains a significant political voice in Malaysia, and has at times expressed his opposition to Najib and his policies. Malaysia faces numerous internal and external challenges as it seeks to attain its goal of becoming a prosperous, developed country that is influential in Southeast Asia and around the world. Chief among Malaysia's domestic challenges are ethnic and religious sensitivities and tensions, a volatile political climate marked by dissention within the ruling coalition and between the coalition and an active political opposition. Compared to its Southeast Asian neighbors, Malaysia has a relatively high average income, but its economy has not yet made a full transition toward high technology, high value-added industries. Malaysia has been successful at developing manufacturing and service industries, but its economy continues to rely heavily on its natural resources, particularly oil, natural gas, and timber. Many economic reform proposals confront opposition from rural, Malay-centric interest groups. As one of the founders and most active voices in the Association of Southeast Asian Nations (ASEAN), Malaysia faces the diplomatic challenges of promoting regional trade integration, maintaining security and stability, and creating an attractive climate for foreign investment. The rise of China brings many opportunities to East Asian countries, as well as concern about Beijing's increasing assertiveness in regional affairs. This is most evident through China's militarization of disputes over islands in the South China Sea. The Federation of Malaysia is a federated constitutional monarchy. The current Head of State, the Yang di-Pertuan Agong (king or supreme sovereign) of Malaysia, is Sultan Muhammad V who took his oath of office on December 13, 2016. The post of Yang di-Pertuan Agong rotates among Malaysia's nine Sultans. The nine Sultans elect one of their own to be Yang di-Pertuan Agong every five years. The Constitution includes special safeguards for Sabah and Sarawak in East Malaysia. The federal parliament has two houses. The Dewan Negara , or Senate, has 70 members of which 26 are elected from the state legislatures and 44 appointed by the Yang di-Pertuan Agong . The Dewan Rakyat , or House of Representatives, consists of 222 directly elected Members. Appointments to the Senate are for three years and the House must stand for election at least every five years. The Yang di-Pertuan Agong may dissolve parliament on the advice of government. Prime Minister Najib's United Malays National Party is the main political party in the Barisan National Coalition which is a 13 party coalition. BN holds 134 of 222 seats in parliament. While this gives BN a majority, it is short of the two thirds required to amend the constitution. Other key parties in the BN include the Malaysian Chinese Association (MCA) and the Malaysian Indian Congress (MIC). The three key political parties in the Pakatan Harapan (PH) opposition alliance are Part Amanah Negara (Amanah), the Democratic Action Party (DAP), and the Parti Keadilan Rakiyat (PKR). The Parti Islam se-Malaysia (PAS), an Islamic party with its base of support in rural areas and peninsular Malaya's north, and the recently formed Parti Pribumi Bersatu of former Prime Minister Mahathir are two other significant opposition political parties. It has been observed that "Political competition in Malaysia has been and continues to occur, largely along the ethnic dimension." There was speculation after the strong performance of the political opposition in the 2013 election that Najib could "come under pressure from conservatives in his own ruling party for not delivering a strong majority." Political trends indicate that while the ruling BN coalition no longer has the firm hold on political power that it once had the opposition is less unified today than it was in the last national election. Malaysia has displayed a high degree of political stability since it gained independence in 1957 despite strong political divides among its population. Political coalitions led by the United Malays National Organization (UMNO), the country's dominant political party, have ruled Malaysia without interruption since independence. Each of Malaysia's seven Prime Ministers has been a member of UMNO. UMNO's position at the center of the ruling coalition reflects the importance of ethnicity, and to a lesser degree religion, in Malaysian politics. In the 1970s, in an effort to reduce tensions between the nation's Muslim Malay majority and minority groups (primarily Chinese and Indian), UMNO leaders implemented the NEP. At the same time, UMNO recruited smaller parties that represented the country's Chinese and Indian communities into the ruling coalition. In the decades since, the question of the NEP's bumiputra preferences (i.e., favoring ethnic Malays and other indigenous groups), and more broadly of ethnic identity, has become one of the defining issues in Malaysian politics. The Chinese- and Indian-based parties in the ruling coalition have performed poorly in recent elections, giving the ruling coalition a less multi-ethnic character. Some Malaysian observers fear a continued trend toward ethnically divided political coalitions. The Parti Islam se-Malaysia (PAS) broke away from the opposition coalition in 2015 when hardline Islamist, pro-Malay elements in PAS would not compromise on their push for an Islamic legal code. Malaysia's political landscape is marked by several other obstacles to achieving a more robust democracy. Uneven election districting has long elevated the importance of rural electoral districts, and Malaysian election laws require that the states of East Malaysia also retain disproportionate numbers of parliamentary seats—both of which work to UMNO's advantage, as many of these districts are UMNO strongholds. Opposition leaders frequently face government harassment and legal action that many observers allege is intended to be defamatory. The Najib government had taken some steps to reduce restrictions on freedom of expression, but later clamped down on dissent beginning in 2014. In 2011, Parliament repealed Malaysia's long-standing Internal Security Act (ISA) and in April 2012 passed a new law called the Security Offenses (Special Measures) 2012 Act (SOSMA), which relaxed some of the ISA's provisions, stating that "no person shall be arrested or detained … solely for his political belief or political activity" and limiting the period individuals can be detained by police without formal charge. However, SOSMA toughened other provisions; for example, allowing police to intercept communications without judicial approval. Human rights groups have criticized the measures as overly restrictive. Prime Minister Najib came under heavy political pressure in 2015 after the Wall Street Journal and other sources reported that nearly $700 million was routed from companies associated with the Malaysian investment fund 1MDB into bank accounts controlled by Najib. Although former Prime Minister Mahathir and others called for Najib's resignation, Najib maintained his innocence and shored up his political foundation by reshuffling the Cabinet. Earlier in 2015, Najib faced renewed allegations of corruption from a decade-old case, involving graft from a submarine contract with France and the murder of a Mongolian model. The Najib Administration has increased its use of the broadly-worded Sedition Law to stifle critics of the government, and it blocked the websites of fault-finding media outlets as the 1MDB scandal grew in the summer of 2015. Various media, politicians, and civil society groups have described a climate of repression of political dissent in Malaysia. Despite structural handicaps, Malaysian politics has become increasingly competitive over the past two national elections, in 2008 and then 2013. In 2008, the BN coalition failed to win two-thirds of the Parliament's seats for the first time. In 2013, the BN won only 47% of the popular vote compared with 51% for the opposition coalition, but won 133 out of Parliament's 222 seats—over 60% of the Parliament. Opposition parties alleged that widespread electoral fraud contributed to the BN's victory, and a series of public protests ensued, drawing tens of thousands of people to several protests in Kuala Lumpur. The position of opposition leader Anwar Ibrahim is of particular sensitivity in Malaysia, and in U.S.-Malaysia relations. From 1993 to 1998, Anwar was the country's Deputy Prime Minister, a UMNO member who was widely considered the heir apparent to longtime Prime Minister Mahathir. After a public break with Mahathir in 1998, Anwar was arrested and accused of sodomy, a crime under Malaysian law. In response to the accusations and evidence of abuse in detention, in October 1998 the U.S. Senate passed S.Res. 294 , which called on the Malaysian government to hold a fair trial for Anwar and to preserve the right to express political views freely. U.S. government officials and many international groups criticized the subsequent trial as politically motivated, but Anwar was convicted in 1999 and remained in prison until 2004, when Malaysia's Supreme Court overturned the conviction. He subsequently became the most prominent figure in the country's political opposition. In 2008, Anwar was arrested again for a separate sodomy charge. He was acquitted of the charge in 2012, but in March 2014 Malaysia's highest appeal court overturned the acquittal and sentenced him to five years in prison, depriving the opposition PR coalition of its charismatic leader. The next election is not due to be held until 2018. Despite this, it is expected that Prime Minister Najib will call for the dissolution of parliament and the holding of elections in the second half of 2017 in an effort to consolidate his position. Observers believe that Najib and the Barisan National are likely to win given the fragmented nature of the political opposition. According to the Economist Intelligence Unit, Prime Minister Najib's "tenure as prime minister will depend on the margin of victory. Any slippage in UMNO's current seat tally would prompt a change in leadership." Bilateral ties between the United States and Malaysia have been both highly cooperative and publicly contentious. Malaysia is a strong partner in many U.S. security and economic initiatives, but domestic Malaysian sensitivities, particularly regarding the nation's identity in the Muslim world, have constrained Malaysian leaders from undertaking high-profile partnerships with the United States. The decision to "elevate" the U.S.-Malaysia relationship to a "Comprehensive Partnership," announced during former President Obama's April 2014 visit, indicated that the two countries were cooperating on a wider range of issues than they had previously. Malaysian Prime Minister Najib Razak has spoken frequently about building stronger relations with the United States. Former President Obama was the first U.S. President to visit Malaysia since 1966, and his visit served as a catalyst to promote bilateral cooperation in several areas. He particularly highlighted people-to-people ties, for example the Fulbright English Teaching Assistant program, which brings American youth to teach in Malaysia. The Najib government has taken visible steps to support U.S. initiatives. In 2010, Malaysia enacted legislation to strengthen its restrictions on the shipment of nuclear materials and in 2014 officially joined the U.S.-led Proliferation Security Initiative. Malaysia sent 40 military medical personnel to Bamiyan province in Afghanistan in 2010, and it subsequently has rotated deployments to support Afghan reconstruction—a notably public move in a Muslim-majority nation where U.S. actions in Iraq have led to large protests at the U.S. Embassy in Kuala Lumpur. The Najib government has condemned the Islamic State organization and cooperated with the United States in stemming the flow of foreign fighters and financing to terrorist groups in Syria. The visibility of these initiatives marked a change for the bilateral relationship. U.S. relations with Malaysia were particularly fraught under long-time Prime Minister Mahathir, who was a vocal advocate of "Asia-only" regional organizations such as the East Asia Economic Caucus (EAEC), which he proposed in 1990. Malaysians were particularly upset both by U.S. criticism of Malaysia's economic policy during the Asian Financial Crisis in 1998 and by high-level U.S. criticism of Malaysia's judiciary after Anwar Ibrahim's conviction in 1999. Following Mahathir's retirement as Prime Minister in 2003, some of the barriers to warmer bilateral ties eased, although Malaysia continues to oppose U.S. support for Israel. Efforts to negotiate a bilateral U.S.-Malaysia free trade agreement in the mid-2000s did not bear fruit, but Malaysia joined the TPP negotiations in 2010, one year after the United States. The emergence in 2015 of new corruption scandals linked to Prime Minister Najib poses a dilemma for U.S. policy toward Malaysia. On one hand, Najib has prioritized good relations with the United States and supported several U.S. initiatives, as described above; he is known as one of the most pro-American leaders in Malaysia. On the other hand, signs of U.S. support for Najib, especially indications of a warm relationship between Najib and former President Obama, risked giving the impression that the United States is not concerned about corruption allegations or that the United States can tolerate some amount of corruption for the sake of maintaining U.S.-Malaysia cooperation. Some analysts assert that U.S. support for Najib might alienate segments of the Malaysian public that want to eliminate cronyism and might spur cynical reactions to U.S. democracy-promotion efforts. The U.S. Justice Department announced in July 2016 that it was filing a civil forfeiture complaint "seeking the forfeiture and recovery of more than $1 billion in assets associated with an international conspiracy to launder funds misappropriated from a Malaysian sovereign wealth fund." This is the single largest action ever brought under the Kleptocracy Asset Recovery Initiative. With today's complaints, the United States seeks to recover more than $1 billion laundered through the United States and traceable to the conspiracy. 1MDB was created by the government of Malaysia to promote economic development in Malaysia through global partnerships and foreign direct investment, and its funds were intended to be used for improving the well-being of the Malaysian people. Instead, as detailed in the complaints, 1MDB officials and their associates allegedly misappropriated more than $3 billion. Allegedly, some of the funds from the fraud scheme were used to fund the movie The Wolf of Wall Street . The United States periodically has raised concerns about human rights and democracy issues in Malaysia. In March 2014, after Malaysia's highest appeals court overturned the acquittal of opposition leader Anwar Ibrahim on a separate sodomy charge—a decision that many observers deemed politically motivated—the U.S. State Department said, "The decision to prosecute Mr. Anwar and his trial have raised a number of concerns regarding the rule of law and the independence of the courts." Although former President Obama spoke out on human rights issues during his April 2014 visit, he did not meet personally with opposition political leaders, who met with National Security Advisor Susan Rice. This apparent consideration for the ruling party contrasts with former Vice President Al Gore's praise for Anwar and the opposition reformasi (reform) movement during a visit to Kuala Lumpur in 1998. The official U.S. reaction to Malaysia's most recent nationwide parliamentary elections in May 2013, in which opposition parties alleged that widespread electoral fraud contributed to the ruling coalition's victory, was restrained. The State Department upgraded Malaysia's ranking in its Trafficking in Persons (TIP) Report from Tier 3 (the worst ranking) in 2014 to Tier 2 Watch List in 2015, sparking a controversy. Critics of the State Department's decision, including the more than 175 Members of Congress who signed letters to the Secretary of State, allege that the State Department overlooked evidence that the Malaysian government has failed to improve its human trafficking problems. In May 2015, authorities discovered large camps on both sides of the Malaysia-Thailand border where migrants, likely from Burma, apparently had been abused and possibly even murdered by smugglers. According to some media reports, senior State Department officials overruled State Department TIP analysts allegedly in an effort to maintain good relations with Malaysia and to ease the approval of the TPP. The Trade Promotion Authority legislation passed in 2015 ( P.L. 114-26 ) does not confer expedited legislative procedures to implementing legislation for a trade agreement with a country that receives a Tier 3 ranking in the TIP Report. The State Department has denied political interference in the TIP Report rankings. In a 2002 speech in Washington, DC, then-Defense Minister Najib Razak called the cooperative U.S.-Malaysia defense relationship "an all too well-kept secret." Despite discord at the political leadership level, the United States and Malaysia have maintained steady defense cooperation since the 1990s, and several aspects of that cooperation improved in the 2010s as the overall relationship warmed. The former Obama Administration's strategic rebalancing to the Asia-Pacific region put more emphasis on bolstering security ties with Malaysia and other so-called "emerging partners." Beginning in 2014, the Islamic State organization in the Middle East created new terrorist threat dynamics globally, including in Southeast Asia, spurring the United States and Malaysia to reinvigorate their counterterrorism cooperation. During the 2000s, a major focus of U.S.-Malaysia security cooperation was counter-terrorism activities aimed at terrorist networks operating in Southeast Asia. Malaysia itself has not been a known base for major terrorist or insurgent groups, but it played a central role as a moderate Muslim voice against terrorism and as a capacity-building partner, establishing the Southeast Asia Regional Centre for Counter-Terrorism in 2003. That said, Malaysia has not been immune to terrorist incidents. To stem the flow of foreign fighters and financing to terrorist groups in Syria and Iraq, the law enforcement and intelligence communities of the United States and Malaysia have enhanced their cooperation in tracking financial flows, information sharing, and other areas. The U.S. and Malaysian defense establishments have built ties through frequent military exercises, combined training, ship visits, and military education exchanges. Every year, dozens of Malaysian officers study at U.S. professional military education institutions through International Military Education and Training (IMET) programs. The United States and Malaysia jointly fund these exchanges to build interpersonal connections and to improve the professionalism of the Malaysian military. The U.S. and Malaysian militaries conduct numerous cooperative activities, highlighted by jungle warfare training at a Malaysian facility, bilateral exercises like Kris Strike, and multilateral exercises like Cobra Gold, which is held in Thailand and involves thousands of personnel from several Asian countries plus the United States. Since 2010, Malaysia has participated in the biennial "Rim of the Pacific" (RIMPAC) multilateral naval exercises held near Hawaii. U.S. military vessels dock at ports in Malaysia for re-supply, for maintenance, and to allow U.S. service members to build ties with their Malaysian counterparts. U.S.-Malaysia security cooperation extends around the world, to include peacekeeping, counter-piracy, and reconstruction operations. As mentioned above, from 2010 until 2013 Malaysia deployed a contingent of 40 military medical personnel to Afghanistan, where they made contributions to public health (especially women's health) and clean water access. The U.S. and Malaysian navies cooperate to combat piracy near the Malacca Strait and, as part of the international counter-piracy coalition, off the Horn of Africa. Malaysia is a large contributor to U.N. peacekeeping operations. Malaysia has purchased high-technology U.S. weapons systems in the past, notably the F/A-18D Hornet strike fighter aircraft, but its recent major defense purchases mostly have been of European and more recently Chinese equipment. The most modern Malaysian fighter aircraft is the Russian Su-30MKM Flanker, and the French "Scorpene" design won the contract for Malaysia's only two submarines. The Malaysian defense budget for FY2017 is $3.6 billion (15.06 billion ringgit). This represents a 13% drop from 2016 funding levels. Malaysia is a significant trading partner for the United States, but the United States is an even more important trading partner for Malaysia. In 2016, Malaysia was the 24 th -largest market for U.S. goods exports and the 14 th -largest supplier of U.S. goods imports. By contrast, the United States was Malaysia's 4 th -largest export market (after Singapore, China, and Japan) and the 4 th -largest supplier of imports (after China, Singapore, and Japan). The two nations report significantly different amounts for their bilateral trade, with the United States listing higher values for imports from Malaysia and lower values for exports to Malaysia. As a result, the United States reports a greater bilateral trade deficit with Malaysia, while Malaysia reports a smaller bilateral trade surplus. In merchandise trade, electrical machinery and equipment dominate trade flows in both directions, reflecting Malaysia's role as a major source for consumer electronics. Over 600 U.S. companies operate in Malaysia, many in the electronics and information technology industries. The total stock of U.S. foreign direct investment (FDI) in Malaysia as of the end of 2014 was $14.4 billion. Roughly one-third of this was in manufacturing (largely electronics), and another third was in mining and energy extraction. By contrast, Malaysia has very little FDI in the United States. There is speculation in the media that the Trump Administration may turn its attention to trade relations with countries in Asia, in addition to China, with whom the U.S. runs trade deficits. Malaysia is mentioned in this context along with India, Indonesia, and Vietnam. Deforestation, driven primarily by clearing for palm oil plantations, and related declines in wildlife habitat, are major environmental and health problems in Malaysia. Malaysia and Indonesia are the world's top two producers of palm oil and collectively account for 85% of world production. According to one source, palm oil and pulp wood companies are responsible for more than half of the deforestation in the Malaysian part of the island of Borneo. According to another report, Malaysia lost 28% of its original forest cover on Borneo between 1973 and 2015 with an estimated 60% of the cleared land being converted to plantations. Another report indicates that Malaysia overall lost 14.4% of its original forest cover between 2000 and 2012 or an area roughly the size of Denmark. Malaysia has made a commitment to maintain 50% forest cover and to reduce its economy's carbon intensity by 40% over 2005 levels by 2020. Malaysia's forest cover was estimated to be 53% in 2012. Malaysia also signed the United Nations' Paris Climate Agreement on April 22, 2016. Clearing and related burning associated with establishing palm oil plantations have been a major contributor to carbon emissions which contribute to global climate change and undermine biodiversity and health in Malaysia. One huge source of global warming emissions associated with palm oil is the draining and burning of the carbon-rich swamps known as peatlands. Peatlands can hold up to 18 to 28 times as much carbon as the forests above them ; when they are drained and burned, both carbon and methane are released into the atmosphere—and unless the water table is restored, peatlands continue to decay and release global warming emissions for decades. The burning associated with the conversion of native forest to palm plantation is also a threat to people's health. According to one study conducted by Columbia and Harvard Universities, it is estimated that forest fires and related haze led to the death of over 100,000 people in Southeast Asia in 2015. The study estimated that 91,600 people in Indonesia, 6,500 in Malaysia and 2,200 in Singapore may have died prematurely [in 2015] because of exposure to fine particle pollution from burning forests, in particular carbon-rich peatlands. The study said those figures were nearly 2.7 times higher than the 37,600 estimated deaths in the three countries because of exposure to fine particles during a fire and haze crisis in 2006 . In a nonbinding motion, the European Parliament voted 640 to 18 to call for a single Certified Sustainable Palm Oil (CSPO) scheme for European destined palm oil in order to ensure that such oil is produced in an environmentally sustainable manner. Malaysia strongly opposes the resolution which links the palm oil industry to deforestation. The threat to biodiversity in Malaysia is of particular concern to conservationists and others as Borneo has been identified as one of the world's biodiversity "hotspots." The government-led Heart of Borneo Initiative, which is supported by nongovernmental organizations, is seeking to assist Malaysia, Brunei, and Indonesia to conserve 240,000 km of land in Borneo's central highland forests, and the biodiversity that these forests sustain. There are an estimated 221 mammals, 620 species of birds, 15,000 plant species and over 1,000 insects in the area. The most visible species under threat is the Bornean Orangutan which is listed as critically endangered and faces an extremely high risk of extinction in the wild. It is estimated that the orangutan population will decline by 86% between 1973 and 2025 largely due to habitat destruction, degradation and fragmentation. It is reported that illegal logging and uncontrolled burning remain continual threats. In the decades leading up to the 2008 global financial crisis, Malaysia had been one of the fastest growing economies in the world. Due to counter-cyclical fiscal policies and intra-regional demand, Malaysia recovered from the global recession and an economic downturn in 2009 comparatively quickly, and its economic performance since 2010 has been close to pre-crisis level. At the same time, however, Prime Minister Najib remained under some domestic pressure to find ways of achieving the nation's self-proclaimed goal of becoming a developed nation by 2020, while addressing the country's regional and income disparities. Economic growth in Malaysia has been impaired by an economic slowdown in China, one of Malaysia's largest export markets, as well as declining prices of natural gas, oil, and other commodities. Malaysia's economy is regionally and sectorally diversified. The state of Selangor, which surrounds the capital of Kuala Lumpur, is the largest contributor to the nation's GDP, followed by Kuala Lumpur. The state of Johor, located next to Singapore, and the state of Sarawak, on the island of Borneo, also are significant contributors to the GDP. These four regions are Malaysia's most prosperous areas and form the core for the nation's manufacturing and services sectors. Najib has promoted the development of information technology businesses in these areas. By contrast, the states of Kedah, Kelantan, Perak, and Perlis, along the border with Thailand, as well as the state of Sabah on the northern tip of the island of Borneo, are relatively poorer regions of Malaysia with less manufacturing and services activity. Malaysia also is economically divided along urban/rural lines and between its ethnicities. Malaysia's urban centers, such as Kuala Lumpur, are relatively prosperous and support a growing middle class, while its rural areas are comparatively underdeveloped. Malaysia's major ethnic groups face differing economic conditions. The Chinese-Malaysians are generally prosperous and play an important role in the nation's commercial and trade sectors. The Indian-Malaysians are split into a comparatively wealthy few and a comparatively poor many. Though they constitute a majority of the population, Malays and other indigenous people (i.e., bumiput ra ) traditionally have been considered economically disadvantaged, leading to the 1971 introduction of the New Economic Policy (NEP) mentioned above. Roughly half of Malaysia's GDP comes from the services sector. Trade-related services (such as finance, insurance, and business services) and tourism dominate the services sector. In 2016, Malaysia's GDP composition by sector of origin was as follows: agriculture 8.2%, industry 37.8%, and services 54%. Malaysia is a significant exporter of oil and natural gas. Malaysia mainly manufactures consumer electronics, much of it parts and components for export and use in regional manufacturing supply chains. Malaysia exports three major crops: cocoa, palm oil, and rubber. Malaysia had worked with the United States and other nations since 2010 on the proposed Trans-Pacific Partnership (TPP) free trade agreement (FTA). The 12 TPP parties signed the agreement in February 2016. President Trump upon coming into office announced the United States would not pursue ratification of the TPP and would seek to negotiate future U.S. trade agreements on a bilateral basis. The TPP text included enforceable commitments on a range of trade and investment issues from tariff and nontariff barriers to labor and environmental standards. To become effective, the agreement would require implementing legislation by Congress, submitted by the President. The Trump Administration has stated it has no intent to revisit its decision to withdraw from the pact. Malaysia was one of only five TPP signatories without an existing U.S. FTA. Therefore, adhering to the TPP commitments would have represented an economically significant shift in U.S.-Malaysia trade relations. Points of contention between the United States and Malaysia during the negotiations included U.S.-proposed commitments on state-owned enterprises (SOEs); Malaysia's government procurement policies, which give preferential treatment to certain types of Malaysian-owned companies; provisions for intellectual property rights (IPR) protection; and market access for key commodities and services. Prior to joining the TPP talks, Malaysia had been negotiating a bilateral trade agreement with the United States. Those talks were effectively folded into the TPP negotiations. The U.S. withdrawal from TPP has created some uncertainty as to next steps in the bilateral trade relationship. The Trump Administration has announced a review of U.S. trade ties with 13 countries, including Malaysia, with which the United States has a bilateral trade deficit. Presumably the results of that review will inform any potential future bilateral trade talks. Neither country publicly has expressed interest to date in returning to bilateral FTA negotiations, but there may be interest in Malaysia in some type of economic dialogue such as a Trade and Investment Framework Agreement (TIFA). TIFAs typically consist of an agreement between the parties to consult annually at high levels regarding existing trade and investment frictions. Another regional trade grouping currently negotiating a pact is the 16-nation Regional Comprehensive Economic Partnership (RCEP) which includes the 10 ASEAN members (Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam), plus Australia, China, India, Japan, New Zealand, and South Korea. RCEP does not include the United States. States in the region such as Malaysia may now have an increased focus on RCEP. Some observers have stated that President Trump's decision to withdraw from the Trans-Pacific Partnership Agreement "may also leave the door open for China to expand its economic might across Asia and the Pacific" through RCEP. Malaysia harbors a strong self-image as one of Southeast Asia's regional leaders and as a moderate, Muslim-majority state that can be a political and economic model for others in the Islamic world. It also has been a mediator in seeking to resolve some regional conflicts, most prominently peace talks between the Philippine government and a separatist group in the southern Philippines. Malaysia was one of the six founding members of ASEAN, Southeast Asia's primary multilateral forum, and it has been a proponent of the consensus-based model for regional coordination. Kuala Lumpur was chosen to chair ASEAN in 2015. A major goal of the ASEAN Economic Community is to harmonize certain trade regulations and practices to move ASEAN incrementally toward becoming more of a common market and production zone. Malaysia is active in many ASEAN initiatives, including the ASEAN Defense Ministers Meeting-Plus (ADMM+), where it worked with Australia as co-chairs of a multilateral maritime security exercise in September 2013. Among other important issues for Malaysia in its relations with neighboring countries are managing relations with Singapore, with which Malaysia has a deep economic interdependency; dealing with the sometimes-violent separatist insurgency in southern Thailand, along Thailand's borders with Malaysia; combatting piracy in the Straits of Malacca along with Indonesia and Singapore; repelling Philippine armed groups that claim parts of Malaysian territory in Sabah; and managing immigration and migrant labor communities from Burma, Indonesia, and other neighbors. The large flow of refugees and migrants from Burma and Bangladesh in April-June 2015 tested the will and ability of ASEAN to manage a complex crisis. Many of the refugees were Muslims from the Rohingya ethnic group fleeing discrimination and persecution in Burma. According to one observer, China is of importance to Malaysia for three main reasons. First, China is a key trade and investment partner. Second, "China is fast becoming the region's military superpower," and third, China is "the motherland of up to a third of Malaysia's population." In the past, Malaysia has used careful hedging strategies to balance its relations with China and the United States. China and Malaysia reportedly signed investment agreements worth $34 billion during Prime Minister Najib's visit to Beijing in November 2016. Malaysia is also to purchase four naval vessels from China. Some view Malaysia's "swing toward China" as a consequence of increasing Chinese investment and note The pressure on Malaysia's long-term accommodation with the West is partly a consequence of the changing power equation in the region including the ambitious initiative (One Belt, One Road, etc) of an increasingly confident Chinese leadership and the apparent faltering of American international commitment. Najib's comments made clear, however, that another factor was his growing irritation, particularly with the U.S. Justice Department, for its pursuit of the 1MDB case. Some observers view the Najib visit to Beijing in this context as diluting U.S. influence in the region and signaling a strategic shift by Malaysia toward China. Other analysts noted that Najib made a similarly productive trip to Tokyo immediately after his China visit. Some argue that recent diplomatic moves by both Malaysia and the Philippines to improve relations with Beijing may be part of a new balance of power in Asia. Others view such predictions as overstated. It remains to be seen if recent Malaysian engagement with China is part of a tilt towards China or if these initiatives are part of a balanced approach towards China and the United States. Malaysia is one of four Southeast Asian nations with maritime territorial disputes with China (the others are Brunei, the Philippines, and Vietnam). It generally has pursued a less forceful diplomatic approach with China than have the Philippines and Vietnam, and it has sought to have all parties agree to a Code of Conduct to manage behavior in disputed waters. Negotiations between ASEAN's 10 members and China over such a code began in September 2013. Chinese claims in the South China Sea overlap with the Exclusive Economic Zone (EEZ) to which Malaysia is entitled under international law, including the U.N. Convention on the Law of the Sea. Malaysia's own claims also overlap with territorial claims made by the Philippines, Vietnam, and Taiwan; each country claims the Spratly Islands. Malaysia is farther geographically from China than the Philippines and Vietnam, and incidents at sea between its vessels and vessels from China have been less frequent than Sino-Philippine or Sino-Vietnam incidents. However, since 2013 Chinese naval vessels have been operating as far south as James Shoal, which lies about 50 miles north of the Malaysian coast in Borneo, with more frequency. Kuala Lumpur was not at the forefront of criticism after China's large-scale reclamation of features in the South China Sea was made public in 2014. Some Malaysian officials have spoken out against China—the chief of Malaysia's armed forces called China's land reclamation activities an "unwarranted provocation" at a security forum in Beijing—but such statements have been less frequent and less strident than those by officials in other claimant states. Malaysia has considerable economic interests in the South China Sea—particularly in oil and gas development. Chinese maritime law enforcement vessels reportedly have interfered with the operation of vessels operated or contracted by Malaysia's state energy company Petronas. Over the past decade, Malaysia regularly has sought to foster more cooperation among Southeast Asian claimants in efforts to resolve their own disputes and to bolster their claims in disputes with China. For example, in 2007 Malaysia joined Vietnam in submitting a joint extended continental shelf claim to the U.N. Commission on the Limits of the Continental Shelf—a submission that China formally protested. Malaysia's maritime territorial dispute with Brunei was resolved when the two countries signed a boundary agreement in April 2009, facilitated by a subsequent agreement between Petronas and the Brunei government to develop energy blocks off Borneo Island. Some observers describe the agreement as a potential model for utilizing joint development as a means to resolve territorial disputes. Relations between Malaysia and North Korea deteriorated after North Korean Leader Kim Jong-un's half-brother Kim Jung-nam was assassinated on February 13, 2017, in the Kuala Lumpur airport with the VX nerve agent. Two women, one from Vietnam and the other from Indonesia, have been arrested and charged with the murder. It is believed that they were hired by someone else to carry out the murder. Malaysia revoked visa free entry to Malaysia for North Koreans following the incident. Income from North Korean migrant workers in Malaysia has been an important source of revenue for Pyongyang. Many of those working in Malaysia were working in the mining sector in Sarawak. The Malaysian military participates in a variety of cooperative security activities on a bilateral and multilateral basis with partners from Southeast Asia and outside the region. Malaysia is a member of the Five-Power Defense Arrangement (FPDA), an agreement between Malaysia, Australia, New Zealand, Singapore, and the United Kingdom to coordinate for mutual defense. The Malaysian and Singaporean militaries cooperate very closely. Malaysia periodically conducts bilateral military exercises with its larger neighbors, China and India. Through the ASEAN-led security groupings—the ASEAN Regional Forum (ARF), the ASEAN Defense Ministers' Meeting (ADMM), and the ADMM+—Malaysia has participated actively in regional security dialogues and cooperative activities. As an example of the potential for conflict avoidance mechanisms in the region, in 2013 Malaysia and Vietnam agreed to establish a "direct connection" communication link between a Malaysian naval base and Vietnam's Southern Command. In the Straits of Malacca, the Malaysian military and maritime law enforcement work closely with counterparts from Indonesia and Singapore on anti-piracy measures. Malaysia promotes itself as a leading voice for moderate Muslim countries; Kuala Lumpur maintains good relations with the United States and other Western countries while speaking out for Islamic causes, such as the status of the Palestinians. Malaysia is an active participant in the Organization of Islamic Conferences (OIC), and even has launched its own initiative, the Global Movement of Moderates (GMM), to diminish extremist voices and improve the public image of Muslims worldwide. Within Southeast Asia, Malaysia has played an active role as a mediator in conflicts between rebel Muslim groups and the central government in both Thailand and in the Philippines. Malaysia helped to broker a 2014 peace agreement between Manila and the Moro Islamic Liberation Front (MILF), a group that seeks more autonomy for the Muslim minority in the southern Philippines. In recent years, the United States and Malaysia have made efforts to maintain a good working relationship. However, political observers believe that neither country appears to seek a fundamentally deeper political and strategic partnership. U.S. concerns about Prime Minister Najib's standing and the sense in Malaysia of a growing U.S.-China strategic rivalry may inhibit deeper bilateral cooperation. The United States faces the familiar but difficult challenge of balancing countervailing impulses in its relationship with Malaysia. Some questions that Members of Congress may wish to consider are: should the United States maintain close ties with Najib despite the allegations of corruption and policies that restrict civil liberties? Is public or private pressure more likely to be effective in improving the Malaysian government's efforts to curb corruption and uphold human rights? And is the United States engaging a sufficiently broad portion of the political sphere, or is it overly reliant on those who advocate closer ties with Washington? The future of domestic politics in Malaysia is difficult to forecast with confidence. The ruling BN coalition no longer has a stranglehold on political power, but the opposition is less unified than it was in the last national election. On one hand, the distribution of seats in favor of rural constituencies and the deference of the mainstream press to government narratives will continue to favor the UMNO-led coalition. On the other hand, dissatisfaction with government inefficiency and corruption could give the opposition enough popular support to improve its electoral standing. Najib could be seen by some as a political liability for UMNO if the taint from 1MDB scandal lingers. Corruption allegations against the Prime Minister add a layer of complexity to possible struggles for control of the party that remains Malaysia's dominant political institution. Some observers believe the NEP's set of ethnic preferences also will be a key issue for Malaysia in the years ahead. Although the NEP has been given some credit in addressing Malaysia's income disparities and maintaining peaceful relations among ethnic groups, it also has fostered resentment among Malaysia's Chinese and Indian minorities. Some analysts see the NEP as a bedrock of the Malaysian political economy and believe that any move strongly to scale back preferences for bumiputra would face deep opposition from many members of the Malay ethnic majority. Former Prime Minister Mahathir long promoted a "Vision 2020," which sought to make Malaysia into a developed country by that year, and the 2020 goal has been taken up by subsequent UMNO-led governments. Although Malaysia's GDP has grown steadily in the last decade, several challenges remain. Within Southeast Asia and worldwide, Malaysia faces stiff competition from low-wage countries attempting to promote their manufacturing sectors and grow exports. Some observers argue that the quality of the education system is not sufficient for development of a high-technology economy. Many of Malaysia's top students go abroad for higher education, or find work overseas after graduation. Many of Malaysia's challenges in the years ahead will mirror those of other Southeast Asian nations. Like others in ASEAN, Malaysia continually seeks to balance the involvement of the United States, China, Japan, India, and others in regional affairs, while maintaining its own independence and that of ASEAN broadly. As a claimant to maritime territory in the South China Sea, Malaysia seeks to uphold its own interests while preventing the escalation of conflict over disputed areas. Southeast Asian nations must decide how deeply to proceed with economic integration aimed at promoting a broader regional trading and investment hub. Malaysia faces challenges in balancing the region's trade and investment agendas, while also providing leadership on regional security issues such as lowering tensions in the South China Sea.

Malaysia, an ethnically diverse majority Muslim nation in Southeast Asia, has long been a partner in U.S. security and economic initiatives in the region, although political sensitivities in Malaysia have constrained both sides from forging deeper ties. Bilateral relations have improved over the past decade. Prime Minister Najib Razak, who came to power in 2009, made relations with the United States a priority early in his administration. More recently he has moved to deepen trade and economic ties with China. Congress has shown interest in a variety of issues in U.S.-Malaysia relations over the years, especially regarding trade, counterterror and security cooperation, human rights, the environment, and Malaysia's external relations. Malaysia is considered a middle-income country that is relatively prosperous when compared to other Southeast Asian countries. The United States and Malaysia are major trade and investment partners. In 2016, Malaysia was the 24th-largest market for U.S. exports and the 14th-largest supplier of U.S. imports. The two countries negotiated and signed the Trans-Pacific Partnership (TPP) free trade agreement (FTA), which would have removed tariff and nontariff barriers to trade between the United States, Malaysia, and the other 10 participants. President Trump withdrew from the pact in January, stating an intent to negotiate future FTAs bilaterally, potentially with TPP partners. To date, there appears to have been little discussion of resuming bilateral U.S.-Malaysia FTA negotiations, but there may be interest in Malaysia in some type of economic dialogue with the United States such as a Trade and Investment Framework Agreement (TIFA). Malaysia is also seeking to develop deeper regional trade ties through the Regional Comprehensive Economic Partnership (RCEP), which does not include the United States. Malaysia has enjoyed considerable political stability since it gained independence in 1957 despite potential cleavages within its multiethnic and multireligious social fabric. Political coalitions led by the United Malays National Organization (UMNO), the country's dominant political party, have ruled Malaysia without interruption since independence. UMNO is a staunch proponent of economic and social preferences for ethnic Malays and other indigenous groups, collectively known as bumiputra. It has supported a wide-ranging economic program known as the New Economic Policy (NEP), which attempts to address socio-economic disparities by privileging bumiputra in government contracts, education, and government hiring. Malaysia has also enjoyed broad success in achieving higher income levels for its citizens since independence. The United States occasionally has criticized the Malaysian government for its weak human rights protections, its record on combatting human trafficking, constraints on press freedom, and prosecution of opposition political leaders like Anwar Ibrahim. The U.S. State Department upgraded Malaysia's ranking in its Trafficking in Persons (TIP) Report from Tier 3 (the worst ranking) in 2014 to Tier 2 Watch List in 2015, sparking a controversy. Many Members of Congress questioned the improved ranking and asserted that the State Department had overlooked serious human trafficking problems in order to facilitate approval of the TPP. Malaysia is actively engaged in diplomacy on numerous regional and global issues. Efforts to promote moderate Islam and marginalize religious extremism have been a major part of Malaysian diplomacy, including acting as a mediator in conflicts between Muslim separatist groups and the central government in both the Philippines and Thailand. Malaysia maintains good relations with its neighbors and has promoted cooperation among the 10 countries in the Association of Southeast Asian Nations (ASEAN). Malaysia is one of several Southeast Asian countries with maritime and territorial claims in the South China Sea, although it has assumed a relatively low profile in those disputes. U.S.-Malaysia security cooperation includes counter-terrorism activities, numerous military exercises, ship visits, and military education exchanges.

In the wake of the September 2001 terrorist attacks on the United States, President George W. Bush launched major military operations as part of a global U.S.-led anti-terrorism effort. Operation Enduring Freedom in Afghanistan has realized major successes with the vital assistance of neighboring Pakistan. Yet a resurgent Taliban today operates in southern and eastern Afghanistan with the benefit of apparent sanctuary in parts of western Pakistan. The United States is increasingly concerned that members of Al Qaeda, its Taliban supporters, and other Islamist militants find safe haven in Pakistani cities such as Quetta and Peshawar, as well as in the rugged Pakistan-Afghanistan border region. This latter area is inhabited by ethnic Pashtuns who express solidarity with anti-U.S. forces. Al Qaeda militants also reportedly have made alliances with indigenous Pakistani terrorist groups that have been implicated in both anti-Western attacks in Pakistan and terrorism in India. These groups seek to oust the Islamabad government of President Gen. Pervez Musharraf and have been implicated in assassination attempts that were only narrowly survived by the Pakistani leader and other top officials. In fact, Pakistan's struggle with militant Islamist extremism appears for some to have become a matter of survival for that country. As more evidence arises exposing Al Qaeda's deadly new alliance with indigenous Pakistani militants—and related conflict continues to cause death and disruption in Pakistan's western regions—concern about Pakistan's fundamental political and social stability has increased. In his January 2007 State of the Union Address, President Bush said, "We didn't drive Al Qaeda out of their safe haven in Afghanistan only to let them set up a new safe haven in a free Iraq." Yet many observers warn that an American preoccupation with Iraq has contributed to allowing the emergence of new Al Qaeda safe havens in western Pakistan. South Asia is viewed as a key arena in the fight against militant religious extremism, most especially in Pakistan and as related to Afghan stability. In November 2006, the State Department's Under Secretary for Political Affairs, Nicholas Burns, said, "It is in South Asia where our future success in the struggle against global terrorism will likely be decided—in Afghanistan and Pakistan." The 9/11 Commission Report emphasized that mounting large-scale international terrorist attacks appears to require sanctuaries in which terrorist groups can plan and operate with impunity. It further claimed that Pakistan's "vast unpoliced regions" remained attractive to extremist groups. The Commission identified the government of President Musharraf as the best hope for stability in Pakistan and Afghanistan, and recommended that the United States make a long-term commitment to provide comprehensive support for Islamabad so long as Pakistan itself is committed to combating extremism and to a policy of "enlightened moderation." In January 2007 Senate testimony assessing global threats, the outgoing Director of National Intelligence, John Negroponte, captured in two sentences the dilemma Pakistan now poses for U.S. policy makers: "Pakistan is a frontline partner in the war on terror. Nevertheless, it remains a major source of Islamic extremism and the home for some top terrorist leaders." In what were surely well-calculated remarks, he went on to identify Al Qaeda as posing the single greatest terrorist threat to the United States and its interests, and warned that the organization's "core elements ... maintain active connections and relationships that radiate outward from their leaders' secure hideouts in Pakistan." This latter reference was considered the strongest such statement to date by a high-ranking Bush Administration official. Throughout the opening months of 2007, Administration officials, U.S. military commanders, and senior U.S. Senators issued further incriminating statements about Pakistan's assumed status as a terrorist base and the allegedly insufficient response of the Islamabad government. The United States also remains concerned with indigenous extremist groups in Pakistan, and with the ongoing "cross-border infiltration" of Islamist militants who traverse the Kashmiri Line of Control and other borders to engage in terrorist acts in India and Indian Kashmir. Many analysts consider such activities conceptually inseparable from the problem of Islamist militancy in western Pakistan and in Afghanistan. Domestic terrorism in Pakistan, much of it associated with Islamist sectarianism, has become an increasingly serious problem affecting major Pakistani cities. Separatist violence in India's Muslim-majority Jammu and Kashmir state has continued unabated since 1989, with some notable relative decline in recent years. Many experts reject efforts by the Pakistani government and others to draw significant distinctions between U.S.- and Indian-designated terrorist groups fighting in Kashmir and those fighting in western Pakistan and Afghanistan, and in Pakistan's interior. India blames Pakistan for the infiltration of Islamist militants into Indian Kashmir, a charge Islamabad denies. The United States reportedly has received pledges from Islamabad that all "cross-border terrorism" would cease and that any terrorist facilities in Pakistani-controlled areas would be closed. Similar pledges have been made to India. Numerous experts raise questions about the determination, sincerity, and effectiveness of Pakistani government efforts to combat religious extremists. Doubts are widely held by Western experts, many of whom express concerns about the implications of maintaining present U.S. policies toward the region, and about the efficacy of Islamabad's latest strategy, which appears to seek reconciliation with pro-Taliban militants. Islamabad is adamant in asserting that it serves its own self-interests through closer relations with the United States since 2001, that there should be no doubts about the sincerity of its anti-terrorism policies (with a corollary that any failings in this area are rooted in Pakistan's capabilities rather than in its intentions), and that solely military efforts to combat religious militancy are bound to fail. Instead, Pakistani officials aver, the so-called "war on terrorism" must emphasize socioeconomic uplift and resolution of outstanding disputes in the Muslim world, including in Kashmir, Palestine, and Iraq. The outcomes of U.S. policies toward Pakistan since 9/11, while not devoid of meaningful successes, have neither neutralized anti-Western militants and reduced religious extremism in that country, nor have they contributed sufficiently to the stabilization of neighboring Afghanistan. Many observers thus urge a broad re-evaluation of such policies, including a questioning of a seeming U.S. reliance on the institution of the Pakistani military and on the person of President Musharraf, along with a shifting of considerable U.S. assistance funds toward programs that might better engender long-term stability in Pakistan. In June 2003, President Bush hosted President Musharraf at Camp David, Maryland, where he vowed to work with Congress on establishing a five-year, $3 billion aid package for Pakistan. Annual installments of $600 million each, split evenly between military and economic aid, began in FY2005. In the Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 ), the 108 th Congress broadly endorsed the recommendations of The 9/11 Commission Report by calling for U.S. aid to Pakistan to be sustained at a minimum of FY2005 levels and requiring the President to report to Congress a description of long-term U.S. strategy to engage with and support Pakistan. The premiere House resolution of the 110 th Congress ( H.R. 1 , the Implementing the 9/11 Commission Recommendations Act of 2007) was passed in January 2007. Section 1442 of the act contains discussion of U.S. policy toward Pakistan, including a requirement that the President report to Congress a long-term U.S. strategy for engaging Pakistan and making a statement of policy that further waivers of coup-related aid sanctions "should be informed by the pace of democratic reform, extension of the rule of law, and the conduct of the parliamentary elections" scheduled to take place in late 2007. Perhaps most notably, the section includes a provision that would end U.S. military assistance and arms sales licensing to that country in FY2008 unless the President certifies that the Islamabad government is "making all possible efforts" to end Taliban activities on Pakistani soil. Many analysts view Section 1442 as a signal that a Democratic-controlled Congress may pressure the Bush Administration to review its Pakistan policy, although many also warn that such overt conditionality is counterproductive to the goal of closer U.S.-Pakistan relations. The Bush Administration explicitly opposes the certification provision on such grounds and it instead urges that the certification be replaced with a reporting requirement. A Senate version of the House bill ( S. 4 ) was passed in March, but contains no Pakistan-specific language. In response to U.S. congressional signals of a possible shift in U.S. policy toward Islamabad, the Pakistani National Assembly's Defense Committee unanimously passed a resolution threatening to end or reduce Islamabad's cooperation on counterterrorism if U.S. aid to Pakistan were to be made conditional. In the years since September 2001, Pakistan has received nearly $1.5 billion in direct U.S. security-related assistance (Foreign Military Financing totaling $970 million plus about $516 million for other programs). Congress also has appropriated billions of dollars to reimburse Pakistan for its support of U.S.-led counterterrorism operations. Some 80% of Defense Department spending for coalition support payments to "Pakistan, Jordan, and other key cooperating nations" has gone to Islamabad. At $4.75 billion to date, averaging more than $80 million per month, the amount is equal to more than one-quarter of Pakistan's total military expenditures. The Bush Administration requested another $1 billion in emergency supplemental coalition support funds for FY2007, however, H.R. 1591 , passed by the full House on March 23, 2007, called for only $300 million in such funds. The Administration also has requested another $1.7 billion in coalition support for FY2008. In justifying these requests, the Administration claims that coalition support payments to Pakistan have led to "a more stable [Pakistan-Afghanistan] border area." Major U.S. defense sales and grants in recent years have included advanced aircraft and missiles. The Pentagon reports Foreign Military Sales (FMS) agreements with Pakistan worth $836 million in FY2003-FY2005. In-process sales of F-16 combat aircraft raised the FY2006 value to nearly $3.5 billion. (In June 2006, the Pentagon notified Congress of a planned FMS for Pakistan worth up to $5.1 billion. The deal involves up to 36 advanced F-16s, along with related refurbishments, munitions, and equipment, and would represent the largest-ever weapons sale to Pakistan.) The Pentagon has characterized F-16 fighters, P-3C maritime patrol aircraft, and anti-armor missiles as having significant anti-terrorism applications, a claim that elicits skepticism from some analysts. Security-related U.S. assistance programs for Pakistan are said to be aimed especially at bolstering Islamabad's counterterrorism and border security efforts, and have included U.S.-funded road-building projects in western Pakistan and the provision of night-vision equipment, communications gear, protective vests, and transport helicopters and aircraft. The United States also has undertaken to train and equip new Pakistan Army Air Assault units that can move quickly to find and target terrorist elements. U.S. security assistance to Pakistan's civilian sector is aimed at strengthening the country's law enforcement capabilities through basic police training, provision of advanced identification systems, and establishment of a new Counterterrorism Special Investigation Group. U.S. efforts may be hindered by Pakistani shortcomings that include poorly trained and poorly equipped personnel who generally are underpaid by ineffectively coordinated and overburdened government agencies. Many commentators on U.S. assistance programs for Pakistan have recommended making adjustments to the proportion of funds devoted to military versus economic aid and/or to the objectives of such programs. Currently, funds are split roughly evenly between economic and security-related aid programs, with the great bulk of the former going to a general economic (budget) support fund and most of the latter financing "big ticket" defense articles such as airborne early warning aircraft, and anti-ship and anti-armor missiles. It may be useful to better target U.S. assistance programs in such a way that they more effectively benefit the country's citizens. One former senior Senate staffer has called for improving America's image in Pakistan by making U.S. aid more visible to ordinary Pakistanis. An idea commonly floated by analysts is the "conditioning" of aid to Pakistan, perhaps through the creation of "benchmarks." For example, in 2003, a task force of senior American South Asia watchers issued a report on U.S. policy in the region which included a recommendation that the extent of U.S. support for Islamabad should be linked to that government's own performance in making Pakistan a more "modern, progressive, and democratic state" as promised by President Musharraf in January 2002. Specifically, the task force urged directing two-thirds of U.S. aid to economic programs and one-third to security assistance, and conditioning increases in aid amounts to progress in Pakistan's reform agenda. A more recent perspective is representative of ongoing concerns about the emphases of U.S. aid programs: [T]he United States has given Musharraf considerable slack in meeting his commitments to deal with domestic extremism or his promises to restore authentic democracy. The U.S. partnership with Pakistan would probably be on firmer footing through conditioned programs more dedicated to building the country's political and social institutions than rewarding its leadership. Other analysts, however, including those making policy for the Bush Administration, believe that conditioning U.S. aid to Pakistan has a past record of failure and likely would be counterproductive. Some add that putting additional pressure on an already besieged Musharraf government might lead to significant political instability in Islamabad. The Bush Administration has come under fire from some quarters for overemphasizing its relationship with the person of Pervez Musharraf—an army general who came to power through extra-constitutional means—at the expense of democratization processes in Pakistan and, further, for maintaining a single-minded focus on anti-terrorism that has "given a pass" to Musharraf and the Pakistani military in the areas of nuclear proliferation, rule of law, and human rights. For several years, veteran Pakistan watchers have been calling attention to the potential problems inherent in a U.S. over-reliance on President Musharraf as an individual at alleged cost to more positive development of Pakistan's democratic institutions and civil society. In 2006, two former senior U.S. diplomats jointly urged the Bush Administration to move beyond its fairly limited focus on the person of Pervez Musharraf by creating better links with a wider array of pro-democracy civil society elements there. More substantive military-to-military relations could be of significant benefit to overall U.S.-Pakistan relations and the attainment of U.S. goals in South Asia. Related sanctions imposed on Pakistan in 1990 were in some respects harmful to subsequent U.S. interests in the region. For example, the suspension of military training (IMET) programs meant that for more than a decade there was no exchange between the Pakistani and U.S. militaries. A Washington-based expert on the Pakistani military has insisted that such exchanges are crucial in encouraging a liberal, secular outlook among Pakistan's officer corps, and provide the United States unique access to that country's leading institution. In apparent response to growing concerns about the course of events in Pakistan and in U.S.-Pakistan relations, Assistant Secretary of State for South and Central Asian Affairs Richard Boucher met with top Pakistani leaders in Islamabad in mid-March, where he lauded Pakistan's role as a vital U.S. ally and announced a new five-year, $750 million aid initiative for development programs in Pakistan's western tribal regions. The Administration also will seek Pentagon authority to spend $75 million in FY2007 funds to improve the capacity of Pakistan's paramilitary Frontier Corps.

This report provides a summary review of issues related to Pakistan and terrorism, especially in the context of U.S. interests, policy goals, and relevant assistance. The outcomes of U.S. policies toward Pakistan since 9/11, while not devoid of meaningful successes, have neither neutralized anti-Western militants and reduced religious extremism in that country nor contributed sufficiently to the stabilization of neighboring Afghanistan. Many observers thus urge a broad re-evaluation of such policies. Sources for this report include, among other things, the U.S. Departments of State and Defense, congressional transcripts, intergovernmental and nongovernmental organizations, regional press reports, and major newswires. This report will be updated periodically.

One of the most controversial issues in U.S. foreign assistance concerns restrictions on U.S. funding for abortion and family planning activities abroad. For many, the debate focuses on three key questions: Do countries or organizations that receive U.S. assistance perform abortions or engage in coercive abortion or involuntary sterilization activities with U.S. funds? Should U.S. funding be permitted or withheld from countries or organizations that participate in these activities? What impact, if any, might the withholding of U.S. funds have on population growth, family planning, and reproductive health services in developing countries? Members of Congress have engaged in heated debates regarding these issues in connection with a broader domestic controversy regarding U.S. abortion policy. These debates have continued since the Supreme Court's 1973 landmark ruling in Roe v. Wade , which holds that the Constitution protects a woman's decision whether to terminate her pregnancy. In nearly every Congress since Roe , Members who oppose abortion have introduced legislation that would prohibit the practice in the United States. Many congressional opponents have also sought to attach provisions to annual appropriations measures banning the use of federal funds to perform abortions. Before the Roe decision, the majority of discussions in Congress regarding the federal funding of abortion focused on domestic authorization and appropriations legislation, particularly labor and health and human services appropriations. After Roe , however, the controversy spread to U.S. foreign assistance, leading to the enactment of abortion and voluntary family planning restrictions in foreign assistance authorizations and appropriations. Debate over international abortion restrictions has also reached the executive branch. In 1984, President Reagan issued what has become known as the "Mexico City policy," which required foreign nongovernmental organizations (NGOs) receiving U.S. Agency for International Development (USAID) family planning assistance to certify that they would not perform or actively promote abortion as a method of family planning, even if such activities were undertaken with non-U.S. funds. In the intervening years, the Mexico City policy has been rescinded and reissued by various Administrations. Most recently, it was rescinded by President Barack Obama in January 2009 and reinstated and expanded by President Donald Trump on January 23, 2017. During the 115 th Congress, Members have continued to debate prohibitions and restrictions on abortion and family planning activities abroad. As in prior appropriations cycles, some Members sought to renew, add, modify, or remove language addressing these issues in State-Foreign Operations legislation. In addition, some introduced legislation aiming to make the Mexico City policy (also referred to as "Protecting Life in Global Health Assistance," or PLGHA), or its reversal, permanent law. Federal funding for abortion and family planning activities remains a controversial issue in foreign assistance, and congressional interest in the subject is likely to continue into the next congressional session. This report examines key legislative and executive branch policies that restrict or place requirements on U.S. funding of abortion or voluntary family planning activities abroad. It discusses when and how the policies were introduced and the types of foreign aid to which they apply. Many of the restrictions attached to U.S. funding of abortion and requirements relating to voluntary family planning programs abroad are included in foreign aid authorizations, appropriations, or both, and affect different types of foreign assistance. Some provisions have come to be known by the name of the lawmakers who introduced them (for example, the "Helms amendment"), while others are identified by the subjects they address (for example, "involuntary sterilization"). Legislation that authorizes foreign aid establishes, continues, or modifies an agency or program for a fixed or indefinite period of time. The Foreign Assistance Act of 1961 (FAA), as amended, is the cornerstone of permanent foreign aid authorization law. The FAA is divided into several "parts" that authorize different types of foreign assistance, including development assistance (part I); military and security assistance (part II); general, administrative, and miscellaneous provisions (part III); the Enterprise for the Americas Initiative (part IV); and debt reduction for developing countries with tropical forests (part V). Congress has routinely amended the FAA since 1961 and has authorized new programs in stand-alone acts, but it has not comprehensively reauthorized most programs in the FAA since 1985. Subsequent authorization bills have often stalled in the face of debates and disagreements on controversial issues (including abortion and family planning), a tight legislative calendar, or foreign policy disputes between Congress and the executive branch. In the absence of the regular enactment of foreign aid authorizations, Congress has annually considered appropriations measures that set spending levels for nearly every foreign assistance account. In recent years, these measures have become increasingly significant for Congress in influencing how U.S. foreign aid is disbursed. Many of them have included family planning or abortion-related restrictions or requirements. The links among the various requirements and restrictions, as well as their inclusion in different legislation, are complex and in some cases not immediately apparent. For example, some amendments that were already enacted in the FAA, such as the Helms and Biden provisions, appear to be added to other foreign assistance-related legislation for emphasis. In other cases, the provisions may have been added so that they apply to additional categories of foreign aid not covered under the FAA. Moreover, some restrictions and requirements stand on their own, while others seek to clarify and amend other existing restrictions. The Leahy amendment, for instance, defines the term "motivate" as written in the Helms amendment, while the Livingston amendment seeks to clarify prohibitions in the DeConcini amendment. This section details enacted legislative restrictions relating to U.S. funding of abortion and requirements related to voluntary family planning programs abroad. They are listed in chronological order by the year they were enacted. The Helms amendment prohibits the use of U.S. foreign assistance funds to perform abortions or to motivate or coerce individuals to practice abortions. Introduced by Senator Jesse Helms in 1973, it was adopted as an amendment to the FAA because of concerns that federal funds could be used to perform abortions overseas. Under the FAA heading "Prohibition on Use of Funds for Abortions and Involuntary Sterilizations," the Helms amendment states the following: (1) None of the funds made available to carry this part may be used to pay for the performance of abortions as a method of family planning or to motivate or coerce any person to practice abortions. The amendment as written in the FAA applies to all foreign assistance activities authorized by part I of that act (development assistance). Since FY1980, the Helms amendment has also periodically been enacted in foreign operations appropriations measures. It is included in two places in the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2018, (hereinafter referred to as the "FY2018 State-Foreign Operations Appropriations Act"). In Section 7018 of Title VII, General Provisions, the language applies to all foreign assistance activities in the act that are authorized under part I of the FAA (development assistance). In Title III, Bilateral Economic Assistance, the language applies to foreign assistance activities in the entire act. In 1978, Congress passed an amendment to the FAA specifying that U.S. foreign assistance may not fund (1) the performance of involuntary sterilizations, or (2) the coercion of involuntary sterilizations (or provide financial incentives to undergo sterilization): None of the funds made available to carry out this part may be used to pay for the performance of involuntary sterilizations as a method of family planning or to coerce or provide any financial incentive to any person to undergo sterilizations. The provision is also repeated in annual foreign operations appropriations. Most recently, it was included in Section 7018 of the FY2018 State-Foreign Operations Appropriations Act. In both the FAA and State-Foreign Operations appropriations acts, it applies to all foreign assistance activities authorized by part I of the FAA (development assistance). Since FY1979, annual foreign operations appropriations have included an abortion restriction on Peace Corps funding due to concerns that money appropriated to the organization was being used to finance abortions for volunteers. The restriction, included under the heading "Peace Corps," states that "none of the funds appropriated under this heading shall be used to pay for abortions." As in some previous fiscal years, the FY2018 State-Foreign Operations Appropriations Act includes an additional provision that allows exceptions to the prohibition on funding abortions in the case of rape, incest, or endangerment to the life of the mother. No restrictions exist on funding for the medical evacuation of Peace Corps volunteers who decide to have an abortion. Under existing policy, the Peace Corps covers the cost of evacuation to a location where "medically adequate facilities" for obtaining an abortion are available and where abortions are legally permissible. In 1981, Congress passed an amendment to the FAA specifying that the United States may not provide foreign assistance for biomedical research related to abortion or involuntary sterilization. This provision, named after Senator Joseph Biden, states the following: None of the funds made available to carry out this part may be used to pay for any biomedical research which relates, in whole or in part, to methods of, or the performance of, abortions or involuntary sterilization as a means of family planning. The Biden amendment has also been included in foreign operations appropriations acts. Most recently, it was included in Section 7018 of the FY2018 State-Foreign Operations Appropriations Act. The provision as included in the FAA and the FY2018 State-Foreign Operations Appropriations Act applies to all foreign assistance activities authorized by part I of the FAA (development assistance). In 1981, Representative Mark Siljander introduced an amendment to the FY1982 Foreign Assistance and Related Programs Appropriations Act specifying that no U.S. funds may be used to lobby for abortion. Since the Siljander amendment was first introduced, Congress has modified the amendment to state that no funds may be used to "lobby for or against abortion" (emphasis added). The Siljander amendment has been included in annual foreign operations appropriations acts. It applies to all programs and activities appropriated under such acts. Most recently, the FY2018 State-Foreign Operations Appropriations Act states that "none of the funds made available under this Act may be used to lobby for or against abortion." In 1985, Congress enacted a provision to the FY1986 Foreign Assistance and Related Programs Appropriations Act specifying that the United States would only fund family planning projects that offer a range of family planning methods and services, either directly or through referral. The measure was enacted to counter a Reagan Administration policy that would provide U.S. funding to overseas groups that advocate only "natural" family planning methods and services, such as abstinence. The amendment, introduced by Senator Dennis DeConcini, states the following: That in order to reduce reliance on abortion in developing nations, funds shall be available only to family planning projects which offer, either directly or through referral to, or information about access to, a broad range of family planning methods and services ... The provision has been included in annual foreign operations appropriations legislation since 1985, and it is most recently included in the FY2018 State-Foreign Operations Appropriations Act. It is applied to family planning assistance funded through all accounts under that act. In 1985, Congress included a provision in the FY1986 Foreign Assistance and Related Programs Appropriations Act requiring that no funds made available under part I of the FAA may be obligated for any given country or organization if the President certifies that the use of such funds violates the aforementioned Helms, Biden, or involuntary sterilization amendments. The amendment states the following: None of the funds made available to carry out part I of the Foreign Assistance Act of 1961, as amended, may be obligated or expended for any country or organization if the President certifies that the use of these funds by any such country or organization would violate any of the above provisions related to abortions or involuntary sterilizations [the Helms, Biden, and involuntary sterilization amendments]. The provision has been included in annual foreign operations appropriations. Most recently, it is incorporated into Section 7018 of the FY2018 State-Foreign Operations Appropriations Act. It applies to all foreign assistance activities in the act that are authorized under part I of the FAA (development assistance). In 1985, Congress agreed to the Kemp-Kasten amendment as part of the FY1985 Supplemental Appropriations Act. The measure, introduced by Senator Bob Kasten and Representative Jack Kemp, states the following: None of the funds made available under this Act nor any unobligated balances from prior appropriations Acts may be made available to any organization or program which, as determined by the President, supports or participates in the management of a program of coercive abortion or involuntary sterilization. The provision was adopted due to the concerns of President Reagan and some Members of Congress that the U.N. Population Fund's (UNFPA's) program in China engaged in or provided funding for abortion or coercive family planning programs. It has been included in annual foreign operations appropriations legislation measures since FY1985. Although it applies to any organization or program that supports or participates in coercive abortion or involuntary sterilization, a determination has only been made regarding UNFPA. Most recently, the provision is included in the FY2018 State-Foreign Operations Appropriations Act, which also states, any determination made under the previous proviso must be made not later than 6 months after the date of the enacted of this Act, and must be accompanied by the evidence and criteria utilized to make the determination. In 16 of the past 34 years, the United States has not contributed to UNFPA as a result of executive branch determinations that UNFPA's program in China violated the Kemp-Kasten amendment. For seven years, the George W. Bush Administration transferred funds appropriated for UNFPA to other foreign aid activities. The Obama Administration supported U.S. funding for the organization, noting that its decision highlighted the President's "strong commitment" to international family planning, women's health, and global development. The United States is currently not providing funding to UNFPA under Kemp-Kasten; in March 2017, the Trump Administration issued a determination that UNFPA "supports, or participates in the management of, a program of coercive abortion or involuntary sterilization" through its country program in China. In recent years, in response to concerns regarding UNFPA's program in China and in addition to Kemp-Kasten restrictions, Congress has enacted certain conditions for U.S. funding of UNFPA. Most recently, Section 7082 of the FY2018 State-Foreign Operations Appropriations Act requires that funds not made available for UNFPA because of any provision of law shall be transferred to the Global Health Programs account and made available for family planning, maternal, and reproductive health activities; none of the funds made available to UNFPA may be used by UNFPA for a country program in China; U.S. contributions to UNFPA be kept in an account segregated from other UNFPA accounts and not be commingled with other sums; and for UNFPA to receive U.S. funding, it cannot fund abortions. The act also required the Secretary of State to submit a report to the committees on appropriations on dollar-for-dollar withholding of funds. Specifically, not later than four months after the enactment of the act, the Secretary is required to submit a report to the committees on appropriations indicating the funds UNFPA is budgeting for a country program in China. If the Secretary's report states that funds will be spent on such a program, then the amount of such funds shall be deducted from the funds made available to UNFPA for the remainder of the fiscal year in which the report is submitted. In 1986, Representative Bob Livingston introduced an amendment as part of FY1987 continuing appropriations that prohibited the United States from discriminating against organizations based on their religious or conscientious commitment to offer only "natural" family planning when awarding related grants: [I]n awarding grants for natural family planning under section 104 of the Foreign Assistance Act no applicants shall be discriminated against because of such applicant's religious or conscientious commitment to offer only natural family planning; and, additionally, all such applicants shall comply with the requirements of the previous proviso [DeConcini amendment]. The Livingston amendment is related to the DeConcini amendment, which states that the United States shall only fund family planning projects that offer a range of family planning methods and services, either directly or through referral. The measure ensures that the United States cannot discriminate against organizations that support natural family planning methods when awarding family planning grants and agreements, providing such organizations comply with the DeConcini amendment. The provision has been included in foreign operations appropriations, and it is most recently incorporated into the FY2018 State-Foreign Operations Appropriations Act. It is applied to family planning assistance from any account appropriated under that act. The Leahy amendment, introduced by Senator Patrick Leahy in 1994 as an amendment to the FY1995 Foreign Operations, Export Financing, and Related Programs Appropriations Act, seeks to clarify language in the Helms amendment, which states, "None of the funds made available … may be used to pay for the performance of abortions as a method of family planning or to motivate or coerce any person to practice abortions" (emphasis added). The Leahy provision aims to address some policymakers' concerns that providing information or counseling about all legal pregnancy options could potentially be viewed as violating the Helms amendment. The most recent version states the following: [F]or purposes of this or any other Act authorizing or appropriating funds for the Department of State, foreign operations, and related programs, the term ''motivate,'' as it relates to family planning assistance, shall not be construed to prohibit the provision, consistent with local law, of information or counseling about all pregnancy options. The amendment has been included in foreign operations appropriations in various forms since it first appeared in enacted legislation. It was included in the FY2018 State-Foreign Operations Appropriations Act, and applies to all enacted authorization and appropriations legislation related to the Department of State, foreign operations, and related programs. In October 1998, Congress enacted an amendment introduced by Representative Todd Tiahrt as part of the FY1999 Foreign Operations, Export Financing, and Related Programs Appropriations Act that directs voluntary family planning projects supported by the United States to comply with five specific requirements. The provision, which became known as the Tiahrt amendment, has been included in foreign operations appropriations in each subsequent fiscal year. It states that "funds shall be made available" only to voluntary family planning projects that meet the following requirements: (1) service providers or referral agents in the project shall not implement or be subject to quotas, or other numerical targets, of total number of births, number of family planning acceptors, or acceptors of a particular method of family planning (this provision shall not be construed to include the use of quantitative estimates or indicators for budgeting and planning purposes); (2) the project shall not include payment of incentives, bribes, gratuities, or financial reward to: (A) an individual in exchange for becoming a family planning acceptor; or (B) program personnel for achieving a numerical target or quota of total number of births, number of family planning acceptors, or acceptors of a particular method of family planning; (3) the project shall not deny any right or benefit, including the right of access to participate in any program of general welfare or the right of access to health care, as a consequence of any individual's decision not to accept family planning services; (4) the project shall provide family planning acceptors comprehensible information on the health benefits and risks of the method chosen, including those conditions that might render the use of the method inadvisable and those adverse side effects known to be consequent to the use of the method; and (5) the project shall ensure that experimental contraceptive drugs and devices and medical procedures are provided only in the context of a scientific study in which participants are advised of potential risks and benefits; and, not less than 60 days after the date on which the Administrator of the United States Agency for International Development determines that there has been a violation of the requirements contained in paragraph (1), (2), (3), or (5) of this proviso, or a pattern or practice of violations of the requirements contained in paragraph (4) of this proviso, the Administrator shall submit to the Committees on Appropriations a report containing a description of such violation and the corrective action taken by the Agency. Representative Tiahrt introduced the amendment amid media and NGO reports that some governments were offering financial incentives to meet sterilization quotas. At that time, many poor women living in rural Peru were reportedly forcibly sterilized and provided with little or no information about alternative contraception methods. In some cases, complications from unsanitary sterilizations led to sickness or death. The intent of the amendment was to ensure that U.S. foreign assistance did not support such practices. In April 1999, USAID issued guidance on implementing the Tiahrt requirements for voluntary family planning projects. It also provided technical guidance on the "Comprehensible Information" paragraph of the amendment. Since the Tiahrt amendment was enacted, USAID reports there have been violations in Peru, Guatemala, and the Philippines. In 2007, the USAID Inspector General conducted an audit of USAID's compliance with the amendment. Several USAID operating units were audited, including the Global Health Bureau, USAID/Bolivia, USAID/Ethiopia, and USAID/Mali. The audit report, published in February 2008, found no further violations of the amendment. Most recently, the Tiahrt amendment was included in the FY2018 State-Foreign Operations Appropriations Act. It is applied to family planning assistance funded through all accounts under that act. This section provides an overview of two executive branch policies addressing abortion or voluntary family planning: the Mexico City policy (also referred to as "Protecting Life in Global Health Assistance," or PLGHA), and USAID Policy Determination 3 (PD-3) on voluntary sterilization. The Mexico City policy has traditionally restricted U.S. family planning assistance to foreign NGOs engaged in voluntary abortion activities, even if such activities are conducted with non-U.S. funds. Unlike the aforementioned laws which are enacted by Congress, the policy has, for the most part, been implemented and reversed through statements and instruments issued by the executive branch. Such actions have generally been split along party lines, with Republicans supporting the policy and Democrats opposing it. Most recently, the Trump Administration reinstated and expanded the policy to include all global health assistance. The Mexico City policy has remained a controversial issue in U.S. foreign assistance. It was first issued by President Reagan at the International Conference on Population held in Mexico City in 1984. At the time, it represented a shift in U.S. population policy; under the aforementioned Helms amendment and other international abortion and family planning-related restrictions, no U.S. funds could be used to pay for the performance of an abortion as a method of family planning or for involuntary sterilizations. However, U.S. and foreign recipients of USAID grants could use their own resources and funds received from other sources to engage, where legal, in abortion-related activities—though they were required to maintain separate accounts for U.S. money in order to demonstrate compliance with U.S. abortion restrictions. The policy, as issued under President Reagan, required foreign NGOs receiving USAID family planning assistance (either as a direct recipient or a subrecipient through a U.S. NGO that receives USAID funds) to certify in writing that they did not, and would not during the time of the funding agreement, perform or actively promote abortion as a method of family planning. The Mexico City policy as described above was maintained by President George H. W. Bush and rescinded by President Clinton in 1993. President George W. Bush issued a memorandum reinstating the policy in January 2001 and expanded it in August 2003 to include all assistance for voluntary population planning furnished to foreign NGOs by the State Department. President Bush also instituted exceptions for cases of rape, incest, conditions that threatened the life of the mother, and for postabortion care. Several months later, he announced additional exceptions for funding provided through the President's Emergency Plan for HIV/AIDS Relief (PEPFAR), and intergovernmental organizations, such as the United Nations and its affiliated entities. President Obama revoked President Bush's policy in January 2009, issuing a memorandum stating that "these excessively broad conditions on grants and assistance awards are unwarranted. Moreover, they have undermined efforts to promote safe and effective voluntary family planning programs in foreign nations." In January 2017, President Trump reinstated George W. Bush's January 2001 memorandum that reestablished the Mexico City policy and expanded it to include global health assistance. In the memo, he directed the Secretary of State to "implement a plan to extend the requirements of the reinstated memorandum to global health assistance furnished by all departments or agencies" in coordination with the Secretary of Health and Human Services, and to "ensure that U.S. taxpayer dollars do not fund organizations or programs that support or participate in the management of a program of coercive abortion or involuntary sterilization." The expanded policy, which the Trump Administration named "Protecting Life in Global Health Assistance" (PLGHA), was approved by the Secretary of State in May 2017. According to Administration officials, "global health assistance" applies to about $8.8 billion in funding for international health programs appropriated to the Department of State, USAID, and the Department of Defense—including programs addressing HIV/AIDS, maternal and child health, malaria, global health security, and family planning and reproductive health. PLGHA excludes global health assistance to national or local governments, public international organizations, and other similar multilateral entities. It also excludes humanitarian assistance, such as State Department migration and refugee assistance activities, USAID disaster and humanitarian-relief activities, and Defense Department disaster and humanitarian relief. Similar to previous iterations of the policy, it includes exemptions for rape, incest, and conditions that threaten the life of the mother, as well as postabortion care. In May 2018, the Trump Administration published a six-month review summarizing the implementation of PLGHA based on feedback from U.S. government agencies and other stakeholders, such as health groups and NGOs. Broadly, the report acknowledged that with less than six months of implementation, it was "too early to assess the full range of benefits and challenges of the PLGHA policy for global health assistance." It stated that four prime recipients, and 12 subrecipients (out of 733 awards tracked) refused to agree to the PLGHA terms. It also identified a number of challenges and possible action items—one of the foremost being to improve understanding of the policy's intent, implementation, compliance, and oversight. (For example, many implementing organizations sought clarification of the definition of certain terms related to PLGHA to ensure they understand the full scope of the policy and implications for their participation.) The department plans to conduct a further review of implementation by December 15, 2018. Policy Determination 3 (PD-3) on voluntary sterilization (VS) was issued by USAID in September 1982 with the purpose of ensuring that voluntary sterilization services funded by the U.S. government protect the needs and rights of individuals. According to USAID, such protections are necessary given the special nature of VS as a highly personal and permanent surgical procedure. PD-3 outlines a number of requirements for USAID voluntary sterilization services, including the following: Informed consent —USAID assistance to VS service programs is contingent on satisfactory determination that such services, performed in whole or in part with USAID funds, are performed only after the acceptor of the procedure has voluntarily presented himself or herself at the treatment facility and given his or her informed consent. Ready access to other methods —Where VS services are available, other means of family planning should also be readily available at a common location, thus allowing the acceptor to have a choice of family planning methods. No incentive payments —USAID funds cannot be used to pay potential acceptors of sterilization to induce their acceptance of VS. In addition, the fee or cost structure applied to VS and other contraceptives shall be established in such a way that no financial incentive is created for sterilization over another method. PD-3 also provides guidance on payments to VS service acceptors, providers, and referral agents. Certain types of payment are not considered incentives provided they are "reasonable." Determination of a reasonable payment must be based on a country- and program-specific basis using knowledge of social and economic circumstances. Specifically: VS acceptors may generally receive recompense for legitimate extra expenses related to VS (such as transportation, food, medicines, and lost wages during a recovery period); VS service providers may receive per-case payment and compensation for related items (such as anesthesia, personal costs, transportation, and pre- and postoperative care); and VS service referral agents may receive per-case payment for extra expenses incurred in informing or referring VS clients. PD-3 applies to family planning assistance from any account where USAID funds are used for whole or partial direct support of the performance of voluntary sterilization activities. It applies to U.S. NGOs, foreign NGOs, public international organizations, and governments.

This report details legislation and policies that restrict or place requirements on U.S. funding of abortion or family planning activities abroad. The level and extent of federal funding for these activities is an ongoing and controversial issue in U.S. foreign assistance and has continued to be a point of contention during the 115th Congress. These issues have been debated for over four decades in the context of a broader domestic abortion controversy that began with the Supreme Court's 1973 ruling in Roe v. Wade, which holds that the Constitution protects a woman's decision to terminate her pregnancy. Since Roe, Congress has enacted foreign assistance legislation placing restrictions or requirements on the federal funding of abortions and on family planning activities abroad. Many of these provisions, often referred to by the name of the lawmakers that introduced them, have been included in foreign aid authorizations, appropriations, or both, and affect different types of foreign assistance. Examples include the "Helms amendment," which prohibits the use of U.S. funds to perform abortions or to coerce individuals to practice abortions; the "Biden amendment," which states that U.S. funds may not be used for biomedical research related to abortion or involuntary sterilization; the "Siljander amendment," which prohibits U.S. funds from being used to lobby for or against abortion; the "Kemp-Kasten amendment," which prohibits funding for any organization or program that, as determined by the President, supports or participates in the management of a program of coercive abortion or involuntary sterilization (the Trump Administration has withheld funding from UNFPA under this law); and the "Tiahrt amendment," which places requirements on voluntary family planning projects receiving assistance from USAID. The executive branch has also engaged in the debate over international abortion and family planning. In 1984, President Ronald Reagan issued what has become known as the "Mexico City policy," which required foreign nongovernmental organizations receiving USAID family planning assistance to certify that they would not perform or actively promote abortion as a method of family planning, even if such activities were conducted with non-U.S. funds. The policy was rescinded by President Bill Clinton and reinstituted and expanded by President George W. Bush to include State Department activities. In January 2009, President Barack Obama rescinded the policy. It was reinstated and expanded by President Trump in January 2017, and renamed "Protecting Life in Global Health Assistance" (PLGHA). This report focuses primarily on legislative restrictions and executive branch policies related to international abortion and family planning. For information on domestic abortion laws and U.S. global health assistance, including international family planning, see CRS Report RL33467, Abortion: Judicial History and Legislative Response, by Jon O. Shimabukuro, and CRS In Focus IF10131, U.S. Global Health Assistance: FY2017-FY2019 Request, by Tiaji Salaam-Blyther. This report is updated as events warrant.

Obstruction of justice is the frustration of governmental purposes by violence, corruption, destruction of evidence, or deceit. It is a federal crime. In fact, federal obstruction of justice laws are legion; too many for even passing reference to all of them in a single report. This is a brief description of some of the more prominent. The general federal obstruction of justice provisions are six: 18 U.S.C. 1512 (tampering with federal witnesses), 1513 (retaliating against federal witnesses), 1503 (obstruction of pending federal court proceedings), 1505 (obstruction of pending congressional or federal administrative proceedings), 371 (conspiracy), and contempt. In addition to these, there are a host of other statutes that penalize obstruction by violence, corruption, destruction of evidence, or deceit. Section 1512 applies to the obstruction of federal proceedings—judicial, congressional, or executive. It consists of four somewhat overlapping crimes: use of force or the threat of the use of force to prevent the production of evidence (18 U.S.C. 1512(a)); use of deception or corruption or intimidation to prevent the production of evidence (18 U.S.C. 1512(b)); destruction or concealment of evidence or attempts to do so (18 U.S.C. 1512(c)); and witness harassment to prevent the production of evidence (18 U.S.C. 1512(d)). The offenses have similar, but not identical, objectives and distinctive elements of knowledge and intent. Section 1512 also contains freestanding provisions that apply to one or more of the offenses within the section. These deal with affirmative defenses (18 U.S.C. 1512(e)); jurisdictional issues (18 U.S.C. 1512(f),(g),(h)); venue (18 U.S.C. 1512(i)); sentencing (18 U.S.C. 1512(j)); and conspiracy (18 U.S.C. 1512(k)). Subsection 1512(a) has slightly different elements depending upon whether the offense involves a killing or attempted killing—18 U.S.C. 1512(a)(1)—or some other use of physical force or a threat—18 U.S.C. 1512(a)(2). In essence, they condemn the use of violence to prevent a witness from testifying, producing evidence for an investigation, or bringing a crime to the attention of authorities, and they set their penalties according to whether the obstructive violence used is a homicide, an assault, or a threat. In more exact terms, they declare: Unless countermanded by subsection 1512(j), subsection 1512(a)(3) provides the sanctions for both subsection 1512(a)(1) and (a)(2). Homicide is punished as provided in 18 U.S.C. 1111 and 1112, that is, murder in the first degree is punishable by death or imprisonment for life; murder in the second degree is punishable by imprisonment for any term of years or for life; voluntary manslaughter is punishable by imprisonment for not more than 15 years and involuntary manslaughter by imprisonment for not more than 8 years. Attempted murder, assault, and attempted assault are punishable by imprisonment for not more than 30 years; and a threat to assault punishable by imprisonment for not more than 20 years. Subsection 1512(j) provides that the maximum term of imprisonment for subsection 1512(a) offenses may be increased to match the maximum term of any offense involved in an obstructed criminal trial. To secure a conviction under the communication to a law enforcement officer offense, "the Government must prove (1) a killing or attempted killing, (2) committed with a particular intent, namely, an intent (a) to 'prevent' a 'communication' (b) about the 'the commission or possible commission of a federal offense' (c) to a federal 'law enforcement officer or judge.'" Attempt requires proof that the defendant intended to commit the killing and that he took a substantial step in furtherance of that intent. There are two statutory defenses to charges under §1512. One covers legitimate legal advice and related services, 18 U.S.C. 1515(c), and is intended for use in connection with the corrupt persuasion offenses proscribed elsewhere in §1512 rather than the violence offenses of subsection 1512(a). The other statutory defense is found in subsection 1512(e) and creates an affirmative defense when an individual engages only in conduct that is lawful in order to induce another to testify truthfully. The defense would appear to be of limited use in the face of a charge of the obstructing use or threat of physical force in violation of subsection 1512(a). Subsections 1512(f) and 1512(g) seek to foreclose a cramped construction of the various offenses proscribed in §1512. Subsection 1512(f) declares that the evidence that is the object of the obstruction need not be admissible and that the obstructed proceedings need not be either pending or imminent. Whether the defendant's misconduct must be shown to have been taken in anticipation of such proceedings is a more difficult question. The Supreme Court rejected the contention that language like that found in subsection 1512(f) (making §1512 applicable to obstructions committed before any official proceedings were convened) absolved the government of having to prove that the obstruction was committed with an eye to possible official proceedings. That case, the Arthur Andersen case, however, involved the construction of subsection 1512(b) which requires that the defendant be shown to have "knowingly" engaged in the obstructing conduct. Subsection 1512(a) has no such explicit "knowing" element. Yet, the government must still show that the offender's violent act was committed with the intent to prevent testimony in a federal official proceeding. By virtue of subsection 1512(g), "where the defendant kills a person with an intent to prevent communication with law enforcement officers generally, that intent includes an intent to prevent communications with federal law enforcement officers only if it is reasonably likely under the circumstances that (in the absence of the killing) at least one of the relevant communications would have been made to a federal officer." As a consequence of subsection 1512(h), murder, attempted murder, or the use or threat of physical force—committed overseas to prevent the appearance or testimony of a witness or the production of evidence in federal proceedings in this country or to prevent a witness from informing authorities of the commission of a federal offense or a federal parole, probation, supervised release violation—is a federal crime outlawed in subsection 1512(a) that may be prosecuted in this country. As a general rule, the courts will assume that Congress intends a statute to apply only within the United States and to be applied consistent with the principles of international law—unless a contrary intent is obvious. Subsection 1512(h) supplies the obvious contrary intent. Since a contrary intent may be shown from the nature of the offense, the result would likely be the same in the absence of subsection 1512(h). In the case of an overseas obstruction of federal proceedings, the courts could be expected to discern a congressional intent to confer extraterritorial jurisdiction and find such an application compatible with the principles of international law. The existence of extraterritorial jurisdiction is one thing; the exercise of such jurisdiction is another. Federal investigation and prosecution of any crime committed overseas generally presents a wide range of diplomatic, legal, and practical challenges. Subsection 1512(i) states that violations of §1512 or §1503 may be prosecuted in any district where the obstruction occurs or where the obstructed proceeding occurs or is to occur. In the case of obstructions committed in this country, the Constitution may limit the trial in the district of the obstructed proceedings to instances when a conduct element of the obstruction has occurred there. Subsection 1512(k) makes conspiracy to violate §1512 a separate offense subject to the same penalties as the underlying offense. The section serves as an alternative to a prosecution under 18 U.S.C. 371 that outlaws conspiracy to violate any federal criminal statute. Section 371 is punishable by imprisonment for not more than five years and conviction requires the government to prove the commission of an overt act in furtherance of the scheme by one of the conspirators. Subsection 1512(k) has no specific overt act element, and the courts have generally declined to imply one under such circumstances. Regardless of which section is invoked, conspirators are criminally liable as a general rule under the Pinkerton doctrine for any crime committed in the foreseeable furtherance of the conspiracy. Accomplices to a violation of subsection 1512(a) may incur criminal liability by operation of 18 U.S.C. 2, 3, 4, or 373 as well. Section 2 treats accomplices before the fact as principals. That is, it declares that those who command, procure or aid and abet in the commission of a federal crime by another, are to be sentenced as if they committed the offense themselves. As a general rule, "[i]n order to aid and abet another to commit a crime it is necessary that a defendant in some sort associate himself with the venture, that he participate in it as in something he wishes to bring about, [and] that he seek by his action to make it succeed." It is also necessary to prove that someone else committed the underlying offense. Section 3 outlaws acting as an accessory after the fact, which occurs when "one knowing that an offense has been committed, receives, relieves, comforts or assists the offender in order to hinder his or her apprehension, trial, or punishment." Prosecution requires the commission of an underlying federal crime by someone else. An offender cannot be both a principal and an accessory after the fact to the same offense. Offenders face sentences set at one half of the sentence attached to the underlying offense, or if the underlying offense is punishable by life imprisonment or death, by imprisonment for not more than 15 years (and a fine of not more than $250,000). Although at first glance §4's misprision prohibition may seem to be a failure-to-report offense, misprision of a felony under the section is in essence a concealment offense. "The elements of misprision of a felony under 18 U.S.C. 4 are (1) the principal committed and completed the felony alleged; (2) the defendant had full knowledge of that fact; (3) the defendant failed to notify the authorities; and (4) defendant took steps to conceal the crime." The offense is punishable by imprisonment for not more than three years and/or a fine of not more than $250,000. Solicitation to commit an offense under subsection 1512(a), or any other crime of violence, is prohibited in 18 U.S.C. 373. "To establish solicitation under §373, the Government must demonstrate that the defendant (1) had the intent for another to commit a crime of violence and (2) solicited, commanded, induced or otherwise endeavored to persuade such other person to commit the crime of violence under circumstances that strongly corroborate evidence of that intent." Section 373 provides an affirmative statutory defense for one who prevents the commission of the solicited offense. Offenders face penalties set at one half of the sanctions for the underlying offense, but imprisonment for not more than 20 years, if the solicited crime of violence is punishable by death or imprisonment for life. A subsection 1512(a) violation opens up the prospect of prosecution for other crimes for which a violation of subsection 1512(a) may serve as an element or otherwise related. The racketeering statutes (RICO) outlaw acquiring or conducting the affairs of an interstate enterprise through a pattern of "racketeering activity." The commission of any of a series of state and federal crimes (predicate offenses) constitutes a racketeering activity. Section 1512 offenses are RICO predicate offenses. RICO violations are punishable by imprisonment for not more than 20 years (or imprisonment for life if the predicate offense carries such a penalty), a fine of not more than $250,000 and the confiscation of related property. The money laundering provisions, among other things, prohibit financial transactions involving the proceeds of a "specified unlawful activity," that are intended to launder the proceeds or to promote further "specified unlawful activity." Any RICO predicate offense is by virtue of that fact a specified unlawful activity, that is, a money laundering predicate offense. Money laundering is punishable by imprisonment for not more than 20 years, a fine ranging from $250,000 to $500,000 depending upon the nature of the offenses, and the confiscation of related property. A subsection 1512(a) offense is by definition a crime of violence. Commission of a crime of violence is an element of, or a sentence enhancement factor for, several other federal crimes, for example: 18 U.S.C. 25 (use of a child to commit a crime of violence), 18 U.S.C. 521 (criminal street gang), 18 U.S.C. 924(c)(carrying a firearm during and in relation to a crime of violence), 18 U.S.C. 929 (carrying a firearm with restricted ammunition during and in relation to a crime of violence), 18 U.S.C. 1028 (identity fraud in connection with a crime of violence). 18 U.S.C. 1959 (violence in aid of a RICO enterprise). The second group of offenses within §1512 outlaws obstruction of federal congressional, judicial, or administrative activities by intimidation, threat, corrupt persuasion, or deception, 18 U.S.C. 1512(b). Parsed to its elements, subsection 1512(b) provides that: I. Whoever II. knowingly A. uses intimidation B. threatens, or C. corruptly persuades another person, or D. attempts to do so, or E. 1. engages in misleading conduct 2. toward another person, III. with intent to A. 1. a. influence, b. delay, or c. prevent 2. the testimony of any person 3. in an official proceeding, or B. cause or induce any person to 1. a. i. withhold testimony, or ii. withhold a (I) record, (II) document, or (III) other object, b. from an official proceeding, or 2. a. i. alter, ii. destroy, iii. mutilate, or iv. conceal b. an object c. with intent to impair d. the object's i. integrity or ii. availability for use e. in an official proceeding, or 3. a. evade b. legal process c. summoning that person i. to appear as a witness, or ii. to produce a (I) record, (II) document, or (III) other object, iii. in an official proceeding, i.e., a (I) federal court proceeding, (II) federal grand jury proceeding, (III) Congressional proceeding, (IV) federal agency proceeding, or (V) proceeding involving the insurance business; or 4. a. be absent b. from an official proceeding, c. to which such person has been summoned by legal process; or C. 1. a. hinder, b. delay, or c. prevent 2. the communication to a a. federal judge or b. federal law enforcement officer 3. of information relating to the a. commission or b. possible commission of a 4. a. federal offense or b. [a] violation of conditions of i. probation, ii. supervisor release, iii. parole, or iv. release pending judicial proceedings; shall be fined under this title or imprisoned not more than 20 years, or both. In more general terms, subsection 1512(b) bans (1) knowingly, (2) using one of the prohibited forms of persuasion (intimidation, threat, misleading or corrupt persuasion), (3)(a) with the intent to prevent a witness's testimony or physical evidence from being truthfully presented at official federal proceedings or (b) with the intent to prevent a witness from cooperating with authorities in a matter relating to a federal offense. It also bans any attempt to so intimidate, threaten, or corruptly persuade . The term "corruptly" in the phrase "corruptly persuades" as it appears in subsection 1512(b) has been found to refer to the manner of persuasion, the motive for persuasion, and the manner of obstruction. Prosecution for obstructing official proceedings under subsection 1512(b)(2) will require proof that the defendant intended to obstruct a particular proceeding. Prosecution for obstructing the flow of information to law enforcement officials under subsection 1512(b)(3), on the other hand, apparently requires no such nexus. A subsection 1512(b)(3) investigation obstruction offense prosecution, however, does require proof that the defendant believed it reasonably likely that the witness, absent tampering, might communicate with federal authorities. The defendant's belief that a witness is reasonably likely to confer with federal authorities can be inferred from the nature of the offense and "additional appropriate evidence." The attributes common to §1512 as a whole, apply to subsection 1512(b); some of which may fit more comfortably in a subsection 1512(b) corrupt persuasion setting than they do in a 1512(a) violence prosecution. The affirmative defenses in subsections 1512(e) and 1515(d) are prime examples. Subsection 1512(e) removes by way of an affirmative defense good faith encouragements of a witness to speak or testify truthfully, although it does not excuse urging a witness to present fabrications as the truth. Subsection 1515(d) makes it clear that bona fide legal advice and related services cannot be used to provide the basis for subsection 1512(b) corrupt persuasion prosecution. Conversely, charges of soliciting a crime of violence—18 U.S.C. 373—or of using a child to commit a crime of violence—18 U.S.C. 25—are more likely to be prosecutorial companions of a charge under subsection 1512(a) than under subsection 1512(b). On the other hand, the extraterritorial and venue statements of subsections 1512(h) and 1512(i) are as readily applicable to subsection 1512(b) persuasion prosecutions as they are to a subsection 1512(a) violent obstruction case. The same can be said of aiding and abetting, accessories after the fact, misprision, and predicate offense status under RICO or the money laundering statutes. And, it is likewise a separate offense to conspire to violate subsection 1512(b) under either §371 or subsection 1512(k). The obstruction by destruction of evidence offense found in subsection 1512(c) is the creation of the Sarbanes-Oxley Act, and proscribes obstruction of federal administrative, judicial, or congressional proceedings by destruction of evidence. More specifically, subsection 1512(c) provides that: I. Whoever II. corruptly III. A.1.alters, 2. destroys, 3. mutilates, or 4. conceals B. 1. a record, 2. document, or 3. other object, or C. attempts to do so, D. with the intent to impair the object's 1. integrity, or 2. availability for use E. in an official proceeding, or IV. otherwise A. 1. obstructs, 2. influences, or 3. impedes B. an official proceeding, or C. attempts to do so shall be fined under this title or imprisoned not more than 20 years, or both. Section 1512(c) covers only obstructions committed or attempted with "corrupt" intent. Here, the courts have said that "corruptly" means "acting with an improper purpose and to engage in conduct knowingly and dishonestly with the specific intent to subvert, impede, or obstruct the proceeding"; that it means "acting with consciousness of wrongdoing." It does not mean that the obstruction must be done with wicked or evil intent. The courts appear divided over whether an FBI investigation may constitute "official proceeding"; a fact that may flow from their ambivalence over whether the evidence the defendant sought to deny need be material. Some have declared that there must be a nexus between the defendant's destructive conduct and the proceedings he sought to obstruct: "the defendant's conduct must 'have a relationship in time, causation, or logic with the [official] ... proceedings'; in other words, 'the endeavor must have the natural and probable effect of interfering with the due administration of justice.'" Others have said that there is no materiality requirement (i.e., that the obstruction is not confined to evidence that has the natural tendency to influence the proceeding). As is generally true of attempts to commit a federal offense, attempt to violate subsection 1512(c) requires an intent to violate the subsection and a substantial step toward the accomplishment of that goal. Like subsection 1512(a) and 1512(b) offenses, subsection 1512(c) offenses are RICO and money laundering predicate offenses, and may provide the foundation for criminal liability as a principal, accessory after the fact, conspirator, or one guilty of misprision. If the federal judicial, administrative or congressional proceedings are obstructed, prosecution may be had in the United States even if the destruction occurs overseas, the proceedings are yet pending, or the offender is unaware of their federal character. The obstruction by harassment prohibition in subsection 1512(d) existed as subsection 1512(c) until redesignated by Sarbanes-Oxley in 2002. Subsection 1512(d) declares: I. Whoever, II. intentionally, III. harasses another person, and thereby IV. A. hinders, B. delays, C. prevents, or D. dissuades, V. any person from A. 1. attending or 2. testifying in 3. an official proceeding, or B. reporting 1. a. to a law enforcement officer, or b. judge c. of the United States, 2. a. the commission, or b. possible commission, of 3. a. a federal offense, or b. a violation of the conditions of i. probation, ii. supervised release, iii. parole, or iv. release pending judicial proceedings, or C. 1. arresting, or 2. seeking to arrest 3. another person 4. in connection with a federal offense, or D. causing 1. a. a criminal prosecution, or b. a parole revocation proceeding, or c. a probation revocation proceeding 2. a. to be sought, or b. instituted, or 3. assisting in such prosecution or proceeding, or VI. attempts to do so shall be fined under this title or imprisoned not more than 3 years, or both. The fine for crimes punishable by imprisonment for not more than 3 years is not more than $250,000 (not more than $500,000 for organizations). The subsection does not apply to obstructing a private individual who seeks information of criminal activity in order to report it to federal authorities. Subsection 1512(d) harassment offenses are RICO and money laundering predicate offenses. The provisions of law relating to principals, accessories after the fact, misprision, and conspiracy apply with equal force to offenses under subsection 1512(d), as do the provisions elsewhere in §1512 relating to extraterritorial application, and abolition of the need to show pendency or knowledge of the federal character of the obstructed proceedings or investigation. Unlike §1512, §1503 does not to apply to the obstruction of congressional or administrative proceedings. Nor, in most circuits at least, does it apply to obstruction of judicial proceedings unless the impeded proceedings are pending. Nevertheless, it condemns obstructing pending judicial proceedings by means of any of four methods. Three explicitly address interfering with federal jurors or court officials; the fourth, the so-called omnibus provision, speaks to interfering with the "due administration of justice." The omnibus provision states: I. Whoever II. A. corruptly or B. by threats or force, or C. by any threatening letter or communication, III. A. influences, B. obstructs, or C. impedes, or D. endeavors to 1. influence, 2. obstruct, or 3. impede, IV. the due administration of justice, shall be punished as provided in subsection (b). Subsection (b) calls for murder and manslaughter to be punished as those crimes are punished when committed in violation of §§1111 and 1112; attempted murder, attempted manslaughter, or any violation involving a juror called to hear a case relating to a class A or B felony is punishable by imprisonment for not more than 20 years; and all other offenses by imprisonment for not more than 10 years. The courts often observe that to convict under this omnibus or "catchall" provision the government must prove beyond a reasonable doubt: "(1) that there was a pending judicial proceeding, (2) that the defendant knew this proceeding was pending, and (3) that the defendant then corruptly endeavored to influence, obstruct, or impede the due administration of justice." Some also assert that the obstruction must also be material to the matters before the judicial proceeding. As to the first two elements, the Supreme Court has maintained for over a century that "a person is not sufficiently charged with obstructing or impeding the due administration of justice in a court unless it appears that he knew or had notice that justice was being administered in such court." There is no requirement that the defendant's endeavors succeed or even that they were capable of succeeding (as long as the accused was unaware of the futility of his efforts to obstruct). In order to "corruptly endeavor" to obstruct the due administration of justice, "[t]he action taken by the accused must be with an intent to influence judicial or grand jury proceedings.... Some courts have phrased this showing as a nexus requirement—that the act must have a relationship in time, causation, or logic with the judicial proceedings. In other words, the endeavor must have the natural and probable effect of interfering with the due administration of justice." The Supreme Court's observations, notwithstanding, the courts are somewhat divided over whether the obstructed judicial proceedings must actually be pending. The courts may be at odds as well over whether the due administration of justice in §1503 may be obstructed by corrupting a witness before a federal judicial proceeding or any other obstruction covered by 18 U.S.C. 1512 or 1513. The Second Circuit held in 1991 that when Congress enacted the more specific witness tampering and witness retaliation provisions of §§512 and 1513 it intended to remove those crimes from the omnibus clause's inventory of proscriptions. The other circuits, to the extent they have later addressed the issue, disagree. Notwithstanding opportunities to reconsider, the Second Circuit has apparently found it unnecessary to do so thus far. The specific kinds of misconduct which will provide the basis for a prosecution under the omnibus clause of §1503 vary considerably. Subsection 1515(c), however, makes it clear that bona fide legal advice will not provide the basis for a prosecution under the omnibus clause of §1503 nor under any other obstruction of justice prohibition found in the same chapter for that matter. Bribery and other forms of jury corruption fall within the proscriptions of the omnibus clause of §1503, but are more explicitly condemned in the remainder of the section. On its face, the section covers both tampering with (and retaliation against) federal grand jurors, petite jurors, magistrates, and other judicial officials. The conduct it outlaws may take the form of threats, force, threatening letters or other communication, corruption ( e.g ., bribery), or in retaliation, personal injury or property damage. Yet the offense is only complete if the misconduct is perpetrated in an endeavor to influence, intimidate or impede a juror or judicial official or on account of the performance of the duties of such a position. Before 1962, bribing a federal judge or juror might be prosecuted either under section 1503 or under the bribery statute, 18 U.S.C. 206 (1958 ed.). Then in 1962 the corresponding provision in §206 disappeared when Congress revised federal bribery statutes and merged a number of individual sections into the general proscriptions now found in 18 U.S.C. 201. That §201 applies to bribery involving judges and certainly to bribery involving jurors seems clear from its language, its history, and the limited available case law. Since 1962, however, such cases appear to have been prosecuted in most instances under §1503 alone. A separate section, 18 U.S.C. 373, outlaws conspiracies to obstruct jurors and other judicial officers in the performance of their duties by force, intimidation or threat. Section 1503 carries a general maximum penalty of imprisonment for not more than 10 years and, with one unusual exception, an escalating penalty structure for more serious violations. Thus, the offense is punishable by imprisonment for not more than 20 years, if it involves either an attempted killing or is committed against a juror in a case involving a class A or B felony, i.e . a felony punishable by death, life imprisonment or a maximum term of imprisonment of at least twenty-five years. If the offense involves a murder, it is punishable in the same manner as an offense under 18 U.S.C. 1111, that is, by death or imprisonment for any term of years or for life. In something of a curiosity, if the offense involves manslaughter it is punishable in the same manner as an offense under 18 U.S.C. 1112, that is, by imprisonment for not more than 10 years in the case of voluntary manslaughter and not more than 6 years in the case of involuntary manslaughter. As a consequence, the penalty for a violation of §1503 that involves voluntary manslaughter is no more severe than for a violation that does not involve a killing (10 years) and less severe (6 years) if the killing is involuntary manslaughter. Each of the offenses other than murder is also subject to a fine of not more than $250,000 (not more than $500,000 for an organization). A conspiracy in violation of §372 is punishable by imprisonment for not more than 6 years and a fine of $250,000 (or $500,000 if the defendant is an organization). Conspiracy to violate §1503 can also be prosecuted under the general conspiracy statute, 18 U.S.C. 371. Section 1503 offenses are RICO predicate offenses and consequently are money laundering predicate offenses. Those who aid and abet a §1503 offense are liable as principals and are punishable as if they committed the offense themselves. An individual who knows that another has committed a §1503 offense and nevertheless assists the offender in order to hinder his capture, trial, or punishment is in turn punishable as an accessory after the fact. And an individual who affirmatively conceals the commission of a §1503 offense by another is guilty of misprision. Section 1503 contains no explicit statement of extraterritorial application. Nevertheless, the courts seem likely to conclude that overseas misconduct in violation of §1503 may be prosecuted in this country. Subsection 1512(i) establishes venue for prosecution under §1512 or §1503 in any district where the obstruction occurs or where the obstructed proceeding occurs or is to occur. The subsection was enacted to resolve a conflict among the circuits on the question of whether venue for a prosecution of either of the two sections was proper in the district of the obstructed proceeding. Thereafter, the Supreme Court clarified venue's constitutional boundaries when it declared that venue is ordinarily only proper where a conduct element of the offense occurs, but left for another day the question of whether venue might be proper in a district where the effect of the offense is felt. The limited subsequent case law on the question has arisen under other statutes and generally holds that the "effects" basis for venue remains valid "only when Congress had defined the essential conduct elements in terms of those effects." Section 1505 outlaws interfering with Justice Department civil investigative demands issued in antitrust cases. However, it deals primarily with obstructing congressional or federal administrative proceedings, condemning: I. Whoever II. A. corruptly, or B. by threats or C. force, or D. by any threatening letter or communication III. A. influences, B. obstructs, or C. impedes or D. endeavors to 1. influence, 2. obstruct, or 3. impede IV. A. 1. the due and proper administration of the law under which 2. any pending proceeding is being had 3. before any department or agency of the United States, or B. 1. the due and proper exercise of the power of inquiry under which 2. any inquiry or investigation is being had 3. by a. either House, or b. any committee of either House or c. any joint committee of the Congress shall be fined under this title or imprisoned not more than 5 years (not more than 8 years if the offense involves domestic or international terrorism), or both. Prosecutions under §1505 have been relatively few, at least until recently, and most of these arise as obstructions of administrative proceedings. "The crime of obstruction of [such] proceedings has three essential elements. First, there must be a proceeding pending before a department or agency of the United States. Second, the defendant must be aware of the pending proceeding. Third, the defendant must have intentionally endeavored corruptly to influence, obstruct or impede the pending proceeding." Perhaps due to the breadth of judicial construction, the question of what constitutes a pending proceeding has arisen most often. Taken as a whole, the cases suggest that a "proceeding" describes virtually any manner in which an administrative agency proceeds to do its business. The District of Columbia Circuit, for example, has held that an investigation by the Inspector General of the Agency for International Development may qualify as a "proceeding" for purposes of §1505. In doing so, it rejected the notion "that §1505 applies only to adjudicatory or rule-making activities, and does not apply to wholly investigatory activity." Moreover, proximity to an agency's adjudicatory or rule-making activities, such as auditors working under the direction of an officer with adjudicatory authority, has been used to support a claim that an obstructed agency activity constitutes a proceeding. The courts seem to see comparable breadth in the congressional equivalent ("obstructing the due and proper exercise of the power of inquiry" by Congress and its committees). In the case of either congressional or administrative proceedings, §1505 condemns only that misconduct which is intended to obstruct the administrative proceedings or the due and proper exercise of the power of inquiry. In order to overcome judicially identified uncertainty as to the intent required, Congress added a definition of "corruptly" in 1996: "As used in §1505, the term 'corruptly' means acting with an improper purpose, personally or by influencing another, including making a false or misleading statement, or withholding, concealing, altering, or destroying a document or other information," 18 U.S.C. 1515(b). Examples of the type of conduct that have been found obstructive vary. Section 1505 offenses are not RICO or money laundering predicate offenses. Section 1505 has neither separate conspiracy provision nor an explicit exterritorial jurisdiction provision. However, conspiracy to obstruct administrative or congressional proceedings may be prosecuted under 18 U.S.C. 371, and the courts would likely find that overseas violations of §1505 may be tried in this country. Moreover, the general aiding and abetting, accessory after the fact, and misprision statutes are likely to apply with equal force in the case of obstruction of an administrative or congressional proceeding. Congress outlawed retaliation against federal witnesses under §1513 at the same time it outlawed witness tampering under §1512. Although somewhat more streamlined, §1513 shares a number of attributes with §1512. The definitions in §1515 apply to both sections. Consequently, the prohibitions apply to witnesses in judicial, congressional, and administrative proceedings. There is extraterritorial jurisdiction over both offenses. In slightly different terms, both protect witnesses against murder and physical abuse—committed, attempted, conspired, or threatened. Offenses under the two are comparably punished. Section 1513 prohibits witness or informant retaliation in the form of killing, attempting to kill, inflicting or threatening to inflict bodily injury, damaging or threatening to damage property, and conspiracies to do so. "The elements of an offense under 18 U.S.C. §1513 are (1) knowing engagement in conduct; (2) either causing, or threatening to cause, bodily injury to another person; and (3) the intent to retaliate for, inter alia , the attendance or testimony of a witness at an official proceeding." It also prohibits economic retaliation against federal witnesses, but only witnesses in court proceedings and only on criminal cases. It does not reach economic retaliation against witnesses on the basis of information relating to the violations of supervised release, bail, parole, or probation conditions. To satisfy the assault prong of §1513, the government must prove that the defendant bodily injured another in retaliation for the victim's testimony or service as a federal informant. The extent of the injuries need not be extensive, nor in the case of a threat even carried out. In fact, in the case of a threat, all that is required is the intent to communicate a retaliatory threat; it matters not that the defendant neither planned nor had the ability to carry out the threat. As a general rule, the intent to retaliate need not have been the sole motivation for the attack. Section 1513 offenses are RICO predicate offenses and consequently money laundering predicate offenses. They are also violent offenses and therefore may result in the application of those statutes in which the commission of a violent crime is an element or sentencing factor. Those who aid and abet a §1513 offense are liable as principals and are punishable as if they committed the offense themselves. An individual who knows another has committed a §1513 offense and nevertheless assists the offender in order to hinder his capture, trial or punishment is in turn punishable as an accessory after the fact. And an individual who affirmatively conceals the commission of a §1513 by another is guilty of misprision. If two or more persons conspire either to commit any offense against the United States or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both. Section 371 contains both a general conspiracy prohibition and a specific obstruction conspiracy prohibition in the form of a conspiracy to defraud proscription. The elements of conspiracy to defraud the United States are (1) an agreement of two more individuals; (2) to defraud the United States; and (3) an overt act by one of the conspirators in furtherance of the scheme. The "fraud covered by the statute 'reaches any conspiracy for the purpose of impairing, obstructing or defeating the lawful functions of any department of Government" by "deceit, craft or trickery, or at least by means that are dishonest." The scheme may be designed to deprive the United States of money or property, but it need not be so; a plot calculated to frustrate the functions of a governmental entity will suffice. The elements of conspiracy to commit a substantive federal offense are "(1) an agreement to engage in criminal activity, (2) one or more overt acts taken to implement the agreement, and (3) the requisite intent to commit the substantive crime." Conspirators must be shown to have exhibited the same level of intent as required for the underlying substantive offense. The overt act need only be furtherance of the scheme; it need not be the underlying substance offense or even a crime at all. Conspirators are liable for the underlying offense should it be accomplished and for any reasonably foreseeable offense committed by a coconspirator in furtherance of the common plot. As noted earlier, a number of federal statues, §§1512 and 1513 among them, include within their proscriptions a separate conspiracy feature that outlaws plots to violate the section's substantive provisions. The advantage for prosecutors of these individual conspiracy provisions is that they carry the same penalties as the underlying substantive offense and that they ordinarily do not require proof of an overt act. Although §§1512 and 1513 provide an alternative means of prosecuting a charge of conspiracy to violate their underlying prohibitions, the government may elect to proceed under general conspiracy statute, 18 U.S.C. 371. The oldest of the general obstruction provisions is contempt. The crime of contempt of court comes to us from antiquity. Blackstone speaks of the power to punish disturbances in the presence of the king's courts that existed before the Conquest, and he notes that the common law classified as contempt the failing to heed the writs or summons of the king or his courts of justice. The first Congress empowered the federal courts "to punish by fine or imprisonment, at the discretion of said courts, all contempts of authority in any cause or hearing." Contemporary federal contempt is derived from statute, rule, and inherent or auxiliary authority. Section 401 of title 18 of the United States Code notes the power of a federal court to punish by fine or imprisonment misconduct committed in the presence of the court or by its officers and disobedience of its orders. Rule 42 of the Federal Rules of Criminal Procedure supplies procedures to be followed in such cases, other than those dealt with summarily. Section 402 provides for a jury trial when the allegations of criminal contempt also constitute separate federal or state criminal offenses. Contempt may be civil or criminal. Civil contempt is coercive and remedial, calculated to compel the recalcitrant to obey the orders of the court or to compensate an opponent aggrieved by the failure to do so. Criminal contempt is punitive. A wide variety of obstructions of justice are punishable as criminal contempt of court. They include: disobedience of a court order to provide handwriting exemplars, violation of a temporary restraining order entered in unfair trade practices action, unlawful disclosure by grand jurors of their vote or deliberations, asset transfer in violation of a bankruptcy court's asset freeze order, refusing to testify before the grand jury, false statement to a probation officer, vulgar insults addressed to court, violation of a condition of supervised release, fraudulently sold business opportunities in violation of court-ordered Federal Trade Commission consent decree, refusing to testify at trial, violation of restraining order prohibiting harassment of the bankruptcy court, violation of the court's witness sequestration order, failure to appear at the supervised release revocation hearing, attorney's repeated failure to follow court's instructions relating to the conduct of the trial, threatening jurors, retaliating against a witness in violation of the court's restraining order, defendant's contacting witnesses in violation of the court's order. Criminal contempt comes in two forms, direct and indirect. Direct contempt involves misconduct in the presence of the court and is punished to ensure the decorum of the court and the dignity of the bench. Indirect contempt consists of those obstructions committed outside the presence of the court. Direct contempt may be summarily punished; indirect contempt may not. Summary contempt . A court may summarily punish as direct criminal contempt under subsection 401(1) and Rule 42(b) of the Federal Rules of Criminal Procedure, "[m]isbehavior of any person in its presence or so near thereto as to obstruct the administration of justice." A witness who in the presence of the court refuses to testify at trial may be summarily punished for contempt, as may an individual who urinates on the courtroom floor in the presence of the court, or who addresses the court or the jury in vulgar and insulting terms. The range of misbehavior proscribed is narrow, however, because the procedural protections afforded the offender are few. There is no indictment, no right to counsel, no trial, no hearing, no right to present exculpatory evidence. There is only the intentional act or omission by the offender and the pronouncement of punishment by the court. The proximity of misconduct occurring "so near ... as to obstruct the administration of justice" is a matter of physical proximity not proximity to the subject matter of the proceedings. Thus, the misbehavior that may summarily be punished does not include misconduct occurring elsewhere that has an adverse impact or potentially adverse impact on the judicial proceedings, such as the tardy arrival of an attorney at court, or a lawyer's failure to present the court with a doctor's affidavit justifying his client's absence, or a party's efforts to influence a juror during breakfast several floors removed from the courtroom, or a party's failure to appear for depositions, or encourage others to flood the court with e-mails. Each of these might be punished as criminal contempt, but not summarily. If not punished summarily, a person charged with criminal contempt is entitled under Rule 42(a) to a statement of the essential facts underlying the charge, a reasonable opportunity to prepare a defense, and notice of the time and place where the hearing is to occur. A person so charged is also entitled to the assistance of counsel; to be prosecuted by a disinterested prosecutor; to subpoena witnesses; to examine and cross-examine witnesses; to present a defense; to the benefit of the privilege against self-incrimination and of the double jeopardy bar; and, if the contempt is to be punished by a term of imprisonment of more than six months, to a jury trial. The right to be prosecuted by the United States Attorney or some other neutral prosecutor is reinforced by the Rule, but may be waived by the person charged. In the trial of criminal contempt in violation of §401(1) that may not be punished summarily "the Government must establish beyond a reasonable doubt: (1) misbehavior of a person, (2) which is in or near the presence of the Court, (3) which obstructs the administration of justice, and (4) which is committed with the required degree of criminal intent." Misbehavior by court officers . Subsection 401(2) is cited most often for the proposition that attorneys are not officers of the court for purposes of the subsection. Otherwise, it is seldom prosecuted or cited. Violation of a court order . A court may punish as criminal contempt under subsection 401(3) and the procedures outlined in Rule 42(a) of the Federal Rules of Criminal Procedure, "[d]isobedience or resistance to its lawful writ, process, order, rule, decree, or command." The conviction for criminal contempt in a violation of subsection 401(3) requires the government to prove beyond a reasonable doubt that the defendant willfully violated a reasonable specific court order. Obstruction of justice is not an element of the offense, but a willful intent is, which means that the defendant must have known of the order and have deliberately or recklessly violated it. Mere negligence is not enough. A person may not be found in criminal contempt of an unclear order of the court, but disobedience of an invalid order is nonetheless punishable as criminal contempt. Although the double jeopardy bar applies to criminal contempt, it does not preclude the use of civil contempt against an individual who has been convicted of criminal contempt of the same recalcitrance nor prosecution of a criminal contempt charge after civil contempt has been imposed. Moreover, the double jeopardy prohibition does not bar sequential prosecution of criminal contempt and substantive offenses arising out of the same events. Unless summarily punished, sentencing for contempt begins with the Sentencing Guidelines. The guideline for contempt, however, is not always easily discerned. The Guidelines assign a specific guideline for most federal offenses. It assigns contempt to an obstruction of justice guideline, U.S.S.G. §2J1.1. But §2J1.1 states in its entirety, "apply §2X5.1 (Other Offenses)." The accompanying commentary does explain that the Sentencing Commission decided not to draft a specific guideline for contempt because of the variety of misconduct that can constitute the offense. It goes on to say that in some instances the general obstruction of justice guideline or the theft guideline may be most analogous for violations of §401. Section 2X5.1 declares "[i]f the offense is a felony for which no guideline expressly has been promulgated, apply the most analogous offense guideline." Federal appellate court decisions indicate that this "most analogous" standard has been used to mirror the misconduct underlying the contempt conviction, although with seemingly conflicting results in some instances. The Guidelines ordinarily operate beneath the maximum penalties established by statute. Section 401, however, speaks of neither a maximum term of imprisonment nor a maximum fine level. It simply states that criminal contempt may be punished by imprisonment or by a fine or both. This approach has implications for things like probation, special assessments, and terms of supervised release that turn upon the maximum term of imprisonment associated with a particular offense. Probation, for example, is unavailable to those charged with a Class A or B felony, special assessments range from $5 to $100 depending on the classification of the offense for which an individual is convicted, and the maximum permissible term of supervised release, if any, is determined in many instances by whether the offender has been convicted of a Class A, B, C, D, or E felony or a misdemeanor other than a petty offense. When the question has been raised, prosecutors have sometimes argued that criminal contempt under §401 should be considered a class A felony, since it is punishable by any term of imprisonment up to and including life imprisonment. Defendants have argued alternatively that criminal contempt under §401 should be (1) considered neither felony nor misdemeanor nor petty offense, or (2) classified according to the sentence imposed or the sentencing maximum the court agrees to accept, as is done when the question is whether a contempt case must be tried before a jury. The Ninth Circuit chose something of a middle ground and classified criminal contempt according to the maximum sentence for the most analogous offense. The Eleventh Circuit, on the other hand, concluded that contempt is sui generis and cannot accurately be classified as either a felony or misdemeanor of any stripe. Civil contempt is coercive and compensatory rather than punitive. A court may hold an individual or entity in civil contempt upon a showing that "(1) the alleged contemnor had notice of the order, (2) the order was clear and unambiguous, (3) the alleged contemnor had the ability to comply with the order, and (4) the alleged contemnor violated the order." Coercive imprisonment or daily fines must end when the contemnor complies or becomes unable to do so. Compensatory contempt in the form of money judgment or other form of relief must be related to the losses suffered as a consequence of violation of the order. Contempt of Congress is punishable by statute and under the inherent powers of Congress. Congress has not exercised its inherent contempt power for some time. The statutory contempt of Congress provision, 2 U.S.C. 192, has been employed only slightly more often and rarely in recent years. Much of what we know of the offense comes from Cold War period court decisions. Parsed to its elements, §192 states that: I. Every person II. summoned as a witness III. by the authority of either House of Congress IV. to A. give testimony, or B. to produce papers V. upon any matter under inquiry VI. before A. either House, B. any joint committee, C. any committee of either House VII. who willfully A. makes default, or B. refuses 1. to answer any question 2. pertinent to the matter under inquiry shall be guilty of a misdemeanor, punishable by a fine of not more than $1,000 or less than $100 and imprisonment in a common jail for not less than one month nor more than twelve months. The Dictionary Act states that, unless the context suggests otherwise when the term "person" appears in the United States Code, it includes organizations as well. Nevertheless, prosecution appears to have been limited to individuals, although the custodians of organizational documents have been charged. The term "summoned," on the other hand, has been read broadly, so as to extend to those who have been served with a testimonial subpoena, to those who have been served with a subpoena to produce documents or other items (subpoena duces tecum), and to those who have appeared without the benefit of subpoena. Section 192 applies only to those who have been summoned by the "authority of either House of Congress." As a consequence, the body which issues the subpoena must enjoy the authority of either the House or Senate to do so, both to conduct the inquiry and to issue the subpoena. Authority may be vested by resolution, rule, or statute. Section 192 speaks only of the houses of Congress and their committees, but there seems little question that the authority may be conferred upon subcommittees. The testimony or documents sought by the subpoena or other summons must be sought for "a matter under inquiry" and in the case of an unanswered question, the question must be "pertinent to the question under inquiry." The statute outlaws "refusal" to answer pertinent questions, but the courts have yet to say whether the proscription includes instances where the refusal takes the form of false or deceptive testimony: There is no word on whether the section outlaws any refusal to answer honestly or only unequivocal obstinacy. On at least two occasions, however, the courts have reportedly accepted nolo contendere pleas under §192 based upon a false statement predicate. Section 192 bans only "willful" recalcitrance. Thus, when a summoned witness interposes an objection either to an appearance in response to the summons or in response to a particular question, the objection must be considered, and if found wanting, the witness must be advised that the objection has been overruled before he or she may be successfully prosecuted. The grounds for a valid objection may be found in rule, statute, or the Constitution, and they may be lost if the witness fails to raise them in a timely manner. The Fifth Amendment protects witnesses against self-incrimination. The protection reaches wherever incriminating testimonial communication is compelled whether in criminal proceedings or elsewhere. It covers communications that are either directly or indirectly incriminating, but only those that are "testimonial." Organizations enjoy no Fifth Amendment privilege from self-incrimination, nor in most cases do the custodians of an organization's documents unless their act of producing the subpoenaed documents is itself an incriminating testimonial communication. An individual's voluntarily created papers and records are by definition not compelled communications and thus ordinarily fall outside the privilege as well. Moreover, the protection may be waived if not invoked, and the protection may be supplanted by a grant of immunity which promises that the truthful testimony the witness provides or is compelled to provide will not be used directly or derivatively in his or her subsequent prosecution. Aside from the Fifth Amendment, the status of constitutionally based objections to a congressional summons or question is somewhat more amorphous. The First Amendment affords a qualified immunity from subpoena or interrogation, whose availability is assessed by balancing competing individual and congressional interests. Although a subpoena or question clearly in furtherance of a legislative purpose ordinarily carries dispositive weight, the balance may shift to individual interests when the nexus between Congress's legitimate purpose and the challenged subpoena or question is vague or nonexistent. In cases of such imprecision, the government's assertion of the pertinence necessary for conviction of statutory contempt may become suspect. The Fourth Amendment may also supply the basis for a witness to disregard a congressional subpoena or question. The Amendment condemns unreasonable governmental searches and seizures. The Supreme Court in Watkins confirmed that witnesses in congressional proceedings are entitled to Fourth Amendment protection, but did not explain what such protection entails. In fact, the courts have addressed only infrequently the circumstances under which the Fourth Amendment cabins the authority of Congress to compel a witnesses to produce papers or response to questions. When dealing with the subpoenas of administrative agencies, the Court noted some time ago that the Fourth Amendment "at the most guards against abuse only by way of too much indefiniteness or breadth in the things required to be 'particularly described,' if also the inquiry is one the demanding agency is authorized by law to make and the materials specified are relevant. The gist of the protection is in the requirement, expressed in terms, that the disclosure sought shall not be unreasonable." At the same time, it pointed out that as in the case of a grand jury inquiry probable cause is not a prerequisite for a reasonable subpoena. In later years, it explained that where a grand jury subpoena is challenged on relevancy grounds, "the motion to quash must be denied unless the district court determines that there is no reasonable possibility that the category of materials the Government seeks will produce information relevant to the general subject of the grand jury's investigation." The administrative subpoena standard has been cited on those infrequent occasions when the validity of a congressional subpoena has been challenged on Fourth Amendment grounds. Contempt convictions have been overturned, however, when a Fourth Amendment violation taints the underlying subpoena or question. Perhaps most unsettled of all is the question the extent to which, if any, the separation of powers doctrine limits the subpoena power of Congress over members and former members of the other branches of government. As a practical matter, however, the other branches of government ultimately control the prosecution and punishment for statutory contempt of Congress, at least under the current state of the law. Section 194 states that the United States Attorney to whom Congress refers a violation of §192 has a duty to submit the matter to the grand jury. Should a grand jury indictment be forthcoming further prosecution is at the discretion of the executive branch in proceedings presided over by the judicial branch. The rules governing the congressional hearing may also afford a witness the basis to object to a congressional summons or interrogation and to defend against a subsequent prosecution for violation of §192. No successful prosecution is possible if the congressional tribunal in question has failed to follow its own rules to the witness's detriment. Among other things those rules may identify evidentiary privileges available to a witness. The evidentiary rules that control judicial proceedings do not govern legislative proceedings, unless and to the extent they are constitutionally required or have been made applicable by congressional rule and decision of the tribunal. To the extent the rules or body issuing the subpoena afford a witness an attorney-client or attorney work product protection or any other evidentiary privilege, the privilege provides a valid basis to object and defend. Section 192 states that violations are punishable by imprisonment for not less than one month nor more than twelve months and a fine of not less than $100 nor more than $1,000. By virtue of generally applicable amendments enacted after the section, class A misdemeanors (crimes punishable by imprisonment for not more than one year) are subject to a fine of not more than $100,000 for individuals and not more than $200,000 for organizations. Congress's exercise of its inherent power to punish for contempt of its authority predates the 1857 enactment of the original version of its statutory contempt provisions. The statute has always been recognized as a supplement rather than a replacement of the inherent power. In fact for the first half of the statute's existence, Congress continued to rely upon its inherent power notwithstanding the presence of a statutory alternative. Thereafter, Congress began to resort to the statutory alternatives more regularly. The inherent power lay dormant and appears have been last invoked nearly a century ago. There are two statutory provisions available to permit Congress to call upon the courts to overcome the resistance of witnesses in congressional proceedings. One covers immunity orders where the witness has claimed his Fifth Amendment privilege against self-incrimination. Continued recalcitrance after the grant of immunity is punishable under the court's civil and criminal contempt powers. The second permits the court enforcement of a Senate subpoena but apparently only to the extent of the court's civil contempt powers. In addition to the basic federal crimes of obstruction of justice, federal law features a host of criminal statutes that proscribe various obstructions according to the obstructive means used, be it physical violence, bribery, property destruction, or deception. Thus, quite aside from the general obstruction provisions of §§1512, 1513, 1505, and 1503, several federal statutes outlaw use of threats or violence for the purpose of obstructing federal government activities. Section 115 prohibits certain acts of violence against judges, jurors, officials, former officials, and their families in order to impede or to retaliate for the performance of their duties. The section consists of three related offenses. One is designed to protect the families of judges and officials against threats and acts of violence; another to protect judges and officials from threats; and a third to protect former judges, former officials, and their families from retaliatory threats and acts of violence. In more precise terms, they declare: (1)(Families) I. Whoever II. A. assaults B. kidnaps, C. murders, D. attempts to assault, kidnap, or murder, E. conspires to assault, kidnap, or murder, or F. threatens to assault, kidnap, or murder III. a member of the immediate family of A. a federal judge, B. a Member of Congress, C. the President and any other federal officer or employee IV. with the intent A. either to 1. a. impede, b. intimidate, or c. interfere with 2. a. a federal judge, b. a Member of Congress, c. the President and any other federal officer or employee 3. in the performance of official duties; B. or to 1. retaliate against 2. a. a federal judge, b. a Member of Congress, c. the President and any other federal officer or employee 3. for the performance of official duties shall be punished as provided in subsection (b). Subsection 115(a)(1)(A) only condemns violence against the families of federal officials, not violence committed against the officials themselves. Subsection 115(b) makes kidnaping, murder, and attempts and conspiracies to commit such offenses in violation of the section subject to penalties imposed for those crimes when committed against the officials themselves under other sections of the Code, i.e., 18 U.S.C. 1201, 1111, 1113, and 1117. The penalties for assault are calibrated according the seriousness of the assault. Simple assault carries a maximum penalty of imprisonment for one year; assault involving physical contact or intent to commit another felony, not more than 10 years; assault result in bodily injury, not more than 20 years; and assault resulting in serious bodily injury or involving the use of dangerous weapon, not more than 30 years. Except in the case of simple assault or murder, the offenses are subject to a fine of not more than $250,000; simple assault carries a fine of not more than $100,000. (2)(Threats) I. Whoever II. threatens to A. assault B. kidnap, or C. murder III.A. a federal judge, B. a Member of Congress, C. the President and any other federal officer or employee IV. with the intent A. either to 1. a. impede, b. intimidate, or c. interfere with 2. a. a federal judge, b. a Member of Congress, c. the President and any other federal officer or employee 3. in the performance of official duties; B. or to 1. retaliate against 2. a. a federal judge, b. a Member of Congress, c. the President and any other federal officer or employee 3. for the performance of official duties shall be punished as noted earlier by imprisonment for not more than 6 years in the case of a threatened assault and not more than 10 years in the case of all other threats outlawed in the section. Subsection 115(a)(1)(B) protects, among others, "an official whose killing would be a crime under [section 1114]." Section 1114, in turn, outlaws killing any "officer or employee of the United States," which has lead one court to conclude that subsection 115(a)(1)(B) protects any federal officer or employee. The circuits are divided over the question of whether a violation of subsection 115(a)(1)(B) is a specific intent offense. The Eleventh Circuit has held that it is not and as a consequence the government need not show that the defendant knew that his victim was a federal official. The Sixth Circuit, on the other hand, held that it is a specific intent offense and as a consequence a defendant is entitled to present a defense of intoxication or diminished capacity. They appear likewise divided over whether the threat proscribed in the section is one that would instill fear in a reasonable person to whom it was communicated or one a reasonable defendant would understand would convey a sense of fear. The Ninth Circuit at one point suggested that the Supreme Court might have resolved the split when it defined those "true threats" that lie beyond the protection of the First Amendment's free speech clause as "those statements where the speaker means to communicate a serious expression of an intent to commit an act of unlawful violence to a particular individual or group of individuals." That hope appears forlorn. (3)(Former Officials) I. Whoever II. A. assaults B. kidnaps, C. murders, D. attempts to assault, kidnap, or murder, or E. conspires to assault, kidnap, or murder, or III. A. a former federal judge, B. a former Member of Congress, C. the former President and any other former federal officer or employee, or D. a member of the immediate family of such former judge, Member or individual IV. on account of the performance of their former official duties shall be punished as provided in subsection (b) as described above with respect to assaults, kidnapings, and murders of members of the families of federal officials. Section 1114 of title 18 of the United States Codes outlaws murder, manslaughter, and attempted murder and manslaughter when committed against federal officers and employees as well as those assisting them during or on account of the performance of their duties. The section's coverage extends to government witnesses. Other provisions outlaw kidnaping or assault committed against federal officers and employees during or on account of the performance of their duties, but their coverage of those assisting them is less clear. Beyond these general prohibitions, federal law proscribes the murder, kidnaping, or assault of Members of Congress, Supreme Court Justices, or the Cabinet Secretaries; and a number of statutes outlaw assaults on federal officers and employees responsible for the enforcement of particular federal statutes and programs. Section 1512(b) outlaws witness tampering by corrupt persuasion. Several other federal statutes outlaw bribery in one form or another. The main federal bribery statutes are 18 U.S.C. 201, which prohibits bribes involving federal officials, employees, jurors and witnesses, and 18 U.S.C. 666, which prohibits bribes involving the recipients of federal funding. Although it makes no mention of bribery, the honest services component of the mail and wire fraud statutes, 18 U.S.C. 1341, 1343, 1346, in some circumstances may afford prosecutors of public corruption greater latitude and more severe penalties than §201. The Hobbs Act, 18 U.S.C. 1951, condemns public officials who use their position for extortion. A few other statutes, noted in the margin, outlaw bribery to obstruct specific activities. Section 201 outlaws offering or soliciting bribes or illegal gratuities in connection with judicial, congressional and administrative proceedings. Bribery is a quid pro quo offense. In simple terms, bribery under "§201(b)(1) as to the giver, and §201(b)(2) as to the recipient ... require[] a showing that something of value was corruptly given, offered, or promised to a public official (as to the giver) or corruptly demanded, sought, received, accepted, or agreed to be received or accepted by a public official (as to the recipient) with intent ... to influence any official act (giver) or in return for being influenced in the performance of any official act (recipient)." In the case of witnesses, subsection 201(b)(3) as to the giver and subsection 201(b)(4) as to the recipient require a showing that something of value was corruptly offered or sought with the intent to influence or be influenced with respect to testimony before, or flight from, a federal judicial, congressional committee, or administrative trial, hearing or proceeding. The subsections condemn invitations and solicitations to corruption, but the entreaties need not be successful nor does it matter that corruption was unnecessary. The intent required for bribery, and the difference between the bribery and illegal gratuity offenses, is the intent to deliberately offer or accept something of value in exchange for the performance or omission of an official act. Section 201 defines the public officials covered broadly to envelope jurors in federal and District of Columbia courts, federal and D.C. officers and employees, as well as those acting on their behalf. This includes anyone who "occupies a position of public trust with official federal responsibilities." Although there is a statutory definition of "official act," it has been a matter of some dispute, perhaps because of its sweeping language. The question becomes particularly difficult when the bribery charge alleges that a bribe was provided in exchange for some unspecified official act or acts or for some general course of conduct. The application difficulties seem to have been exemplified by one appellate panel which held that governmental plea bargain practices fell within the reach of §201's prohibitions. No such difficulties seem to attend the provisions of subsection 201(d) which make it clear that prohibitions do not preclude the payment of witness fees, travel costs, or other reasonable witness expenses. The penalty structure for illegal gratuities under §201 is typical. Illegal gratuities, that is, offering or soliciting a gift as a reward for an official act, is punishable by imprisonment for not more than two years and/or a fine of not more than $250,000. The penalty structure for bribery, however, is fairly distinctive: imprisonment for not more than 15 years; a fine of the greater of three times the amount of the bribe or $250,000; and disqualification from holding any federal position of honor or trust thereafter. Section 201 offenses are RICO and money laundering predicate offenses. Federal law governing principals, accessories after the fact, misprision, conspiracy, and extraterritorial jurisdiction applies with equal force to bribery and illegal gratuities under §201. Section 666 embodies two offenses: embezzlement from federally funded programs or bribery relating to transactions involving such programs. Congress enacted §666 out of concern in part that federal program bribery involving state or local officials would otherwise lie beyond the reach of federal criminal law. The Supreme Court has observed that it constitutes a valid exercise of Congress's legislative authority under the Constitution's Spending and Necessary and Proper Clauses. The bribery offense applies when (1) any agent of a recipient of more than $10,000 a year in federal program funds, (2) corruptly, (3) solicits or accepts, or is offered or given, (4) anything of value, (5) in order to influence or reward the agent, (6) with respect to a transaction involving the recipient and valued at $5,000 or more. Section 666(d)(1) defines "agent" to include any employee, officer, or representative authorized to act on behalf of the recipient. The absence of a direct connection between the bribe and any federal funds is no bar to prosecution. Thus, an agent need not have authority to act with respect to the funds the entity receives from the United States. Whether he must have authority to act with respect to the recipient's funds in some manner is more uncertain. The section reaches agents of any governmental or non-governmental entity that receives $10,000 or more in federal funds "in any one year period." It extends to corrupt offers and solicitations whether they occur before or after federal funds have arrived. Section 666 does not say what constitutes "corruptly" giving or accepting a thing of value. It does exempt salaries and other ordinary business expenses. The lower courts have yet to endorse a single definition of the term, finding that the term means either a breach of public or private duty or finding alternatively that it means committing an unlawful act or committing a lawful act illegally. As for the offer-or-solicit element, bribery is ordinarily a this-for-that ( quid pro quo ) offense. Nevertheless, several federal appellate courts have concluded that §666 demands no more than an offer or request with the intent to influence a business, transaction, or series of transactions; proof of a specific act in exchange for a thing of value, that is, proof of a specific quid pro quo , is unnecessary. The "thing of value" element "encompasses all transfers of personal property or other valuable consideration, in exchange for the influence or reward." The placement of the $5,000 threshold makes it difficult to determine whether the section is referring to the value of the bribe or the value of the targeted transaction: "Whoever ... corruptly gives ... anything of value ... with intent to influence ... an agent ... in connection with any ... transaction ... involving anything of value of $5,000 or more.... " Some courts use the value of the thing offered; others, the value of the transaction with which it is associated. Section 666 speaks of influencing and rewarding. This suggests an intention to outlaw both bribery as well as gratuities, that is, bribery as well as rewards for things past done. Some courts agree; others do not. Finally, the section's reach is not confined to commercial transactions. The term "business, transaction, or series of transactions" encompasses any of the recipient entity's activities. Section 666 makes violations punishable by imprisonment for not more than 10 years and a fine of not more than $250,000. Section 666 does not appear on either the RICO or money laundering predicate lists. Violations, however, may constitute RICO and consequently money laundering predicates to the extent that they constitute violations of both §666 and the bribery felony under the law of the state where the bribery occurs. Federal law governing principals, accessories after the fact, misprision, and conspiracy applies to §666 as well. The mail fraud and wire fraud statutes have been written and constructed with such sweep that they cover among other things, obstruction of government activities by corruption. They reach any scheme to obstruct the lawful functioning in the judicial, legislative, or executive branch of government that involves (1) the deprivation of money, property, or honest services, and (2) the use of the mail or wire communications as an integral part of scheme. The elements of the two offenses are similar. Mail fraud is the federal crime of scheming to defraud when use of the mail furthers the scheme, 18 U.S.C. 1341. Wire fraud is the federal crime of scheming to defraud when use of wire communications furthers the scheme, 18 U.S.C. 1343. The courts have construed their common elements in the same manner. Thus, what constitutes a scheme to defraud is the same in both instances: any act or omission that "wrong[s] one in his property rights by dishonest methods or schemes and usually signif[ies] the deprivation of something of value by trick, deceit, chicane or overreaching." The deception that is part of the scheme, however, must be material; that is, it must have a natural tendency to induce reliance in the victim to his detriment or the offender's benefit. Both crimes require a specific intent to defraud, and they are punishable regardless of whether the scheme succeeds. As for the jurisdictional element, the "statute doesn't require that a defendant be able to anticipate every technical detail of a wire [or postal] transmission, before she may be held liable for causing it. It's enough if she 'sets forces in motion which foreseeably would involve' use of the wires." And so it is with mail fraud. Both statutes refer to a "scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses ... " The extent to which that phrase encompasses intangibles has not always been clear. In spite of a generous interpretation by many of the lower federal appellate courts that encompassed frustration of governmental functions in many forms, the Supreme Court in McNally declared that the mail fraud statute did not proscribe schemes to defraud the public of the honest and impartial services of its public employees or officials. Lest McNally be read to limit the mail and wire fraud statutes exclusively to tangible money or property, the Court explained in Carpenter , soon thereafter, that the "property" of which the mail and wire fraud statutes speak includes recognized intangible property rights. There, it upheld application of the mail fraud statute to a scheme to deny a newspaper its pre-publication property right to its confidential information. The Court later confirmed that the wire fraud statute could be used against a smuggling scheme that deprived a governmental entity of its intangible right to collect tax revenues. In the wake of McNally , Congress expanded the scope of the mail and wire fraud statutes with the passage of 18 U.S.C. 1346, which defines the "scheme to defraud" element in the fraud statutes to include a scheme "to deprive another of the intangible right of honest services." Section 1346 extends mail and wire fraud to prohibit the deprivation of the intangible right to honest services of both public and private officers and employees. Until construed more narrowly by the Supreme Court in Skilling , some of the lower courts understood it to proscribe bribery, kickbacks as well as various forms of self-dealing committed to the detriment of those to whom the offender owed a fiduciary duty of some kind. In the public sector, it was thought to condemn dishonesty in public officers and employees, although the exact scope of that proscription remained largely undefined. Some lower courts said that honest services fraud in the public sector "typically occurs in either of two situations: (1) bribery, where a public official was paid for a particular decision or action; or (2) failure to disclose a conflict of interest resulting in personal gain." The bribery examples caused little pause; more perplexing were the issues of how broadly the conflict-of-interest provision might reach and what atypical situations might come within the honest services fraud prohibition. The uncertainty led the Supreme Court to conclude that Congress intended the honest services provision to apply to bribery and kickbacks, but that "[i]nterpreted to encompass only bribery and kickbacks, [it] was not unconstitutionally vague." Prosecutors may favor a mail or wire fraud charge over or in addition to a bribery charge if for no other reason than that under both fraud sections offenders face imprisonment for not more than 20 years rather than the 15-year maximum found in §201. Mail fraud and wire fraud are both RICO and money laundering predicate offenses. The legal precepts relating to principals, accessories after the fact, misprision, and conspiracy apply to mail fraud and wire fraud as well. However, the courts are unlikely to conclude that either applies to misconduct occurring entirely overseas, since their jurisdictional elements (United States mails and interstate and foreign commerce of the United States) are clearly domestic. The Hobbs Act speaks of the obstruction of commerce, but it is mentioned here because bribery and extortion under color of official right corrupt the due administration of justice in similar ways. The Hobbs Act outlaws the obstruction of interstate or foreign commerce by means of robbery or extortion. Extortion under the act comes in two forms: extortion induced by fear and extortion under color of official right. Extortion under color of official right occurs when a federal, state, or local public official receives a payment to which he is not entitled, knowing it is being provided in exchange for the performance of an official act. Liability may be incurred by public officers and employees, those in the process of becoming public officers or employees, their coconspirators, or those who aid and abet public officers or employees in extortion under color or official right. The payment need not have been solicited, nor need the official act for which it is exchanged have been committed. The prosecution must establish that the extortion obstructed, delayed, or affected interstate or foreign commerce, but proof of a potential impact, even one that is not particularly severe, may be sufficient. Hobbs Act violations are punishable by imprisonment for not more than 20 years and a fine of not more than $250,000. Hobbs Act offenses are RICO and money laundering predicates. It is a crime to attempt to commit a Hobbs Act offense. Moreover, the act has a separate conspiracy component, but recourse to prosecution of conspiracy under 18 U.S.C. 371 is an alternative. An offender may incur criminal liability under the misprision statute or as a principal or accessory before the fact to a violation of the Hobbs Act by another. Before Congress rewrote federal obstruction of justice law in 1982, §1510 covered the obstruction of federal criminal investigations by "misrepresentation, intimidation, or force or threats thereof" as well as by bribery. All that remains of the original proscription is the prohibition on obstruction by bribery: Whoever willfully endeavors by means of bribery to obstruct, delay, or prevent the communication of information relating to a violation of any criminal statute of the United States by any person to a criminal investigator shall be fined under this title, or imprisoned not more than five years, or both. Prosecutions under subsection 1510(a) have been more infrequent since the enactment of 1512 in 1982, perhaps because §1512 governs the obstruction of federal criminal investigations not only by corrupt persuasion such as bribery but also by intimidation, threat, deception, or physical force. Moreover, §1510 defines the federal investigators within its protection more narrowly than does the definition that applies to §1512 coverage. In addition, §1512 outlaws impeding communications relating to a violation of bail, parole, probation, or supervised release conditions, which §1510 does not. Like §1512 offenses, however, §1510 offenses are RICO and money laundering predicate offenses. Other than subsection 1512(c), three federal statutes expressly outlaw the destruction of evidence in order to obstruct justice: 18 U.S.C. 1519 prohibits destruction of evidence in connection with federal investigation or bankruptcy proceedings; 18 U.S.C. 1520 prohibits destruction of corporate audit records; and 18 U.S.C. 2232(a) prohibits the destruction of property to prevent the government from searching or seizing it. None of the three are RICO or money laundering predicate offenses. There are no explicit statements of extraterritorial jurisdiction for any of them, but the courts are likely to conclude that overseas violation of their provisions is subject to prosecution in this country. None of them feature an individual conspiracy component, but all of them are subject to general federal law governing conspiracy, principals, accessories after the fact, and misprision. Where subsection 1512(c) condemns obstruction of federal proceedings by destruction of evidence, §1519 outlaws obstruction of federal investigations or bankruptcy proceedings by such means. It declares: Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both. Although its "relation to or contemplation of" clause may admit to more than one construction, the section's elements might be displayed as follows: I. Whoever II. knowingly III. A. alters, B. destroys, C. mutilates, D. conceals, E. covers up, F. falsifies, or G. makes a false entry in IV. any A. record, B. document, or C. tangible item V. with the intent to A. impede, B. obstruct, or C. influence VI. A. the investigation 1. of any matter within the jurisdiction of any department or agency of the United States, or 2. of any case filed under title 11 (relating to bankruptcy), or B. the proper administration 1. of any matter within the jurisdiction of any department or agency of the United States, or 2. of any case filed under title 11 (relating to bankruptcy), or C. 1.a. in relation to or b. in contemplation of 2. any such a. matter or b. case shall be fined under this title, imprisoned not more than 20 years, or both. Conviction does not require the government to prove that the defendant knew that he was obstructing a matter within the jurisdiction of a federal department or agency. It is fairly clear that the tangible item destroyed or disposed of in order to frustrate an investigation need not be a record or document or anything like either of them. The legislative history of §1519 evidences a strong inclination to "close the loopholes" in federal obstruction law, but is not quite so clear on the issue of whether the offense would have an element of specific intent under all circumstances. Section 1519 was passed with an eye to the prosecution of the Arthur Andersen accounting firm, yet without the benefit the Supreme Court's later decision in the case. Characterized as the "anti-shredding" provision of the Sarbanes-Oxley Act, the section clearly reaches the destruction of evidence, but it is used with at least equal frequency to prosecute the falsification of evidence. It seems clear that the conduct which §1519 proscribes is not limited to conduct that impedes a pending investigation ; the obstructed official consideration need be neither pending ("in contemplation of") nor take the form of an investigation ("investigation ... or proper administration of any matter"). Section 1519's language might suggest that it only reaches executive branch investigations and does not extend to congressional investigations or judicial investigations such as those conducted by a federal grand jury. The question whether §1519 applies to congressional and grand jury investigations might be the subject of some disagreement. At one time, the general federal false statement statute forbid false statements in "any matter within the jurisdiction of any department or agency of the United States," 18 U.S.C. 1001 (1994 ed.). There, the phrase "any department or agency of the United States" referred only to executive branch entities, the Supreme Court said; it did not refer to judicial entities nor by implication to congressional entities. Congress then amended §1001 to cover false statements "in any matter within the jurisdiction of the executive, legislative, or judicial branches of the Government of the United States," a turn of phrase Congress elected not to use in §1519. Beyond the bankruptcy matters to which the section explicitly refers, however, the case law suggests that, as long as a matter is within the investigative purview of a federal executive branch agency, the section extends to the obstruction of other judicial branch investigations such as those of the grand jury. The same logic might be used to bring destruction of evidence sought by Congress within the section's purview. The Sarbanes-Oxley Act augmented §1519 with a very explicit prohibition on the destruction of corporate audit records in §1520. Section 1520 requires those who audit the issuers of securities to keep their records and work papers for 5 years. The penalty for violation of §1520 is imprisonment for not more than 10 years and/or a fine of not more than $250,000. Section 2232(a) mentions neither proceedings nor investigations; it simply outlaws destruction of property in order to prevent the government from seizing it. The offense has three elements: (1) a person "authorized to search for or seize certain property"; (2) "the accused knowingly destroys or removes or attempts to destroy or remove the property subject to the authorized search or seizure"; and (3) "the destruction or removal of the property [is] for the purpose of preventing its seizure." Prosecution is apparently limited to those instances where the property is subject to seizure either with, or because of exigent or other circumstances without, a warrant at the time of its removal, destruction, or attempted destruction or removal. On the other hand, the section reaches both seizure for purposes of investigation and seizure for purposes of forfeiture. Section 2232(a) is closely related to 18 U.S.C. 1519, and individuals who destroy property to prevent its seizure by federal law enforcement officials may also find themselves charged or convicted with obstructing a federal investigation under §1519 based on the same misconduct. Section 2232(a) violations are punishable by imprisonment for not more than five years and/or a fine of not more than $250,000. In addition to the obstruction of justice provisions of 18 U.S.C. 1503 and 1512, four other general statutes outlaw obstructing the government's business by deception. Three involve perjury: 18 U.S.C. 1623, which outlaws false swearing before federal courts and grand juries; 18 U.S.C. 1621, the older and more general prohibition that proscribes false swearing in federal official matters (judicial, legislative, or administrative); and 18 U.S.C. 1622, which condemns subornation, that is, inducing another to commit perjury. The fourth, 18 U.S.C. 1001, proscribes material false statements concerning any matter within the jurisdiction of a federal executive branch agency, and to a somewhat more limited extent within the jurisdiction of the federal courts or a congressional entity. None of the four are RICO predicate offenses or money laundering predicate offenses. The laws relating to aiding and abetting, accessories after the fact, misprision, and conspiracy, however, apply to all four. Sections 1621 and 1623 state that their prohibitions apply regardless of whether the perjurious conduct occurs overseas or within this country. Section 1001 has no such explicit declaration, but has been held to have extraterritorial application nonetheless. Congress enacted Section 1623 to avoid in relation to judicial proceedings some of the common law technicalities embodied in the more comprehensive perjury provisions found in Section 1621 and thus "to facilitate perjury prosecutions and thereby enhance the reliability of testimony before federal courts and grand juries." Unlike Section 1621, Section 1623 permits a conviction in the case of two mutually inconsistent declarations without requiring proof that one of them is false. It recognizes a limited recantation defense. It dispenses with the so-called two-witness rule. And, it employs a "knowing" mens rea standard rather than the more demanding "willfully" standard used in Section 1621. Parsed into elements, Section 1623 declares that: I. Whoever II. a. under oath or b. in any i. declaration, ii. certificate, iii. verification, or iv. statement under penalty of perjury as permitted under [Section ]1746 of title 28, United States Code III. in any proceeding before or ancillary to a. any court or b. grand jury of the United States IV. knowingly V. a. makes any false material declaration or b. makes or uses any other information, including any i. book, ii. paper, iii. document, iv. record, v. recording, or vi. other material, knowing the same to contain any false material declaration, shall be fined under this title or imprisoned not more than five years, or both. In most cases, the courts abbreviate their description of the elements and state in one form or another that to prove perjury the government must establish that the defendant (1) knowingly made a (2) false (3) material declaration (4) under oath (5) in a proceeding before or ancillary to any court or grand jury of the United States. The allegedly perjurious declaration must be presented in a "proceeding before or ancillary to any court or grand jury of the United States." An interview in an attorney's office in preparation for a judicial hearing cannot be considered such an ancillary proceeding, but the phrase "proceedings ancillary to" court or grand jury proceedings does cover proceedings to take depositions in connection with civil litigation, as well as a variety of pretrial proceedings in criminal cases, including habeas proceedings, bail hearings, venue hearings, or suppression hearings. The Supreme Court's observation that a statement that is misleading but literally true cannot support a conviction under Section 1621 because it is not false applies with equal force to perjury under Section 1623. Similarly, perjury cannot be the product of confusion, mistake, or faulty memory, but must be a statement that the defendant knows is false, although this requirement may be satisfied with evidence that the defendant was deliberately ignorant or willfully blind to the fact that the statement was false. On the other hand, "[a] question that is truly ambiguous or which affirmatively misleads the testifier can never provide a basis for a finding of perjury, as it could never be said that one intended to answer such a question untruthfully." Yet ambiguity will be of no avail if the defendant understands the question and answers falsely nevertheless. Materiality is perhaps the most nettlesome of perjury's elements. It is usually said that a statement is material "if it has a natural tendency to influence, or is capable of influencing, the decision of the decisionmaking body to whom it is addressed." This definition is not easily applied when the precise nature of the underlying inquiry remains somewhat undefined such as in grand jury proceedings or in depositions at the discovery stage of a civil suit. On the civil side, the lower federal courts appear divided between the view (1) that a statement in a deposition is material if a "truthful answer might reasonably be calculated to lead to the discovery of evidence admissible at the trial of the underlying suit" and (2) that a statement is material "if the topic of the statement is discoverable and the false statement itself had a tendency to affect the outcome of the underlying civil suit for which the deposition was taken." In the case of perjury before the grand jury, rather than articulate a single standard the courts have described several circumstances under which false testimony may be considered material. In any event, a statement is no less material because it did not or could not divert the decision maker. The courts seem to have had less difficulty dealing with a materiality issue characterized as the perjury trap doctrine. The doctrine arises where a witness is called for the sole purpose of eliciting perjurious testimony from him. Under such circumstances it is said the tribunal has no valid purpose to which a perjurious statement could be considered material. The doctrine poses no bar to prosecution in most cases, however, since the government is usually able to identify some valid reason for the grand jury's inquiries. Subsection 1623(c) permits a perjury conviction simply on the basis of two necessarily inconsistent material declarations rather than a showing that one of the two statements is false. Conviction does require a showing, however, that the two statements were made under oath; it is not enough to show that one was made under oath and the other was made in the form of an affidavit signed under penalty of perjury. Moreover, the statements must be so inherently contradictory that one of them of necessity must be false. Some years ago, the Supreme Court declined to reverse an earlier ruling that "[t]he general rule in prosecutions for perjury is that the uncorroborated oath of one witness is not enough to establish the falsity of the testimony of the accused set forth in the indictment." Since the two witness rule rests on the common law rather than on a constitutional foundation, it may be abrogated by statute without offending constitutional principles. Subsection 1623(e) permits a perjury conviction without compliance with this traditional two witness rule. Most of the other subsections of Section 1623 are designed to overcome obstacles which the common law placed in the path of a successful perjury prosecution. Subsection 1623(d), in contrast, offers a defense unrecognized at common law. The defense is stated in fairly straightforward terms, "[w]here in the same continuous court or grand jury proceeding in which a declaration is made, the person making the declaration admits such declaration to be false, such admission shall bar prosecution under this section if, at the time the admission is made, the declaration has not substantially affected the proceeding, or it has not become manifest that such falsity has been or will be exposed." Although phrased in different terms, the courts seem to agree that repudiation of the false testimony must be specific and thorough. There is some disagreement whether a recanting defendant must be denied the defense if both the substantial impact and manifest exposure conditions have been met or if the defense must be denied if either condition exists. Most courts have concluded that the presence of either condition dooms the defense. Early construction required that a defendant establish both that his false statement had not substantially affected the proceeding before his recantation and that it had not become manifest that his false statement would be exposed. One more recent appellate case, however, decided that the defense should be available to a witness who could show a want of either an intervening adverse impact or of likely exposure of his false statement. Even without the operation of subsection 1623(d), relatively contemporaneous corrections of earlier statements may negate any inference that the witness is knowingly presenting false testimony and thus preclude conviction for perjury. When Congress passed Section 1623, it did not repeal Section 1621 either explicitly or by implication; where its proscriptions overlap with those of Section 1623, the government is free to choose under which it will prosecute. Since Section 1623 frees prosecutors from many of the common law requirements of Section 1621, it is perhaps not surprising that they ordinarily elect to prosecute under Section 1623. Section 1623 does outlaw perjury under a wider range of circumstances than Section 1621; it prohibits perjury before official proceedings generally—both judicial and nonjudicial. Separated into its elements, the section provides that: (1) I. Whoever having taken an oath II. before a competent tribunal, officer, or person, III. in any case in which a law of the United States authorizes an oath to be administered, IV. a. that he will i. testify, ii. declare, iii. depose, or iv, certify truly, or b. that any written i. testimony, ii. declaration, iii. deposition, or iv. certificate by him subscribed, is true, V. willfully and contrary to such oath VI. a. states or b. subscribes any material matter which he does not believe to be true; or (2) I. Whoever in any a. declaration, b. certificate, c. verification, or d. statement under penalty of perjury as permitted under [Section ]1746 of title 28, United States Code, II. willfully subscribes as true III. any material matter IV. which he does not believe to be true is guilty of perjury and shall, except as otherwise expressly provided by law, be fined under this title or imprisoned not more than five years, or both. This section is applicable whether the statement or subscription is made within or without the United States. The courts generally favor an abbreviated encapsulation such as the one found in United States v. Dunnigan : "A witness testifying under oath or affirmation violates this section if she gives false testimony concerning a material matter with the willful intent to provide false testimony, rather than as a result of confusion, mistake, or faulty memory." Perjury is only that testimony which is false. Thus, testimony that is literally true, even if deceptively so, cannot be considered perjury for purposes of a prosecution under Section 1621. Moreover, Section 1621 requires compliance with "the two witness rule" to establish that a statement is false. Under the rule, "the uncorroborated oath of one witness is not sufficient to establish the falsity of the testimony of the accused as set forth in the indictment as perjury." Thus, conviction under Section 1621 requires that the government "establish the falsity of the statement alleged to have been made by the defendant under oath, by the testimony of two independent witnesses or one witness and corroborating circumstances." If the rule is to be satisfied with corroborative evidence, the evidence must be trustworthy and support the account of the single witness upon which the perjury prosecution is based. The test for materiality under Section 1621 is whether the false statement "has a natural tendency to influence or [is] capable of influencing the decision-making body to which it [is] addressed." Conviction under Section 1621 requires not only that the defendant knew his statement was false ("which he does not believe to be true"), but that his false statement is "willfully" presented. There is but scant authority on precisely what "willful" means in this context. The Supreme Court in dicta has indicated that willful perjury consists of " deliberate material falsification under oath." Other courts have referred to it as acting with an "intent to deceive" or as acting "intentionally." Although a contemporaneous correction of a false statement may demonstrate the absence of the necessary willful intent to commit perjury, the crime is completed when the false statement is presented to the tribunal; without a statute such as that found in Section 1623, recantation is no defense, nor does it bar prosecution. Section 1622 outlaws procuring or inducing another to commit perjury: "Whoever procures another to commit any perjury is guilty of subornation of perjury, and shall be fined under this title or imprisoned for not more than five years, or both," 18 U.S.C. 1622. The crime consists of two elements—(1) an act of perjury committed by another (2) induced or procured by the defendant. Perjury under either Section 1621 or Section 1623 will support a conviction for subornation under Section 1622, but proof of the commission of an act of perjury is a necessary element of subornation. Although the authorities are exceptionally sparse, it appears that to suborn one must know that the induced statement is false and that at least to suborn under Section 1621 one must also knowingly and willfully induce. Subornation is only infrequently prosecuted as such perhaps because of the ease with which it can now be prosecuted as an obstruction of justice under either 18 U.S.C. 1503 or 1512, which unlike Section 1622 do not insist upon suborner success as a prerequisite to prosecution. The general false statement statute, 18 U.S.C. 1001, outlaws false statements, concealment, or false documentation in any matter within the jurisdiction of any of the three branches of the federal government, although it limits application in the case of Congress and the courts. More specifically it states: I. Except as otherwise provided in this section, II. whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, III. knowingly and willfully— IV. a. falsifies, conceals, or covers up by any trick, scheme, or device a material fact; b. makes any materially false, fictitious, or fraudulent statement or representation; or c. makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both. If the matter relates to an offense under chapter 109A [sexual abuse], 109B [sex offender registration], 110 [sexual exploitation], or 117 [transportation for illicit sexual purposes], or section 1591 [sex trafficking], then the term of imprisonment imposed under this section shall be not more than 8 years. The courts' description of the elements will sometimes be couched in terms of the form of deception at hand—false statement, concealment, or false documentation. On other occasions the courts will simply treat concealment or false documentation as a form of false statement. Section 1001 also imposes a limitation upon an offense that involves matters within the jurisdiction of either the judicial or legislative branch: (b) Subsection (a) does not apply to a party to a judicial proceeding, or that party's counsel, for statements, representations, writings or documents submitted by such party or counsel to a judge or magistrate in that proceeding. (c) With respect to any matter within the jurisdiction of the legislative branch, subsection (a) shall apply only to—(1) administrative matters, including a claim for payment, a matter related to the procurement of property or services, personnel or employment practices, or support services, or a document required by law, rule, or regulation to be submitted to the Congress or any office or officer within the legislative branch; or (2) any investigation or review, conducted pursuant to the authority of any committee, subcommittee, commission or office of the Congress, consistent with applicable rules of the House or Senate. 18 U.S.C. 1001(b),(c). The defendant must establish his right to the benefits of Section 1001(b)'s judicial limitation exception. Section 1001(c) establishes additional elements for a false statement offense in a legislative context, which the government must establish. A matter is within the jurisdiction of a federal entity when it involves a matter "confided to the authority of a federal agency or department ... A department or agency has jurisdiction, in this sense, when it has power to exercise authority in a particular situation. Understood in this way, the phrase 'within the jurisdiction' merely differentiates the official, authorized functions of an agency or department from matters peripheral to the business of that body." Several courts have held that the phrase contemplates coverage of false statements made to state, local, or private entities but relating to matters that involve federal funds or regulations. Subsection 1001(b) precludes application of prohibitions in Section 1001(a) to the statements, omissions, or documentation presented to the court by a party in judicial proceedings. This includes statements of indigence filed by a defendant seeking the appoint of counsel, or by a defendant for a probation officer's presentence report, but not statements made by one on supervised release to a parole officer. Although the offense can only be committed "knowingly and willfully," the prosecution need not prove that the defendant knew that his conduct involved a "matter within the jurisdiction" of a federal entity nor that he intended to defraud a federal entity. It does, however, require the government to show the defendant knew or elected not to know that the statement, omission, or documentation was false and that the defendant presented it with the intent to deceive. The phrase "knowingly and willfully" refers to the circumstances under which the defendant made his statement, omitted a fact he was obliged to disclose, or included with his false documentation, that is, "that the defendant knew that his statement was false when he made it or—which amounts in law to the same thing—consciously disregarded or averted his eyes from the likely falsity." Prosecution for a violation of Section 1001 requires proof of materiality, as does conviction for perjury, and the standard is the same: the statement must have a "natural tendency to influence, or be capable of influencing the decisionmaking body to which it is addressed." There is no need to show that the decision maker was in fact diverted or influenced. Conviction for false statements or false documentation under Section 1001 also requires that the statements or documentation be false, that they not be true. And the same can be said of the response to a question that is so fundamentally ambiguous that the defendant's answer cannot be said to be knowingly false. On the other hand, unlike the perjury provision of Section 1623, "there is no safe harbor for recantation or correction of a prior false statement that violates [Section ]1001." Prosecutions under subsection 1001(a)(1) for concealment, rather than false statement or false documentation, must also prove the existence of duty or legal obligation not to conceal. Although an individual who obstructs a federal investigation by tipping off the targets of the investigation is likely to incur liability either as a principal under 18 U.S.C. 2 or as an accessory after the fact under 18 U.S.C. 3, there are several federal anti-tip-off statutes like §1510, which prohibits bank officials from notifying suspects that they are under investigation, and which imposes a similar restriction on insurance company officers and employees. Subsection 2511(1)(e) proscribes tipping off the targets of federal or state law enforcement wiretaps. A similar prohibition appears in 18 U.S.C. 2232, which also outlaws improper notification in the case of search warrants or Foreign Intelligence Surveillance Act orders. All three offenses are punishable by imprisonment for not more than five years. A number of federal statutes proscribe obstruction of specific types of investigations or proceedings in general terms. Their prohibitions may be breached by bribery, deception, violence, or threat; although the limited case law suggests that most are more likely to be violated by corruption or deception than violence. Numbered among them are 18 U.S.C. 1511 that outlaws obstruction of state illegal gambling business investigations; 18 U.S.C. 1516 that bans obstruction of a federal audit of an activity involving more than $100,000 in federal funds; 18 U.S.C. 1517 that prohibits obstruction of the federal audit of a financial institution; 18 U.S.C. 1518 that condemns obstruction of federal criminal investigation of possible health care offenses; 18 U.S.C. 118 that proscribes obstructing federal protection of foreign diplomats and other dignitaries in this country and of personnel in federal facilities overseas; and 18 U.S.C. 1521 that proscribes retaliating against federal judges, officers, or employees by subjecting their property to false liens. The penalty for violating each of the sections other than §118 or §1521 is imprisonment for not more than five years. Section 1521 offenses are punishable by imprisonment for not more than 10 years, and §118 offenses are punishable by imprisonment for not more than one year. Several of the human trafficking and sex trafficking statutes found in chapter 77 of title 18 of the United States Code proscribe obstructing an investigation into the possible violation of their provisions. In most instances, obstruction and the underlying offense carry the same penalty. It is a federal crime to communicate in writing with any member of federal grand or trial jury in an attempt to influence the performance of his or her duties. Violations are punishable by imprisonment for not more than 6 months and/or a fine of not more than $5,000. The section appears to have been prosecuted only infrequently, perhaps in part because of the availability of prosecution under other statutes such as contempt or obstruction of justice. Although the statute suggests that the section does not preclude written requests to appear before the grand jury ("nothing in this section shall be construed to prohibit the communication of a request to appear before the grand jury"), the cases indicate the exception is limited to communications forwarded through the court or the prosecutor or to those requested by the grand jury itself. On a practical note, a federal court in Southern District of New York recently explained that, "jury tampering is generally prosecuted under the statute prohibiting influencing a juror generally, 18 U.S.C. 1503, or through contempt statutes." Faced with one of the few exceptions, the court declared that: Based upon the plain meaning of the text of 18 U.S.C. 1504, reinforced by relevant judicial interpretations and the doctrine of constitutional avoidance, the court holds that a person violates the statute only when he knowingly attempts to influence the action or decision of a juror upon an issue or matter pending before that juror or pertaining to that juror's duties by means of written communication made in relation to a specific case pending before that juror in relation to a point in dispute between the parties before that juror . Regardless of the offense for which an individual is convicted, his sentence may be enhanced as a consequence of any obstruction of justice for which he is responsible, if committed during the course of the investigation, prosecution, or sentencing for the offense of his conviction. The enhancement may result in an increase in his term of imprisonment by as much as 4 years. The enhancement is the product of the influence of §3C1.1 of the United States Sentencing Guidelines. Federal sentencing begins with, and is greatly influenced by, the calculation of the applicable sentencing range under the Sentencing Guidelines. The Guidelines assign every federal crime a base offense level to which they add levels for various aggravating factors. Obstruction of justice is one of those factors. Each of the final 43 offense levels is assigned to one of six sentencing ranges, depending on the extent of the defendant's past crime history. For example, a final offense level of 15 means a sentencing range of from 18 to 24 months in prison for a first time offender (criminal history category I) and from 41 to 51 months for a defendant with a very extensive criminal record (criminal history category VI). Two levels higher, at a final offense level of 17, the range for first time offenders is 24 to 30 months; and 51 to 63 months for the defendant with a very extensive prior record. The impact of a 2-level increase spans from no impact at the lowest final offense levels to a difference of an additional 68 months at the highest levels. Section 3C1.1 instructs sentencing courts to add 2 offense levels in the case of an obstruction of justice: If (1) the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice with respect to the investigation, prosecution, or sentencing of the instant offense of conviction, and (2) the obstructive conduct related to (A) the defendant's offense of conviction and any relevant conduct; or (Bi) a closely related offense, increase the offense level by 2 levels. U.S.S.G. §3C1.1. The accompanying commentary explains that the section "is not intended to punish a defendant for the exercise of a constitutional right." More specifically, a "defendant's denial of guilt (other than a denial of guilt under oath that constitutes perjury), refusal to admit guilt or provide information to a probation officer, or refusal to enter a plea of guilty is not a basis for application of this provision." Early on, the Supreme Court made it clear that an individual's sentence might be enhanced under U.S.S.G §3C1.1, if he committed perjury during the course of his trial. Moreover, the examples provided elsewhere in the section's commentary and the cases applying the section confirm that it reaches perjurious statements in a number of judicial contexts and to false statements in a number of others. The examples in the section's commentary cover conduct: (B) committing, suborning, or attempting to suborn perjury, including during the course of a civil proceeding if such perjury pertains to conduct that forms the basis of the offense of conviction; (F) providing materially false information to a judge or magistrate; (G) providing a materially false statement to a law enforcement officer that significantly obstructed or impeded the official investigation or prosecution of the instant offense; (H) providing materially false information to a probation officer in respect to a presentence or other investigation for the court; [and] (I) other conduct prohibited by obstruction of justice provisions under Title 18, United States Code (e.g., 18 U.S.C. §§1510, 1511). The courts have concluded that an enhancement under the section is appropriate, for instance, when a defendant has (1) given preposterous or outrageous, perjurious testimony during his own trial; (2) given perjurious testimony at his suppression hearing; (3) given perjurious, exculpatory testimony at the separate trial of his girlfriend; (4) made false statements in connection with a probation officer's bail report; (5) made false statements to the court in an attempt to change his guilty plea; (6) made false statements to federal investigators; and (7) made false statements to state investigators relating to conduct for which the defendant was ultimately convicted. When perjury provides the basis for an enhancement under the section, the court must find that the defendant willfully testified falsely with respect to a material matter. When based upon a false statement not under oath, the statement must still be material, that is, it must "tend to influence or affect the issue under determination." Even then, false identification at the time of arrest only warrants a sentencing enhancement under the section when the deception significantly hinders the investigation or prosecution. The commentary accompanying the section also states that the enhancement may be warranted when the defendant threatens or otherwise tampers with a victim, witness, or juror; submits false documentations; destroys evidence; flees (in some cases); or engages in any other conduct that constitutes an obstruction of justice under the criminal law provisions of title 18 of the United States Code. By definition, however, the enhancement is only available when the obstruction occurs "during the course of the investigation, prosecution, or sentencing of the instance offense."

Obstruction of justice is the impediment of governmental activities. There are a host of federal criminal laws that prohibit obstructions of justice. The six most general outlaw obstruction of judicial proceedings (18 U.S.C. 1503), witness tampering (18 U.S.C. 1512), witness retaliation (18 U.S.C. 1513), obstruction of congressional or administrative proceedings (18 U.S.C. 1505), conspiracy to defraud the United States (18 U.S.C. 371), and contempt (a creature of statute, rule and common law). The laws that supplement, and sometimes mirror, the basic six tend to proscribe a particular means of obstruction. Some, like the perjury and false statement statutes, condemn obstruction by lies and deception. Others, like the bribery, mail fraud, and wire fraud statutes, prohibit obstruction by corruption of public employees or officials. Some outlaw the use of violence as a means of obstruction. Still others ban the destruction of evidence. A few simply punish "tipping off" those who are the targets of an investigation. Many of these offenses may also provide the basis for racketeering and money laundering prosecutions, and each provides the basis for criminal prosecution of anyone who aids and abets in or conspires for their commission. Moreover, regardless of the offense for which an individual is convicted, his sentence may be enhanced as a consequence of any obstruction of justice for which he is responsible, if committed during the course of the investigation, prosecution, or sentencing for the offense of his conviction. The enhancement may result in an increase in his term of imprisonment by as much as four years. This report is available in abbreviated form—without footnotes, quotations, or citations—as CRS Report RS22783, Obstruction of Justice: An Abridged Overview of Related Federal Criminal Laws. Excerpted portions of this report are available as follows: CRS Report RL34304, Obstruction of Congress: A Brief Overview of Federal Law Relating to Interference with Congressional Activities; CRS Report RS22784, Obstruction of Congress: An Abridged Overview of Federal Criminal Laws Relating to Interference with Congressional Activities; CRS Report 98-808, Perjury Under Federal Law: A Brief Overview; and CRS Report 98-807, Perjury Under Federal Law: A Sketch of the Elements. All by [author name scrubbed].

The Marine Protection, Research, and Sanctuaries Act of 1972 (MPRSA, P.L. 92-532) has two basic aims: to regulate intentional ocean disposal of materials, and to authorize related research. Title I of the act, which is often referred to as the Ocean Dumping Act, contains permit and enforcement provisions for ocean dumping. Research provisions are contained in Title II; Title IV authorizes a regional marine research program; and Title V addresses coastal water quality monitoring. The third title of the MPRSA, which authorizes the establishment of marine sanctuaries, is not addressed here. This report presents a summary of the law, describing the essence of the statute. It is an excerpt from a larger document, CRS Report RL30798, Environmental Laws: Summaries of Major Statutes Administered by the Environmental Protection Agency . Descriptions of many details and secondary provisions are omitted here, and even some major components are only briefly mentioned. Further, this report describes the statute, but does not discuss its implementation. Table 1 shows the original enactment and subsequent amendments. Table 2 , at the end of this report, cites the major U.S. Code sections of the codified statute. The nature of marine pollution requires that it be regulated internationally, since once a pollutant enters marine waters, it knows no boundary. Thus, a series of regional treaties and conventions pertaining to local marine pollution problems and more comprehensive international conventions providing uniform standards to control worldwide marine pollution has evolved over the last 40 years. At the same time that key international protocols were being adopted and ratified by countries worldwide (in the early 1970s), the United States enacted the MPRSA to regulate disposal of wastes in marine waters that are within U.S. jurisdiction. It implements the requirements of the London Convention, which is the international treaty governing ocean dumping. The MPRSA requires the Environmental Protection Agency (EPA) Administrator, to the extent possible, to apply the standards and criteria binding upon the United States that are stated in the London Dumping Convention. This convention, signed by more than 85 countries, includes annexes that prohibit the dumping of mercury, cadmium, and other substances such as DDT and PCBs, solid wastes and persistent plastics, oil, high-level radioactive wastes, and chemical and biological warfare agents; and requires special permits for other heavy metals, cyanides and fluorides, and medium- and low-level radioactive wastes. The MPRSA uses a comprehensive and uniform waste management system to regulate disposal or dumping of all materials into ocean waters. Prior to 1972, U.S. marine waters had been used extensively as a convenient alternative to land-based sites for the disposal of various wastes such as sewage sludge, industrial wastes, and pipeline discharges and runoff. The basic provisions of the act have remained virtually unchanged since 1972, but many new authorities have been added. These newer parts include (1) research responsibilities for EPA; (2) specific direction that EPA phase out the disposal of "harmful" sewage sludges and industrial wastes; (3) a ban on the ocean disposal of sewage sludge and industrial wastes by December 31, 1991; (4) inclusion of Long Island Sound within the purview of the act; and (5) inclusion of medical waste provisions. Authorizations for appropriations to support provisions of the law expired at the end of FY1997 (September 30, 1997). Authorities did not lapse, however, and Congress has continued to appropriate funds to carry out the act. Four federal agencies have responsibilities under the Ocean Dumping Act: EPA, the U.S. Army Corps of Engineers, the National Oceanic and Atmospheric Administration (NOAA), and the Coast Guard. EPA has primary authority for regulating ocean disposal of all substances except dredged spoils, which are under the authority of the Corps of Engineers. NOAA is responsible for long-range research on the effects of human-induced changes to the marine environment, while EPA is authorized to carry out research and demonstration activities related to phasing out sewage sludge and industrial waste dumping. The Coast Guard is charged with maintaining surveillance of ocean dumping. Title I of the MPRSA prohibits all ocean dumping, except that allowed by permits, in any ocean waters under U.S. jurisdiction, by any U.S. vessel, or by any vessel sailing from a U.S. port. Certain materials, such as high-level radioactive waste, chemical and biological warfare agents, medical waste, sewage sludge, and industrial waste, may not be dumped in the ocean. Permits for dumping of other materials, except dredge spoils, can be issued by the EPA after notice and opportunity for public hearings where the Administrator determines that such dumping will not unreasonably degrade or endanger human health, welfare, the marine environment, ecological systems, or economic potentialities. The law regulates ocean dumping within the area extending 12 nautical miles seaward from the U.S. baseline and regulates transport of material by U.S.-flagged vessels for dumping into ocean waters. EPA designates sites for ocean dumping and specifies in each permit where the material is to be disposed. EPA is required to prepare an annual report of ocean dumping permits for material other than dredged material. In 1977, Congress amended the act to require that dumping of municipal sewage sludge or industrial wastes that unreasonably degrade the environment cease by December 1981. (However, that deadline was not achieved, and amendments passed in 1988 extended the deadline to December 1991.) In 1986, Congress directed that ocean disposal of all wastes cease at the traditional 12-mile site off the New York/New Jersey coast (that is, it barred issuance of permits at the 12-mile site) and directed that disposal be moved to a new site 106 miles offshore. In 1988, Congress enacted several laws amending the Ocean Dumping Act, with particular emphasis on phasing out sewage sludge and industrial waste disposal in the ocean, which continued despite earlier legislative efforts. In 1992, Congress amended the act to permit states to adopt ocean dumping standards more stringent than federal standards and to require that permits conform with long-term management plans for designated dumpsites, to ensure that permitted activities are consistent with expected uses of the site. Virtually all ocean dumping that occurs today is dredged material, sediments removed from the bottom of waterbodies in order to maintain navigation channels and port berthing areas. Other materials that are dumped include vessels, fish wastes, and human remains. The Corps of Engineers issues permits for ocean dumping of dredged material, using EPA's environmental criteria and subject to EPA's concurrence. The bulk of dredged material disposal results from maintenance dredging by the Corps itself or its contractors. According to data from the Corps, amounts of dredged material sediment that are disposed each year at designated ocean sites fluctuate, averaging in recent years about 47 million cubic yards. Before sediments can be permitted to be dumped in the ocean, they are evaluated to ensure that the dumping will not cause significant harmful effects to human health or the marine environment. EPA is responsible for developing criteria to ensure that the ocean disposal of dredge spoils does not cause environmental harm. Permits for ocean disposal of dredged material are to be based on the same criteria utilized by EPA under other provisions of the act, and to the extent possible, EPA-recommended dumping sites are used. Where the only feasible disposition of dredged material would violate the dumping criteria, the Corps can request an EPA waiver. Amendments to MPRSA enacted in 1992 expanded EPA's role in permitting of dredged material by authorizing EPA to impose permit conditions or even deny a permit, if necessary to prevent environmental harm to marine waters. Permits issued under the Ocean Dumping Act specify the type of material to be disposed, the amount to be transported for dumping, the location of the dumpsite, the length of time the permit is valid, and special provisions for surveillance. The EPA Administrator can require a permit applicant to provide information necessary for the review and evaluation of the application. In addition to issuing individual permits for non-dredged material, EPA has issued general permits under the MPRSA for several types of disposal activities, such as burial at sea of human remains, transportation and disposal of vessels, and disposal of manmade ice piers in Antarctica. The act authorizes EPA to assess civil penalties of not more than $50,000 for each violation of a permit or permit requirement, taking into account such factors as gravity of the violation, prior violations, and demonstrations of good faith; however, no penalty can be assessed until after notice and opportunity for a hearing. Criminal penalties (including seizure and forfeiture of vessels) for knowing violations of the act also are authorized. In addition, the act authorizes penalties for ocean dumping of medical wastes (civil penalties up to $125,000 for each violation and criminal penalties up to $250,000, five years in prison, or both). The Coast Guard is directed to conduct surveillance and other appropriate enforcement activities to prevent unlawful transportation of material for dumping, or unlawful dumping. Like many other federal environmental laws, the Ocean Dumping Act allows individuals to bring a citizen suit in U.S. district court against any person, including the United States, for violation of a permit or other prohibition, limitation, or criterion issued under Title I of the act. In conjunction with the Ocean Dumping Act, the Clean Water Act (CWA) regulates all discharges into navigable waters including the territorial seas. Although these two laws overlap in their coverage of dumping from vessels within the territorial seas, any question of conflict is essentially moot because EPA has promulgated a uniform set of standards (40 CFR Parts 220-229). The Ocean Dumping Act preempts the CWA in coastal waters or open oceans, and the CWA controls in estuaries. States are permitted to regulate ocean dumping in waters within their jurisdiction under certain circumstances. Title II of the MPRSA authorizes two types of research: general research on ocean resources, under the jurisdiction of NOAA; and EPA research related to phasing out ocean disposal activities. NOAA is directed to carry out a comprehensive, long-term research program on the effects not only of ocean dumping, but also of pollution, overfishing, and other human-induced changes on the marine ecosystem. Additionally, NOAA assesses damages from spills of petroleum and petroleum products. EPA's research role includes "research, investigations, experiments, training, demonstrations, surveys, and studies" to minimize or end the dumping of sewage sludge and industrial wastes, along with research on alternatives to ocean disposal. Amendments in 1980 required EPA to study technological options for removing heavy metals and certain organic materials from New York City's sewage sludge. Title IV of the MPRSA established nine regional marine research boards for the purpose of developing comprehensive marine research plans, considering water quality and ecosystem conditions and research and monitoring priorities and objectives in each region. The plans, after approval by NOAA and EPA, are to guide NOAA in awarding research grant funds under this title of the act. Title V of the MPRSA established a national coastal water quality monitoring program. It directs EPA and NOAA jointly to implement a long-term program to collect and analyze scientific data on the environmental quality of coastal ecosystems, including ambient water quality, health and quality of living resources, sources of environmental degradation, and data on trends. Results of these activities (including intensive monitoring of key coastal waters) are intended to provide information necessary to design and implement effective programs under the Clean Water Act and Coastal Zone Management Act.

The Marine Protection, Research, and Sanctuaries Act (MPRSA) has two basic aims: to regulate intentional ocean disposal of materials, and to authorize related research. Permit and enforcement provisions of the law are often referred to as the Ocean Dumping Act. The basic provisions of the act have remained virtually unchanged since 1972, when it was enacted to establish a comprehensive waste management system to regulate disposal or dumping of all materials into marine waters that are within U.S. jurisdiction, although a number of new authorities have been added. This report presents a summary of the law. Four federal agencies have responsibilities under the Ocean Dumping Act: the Environmental Protection Agency (EPA), the U.S. Army Corps of Engineers, the National Oceanic and Atmospheric Administration (NOAA), and the Coast Guard. EPA has primary authority for regulating ocean disposal of all substances except dredged spoils, which are under the authority of the Corps of Engineers. NOAA is responsible for long-range research on the effects of human-induced changes to the marine environment, while EPA is authorized to carry out research and demonstration activities related to phasing out sewage sludge and industrial waste dumping. The Coast Guard is charged with maintaining surveillance of ocean dumping. Title I of the MPRSA prohibits all ocean dumping, except that allowed by permits, in any ocean waters under U.S. jurisdiction, by any U.S. vessel, or by any vessel sailing from a U.S. port. Certain materials, such as high-level radioactive waste, chemical and biological warfare agents, medical waste, sewage sludge, and industrial waste, may not be dumped in the ocean. Permits for dumping of other materials, except dredge spoils, can be issued by the EPA after notice and opportunity for public hearings where the Administrator determines that such dumping will not unreasonably degrade or endanger human health, welfare, the marine environment, ecological systems, or economic potentialities. Permits specify the type of material to be disposed, the amount to be transported for dumping, the location of the dumpsite, the length of time the permit is valid, and special provisions for surveillance. The law regulates ocean dumping within the area extending 12 nautical miles seaward from the U.S. baseline and regulates transport of material by U.S.-flagged vessels for dumping into ocean waters. EPA designates sites for ocean dumping and specifies in each permit where the material is to be disposed. Title II of the MPRSA authorizes two types of research: general research on ocean resources, under the jurisdiction of NOAA; and EPA research related to phasing out ocean disposal activities. NOAA is directed to carry out a comprehensive, long-term research program on the effects not only of ocean dumping, but also of pollution, overfishing, and other human-induced changes on the marine ecosystem. EPA's research role includes "research, investigations, experiments, training, demonstrations, surveys, and studies" to minimize or end the dumping of sewage sludge and industrial wastes, along with research on alternatives to ocean disposal. (Title III, concerning marine sanctuaries, is not discussed in this report.) Title IV of the MPRSA established nine regional marine research boards for the purpose of developing comprehensive marine research plans, considering water quality and ecosystem conditions and research and monitoring priorities and objectives in each region. Title V of the MPRSA established a national coastal water quality monitoring program. It directs EPA and NOAA jointly to implement a long-term program to collect and analyze scientific data on the environmental quality of coastal ecosystems, including ambient water quality, health and quality of living resources, sources of environmental degradation, and data on trends.

Renewed attention to the role of Congress in the termination of treaties and other international agreements has arisen in response to President Donald J. Trump's actions related to certain high-profile international commitments. This report examines the legal framework for withdrawal from international agreements, and it focuses specifically on two pacts that may be of interest to the 115 th Congress: the Paris Agreement on climate change and the Joint Comprehensive Plan of Action (JCPOA) related to Iran's nuclear program. Although the Constitution sets forth a definite procedure whereby the President has the power to make treaties with the advice and consent of the Senate, it is silent as to how treaties may be terminated. Moreover, not all pacts between the United States and foreign nations take the form of Senate-approved, ratified treaties. The President commonly enters into binding executive agreements, which do not receive the Senate's advice and consent, and "political commitments," which are not legally binding, but may carry significant political weight . Executive agreements and political commitments are not mentioned in the Constitution, and the legal procedure for withdrawal may differ depending on the precise nature of the pact. Treaties and other international pacts also operate in dual international and domestic contexts. In the international context, many international agreements that are binding in nature constitute compacts between nations, and they often create rights and obligations that sovereign states owe to one another under international law. In this regard, international law creates a distinct set of rules governing the way in which sovereign states enter into—and withdraw from—international agreements. Those procedures are intended to apply to all nations, but they may not account for the distinct constitutional and statutory requirements of the domestic law of the United States. Consequently, the legal regime governing withdrawal under domestic law may differ in meaningful ways from the procedure for withdrawal under international law. And the domestic withdrawal process may be further complicated if Congress has enacted legislation implementing an international pact into the domestic law of the United States. In sum, the legal procedure for termination of or withdrawal from treaties and other international pacts depends on three main features: (1) the type of pact at issue; (2) whether withdrawal is analyzed under international law or domestic law; and (3) whether Congress has enacted implementing legislation. These procedures and considerations are explored below and applied to the Paris Agreement and the JCPOA. For purposes of U.S. law and practice, pacts between the United States and foreign nations may take the form of treaties, executive agreements, or nonlegal agreements, which involve the making of so-called "political commitments." Under the domestic law of the United States, a treaty is an agreement between the United States and another state that does not enter into force until it receives the advice and consent of a two-thirds majority of the Senate and is subsequently ratified by the President. The great majority of international agreements that the United States enters into, however, fall into the distinct and much larger category of executive agreements. Although they are intended to be binding, executive agreements do not receive the advice and consent of the Senate, but rather are entered into by the President based upon a source of authority other than the Treaty Clause in Article II, Section 2 of the Constitution. In the case of congressional-executive agreements , the domestic authority is derived from an existing or subsequently enacted statute. The President also enters into executive agreements made pursuant to a treaty based upon authority created in prior Senate-approved, ratified treaties. In other cases, the President enters into sole executive agreements based upon a claim of independent presidential power in the Constitution. In addition to treaties and executive agreements, the United States makes nonlegal pacts that often involve the making of so-called political commitments . While political commitments are not intended to be binding under domestic or international law, they may nonetheless carry moral and political weight and other significant incentives for compliance. Under international law, a nation may withdraw from any binding international agreement either in conformity with the provisions of the agreement—if the agreement permits withdrawal—or with the consent of all parties. Most modern international agreements contain provisions allowing and specifying the conditions of withdrawal, and many require a period of advance notice before withdrawal becomes effective . Even when an agreement does not contain an express withdrawal clause, international law still permits withdrawal if the parties intended to allow a right of withdrawal or if there is an implied right to do so in the text of the agreement. In those cases, under the Vienna Convention on the Law of Treaties (Vienna Convention), the withdrawing party must give 12 months' notice of its intent to depart from the agreement. In addition, certain superseding events, such as a material breach by one party or a fundamental change in circumstances, may give rise to a right to withdraw. Under the Vienna Convention, treaties and other binding international agreements may be terminated through: [a]ny act declaring invalid, terminating, withdrawing from or suspending the operation of a treaty pursuant to the provisions of the treaty . . . through an instrument communicated to the other parties. If the instrument is not signed by the Head of State, Head of Government or Minister for Foreign Affairs, the representative of the State communicating it may be called upon to produce full powers. Under this rule, a notice of withdrawal issued by the President (i.e., the "Head of State" for the United States) would effectively withdraw the United States from the international agreement as a matter of international law, provided such notice complied with applicable treaty withdrawal provisions. In this regard, the withdrawal process under international law may not account for the unique constitutional and separation of powers principles related to withdrawal under U.S. domestic law, discussed below. Political commitments are not legally binding between nations, and thus a party can withdraw at any time without violating international law regardless of whether the commitment contains a withdrawal clause. Although such withdrawal may not constitute a legal infraction, the withdrawing party still may face the possibility of political consequences and responsive actions from its international counterparts. Under domestic law, it is generally accepted among scholars that the Executive, by virtue of its role as the "sole organ" of the government charged with making official communications with foreign states, is responsible for communicating the United States' intention to withdraw from international agreements and political commitments. The degree to which the Constitution requires Congress or the Senate to participate in the decision to withdraw, however, has been the source of historical debate and may differ depending on the type of pact at issue. And in those cases when the President's authority to terminate an international pact has been challenged in court, discussed below, courts have declined to answer the underlying separation-of-powers question. Instead, the executive and legislative branches largely have been left to resolve disagreement over the termination power through political processes rather than through judicial settlement. In the case of executive agreements, it appears to be generally accepted that, when the President has independent authority to enter into an executive agreement, the President may also independently terminate the agreement without congressional or senatorial approval. Thus, observers appear to agree that, when the Constitution affords the President authority to enter into sole executive agreements, the President also may unilaterally terminate those agreements. This same principle would apply to political commitments: to the extent the President has the authority to make nonbinding commitments without the assent of the Senate or Congress, the President also may withdraw unilaterally from those commitments. For congressional-executive agreements and executive agreements made pursuant to treaties, the mode of termination may be dictated by the underlying treaty or statute on which the agreement is based. For example, in the case of executive agreements made pursuant to a treaty, the Senate may condition its consent to the underlying treaty on a requirement that the President not enter into or terminate executive agreements under the authority of the treaty without senatorial or congressional approval. And for congressional-executive agreements, Congress may dictate how termination occurs in the statute authorizing or implementing the agreement. Congress also has asserted the authority to direct the President to terminate congressional-executive agreements. For example, in the Comprehensive Anti-Apartheid Act of 1986, which was passed over President Reagan's veto, Congress instructed the Secretary of State to terminate an air services agreement with South Africa. The Reagan Administration complied and provided the requisite notice of termination. Another example of Congress asserting a role in the termination of congressional-executive agreements was via the Trade Agreements Extension Act of 1951. The Act directed the President to "take such action as is necessary to suspend, withdraw or prevent the application of" trade concessions contained in prior trade agreements regulating imports from the Soviet Union and "any nation or area dominated or controlled by the foreign government or foreign organization controlling the world Communist movement." The Truman Administration relied on this law in terminating certain congressional-executive agreements with the Soviet Union and several Soviet satellite countries. Presidents also have asserted the authority to withdraw unilaterally from congressional-executive agreements, but there is an emerging scholarly debate over the extent to which the Constitution permits the President to act without the approval of the legislative branch in such circumstances. For congressional-executive agreements that Congress pre-authorized by statute (called ex ante agreements), Presidents sometimes have unilaterally terminated the agreement without objection. But for those congressional-executive agreements that are approved by Congress after they are entered into by the President (called ex post agreements), commentators disagree on whether the President possesses the power of unilateral termination. Some argue that certain congressional-executive agreements—chiefly those involving international trade —are based on exclusive congressional powers, and therefore Congress must approve their termination. Others assert that the President has the power to withdraw from these agreements unilaterally, but he cannot terminate the domestic effect of their implementing legislation in the absence of congressional authorization —an issue discussed in more detail below. Although this debate is still developing, unilateral termination of congressional-executive agreements by the President has not been the subject of a high volume of litigation, and prior studies have concluded that such termination has not generated large-scale opposition from the legislative branch. Unlike the process of terminating executive agreements, which has not generated extensive opposition from Congress, the constitutional requirements for the termination of Senate-approved, ratified treaties have been the subject of occasional debate between the legislative and executive branches. The Constitution sets forth a definite procedure for the President to make treaties with the advice and consent of the Senate, but it does not describe how they should be terminated. Some commentators and executive branch attorneys have argued that the President possesses broad powers to withdraw unilaterally from treaties based on Supreme Court case law describing the President as the "sole organ" of the nation in matters related to foreign affairs and pursuant to the "executive Power" conveyed to the President in Article II, Section 1 of the Constitution . Other proponents of executive authority have likened the power to withdraw from treaties to the President's power to remove executive officers . Although appointment of certain executive officers requires senatorial advice and consent, courts have held that the President has some unilateral authority to remove those officers. In the same vein, some argue that the President may unilaterally terminate treaties even though those treaties were formed with the consent of the Senate. Since the turn of the 20 th century, officials in the executive branch have adopted variations of these arguments and consistently taken the position that domestic law permits the President to terminate or withdraw from treaties without receiving express approval from the legislative branch . Not all courts and commentators, however, agree that the President possesses this power, or at least contend that the power is shared between the political branches and that the President cannot terminate a treaty in contravention of the will of Congress or the Senate. Some have argued that the termination of treaties is analogous to the termination of federal statutes. Because domestic statutes may be terminated only through the same process in which they were enacted —i.e., through a majority vote in both houses and with the signature of the President or veto override—these commentators contend that treaties must be terminated through a procedure that is symmetrical to their making and that includes, at a minimum, the Senate's consent. Proponents of congressional or senatorial participation further assert the Founders could not have intended the President to be the "sole organ" in the broader context of treaty powers because the Treaty Clause expressly provides a role for the Senate in the formation of treaties. While proponents on both sides of the debate over the Executive's power of unilateral treaty termination cite historical practices in favor of their respective branches, past practices related to treaty termination vary considerably. These historical practices can generally be organized into five categories: 1. executive withdrawal or termination pursuant to prior authorization or direction from Congress; 2. executive withdrawal or termination pursuant to prior authorization or direction from the Senate; 3. executive withdrawal or termination without prior authorization, but with subsequent approval by Congress; 4. executive withdrawal or termination without prior authorization, but with subsequent approval by the Senate; and 5. unilateral executive withdrawal or termination without authorization or direction by Congress or the Senate. During the 19th century, treaties consistently were terminated through one of the first four methods listed above, all of which include joint action by the legislative and executive branches. At the turn of the 20th century, however, historical practices began to change, and the fifth form of treaty termination emerged: unilateral termination by the President without approval by the legislative branch. During the Franklin Roosevelt Administration and World War II, unilateral presidential termination increased markedly. Although Congress occasionally enacted legislation authorizing or instructing the President to terminate treaties during the 20th century, unilateral presidential termination eventually became the norm. In most cases, this presidential action has not generated significant opposition in either chamber of Congress, but there have been occasions in which Members filed suit in an effort to block the President from terminating a treaty without first receiving congressional or senatorial approval. The most prominent attempt by Members of Congress to prevent the President from terminating a treaty through litigation occurred during the 1970s as the United States began to pursue closer relations with the government of the People's Republic of China (PRC). Anticipating that, as part of its efforts to normalize relations with the PRC, the executive branch might terminate a 1954 mutual defense treaty with the government of Taiwan, Congress enacted (and President Carter signed) the International Security Assistance Act, which, among other things, expressed "the sense of the Congress that there should be prior consultation between the Congress and the executive branch on any proposed policy changes affecting the continuation in force of the Mutual Defense Treaty of 1954." When the Carter Administration announced that the United States would provide the required notice to terminate the treaty without having first obtained the consent of Congress, a group of 16 Members of the House of Representatives and 9 Senators, led by Senator Barry Goldwater, filed suit before the U.S. District Court for the District of Columbia seeking to block the President's action on the ground that the Executive lacks the constitutional authority for unilateral treaty termination. In the early stages of the litigation, the district court agreed with the Members and entered an order permanently enjoining the State Department from "taking any action to implement the President's notice of termination unless and until that notice is so approved [by the Senate or Congress]." The district court reasoned as follows: [T]reaty termination generally is a shared power, which cannot be exercised by the President acting alone. Neither the executive nor legislative branch has exclusive power to terminate treaties. At least under the circumstances of this case involving a significant mutual defense treaty . . . any decision of the United States to terminate that treaty must be made with the advice and consent of the Senate or the approval of both houses of Congress. Notably, the district court relied, in part, on historical practice, and stated that, although no definitive procedure exists, "the predominate United States' practice in terminating treaties . . . has involved mutual action by the executive and legislative branches." On appeal, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit), sitting en banc, disagreed both with the district court's interpretation of past practice and the ultimate decision on the constitutionality of President Carter's action. In addition to relying on case law emphasizing the President's role as the "sole organ" in foreign relations, the D.C. Circuit reasoned that past practices were varied, and that there was no instance in which a treaty continued in force over the opposition of the President. Of "central significance" to the appellate court's decision was the fact that the Mutual Defense Treaty of 1954 contained a termination clause. Because there was "[n]o specific restriction or condition" on withdrawal specified in the termination clause, and because the Constitution does not expressly forbid the Executive from terminating treaties, the D.C. Circuit reasoned that the termination power, for that particular treaty, "devolves upon the President[.]" In an expedited decision issued two weeks later, the Supreme Court vacated the appellate court's decision and remanded with instructions to dismiss the complaint, but it did so without reaching the merits of the constitutional question and with no majority opinion. Writing for a four-Justice plurality, Justice Rehnquist concluded that the case should be dismissed because it presented a nonjusticiable political question—meaning that the dispute was more properly resolved in the politically accountable legislative and executive branches than in the court system. One member of the Court, Justice Powell, also voted for dismissal, but did so based on the ground that the case was not ripe for judicial review until the Senate passed a resolution disapproving of the President's termination. Only one Justice reached a decision on the constitutionality of President Carter's action: Justice Brennan would have affirmed the D.C. Circuit, but his opinion was premised on the conclusion that termination of the Mutual Defense Treaty implicated the Executive's power to recognize the PRC as the official government of China, and not because the President possesses a general, constitutional power over treaty termination. Accordingly, it is not clear that Justice Brennan's reasoning would apply to all treaties, particularly those that do not address matters where the President does not have preeminent constitutional authority. In the years after the litigation over the Mutual Defense Treaty with Taiwan, the Executive continued the practice of unilateral treaty termination in many, but not all, cases. In 1986, a group of private plaintiffs filed suit seeking to prevent President Reagan from unilaterally terminating a Treaty of Friendship, Commerce, and Navigation with Nicaragua, but the district court dismissed the suit as a nonjusticiable political question following the reasoning of the four-Justice plurality in Goldwater . Sixteen years later, Members of Congress again instituted litigation in opposition to the President's unilateral termination, this time in response to George W. Bush's 2001 announcement that he was terminating the Anti-Ballistic Missile (ABM) Treaty with Russia. Thirty-two Members of the House of Representatives challenged the constitutionality of that termination in Kucinich v. Bush , but the district court dismissed the suit on jurisdictional grounds without reaching the merits for two reasons. First, the court held that the Member-Plaintiffs failed to meet the standards for Members of Congress to have standing to assert claims for institutional injuries to the legislative branch as set by the Supreme Court in Raines v. Byrd . Second, the district court held that the interbranch dispute over the proper procedure for treaty termination was a nonjusticiable political question better resolved in the political branches. The district court did not opine on the underlying constitutional question, and no appeal was filed. In addition to courts' reluctance to reach the merits of separation of powers disputes over treaty termination, past cases have not addressed a circumstance in which the Executive's decision to terminate a treaty was in direct opposition to the stated will of the Senate or Congress. While the International Security Assistance Act, passed in 1978, expressed the sense of the Congress that there should be consultation between the Congress and the executive branch related to termination of the Mutual Defense Treaty with Taiwan, it did not direct the President to obtain the Senate's consent before terminating the treaty. The following year, the Senate introduced a resolution expressing the "sense of the Senate that approval of the United States Senate is required to terminate any mutual defense treaty between the United States and another nation." But that resolution was never passed, and it does not appear that Congress has enacted a provision purporting to block the President from terminating a treaty or expressing the sense of the Senate or Congress that unilateral termination by the President is wrongful unless approved by Congress. If such an act or resolution were passed and the Executive still terminated without approval from the legislative branch, the legal paradigm governing the separation of powers analysis might shift. When faced with certain separation of powers conflicts, the Supreme Court has frequently adopted the reasoning of Justice Jackson's oft-cited concurring opinion in Youngstown Sheet & Tube Co. v. Sawyer , which stated that the President's constitutional powers often "are not fixed but fluctuate, depending on their disjunction or conjunction with those of Congress." Justice Jackson's opinion sets forth a tripartite framework for evaluating the constitutional powers of the President. The President's authority is (1) at a maximum when acting pursuant to authorization by Congress; (2) in a "zone of twilight" when Congress and the President "may have concurrent authority, or in which its distribution is uncertain," and Congress has not spoken on an issue; and (3) at its "lowest ebb" when taking measures incompatible with the will of Congress. Because Congress, in Goldwater and the district court cases discussed above, had not passed legislation disapproving the President's terminations, presidential authority in those cases likely fell into the "zone of twilight." But a future resolution or legislation disapproving of unilateral treaty termination could place the President's authority at the "lowest ebb." In that scenario, the President only may act in contravention of the will of Congress in matters involving exclusive presidential prerogatives that are "at once so conclusive and preclusive" that they "disabl[e] the Congress from acting upon the subject." Members of the executive branch have suggested that treaty termination is part of the President's plenary powers, but a counterargument could be made that the legislative branch plays a shared role in the termination process, especially in matters that implicate Congress's enumerated powers. The legal framework for withdrawal from an international agreement may also depend on whether Congress has enacted legislation implementing its provisions into the domestic law of the United States. Some provisions of international agreements are considered self-executing and have the force of domestic law without the need for subsequent congressional action. But for non-self-executing provisions or agreements, implementing legislation from Congress may be required to provide U.S. agencies with legal authority to carry out functions contemplated by the agreement or to make them enforceable by private parties. Certain political commitments have also been incorporated into domestic law through implementing legislation. Under Supreme Court precedent, the repealing of statutes generally must conform to the same bicameral process set forth in Article I that is used to enact new legislation. Accordingly, when Congress has passed legislation implementing an international pact into domestic law, the President would appear to lack the authority to terminate the domestic effect of that legislation without going through the full legislative process for repeal. Even when the President may have the power under international law to withdraw the United States from an international pact and suspend U.S. obligations to its pact counterparts, that withdrawal likely would not, on its own accord, repeal the domestic effect of implementing legislation. Moreover, Congress could influence the international pact's role in domestic law by repealing the pact's implementing legislation, and such a repeal could encourage the President to withdraw from the pact. In some cases, implementing legislation may dictate the extent to which termination of an underlying international agreement affects domestic law. For example, implementing legislation for several bilateral trade agreements provides that, on the date the agreement terminates, the provisions of the implementing legislation automatically cease to be effective immediately. In other cases, legislation expressly delays the impact that termination of an international agreement would have on domestic law. Consequently, analysis of the terms of the implementing statutes may be necessary to understand the precise legal effect that termination of an international agreement has on U.S. law. On June 1, 2017, President Trump announced that he intends to withdraw the United States from the Paris Agreement—a multilateral, international agreement intended to reduce the effects of climate change by maintaining global temperatures "well below 2°C above pre-industrial levels[.]" The Paris Agreement is a subsidiary to the 1992 United Nations Framework Convention on Climate Change (UNFCCC), a broader, framework treaty entered into during the George H. W. Bush Administration. Unlike the UNFCCC, which received the Senate's advice and consent in 1992, the Paris Agreement was not submitted to the Senate for approval. Instead, the Obama Administration took the position that the Paris Agreement is an executive agreement for which senatorial or congressional approval was not required. President Obama signed an instrument of acceptance of the Paris Agreement on August 29, 2016, which was deposited with U.N. Secretary General Ban-Ki Moon on September 3, 2016. The Agreement entered into force on November 4, 2016. Although the Obama Administration described the Paris Agreement as an executive agreement, it did not publicly articulate the precise sources of executive authority on which the President relied in entering into the Agreement. Possible sources include the UNFCCC, existing statutes such as the Clean Air Act and Energy Policy Act, the President's sole constitutional powers, or a combination of these authorities. While the precise source of authority is not readily apparent, there does not appear to be an underlying restriction on unilateral presidential withdrawal (i.e., a treaty reservation, statutory restriction, or other form of limitation) in any of the potential sources of executive authority. Therefore, the Paris Agreement would likely fall into the category of executive agreements that the Executive has terminated without seeking consent from the Senate or Congress. Although the President's domestic withdrawal has not been disputed, the terms of the Paris Agreement establish a multiyear withdrawal process that appears to prevent nations from immediately exiting the Agreement. Article 28.1 specifies the procedure for withdrawal, stating: "any time after three years from the date on which this Agreement has entered into force . . ., [a] Party may withdraw from this Agreement by giving written notification" to the Secretary-General of the United Nations. Further, under Article 28.2 , a notice of withdrawal does not become effective until one year after the Secretary-General receives written notification. Because the Paris Agreement did not enter into force until November 4, 2016 , the United States could not fully withdraw under the Article 28 procedure until November 4, 2020. President Trump did not mention Article 28 during his June 1, 2017 announcement, and some of the President's statements could be interpreted to suggest that the Trump Administration considered the withdrawal announcement to have terminated the United States' participation in Agreement immediately. However, subsequent actions by the Trump Administration officials have clarified that, although the United States intends to exercise its right to withdrawal from the Agreement "as soon as it is eligible to do so[,]" it will comply with the requirements of Article 28. Some commentators advocated for withdrawal from the parent treaty to the Paris Agreement—the UNFCCC—as a more expedient method of exiting the Paris Agreement. Article 28 of the Paris Agreement provides that any party that withdraws from the UNFCCC shall be considered also to have withdrawn from the Paris Agreement. The UNFCCC has nearly identical withdrawal requirements to the Paris Agreement, but because the UNFCCC entered into force in 1994, the three-year withdrawal prohibition expired in 1997. Therefore withdrawal from both the parent treaty and the subsidiary Paris Agreement could be accomplished within one year. The Trump Administration, however, has not announced that it intends to take action with respect to the UNFCCC. Therefore, at present, the United States remains a party to the subsidiary Paris Agreement until Article 28's withdrawal procedure is complete—albeit one that has announced its intention to withdraw once it is eligible to do so. On October 13, 2017, President Trump delivered a speech in which he described his Administration's strategy toward Iran and criticized the Joint Comprehensive Plan of Action (JCPOA) related to Iran's nuclear program that was entered into during the Obama Administration. The JCPOA was finalized in 2015 when Iran and six nations (the United States, the United Kingdom, France, Russia, China, and Germany—collectively known as the P5+1) finalized the "plan of action" placing limitations on the development of Iran's nuclear program . The JCPOA identifies a series of "voluntary measures" in which the P5+1 provides relief from sanctions imposed on Iran through U.S. law, EU law, and U.N. Security Council resolutions in exchange for Iranian implementation of certain nuclear-related measures. In his October 2017 speech, the President announced that he would not renew certain certifications related to Iranian compliance with the JCPOA established under Iran Nuclear Agreement Review Act, and the President again declined to certify compliance in January 12, 2018. The certification provisions in the Iran Nuclear Agreement Review Act are related to, but separate from, the commitments made by Iran and the P5+1 in the JCPOA. As discussed in more detail below, the President's certification decisions did not automatically terminate the United States' participation in the JCPOA or re-impose lifted sanctions, even though the President stated that he may take these actions in the future and may have domestic legal authority to do so unilaterally. The JCPOA was not signed by any party, and it does not contain provisions for ratification or entry into force, but the bulk of the sanctions addressed by the document were lifted on January 16, 2016, the date referred to as "Implementation Day." Because the JCPOA is an unsigned document that purports to rely on "voluntary measures" rather than binding obligations, the Obama Administration treated the document as a political commitment that did not require congressional or senatorial approval. Many commentators agree with this assessment, but there is some debate over the classification of the plan of action, and its legal status may have been affected by a subsequent U.N. Security Council resolution (discussed below). To the extent the JCPOA is correctly understood as a nonbinding political commitment, international law would not prohibit President Trump from withdrawing from the plan of action and reinstating certain sanctions that had been previously imposed under U.S. law, but there may be political consequences for this course of action. It is also unlikely that domestic law would require congressional or senatorial approval for withdrawal in light of the Obama Administration's treatment of the JCPOA as a nonbinding commitment. The JCPOA states that the United States will, among other things, withdraw certain "secondary sanctions" imposed under U.S. law that are related to foreign entities and countries that conduct specified transactions with Iran. "Secondary" sanctions are distinguished from "primary" sanctions in that primary sanctions prohibit economic activity with Iran involving U.S. persons or goods, and secondary sanctions seek to discourage non-U.S. parties from doing business with Iran. On Implementation Day, President Obama issued an executive order revoking all or portions of five prior executive orders that imposed secondary sanctions on Iran. These executive orders generally may be revoked or modified at the will of the President, and therefore nothing in domestic law would prevent President Trump from reinstating these sanctions through his own executive order, provided he complies with the requirements of the underlying statutes that authorize the President to sanction Iran via executive order. Other secondary sanctions addressed in the JCPOA were imposed on Iran by statute rather than through executive order. These statutes gave the President or a delegate in the executive branch authority to waive sanctions under certain conditions, and the waiver remains effective for a period ranging from 120 days to one year, depending on the statute. The Obama Administration first exercised this waiver authority on Implementation Day, and the Trump Administration has continued to issue these waivers, most recently on July 17, 2017 and January 12, 2018. When those waivers expire, nothing in domestic law would prevent the Trump Administration from choosing not to renew them, thereby reinstating U.S. sanctions imposed on Iran by statute. In addition to U.S. withdrawal of secondary sanctions, the JCPOA calls for the "comprehensive lifting of all U.N. Security Council sanctions . . . related to Iran's nuclear programme," and it specifies a set of resolutions to be terminated through a future act of the Security Council. On July 20, 2015, the Security Council unanimously voted to approve Resolution 2231, which, as of Implementation Day, terminated the prior sanctions-imposing Security Council resolutions subject to certain terms in Resolution 2231 and the JCPOA. Resolution 2231 annexes the JCPOA, and it states that the Security Council "[w]elcom[es] diplomatic efforts by [the P5+1] and Iran to reach a comprehensive, long-term and proper solution to the Iranian nuclear issue, culminating in the [JCPOA]." Although the text of the JCPOA appears to rely on "voluntary measures," some observers have stated that Resolution 2231 may have converted some voluntary political commitments in the JCPOA into legal obligations that are binding under U.N. Charter. Whether a U.N. Security Council resolution imposes legal obligations on U.N. Member States depends on the nature of the provisions in the resolution. As a matter of international law, many observers agree that "decisions" of the Security Council are generally binding pursuant to Article 25 of the U.N. Charter, but the Security Council's "recommendations," in most cases, lack binding force. Whether a provision is understood as a nonbinding "recommendation" or a binding "decision" frequently depends on the precise language in the resolution. Commentators have noted that the Security Council's use of certain affirmative language, such as "shall" as opposed to "should," or "demand" as opposed to "recommend," may indicate that a resolution is intended to establish legally binding duties upon U.N. Member States. Resolution 2231 appears to contain a combination of nonbinding recommendations and binding decisions. It seems clear that the Security Council intended the provisions that lifted its prior sanctions to be binding, as these paragraphs begin with the statement that the Security Council " Decide s , acting under Article 41 of the Charter of the United Nations" that its prior resolutions are terminated subject to certain conditions. Article 41 authorizes the Security Council to "decide" what measures "not involving the use of armed force are to be employed to give effect to its decisions," and it is understood to allow the Security Council to issue resolutions that are binding on U.N. Member States. Whether Resolution 2231 creates an obligation under international law for the United States to continue to withhold its domestic secondary sanctions or to comply with the JCPOA more broadly is a more complex question. Paragraph 2 of Resolution 2231 states that the Security Council: Calls upon all Members States . . . to take such actions as may be appropriate to support the implementation of the JCPOA, including by taking actions commensurate with the implementation plan set out in the JCPOA and this resolution and by refraining from actions that undermine implementation of commitments under the JCPOA[.] While this provision arguably seeks general compliance with the JCPOA, the phrase "calls upon" is understood by some commentators as a hortatory, nonbinding expression in Security Council parlance. Others have interpreted the phrase to create an obligation under international law to comply, and a third group falls in between, describing the phrase as purposefully ambiguous. Historically, U.N. Member States have ascribed varying levels of significance to the phrase "calls upon" in Security Council resolutions. As a consequence, there may not be a definitive answer as to whether Resolution 2231 creates a binding international legal obligation for the United States to "support the implementation of the JCPOA" or whether the JCPOA remains a nonbinding political commitment that the United States may withdraw from without violating international law. As a matter of domestic law, U.N. Security Council Resolutions are frequently seen to be non-self-executing, and therefore their legal effect is dependent on their relationship with existing authorizing or implementing legislation. In certain cases, existing statutory enactments may authorize the Executive to implement the provisions of a resolution through economic and communication-related sanctions. But, to the extent Resolution 2231 is not self-executing, domestic law would not, on its own accord, mandate that the President comply with the terms of the resolution. Because the Obama Administration treated the JCPOA as a nonbinding political commitment for which congressional or senatorial consent was not required, Congress did not directly approve the United States' entry into the JCPOA. However, Congress did pass legislation—the Iran Nuclear Agreement Review Act —providing certain congressional review and oversight over the plan of action. Among other provisions, the Iran Nuclear Agreement Review Act requires the President to certify every 90 days that Iran (i) is fully implementing the JCPOA; (ii) has not committed an uncured, material breach of the plan of action; (iii) has not taken action that could significantly advance its nuclear weapons program; and (iv) that the continued suspension of sanctions under the JCPOA is vital to the national security interests of the United States and is "appropriate and proportionate" to Iran's measures to terminate its nuclear weapons program. If the President elects not to certify, the Act allows Congress to use expedited procedures to pass legislation re-imposing U.S. sanctions that the President lifted pursuant to the JCPOA. In his October 13 announcement, President Trump stated that he is withholding certification under the Iran Nuclear Agreement Review Act on the ground that he cannot certify that the continued lifting of sanctions is "appropriate and proportionate" relative to Iran's measures to terminate its nuclear weapons program. The President did not state that he is immediately terminating U.S. participation in the JCPOA or re-imposing U.S. domestic sanctions under his own authority. Rather, declining to certify Iranian compliance provides Congress with an opportunity to utilize the Iran Nuclear Agreement Review Act's expedited procedures to re-impose sanctions on Iran. Still, the President stated that he had the authority to terminate the JCPOA "at any time." And in a January 2018 speech on the JCPOA, President Trump stated that "the United States will not again waive sanctions in order to stay in the Iran nuclear deal[,]" and that he "will withdraw from the deal immediately" unless the JCPOA is renegotiated." For the reasons described in the sections above, under current domestic law, the President may possess authority to terminate U.S. participation in the JCPOA and to re-impose U.S. sanctions on Iran, either through executive order or by declining to renew statutory waivers. As a matter of international law, by contrast, termination of the JCPOA or re-imposition of sanctions (either by Congress or the President alone) could implicate the question of whether Resolution 2231 converted the JCPOA's nonbinding political commitments into obligations that are binding under the U.N. Charter. Absent an uncured breach or nonperformance of the JCPOA by Iran, which the Trump Administration has not claimed to date, some argue that unilateral withdrawal from the plan of action or re-imposition of U.S. secondary sanctions would amount to a violation of Resolution 2231. But there is no clear answer on whether this Security Council resolution creates a legally binding obligation to comply with the overall terms of the JCPOA, and the political ramifications of any future U.S. action related to JCPOA may be significant regardless of which legal interpretation is superior. If the Trump Administration believes Iran has not complied with the JCPOA, the terms of the plan of action and Resolution 2231 may offer an avenue for the United States to relieve itself of any commitments under the JCPOA regardless of whether those commitments were converted to legally binding obligations. Article 36 of the JCPOA establishes a multistage dispute resolution procedure that can be invoked if the United States (or another member of the P5+1) believes Iran is "not meeting its commitments" under the plan of action. If the dispute remains unresolved after this process, Article 36 would allow the United States to cease performing its commitments, provided it deems Iran's actions to constitute "significant nonperformance" of the JCPOA. "Significant non-performance" is not defined in the JCPOA or Resolution 2231, but a party may report such nonperformance to the U.N. Security Council. After receiving a notice of nonperformance, Resolution 2231 requires the Security Council to vote on a draft resolution addressing whether it should continue to withhold the U.N. sanctions imposed on Iran through its earlier resolutions. Unless the Security Council votes to continue to lift those sanctions within 30 days of receiving a notice of significant nonperformance, the prior Security Council resolutions "shall apply in the same manner as they applied before the adoption of" Resolution 2231. Thus, the Resolution 2231 creates a procedure—often referred to as the "snapback" process —that places the onus on the Security Council to vote affirmatively to continue to lift its sanctions. As a permanent member of the Security Council, the United States would possess the power to veto any such vote and effectively force the reinstatement of the Security Council's sanctions on Iran. To date, President Trump has criticized Iran's performance of the JCPOA, but the Administration does not appear to have publicly invoked the dispute resolution mechanisms or the "snapback" process.

The legal procedure through which the United States withdraws from treaties and other international agreements has been the subject of long-standing debate between the legislative and executive branches. Recently, questions concerning the role of Congress in the withdrawal process have arisen in response to President Donald J. Trump's actions related to certain high-profile international commitments. This report outlines the legal framework for withdrawal from international agreements under domestic and international law, and it applies that framework to two pacts that may be of significance to the 115th Congress: the Paris Agreement on climate change and the Joint Comprehensive Plan of Action (JCPOA) related to Iran's nuclear program. Although the Constitution sets forth a definite procedure whereby the Executive has the power to make treaties with the advice and consent of the Senate, it is silent as to how treaties may be terminated. Moreover, not all agreements between the United States and foreign nations take the form of Senate-approved, ratified treaties. The President also enters into executive agreements, which do not receive the Senate's advice and consent, and "political commitments" that are not binding under domestic or international law. The legal procedure for withdrawal often depends on the type of agreement at issue, and the process may be further complicated when Congress has enacted legislation to give the international agreement domestic legal effect. On June 1, 2017, President Trump announced that he intends to withdraw the United States from the Paris Agreement—a multilateral, international agreement intended to reduce the effects of climate change. Historical practice suggests that, because the Obama Administration considered the Paris Agreement to be an executive agreement that did not require the Senate's advice and consent, the President potentially may claim authority to withdraw without seeking approval from the legislative branch. By its terms, however, the Paris Agreement does not allow parties to complete the withdrawal process until November 2020, and Trump Administration officials have stated that the Administration intends to follow the multiyear withdrawal procedure. Consequently, absent additional action by the Trump Administration, the United States will remain a party to the Paris Agreement until November 2020, albeit one that has announced its intent to withdraw once it is eligible to do so. The Trump Administration has not withdrawn the United States from the JCPOA, but the President has stated he intends do so unless the plan of action is renegotiated. When the Obama Administration concluded the JCPOA, it treated the plan of action as a non-binding political commitment. To the extent this understanding is correct, President Trump's ability to withdraw from the JCPOA would not be restricted by international or domestic law. However, some observers have suggested that U.N. Security Council Resolution 2231 subsequently converted at least some provisions in the JCPOA into obligations that are binding under international law. As a result, withdrawal from the JCPOA could implicate a complex debate over the plan of action's status in international law. As a matter of domestic law, the President and Congress have authority to reassert sanctions lifted pursuant to U.S. pledges made in the JCPOA if they deem the reinstitution of such sanctions to be appropriate, even if such action resulted in a violation of international law. Several possible domestic legal avenues exist to re-impose sanctions, some of which would involve joint action by the President and the legislative branch, and others that would involve decisions made by the President alone.

Each year, the House and Senate Armed Services Committees take up national defense authorization bills. These bills contain numerous provisions that affect military personnel, retirees, and their family members. Provisions in one version are often not included in the other, are treated differently, or, in some cases, are identical. Following passage of these bills by the House and by the Senate, a conference committee is usually convened to resolve the differences between the respective Chambers' versions of the bill. In the typical course of enacting an annual defense authorization, congressional staffs receive many requests for information on provisions contained in these bills. This report is intended to highlight those personnel-related issues that may generate high levels of congressional and constituent interest, and compares differences between House and Senate versions. This report summarizes selected highlights of S. 1356 , the National Defense Authorization Act for Fiscal Year 2016 (FY2016 NDAA), which was passed by the House of Representatives on November 5, 2015, passed by the Senate on November 10, 2015, and signed by the President on November 25, 2015 ( P.L. 114-92 ), and an initial bill, H.R. 1735 , that was passed by both the House and the Senate. The President had vetoed H.R. 1735 , an earlier version of the FY2016 NDAA, on October 22, 2015. In his veto message, the President objected that the bill would have provided more funding for defense-related activities than would be allowed under spending caps that then were in effect, which initially had been imposed by P.L. 112-25 , the Budget Control Act of 2011 (BCA). The President objected to legislation that would, in effect, allow defense-related spending for FY2016 to exceed the BCA defense spending cap without allowing similar budgetary leeway for nondefense related spending, which was subject to a similar BCA spending cap. Subsequently, the President signed into law the Bipartisan Budget Act of 2015 ( P.L. 114-74 ) which raised the FY2016 spending caps for both defense and nondefense spending. The text of the initial bill ( H.R. 1735 ) then was modified to comply with the revised spending caps while retaining intact the final military personnel provisions discussed in this report. For procedural reasons, the text of that revised NDAA then was substituted for the original text of S. 1356 , an unrelated bill previously passed by the Senate. The amended version of S. 1356 (i.e., the revised FY2016 NDAA) then was passed by the House and Senate and signed by the President. The Congressional Budget Office issued cost estimates for these bills on May 4, May 11, June 3, September 30, and November 4, 2015 Related CRS products are identified in each section to provide more detailed background information and analysis of the issues. For each issue a CRS analyst is identified and contact information is provided. Some issues discussed in this report previously were addressed in the Carl Levin and Howard P. 'Buck' McKeon National Defense Authorization Act for Fiscal Year 2015 ( P.L. 113-291 ), and discussed in CRS Report R43647, FY2015 National Defense Authorization Act: Selected Military Personnel Issues , coordinated by [author name scrubbed], or other reports. Those issues that were considered previously are designated with an asterisk in the relevant section titles of this report. Background: The authorized active duty end-strengths for FY2001, enacted in the year prior to the September 11 th terrorist attacks, were as follows: Army (480,000), Navy (372,642), Marine Corps (172,600), and Air Force (357,000). Over the next decade, in response to the demands of wars in Iraq and Afghanistan, Congress increased the authorized personnel strength of the Army and Marine Corps. Some of these increases were quite substantial, particularly after FY2006, but Congress began reversing these increases in anticipation of the withdrawal of U.S. forces from Iraq in 2011, the drawdown of U.S. forces in Afghanistan which began in 2012, and budgetary constraints. End-strengths for the Air Force and Navy have been generally declining since 2001. In FY2015, authorized end-strengths were as follows: Army (490,000), Navy (323,600), Marine Corp (184,100), and Air Force (312,980). Given the budgetary outlook, including the future impact of the Budget Control Act of 2011 (BCA), the Army plans to reduce its active personnel strength to between 420,000 and 450,000 by FY2017, while the Marine Corps plans to reduce its active personnel strength to between 175,000 and 182,000 in the FY2017-2019 timeframe. Discussion: The Administration request proposed continuing the reduction in strength for the Army (-15,000 compared to FY2015), although its proposed strengths for the other three services are essentially level or increasing in comparison to FY2015: Navy (+5,600), Marine Corps (-100), and Air Force (+4,020). The end-strengths authorized in the final bill are identical to the Administration's end-strength request with the exception of the Air Force, which is 3,715 higher than the Administration's request. Section 402 of the initial Senate-passed bill (H.R. 1735) would have repealed 10 U.S.C. 691, which sets minimum end-strengths for the armed forces and stipulates that the DOD budget for any fiscal year shall include amounts necessary to maintain these congressionally directed minimum strength levels. Section 402 of initial Senate-passed bill ( H.R. 1735 ) would also have allowed the Secretary of Defense to reduce the number of personnel in an active component by up to 3% below the authorized end-strength, to reduce the number of full-time National Guard and Reserve personnel in a reserve component by up to 2%, and to reduce the number of National Guard and Reserve personnel performing active duty for operational support and certain other purposes by up to 10%. Additionally, it would have allowed the Service Secretaries to decrease the number of personnel in an active component and in the Selected Reserve of a reserve component under their jurisdiction by up to 2% below the authorized end-strength. Section 402 of the final bill ( P.L. 114-92 / S. 1356 ) adjusted the minimum end-strengths required by 10 USC 619 downward, to a level equal to or slightly below the authorized end-strengths set in section 401, and expanded the authority of the Secretary of Defense to reduce these minimum strengths downward, permitting a decrease of up to 2% versus the current 0.5%. Reference(s): Previously discussed in CRS Report R43647, FY2015 National Defense Authorization Act: Selected Military Personnel Issues , coordinated by [author name scrubbed] and similar reports from earlier years. CRS Point of Contact: [author name scrubbed], x[phone number scrubbed]. Background: Although the Reserves have been used extensively in support of operations since September 11, 2001, the overall authorized end strength of the Selected Reserves has declined by about 5% over the past 14 years (874,664 in FY2001 versus 829,800 in FY2015). Much of this can be attributed to the reductions in Navy Reserve strength during this period. There were also modest shifts in strength for some other components of the Selected Reserve. For comparative purposes, the authorized end strengths for the Selected Reserves for FY2001 were as follows: Army National Guard (350,526), Army Reserve (205,300), Navy Reserve (88,900), Marine Corps Reserve (39,558), Air National Guard (108,022), Air Force Reserve (74,358), and Coast Guard Reserve (8,000). Between FY2001 and FY2015, the largest shifts in authorized end strength have occurred in the Navy Reserve (-31,600 or -35.5%), Air Force Reserve (-7,258 or -9.8%), and Coast Guard Reserve (-1,000 or -12.5%). A smaller change occurred in the Air National Guard (-3,022 or -2.8%) and Army Reserve (-3,300 or -1.6%), while the authorized end strength for the Army National Guard (-326 or -0.1%) and the Marine Corps Reserve (-358 or -0.9%) have been largely unchanged during this period. Discussion: For FY2016, the Administration requested a reduction in authorized Selected Reserve end strength for three of the seven reserve components. The proposed reductions in comparison to FY2015 are as follows: Army National Guard (-8,200), Army Reserve (-4,000), and Marine Corps Reserve (-300). The proposed increases as follows: Navy Reserve (+100), Air National Guard (+500), Air Force Reserve (+2,100). The administration proposed no change in the authorized strength for the Coast Guard Reserve. The end-strengths authorized in the enacted bill ( P.L. 114-92 , S. 1356 ) were identical to the Administration's request. Reference(s): Previously discussed in CRS Report R43647, FY2015 National Defense Authorization Act: Selected Military Personnel Issues , coordinated by [author name scrubbed], and similar reports from earlier years. CRS Point of Contact: [author name scrubbed], x[phone number scrubbed]. Background: Increasing concern with the overall cost of military personnel, combined with long-standing congressional interest in recruiting and retaining high quality personnel to serve in the all-volunteer military, have continued to focus interest on the military pay raise. Section 1009 of Title 37 provides a permanent formula for an automatic annual increase in basic pay that is indexed to the annual increase in the Employment Cost Index (ECI). The increase in basic pay for 2016 under this statutory formula would be 2.3% unless either: (1) Congress passes a law to provide otherwise; or (2) the President specifies an alternative pay adjustment under subsection (e) of 37 U.S.C. 1009. The FY2016 President's Budget requested a 1.3% military pay raise, lower than the statutory formula of 2.3%. This is in keeping with Department of Defense (DOD) plans to limit increases in basic pay through FY2020. While estimating that the ECI will increase by 2.3% per year in each of the next four years, the DOD Budget Request Overview stated ...outyear pay raise planning factors currently assume limited pay raises will continue through FY 2020, with increases of 1.3 percent in FY 2017, 1.5 percent in FY 2018 and FY 2019, and 1.8 percent in FY 2020. Discussion: The initial House bill (H.R. 1735) contained no provision to specify the rate of increase in basic pay, although the report accompanying it (H.Rept. 114-102) contained the following statement: The committee continues to believe that robust and flexible compensation programs are central to maintaining a high-quality, all volunteer, combat-ready force. Accordingly, the committee supports a 2.3 percent military pay raise for fiscal year 2016, in accordance with current law, in order for military pay raises to keep pace with the pay increases in the private sector, as measured by the Employment Cost Index. The initial Senate version ( H.R. 1735 ) contained a provision waiving the automatic adjustment of 37 U.S.C. 1009 and setting the pay increase at 1.3% for servicemembers below the O-7 paygrade (that is, below the grade of brigadier general or, for the Navy, rear admiral lower half). It would also have maintained the cap on the pay of officers in the O-7 through O-10 paygrades at the Executive Schedule level II rate for 2014, thereby ensuring that no general or flag officers receive an increase in basic pay. On August 28, President Obama sent a letter to Congress invoking 37 U.S.C. 1009(e) to set the pay raise for 2016 at 1.3%. The final bill contained no general pay raise provision, thereby leaving in place the 1.3% increase specified by President Obama, although section 601 of the enacted bill ( P.L. 114-92 , S. 1356 ) freezes the basic pay of generals and admirals at 2014 levels. Reference(s): For an explanation of the pay raise process and historical increases, see CRS In Focus IF10260, Military Pay Raise , by [author name scrubbed]. Previously discussed in CRS Report R43647, FY2015 National Defense Authorization Act: Selected Military Personnel Issues , coordinated by [author name scrubbed], and similar reports from earlier years. CRS Point of Contact: [author name scrubbed], x[phone number scrubbed]. Background: The military retirement system is a funded, noncontributory, defined benefit system that provides a monthly annuity to servicemembers after 20 years of qualifying service. The National Defense Authorization Act (NDAA) for FY2013 ( P.L. 113-66 ) established a Military Compensation and Retirement Modernization Commission (MCRMC) to provide the President and Congress with specific recommendations to modernize pay and benefits for the armed services. The Commission delivered its final report and recommendations to Congress on January 29, 2015. Congress has included many of the Commission's proposed changes in the enacted bill ( P.L. 114-92 , S. 1356 ). Discussion : The military retirement system has historically been viewed as a significant incentive in retaining a career military force and any changes are closely followed by active duty military and veteran's groups. The enacted bill ( P.L. 114-92 , S. 1356 ) will change the existing system from a defined-benefit system that is vested at 20 years of qualifying service, to a blended defined-benefit, defined-contribution system with government matching contributions through the Thrift Savings Plan. The new system will implement a reduced multiplier for the defined benefit to 2.0% from 2.5% (a retirement annuity equal to 40% basic pay at 20 YOS rather than 50% of basic pay) and authorized continuation pay at 12 years of service as a retention incentive. Existing servicemembers and all those entering the military prior to January 1, 2018 will be grandfathered into the current system, and those with less than 12 YOS on December 31, 2017 will be given the option to elect the new system. Cost of Living Allowance (COLA) adjustments first enacted by the Bipartisan Budget Act of 2013 ( P.L. 113-67 §403) are repealed by this Act. Reference ( s ) : CRS Report RL34751, Military Retirement: Background and Recent Developments , by [author name scrubbed]; CRS Report IF10141, Proposed Changes to the Military Retirement System, by [author name scrubbed]; CRS Report R43393, Reducing Cost-of-Living Adjustments for Military Retirees and the Bipartisan Budget Act: In Brief , by [author name scrubbed] and [author name scrubbed]. CRS Point of Contact : [author name scrubbed], x[phone number scrubbed]. Background: Over the past few years, the issue of sexual assault in the military has generated a good deal of congressional and media attention. Congress has enacted numerous changes in previous NDAAs, but issues remain. The final version of the bill contained numerous provisions regarding the legal procedures, policies and programs, and data collection and reporting for military sexual assaults. Discussion : The FY2014 DOD Annual Report on Sexual Assault in the Military reported that an estimated 4.3% of women and 0.9% of men in the military experienced unwanted sexual contact in 2014 based on survey data. Of those who reported unwanted sexual contact, 53% perceived some sort of social retaliation. The types of social retaliation that were reported included adverse administrative action (35%), professional retaliation (32%), and punishment for an infraction in relation to their report (11%). A recent report by the G overnment Accountability Office (GAO) also identified a need for the DOD to enhance its efforts to improve the effectiveness of care provided to male sexual assault victims. The enacted bill's ( P.L. 114-92 , S. 1356 ) provisions address some of these concerns about retaliation and male victims of sexual assault. These provisions also enhance the Special Victims' Counsel Program, and modify requirements for judicial proceedings, reporting, and sentencing in sex-related offenses. Reference ( s ) : Previously discussed in CRS Report R43647, FY2015 National Defense Authorization Act: Selected Military Personnel Issues , coordinated by [author name scrubbed]. See also CRS Report R43168, Military Sexual Assault: Chronology of Activity in Congress and Related Resources , by [author name scrubbed]; CRS Report R43213, Sexual Assaults Under the Uniform Code of Military Justice (UCMJ): Selected Legislative Proposals , by [author name scrubbed]. CRS Point of Contact : [author name scrubbed], x[phone number scrubbed]. Background: On January 24, 2013, then- Secretary of Defense Leon Panetta announced that the Department of Defense (DOD) was rescinding its 1994 Direct Combat Exclusion Rule to allow women to serve in previously restricted combat occupations, and gave the military services until January 1, 2016, to conduct women in the services reviews, to develop implementation plans, and to request waivers if deemed appropriate. On December 3, 2015, Secretary of Defense Ashton Carter announced that all military occupations were open to women with no exceptions. Discussion : In the National Defense Authorization Act for Fiscal Year 1994 ( P.L. 103-160 ) Congress established requirements for "gender-neutral" occupational performance standards and has in subsequent years directed DOD in how these standards should be developed and applied. Section 524 of the Carl Levin and Howard P. ''Buck'' McKeon National Defense Authorization Act for Fiscal Year 2015 ( P.L. 113-291 ), entitled "Removal of artificial barriers to the service of women in the Armed Forces," emphasized that the standards DOD uses to measure performance must be related to the "actual, regular, and recurring duties" in a specific military occupation and standards must measure "individual capabilities." The FY2016 NDAA adds additional criteria for developing performance standards relating to combat unit readiness that could require DOD to undertake validation efforts for unit-level performance. Under the law (10 U.S.C. §652), DOD must notify Congress of changes to assignment policies that open or close any category of unit, position, or career designator for females. Under previous law, Congress had a period of 30 days in continuous session (House and Senate) for review of these changes before DOD could take any action on implementing them (this provision is sometimes referred to as "notify-and-wait"). Changes made by the enacted bill ( P.L. 114-92 , S. 1356 ) shorten this waiting period to 30 calendar days. For DOD, this could provide a more definitive timeline for implementation. For Congress, this could reduce the amount of in-session time to review and act on proposed changes. Reference ( s ) : Previously discussed in CRS Report R43647, FY2015 National Defense Authorization Act: Selected Military Personnel Issues , coordinated by [author name scrubbed]. See also CRS Report R42075, Women in Combat: Issues for Congress , by [author name scrubbed]. CRS Point of Contact : [author name scrubbed], x[phone number scrubbed]. Background: One of the findings of the congressionally mandated ( P.L. 113-66 ) Military Compensation and Retirement Modernization Commission (MCRMC) was that weaknesses in existing financial literacy programs for military servicemembers were potentially linked to adverse effects on servicemembers, military families, and overall readiness. Discussion : Enhancing personal financial management training programs would require some initial costs; however, DOD has estimated that improved financial literacy could save the DOD between $13 million and $137 million annually and could reduce the number of troops involuntarily separated due to financial distress. Changes to the military retirement system that would offer more options for retirement savings and continuation pay might also necessitate enhanced financial management training. The enacted bill ( P.L. 114-92 , S. 1356 ) includes provisions that require financial literacy training upon entry into the service, and at various points in the servicemember's career due to life changes (e.g., marriage or divorce) or transitions (e.g. change of duty station or promotion). CRS Point of Contact : [author name scrubbed], x[phone number scrubbed]. Background: The statutory requirements for enlistment in the active component (10 U.S.C. §504) are slightly different than the statutory requirements for enlistment in the reserve components (10 U.S.C. §12102). Under 10 U.S.C. §504, an individual must be: (1) a national of the United States (i.e., either a citizen or a person who, though not a citizen of the United States, owes permanent allegiance to the United States ‐ a category that currently includes only American Samoans); (2) a lawful permanent resident; or (3) a person described in the Compact of Free Association between the United States and Micronesia, the Marshall Islands, and Palau. Section 504 of Title 10, United States Code, also contains a provision that allows the service secretaries to provide exceptions "if the Secretary determines that such enlistment is vital to the national interest." This provision is the basis of the Military Accessions Vital to National Interest or MAVNI program. Section 12102 of Title 10 specifies that an enlistee must be (1) a citizen of the United States; (2) a lawful permanent resident; or (3) have previously served in the armed forces. Discussion: Section 513 of the initial Senate-passed bill (H.R. 1735) would have linked the statutory requirements for eligibility to enlist in the reserve component with the requirements necessary to enlist in the active component. The enacted bill (P.L. 114-92, S. 1356) did not include this provision. Reference(s): None. CRS Point of Contact: [author name scrubbed], x[phone number scrubbed]. Background: In 2004, Congress established the Reserve Educational Assistance Program (REAP) to provide enhanced educational benefits to reservists who were called or ordered to active service in response to a war or national emergency declared by the President or Congress. Four years later, Congress approved the Post‐9/11 GI Bill, which provided more generous educational benefits than REAP. As a result, the Military Compensation and Retirement Modernization Commission recommended terminating REAP, while allowing those currently receiving REAP benefits to exhaust their entitlement. Discussion: The initial Senate-passed bill (H.R. 1735) adopted the recommendations proposed by the Military Compensation and Retirement Modernization Commission by establishing a sunset date for REAP four years after the date of enactment of the National Defense Authorization Act for Fiscal Year 2016. It also stipulated that in the interim period, only those using REAP in the enrollment period immediately prior to the date of enactment could continue to use the program. The enacted bill (P.L. 114-92, S. 1356) contained the Senate provision. Reference(s): For more information on REAP and the Post 9/11 GI Bill, generally, see CRS Report RL30802, Reserve Component Personnel Issues: Questions and Answers , by [author name scrubbed] and [author name scrubbed]. For more detailed information, see CRS Report R42785, GI Bills Enacted Prior to 2008 and Related Veterans' Educational Assistance Programs: A Primer , by [author name scrubbed], and CRS Report R42755, The Post-9/11 Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill): Primer and Issues , by [author name scrubbed]. CRS Point of Contact: [author name scrubbed], x[phone number scrubbed]. Background: There have been periodic requests from veterans and veterans' advocacy groups for an official identification card to verify their past military service. Discussion: The initial Senate passed bill (H.R. 1735) would entitle any "individual who is undergoing discharge or release from the Armed Forces" (other than as the result of a punitive discharge as part of a sentence of a court-martial) beginning one year from the enactment of the Act to a "Recognition of Service ID Card." This card must identify the bearer as a veteran and include their name and a photograph. The Act also authorizes the Secretary of Defense to negotiate with "national retail chains that offer reduced prices on services, consumer products, and pharmaceuticals to veterans" to ensure that the ID card will be accepted. The enacted bill (P.L. 114-92, S. 1356) contained no "recognition of service ID card" provision. The Joint Explanatory statement noted: An alternative option exists for honorably discharged veterans to utilize state-issued ID cards that designate veteran status. Veterans in 44 states and the District of Columbia may apply for a driver's license or State issued ID card that designates veteran status... Additionally, since January 2014, honorably separated members of the Uniformed Services are able to obtain an ID card providing proof of military service through the joint DOD-VA eBenefits web portal. Furthermore, on July 20, 2015, President Obama signed into law Public Law 114-31, the Veterans Identification Card Act of 2015. This law requires the Secretary of Veterans Affairs to provide an identification card to veterans who demonstrate their military service with a DD-214 or other official document. Reference(s): None. CRS Point of Contact: [author name scrubbed], x[phone number scrubbed]. Background: Congress has an ongoing interest in recruiting and retaining high quality personnel to serve in the armed forces. The use of recruiting bonuses and other incentives, such as educational benefits, help the military services attract well qualified applicants. A wide array of bonus and incentive pay authorities is contained in chapter 5 of Title 37 of the United States Code. Discussion: Section 531 of the initial House-passed bill (H.R. 1735) would authorize the service secretaries to develop and provide additional recruitment incentives (no more than three types) for up to 20% of the fiscal year accession target for officers, warrant officers, and enlisted personnel. Implementation of the proposed incentive would be subject to a 30‐day congressional review and approval period. Section 522 of the enacted bill (P.L. 114-92, S. 1356) incorporated the House provision. Reference(s): More information on recruitment and retention can be found in CRS Report RL32965, Recruiting and Retention: An Overview of FY2013 and FY2014 Results for Active and Reserve Component Enlisted Personnel , by [author name scrubbed], and similar reports from earlier years. CRS Point of Contact: [author name scrubbed], x[phone number scrubbed]. Background: When reservists are called into active federal service, they become eligible for a number of legal protections. Among these is the right to reemployment found in the Uniformed Services Employment and Reemployment Rights Act (USERRA) of 1994. The act confers a general right to reemployment on those who leave civilian employment to perform military service, but the cumulative length of service generally may not exceed five years. However, USERRA specifically exempts types of duty from counting towards the five year limit, for example, reservist activations under the long-standing activation authorities known as Full Mobilization, Partial Mobilization, and Presidential Reserve Call-Up. In 2011, Congress created two new mobilization authorities for reservists in the National Defense Authorization Act for Fiscal Year 2012 ( P.L. 112-81 ). Codified at 10 U.S.C. 12304a and 12304b, these new activation authorities allow 120-day activations of certain reservists for disaster response and 365 day activations for preplanned missions in support of the combatant commands (12304a). At present, activations under these new authorities are not excepted from the five year cumulative limit. Discussion: Section 565 of the initial House-passed bill (H.R. 1735) would exempt military duty under the new reserve activation authorities from counting towards the cumulative five year limit on military service for reemployment protection under USERRA. Section 562 of the enacted bill (P.L. 114-92, S. 1356) incorporated the House provision. Reference(s): For more information on USERRA and the mobilization authorities, please see CRS Report RL30802, Reserve Component Personnel Issues: Questions and Answers , by [author name scrubbed] and [author name scrubbed]. CRS Point of Contact: [author name scrubbed], x[phone number scrubbed]. Background: By statute (38 U.S.C. 101(2)), a veteran is defined as a "person who served in the active military, naval, or air service, and who was discharged or released therefrom under conditions other than dishonorable." Thus, an individual must have "active military, naval, or air service" to be considered a veteran for most VA benefits. However, not all types of service are considered active military service for this purpose. In general, active service means full-time service, other than active duty for training, as a member of the Army, Navy, Air Force, Marine Corps, or Coast Guard; as a commissioned officer of the Public Health Service; or as a commissioned officer of the National Oceanic and Atmospheric Administration or its predecessors. Active service also includes a period of active duty for training during which the person was disabled or died from an injury or disease incurred or aggravated in the line of duty and any period of inactive duty for training during which the person was disabled or died from an injury incurred or aggravated in the line of duty or from certain health conditions incurred during the training. Additional circumstances of service, and whether they are deemed to be active military service, are set out in law (38 U.S.C. 101). Members of the National Guard and reserves who are never activated for active duty military service (other than active duty for training) do not meet the statutory definition of veteran even if they eventually qualify for reserve retirement. Discussion: Reservists become eligible for retirement after 20 years of qualifying service. Under current law, a reservist who completes this requirement is eligible to retire and would receive retired pay upon reaching the appropriate age (usually age 60); however, the reservists would not necessarily be a veteran unless he or she had completed the required active service as well. The initial House-passed bill (H.R. 1735) provided that reservists who qualify for reserve retirement are to be "honored as veterans," but stipulated that this designation would not confer entitlement to any additional benefits. The enacted bill (P.L. 114-92, S. 1356) did not incorporate the House provision. Reference(s): For information on who qualifies as a veteran, see CRS Report R42324, Who Is a "Veteran"?—Basic Eligibility for Veterans' Benefits , by [author name scrubbed]. For information on veterans' burial benefits see CRS Report R41386, Veterans' Benefits: Burial Benefits and National Cemeteries , by [author name scrubbed]. For information on the Reserve Component and retirement and other benefits, please see CRS Report RL30802, Reserve Component Personnel Issues: Questions and Answers , by [author name scrubbed] and [author name scrubbed]. CRS Point of Contact: [author name scrubbed], x[phone number scrubbed], Barbara Salazar-Torreon, x[phone number scrubbed], and Noah Meyerson, x[phone number scrubbed]. Background: The Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 ( P.L. 110-417 , §533) established a pilot Career Intermission Program (CIP) as a retention initiative that authorized 20 officers and enlisted per year to take time out from their military career. This intermission may last up to 3 years. The purpose is to allow servicemembers to address work/life balances (e.g., starting a family or taking care of a sick parent) or to pursue broadening opportunities (e.g., graduate school or industry experience). The servicemember then would return to active duty in a later year group, so as to not negatively impacting their military career progression. Discussion : DOD invests substantial resources in recruiting and training servicemembers and has an interest in retaining high-performers. The CIP was initiated to provide more career flexibility for high-performing servicemembers and to increase retention rates for those who might otherwise leave the service. Servicemembers who are accepted into the program accept an additional active duty service obligation of two months for every one month spent in CIP (for a maximum six year follow-on obligation). DOD is required to submit a final assessment to Congress on the pilot program not later than March 1, 2016. The enacted bill (P.L. 114-92, S. 1356) would remove prohibitions on program participation by members of the Armed Forces serving under an agreement upon entry, or members receiving a critical military skill retention bonus. Section 523 removes the restriction that limits the number of annual participants in the program to 20 officers and 20 enlisted members. CRS Point of Contact : [author name scrubbed], x[phone number scrubbed]. Background: Over the past few years, Congress has been concerned with improving the recruitment, retention, and career management for the acquisition workforce. Some have suggested that improving the quality of the acquisition workforce, requires additional incentives for high-performing military personnel to seek acquisition assignments, and enhanced professional military education in the area of acquisition. Discussion : Military acquisition professionals oversee billions of dollars of funding for major defense acquisition programs. Many in Congress and DOD have an interest in ensuring a cadre of high-performing and qualified personnel for acquisition duty assignments. The Goldwater-Nichols Act of 1986 ( P.L. 99-433 ) created incentives for officers to be educated and experienced in joint matters by tying joint professional military education and service in joint assignments to promotions and advancement to general/flag officer ranks. Provisions in the enacted bill (P.L. 114-92, S. 1356) extend joint duty credit to include service in acquisition-related assignments. The act also includes provisions that would allow officers to pursue a dual career track with a primary specialty in combat arms and a functional sub-specialty in an acquisition field. In addition the NDAA conferees encouraged the Secretary of Defense to ensure that the curriculum for Phase II joint professional military education includes acquisition matters to ensure successful performance in acquisition or acquisition-related fields. CRS Point of Contact : For military personnel issues contact [author name scrubbed], x[phone number scrubbed]; for defense acquisition issues contact [author name scrubbed], x[phone number scrubbed]. Background: Section 1585 of Title 10, United States Code authorizes the Secretary of Defense to prescribe policy and regulations regarding the carrying of firearms for DOD civilian employees and military servicemembers on military bases. Current DOD policies limit the carrying of government-issued firearms on military installations to personnel engaged in assigned duties. By policy, it is prohibited for military servicemembers to carry personal firearms (concealed or open carry) on military bases and installations while on duty and under most other circumstances. Discussion : On July 16, 2015, a Marine Corps recruiting center and U.S. Naval Reserve Center were attacked by an armed shooter. This has followed other active shooter incidents on military installations, for example, the 2009 and 2014 shootings at Fort Hood, Texas, and the 2013 Washington Navy Yard shooting. Following the most recent incident, some have questioned whether force protection measures at military installations are adequate and whether current DOD policies and regulations should be modified to broaden the authority for servicemembers to carry personal or government-issued firearms. The enacted bill (P.L. 114-92, S. 1356) would compel DOD to initiate a process that would give more flexibility to commanders of installations and other defense facilities to establish protocols for servicemembers to be authorized to carry appropriate firearms as a force protection measure. Reference ( s ) : CRS Report IN10318, Can Military Servicemembers Carry Firearms for Personal Protection on Duty? by [author name scrubbed] and [author name scrubbed]. CRS Point of Contact : [author name scrubbed], x[phone number scrubbed]. Background: The Purple Heart is awarded to any member of the Armed Forces who has been (1) killed or wounded in action by weapon fire while directly engaged in armed conflict against an enemy of the United States; (2) killed or wounded by friendly fire under certain circumstances; or (3) killed or wounded as a result of an intentional terrorist attack against the United States. On April19, 1995, a domestic terrorist bomb attack on the Alfred P. Murrah Federal Building in downtown Oklahoma City, OK, killed 168 people and injured more than 650 including six servicemembers in the Army Recruiting Battalion and in the Marine Corps Recruiting office. These servicemembers are ineligible for the Purple Heart based on the criteria listed above. Supporters of Section 583 of the initial House-passed bill ( H.R. 1735 ) contend that the servicemembers killed in the Oklahoma City bombing were victims of terrorism and therefore eligible for the Purple Heart. Opponents maintain that these servicemembers were victims of domestic terrorism and do not qualify under current law. Discussion: Eligibility was expanded in the FY2015 NDAA ( P.L. 113-291 ) to include servicemembers wounded and killed in 2009 during the terrorist attacks at Little Rock, AR and Fort Hood, TX. Authorities initially treated the 2009 shootings at Little Rock and Fort Hood as criminal acts and not acts perpetrated by an enemy or hostile force. Yet, because these acts involved Muslim perpetrators angered over U.S. actions in Iraq and Afghanistan, some believed they should be viewed as acts of terrorism. Still others were concerned that awarding the Purple Heart in these situations could have anti-Muslim overtones. However, Section 571 of the NDAA for FY2015 (P.L.113-291) expanded the eligibility for the Purple Heart by redefining what should be considered an attack by a "foreign terrorist organization" for purposes of determining eligibility for the Purple Heart. The law states that an event should be considered an attack by a foreign terrorist organization if the perpetrator of the attack "was in communication with the foreign terrorist organization before the attack" and "the attack was inspired or motivated by the foreign terrorist organization." The provision in Section 583 of the initial House-passed bill (H.R. 1735) was not adopted, thus servicemembers who were victims of the Oklahoma City bombing will not be eligible for the Purple Heart under the enacted bill (P.L. 114-92, S. 1356). Reference ( s ) : CRS Report R43647, FY2015 National Defense Authorization Act: Selected Military Personnel Issues , coordinated by [author name scrubbed]; and CRS Report R42704, The Purple Heart: Background and Issues for Congress, by [author name scrubbed]. CRS Point of Contact : [author name scrubbed], x[phone number scrubbed]. Background: The issue of military working dogs (MWDs) has received congressional and media attention over the years with Congress enacting laws and provisions in the NDAA related to the transfer and adoption of MWDs. In November 2000, Congress passed "Robby's Law" ( P.L. 106-446 ), "To require the immediate termination of the Department of Defense practice of euthanizing military working dogs at the end of their useful working life and to facilitate the adoption of retired military working dogs by law enforcement agencies, former handlers of these dogs, and other persons capable of caring for these dogs." Congress also included language that limited liability claims arising from the transfer of these dogs. The NDAA for FY2012 (Sec. 351, P.L. 112-81 ) expanded the eligibility list to adopt MWDs to include the handler (if wounded or retired), or a parent, spouse, child, or sibling of the handler if the handler is deceased. Military working dogs were classified as "equipment" and eligible individuals interested in adopting one of these dogs paid for transporting the MWD stateside. On January 2, 2013, Congress passed the NDAA for FY2013 (P.L 112-239) with a provision in Section 371 that a retiring MWD may be transferred to the 341 st Training Squadron (in Lackland, Texas, where MWDs are trained) or to another location for adoption. The current law (10 U.S.C. §2583) does not require DOD to transfer MWDs that are "retired" overseas back to the United States. Discussion: Section 342 of the enacted bill (P.L. 114-92, S. 1356) includes provisions from both Section 594 of the initial House-passed bill ( H.R. 1735 ) and Section 352 of the initial Senate-passed bill ( H.R. 1735 ) requiring DOD to transfer retiring MWDs located overseas to the United States and give adoption priority to former handlers. It does not alter, revise, or override existing military policy allowing law enforcement agencies to adopt military working dogs. Advocates of MWDs contend that the enacted bill ( P.L. 114-92 , S. 1356 ) language changing "may" to "shall" requires all military working dogs to be retired only after they are returned to the United States and will help facilitate domestic transfer of these dogs to those who qualify to adopt them. Opponents maintain that it will be costly since there are currently no appropriated funds designated for the transfer of retiring MWDs from abroad. Reference ( s ) : CRS Report R42651, FY2013 National Defense Authorization Act: Selected Military Personnel Policy Issues , coordinated by [author name scrubbed], and AFI 31-126, Military Working Dog Program , June 1, 2015 . CRS Point of Contact : [author name scrubbed], Analyst in Defense Budget and Military Manpower, x[phone number scrubbed]. Background: Over the past few years, Congress has been concerned with improving the Defense Commissary (DeCA) system but there have been no legislated changes. The President's FY2015 budget proposal included $1 billion in cuts to the Defense Commissary System over a three-year period, beginning with $200 million reduction in FY2015. However, commissary funding was fully restored in the FY2015 NDAA which added $100 million to the commissary budget to reverse the Administration's budget proposal. It also required a study of possible cost reductions. Similar to the FY2015 budget request, the President's FY2016 budget request proposed cutting $300 million in subsidies for commissaries, cutting the commissary budget from $1.3 billion to $400 million in three years, with only funds to stateside commissaries being cut. The reduced subsidies could result in a reduction in operating days and hours for commissary patrons and might increase costs for some goods and services. Authorized patrons include active duty military members, Guard and Reserve component members, retired personnel and their families, 100% disabled veterans, Medal of Honor recipients, and DOD civilians stationed at U.S. installations overseas. Discussion: Sections 651 and 652 of the enacted bill (P.L. 114-92, S. 1356) include provisions similar to the initial Senate-passed version of H.R. 1735. Section 651 of the enacted bill ( P.L. 114-92 , S. 1356 ) requires that the Secretary of Defense submit a report to the Committees on Armed Services of the House and Senate no later than March 1, 2016, with a plan to obtain budget-neutrality for the DeCA and the military exchange system. This comprehensive plan is to detail how to achieve budget-neutrality by meeting benchmarks set in the report such as customer service satisfaction, high product quality, and sustainment of discount savings to eligible patrons by October 1, 2018. Elements of this report shall include descriptions of any modifications to the commissary and exchange systems including privatization, in whole or in part; closure of any commissary in close proximity to other commissaries; an analysis of different pricing constructs to improve or enhance the commissary and exchange benefits; and the impact of any modification on Morale, Welfare and Recreation (MWR) quality-of-life programs. Also, as part of this report, the Defense Secretary shall consider Section 634 of the Carl Levin and Howard P. "Buck" McKeon National Defense Authorization Act for Fiscal Year 2015 ( P.L. 113-291 ) as well as previous reports and studies. Section 634 of P.L. 113-291 required a review of management, food, and pricing options for DeCA including using variable pricing in commissary stores to reduce the expenditure of appropriated funds; implementing a program to make available more private label products in commissary stores; converting the defense commissary system to a non-appropriated fund instrumentality; and eliminating or at least reducing second-destination funding. Section 652 of the enacted bill ( P.L. 114-92 , S. 1356 ) requires the Comptroller General of the United States to submit a report on the Commissary Surcharge, Non-appropriated Fund, and Privately-Financed Major Construction Program. The report will be submitted to the Committees on Armed Services of both chambers no later than 180 days after the date of the enactment of this Act. Reference ( s ) : CRS Report R43806, Fact Sheet: Selected Highlights of H.R. 3979, the Carl Levin and Howard "Buck" McKeon National Defense Authorization Act for FY2015 , by [author name scrubbed]. Military Compensation and Retirement Modernization Commission (MCRMC), Final Report , January 29, 2015, at http://www.mcrmc.gov/public/docs/report/MCRMC-FinalReport-29JAN15-HI.pdf . CRS Point of Contact : [author name scrubbed], Specialist in Defense Acquisition, x-7617, and [author name scrubbed], Analyst in Defense Budget and Military Manpower, x[phone number scrubbed]. Background: TRICARE is a health care program serving uniformed servicemembers, retirees, their dependents, and survivors. In its FY2016 budget request, the Administration proposed to replace the TRICARE Prime, Standard, and Extra health plan options with a consolidated plan, to increase copays for pharmaceuticals, and to establish a new enrollment fee for future enrollees in the TRICARE-for-Life program (that acts like a Medigap supplement plan for Medicare-enrolled beneficiaries). Discussion: Except for pharmaceutical copays in the initial Senate-passed bill (H.R. 1735), none of the remainder of the Administration's proposals was adopted. In addition, recommendations for changes to TRICARE were included in the final report of the Military Compensation and Retirement Compensation Modernization Commission. However, the President did not endorse those recommendations nor were they adopted in either the House- or Senate-passed versions of H.R. 1735 . This is not to suggest that Congress will not consider major changes to the TRICARE benefit in the future: the Senate report stated Although the committee believes that the Commission's healthcare recommendations may address lingering problems with-in the military health system, the committee feels it is prudent to take a very deliberate approach to enacting TRICARE reform legislation. The committee must better understand the implications and unintended consequences of any plan to transform a large, complex health program like TRICARE. The committee has recommended provisions in this Act, however, that would ensure the Department of Defense improves access to care, delivers better health outcomes, enhances the experience of care for beneficiaries, and controls health care costs. These provisions help lay the foundation for comprehensive TRICARE modernization and reform legislation in the near future. The joint explanatory statement to accompany the enacted bill ( P.L. 114-92 , S. 1356 ) further stated: We agree that comprehensive reform of the military health care system is essential and commit to working with the Department of Defense in fiscal year 2017 to begin reforming the military healthcare system. This reform must improve access, quality and the experience of care for all beneficiaries; maintain medical readiness of the military health professionals; and ensure the long-term viability and cost effectiveness of the military health care system. The current system has not kept pace with the best practices and latest innovations in the commercial healthcare market and will not meet the future needs of the DOD, the servicemembers, families, or retirees. In order to modernize and improve the military healthcare system, we agree that all elements of the current system must be reevaluated, and that increases to fees and co-pays will be a necessary part of such a comprehensive reform effort. The Senate pharmacy provision is discussed separately on page 32. Reference ( s ) : Previously discussed in CRS Report R43647, FY2015 National Defense Authorization Act: Selected Military Personnel Issues . CRS Point of Contact : [author name scrubbed], x[phone number scrubbed]. Background: TRICARE beneficiaries have access to a pharmacy program that allows outpatient prescriptions to be filled through military pharmacies, TRICARE mail-order pharmacy, and TRICARE retail network and non-network pharmacies. Active duty servicemembers have no pharmacy copayments when using military pharmacies, TRICARE Pharmacy Home Delivery, or TRICARE retail network pharmacies. Military pharmacies will provide free-of-charge a 90-day supply of formulary medications for prescriptions written by both civilian and military providers. Non-formulary medicines generally are not available at military pharmacies. It is DOD policy to use generic medications instead of brand-name medications whenever possible. The 2015 NDAA allowed a one-time $3 increase to retail and mail order pharmacy copays and required refills for maintenance drug prescriptions (e.g., cholesterol, blood pressure) to be filled through lower cost mail order or military pharmacies. The Administration's FY2016 budget request proposed a series of annual increases in the amount of copayments for fiscal years 2016 through 2025. Discussion: Section 702 of the enacted bill (P.L. 114-92, S. 1356) provides for smaller pharmacy copayment increases than would have been provided under the initial Senate-passed bill (H.R. 1735). Section 702 of the enacted bill (P.L. 114-92, S. 1356) contains a one-time increase to pharmacy copayments. It increases the copay for prescriptions filled at retail pharmacies from $8 to $10 for generic drugs and from $20 to $24 for formulary brand name drugs. For prescriptions filled by mail order, the copay for formulary drugs is increased from $16 to $20 and for non-formulary drugs from $46 to $49. CBO estimates that section 702 as enacted would reduce direct spending by about $1.5 billion over 10 years. Reference(s) : Previously discussed in CRS Report R43647, FY2015 National Defense Authorization Act: Selected Military Personnel Issues , and CRS Report R43184, FY2014 National Defense Authorization Act: Selected Military Personnel Issues . CRS Point of Contact: Don Jansen, x[phone number scrubbed]. Background: The quality of health care provided through the military health system was the subject of a recent series of news articles. Last year, then-Secretary of Defense Hagel ordered a 90-day review of the military health system which resulted in an action plan. Some Members of Congress have expressed interest in the implementation of that follow-up plan. Discussion : Sections 711 and 731 to 735 of the initial Senate-passed bill (H.R. 1735) would have required a variety of actions to increase the visibility of various health quality metrics by public access and through reports to Congress. CBO estimated that about $95 million would be required over the period 2016-2020 to satisfy these requirements. By not including the provisions of the initial Senate Section 711, the provisions of the enacted bill (P.L. 114-92, S. 1356) would be less demanding and presumably less costly. CRS Point of Contact : [author name scrubbed], x[phone number scrubbed]. Background: The 2014 annual report of the Defense Advisory Committee on Women in the Service reported that access to contraception remains a concern, stating that "recent studies have indicated continuing challenges with Service members' access to reproductive health care." TRICARE covers the following forms of birth control when prescribed by a TRICARE-authorized provider: Contraceptive diaphragm, including measurement, purchase and replacement, Intrauterine devices, including surgical insertion, removal and replacement, Prescription contraceptives, including the Preven Emergency Contraceptive Kit containing special doses of regular birth control pills and a self-administered pregnancy test, and Surgical sterilization, male and female. TRICARE does not cover condoms and nonprescription spermicidal foams, gels or sprays. Discussion : Both the initial House and Senate-passed versions of the bill (H.R. 1735) included provisions that would have required DOD to take actions to increase access to contraception. The enacted bill (P.L. 114-92, S. 1356), similar to the initial Senate-passed bill ( H.R. 1735 ), requires the Secretary of Defense to establish, within one year, clinical practice guidelines for DOD health care providers with respect to methods of contraception and counseling on methods of contraception. It also requires that all women members of the Armed Forces have access to comprehensive counseling on the full range of methods of contraception. CRS Point of Contact : [author name scrubbed], x[phone number scrubbed].

Military personnel issues typically generate significant interest from many Members of Congress and their staffs. Ongoing operations in Afghanistan and Iraq, along with the regular use of the reserve component personnel for operational missions, further heighten interest in a wide range of military personnel policies and issues. The Congressional Research Service (CRS) has selected a number of the military personnel issues considered in deliberations on H.R. 1735 as passed by the House and by the Senate and the final bill, S. 1356, as enacted (P.L. 114-92). This report provides a brief synopsis of sections in each bill that pertain to selected personnel policy. These include major military retirement reforms, end strengths, compensation, health care, and sexual assault, as well as less prominent issues that nonetheless generate significant public interest. This report focuses exclusively on the annual defense authorization process. It does not include language concerning appropriations, or tax implications of policy choices, topics which are addressed in other CRS products. Some issues were addressed previously in the FY2015 National Defense Authorization Act and discussed in CRS Report R43647, FY2015 National Defense Authorization Act: Selected Military Personnel Issues, coordinated by [author name scrubbed]. Such issues are designated with an asterisk in the relevant section titles of this report. This report summarizes selected highlights of S. 1356, the National Defense Authorization Act for Fiscal Year 2016 (FY2016 NDAA), which was passed by the House of Representatives on November 5, 2015, passed by the Senate on November 10, 2015, and signed by the President on November 25, 2015 (P.L. 114-92), and an initial bill, H.R. 1735, that was passed by both the House and the Senate. The President had vetoed H.R. 1735, an earlier version of the FY2016 NDAA, on October 22, 2015. In his veto message, the President objected that the bill would have provided more funding for defense-related activities than would be allowed under spending caps that then were in effect, which initially had been imposed by P.L. 112-25, the Budget Control Act of 2011 (BCA). The President objected to legislation that would, in effect, allow defense-related spending for FY2016 to exceed the BCA defense spending cap without allowing similar budgetary leeway for nondefense related spending, which was subject to a similar BCA spending cap. Subsequently, the President signed into law the Bipartisan Budget Act of 2015 (P.L. 114-74) which raised the FY2016 spending caps for both defense and nondefense spending. The text of the initial bill (H.R. 1735) then was modified to comply with the revised spending caps while retaining intact the final military personnel provisions discussed in this report. For procedural reasons, the text of that revised NDAA then was substituted for the original text of S. 1356, an unrelated bill previously passed by the Senate. The amended version of S. 1356 (i.e., the revised FY2016 NDAA) then was passed by the House and Senate and signed by the President. This report summarizes selected highlights of S. 1356, the National Defense Authorization Act for Fiscal Year 2016 (FY2016 NDAA), which was passed by the House of Representatives on November 5, 2015, passed by the Senate on November 10, 2015, and signed by the President on November 25, 2015 (P.L. 114-92), and an initial bill, H.R. 1735, that was passed by both the House and the Senate. The President had vetoed H.R. 1735, an earlier version of the FY2016 NDAA, on October 22, 2015. In his veto message, the President objected that the bill would have provided more funding for defense-related activities than would be allowed under spending caps that then were in effect, which initially had been imposed by P.L. 112-25, the Budget Control Act of 2011 (BCA). The President objected to legislation that would, in effect, allow defense-related spending for FY2016 to exceed the BCA defense spending cap without allowing similar budgetary leeway for nondefense related spending, which was subject to a similar BCA spending cap. Subsequently, the President signed into law the Bipartisan Budget Act of 2015 (P.L. 114-74) which raised the FY2016 spending caps for both defense and nondefense spending. The text of the initial bill (H.R. 1735) then was modified to comply with the revised spending caps while retaining intact the final military personnel provisions discussed in this report. For procedural reasons, the text of that revised NDAA then was substituted for the original text of S. 1356, an unrelated bill previously passed by the Senate. The amended version of S. 1356 (i.e., the revised FY2016 NDAA) then was passed by the House and Senate and signed by the President.

Many situations have focused congressional attention on the adequacy of the science supporting implementation of the Endangered Species Act (ESA). While most science-based actions under ESA are unchallenged, opponents of some actions under ESA accuse agencies of using "junk science," while others assert that decisions that should rest on science are instead being dictated by political concerns. Legislation to address the use of science in implementing ESA has been introduced in each Congress since the 107 th Congress, but no measures have been enacted. The ESA was enacted to identify species at risk of extinction, to provide means to help such species recover, and to protect the ecosystems of which declining species are a part. Listings and other actions under the ESA may affect land uses and development. Endangered species are likely to reflect stressed resources or ecosystems, with various interests on all sides of the resource issues. There are multiple examples, such as protecting salmon in the Klamath River Basin or northern spotted owl habitat in the Pacific Northwest, where economic and social disputes have resulted from actions taken to list, protect, and recover species under the ESA. As a result, the protective posture of the ESA and the use of science in its implementation have received renewed attention. By law, ESA decisions must be based on the best science available, but this requirement can mean different things to different people. The agencies that administer the ESA, the Fish and Wildlife Service (FWS) in the Department of the Interior, and the National Marine Fisheries Service (NMFS) in the Department of Commerce, have procedures and policies in place to ensure the objectivity and integrity of the science that underpins agency decisions. In addition, the Information Quality Act (IQA) resulted in guidelines from the Office of Management and Budget (OMB) in 2001 that also relate to the quality of agency information. The agencies have responded to the IQA with additional ESA-related guidelines, and FWS, like the rest of the Department of the Interior, has adopted a new Scientific Integrity Policy. At issue has been how science is used in the ESA processes for listing species, consulting on federal actions, designating critical habitat, and developing recovery plans. For example, oversight hearings have focused on whether more scientific rigor is necessary in implementing the ESA. A later hearing concerned DOI efforts to avoid more instances of documented modification of scientific conclusions through political manipulations by senior officials. Beginning with the 107 th Congress, bills have been introduced to require empirical or field-tested data as well as independent scientific reviews, science review boards, and increased public involvement. Questions have also been raised on how to handle situations when the available science is not extensive. Some suggest that considerations other than species conservation should prevail; others seek to change the current posture of the law by changing the role of science. For still others, efforts to amend the ESA in these areas are seen as an attempt to undermine the ESA, which they assert struck a reasonable balance on these issues, and they question whether an amendment concerning science is advisable or practical. These considerations are complicated by the costs and time required to acquire more extensive data, particularly in connection with many lesser-known species. Many rare and endangered species are little studied because they are hard to find or because it is difficult to locate enough of them to support scientific research. In addition, restrictions on activities that might affect listed species could discourage some research. This report approaches the issues surrounding "sound science" by discussing (1) controversies over the last decade; (2) the role of science in general—what science is, and what it can and cannot do—as background for assessing the adequacy of science in ESA implementation; (3) the role of science in the legal and policy ESA context; (4) current requirements on the quality and use of information and science by FWS and NMFS; and (5) legislation to address concerns relating to ESA science. Several situations have focused congressional attention on concerns about the adequacy of ESA science. Examples illustrating a range of different types of scientific concerns include (1) allegations of sample tampering in population surveys for Canada lynx; (2) concerns over how to treat surplus hatchery-propagated salmon; (3) Steller sea lion protection and its conflicts with North Pacific fishery management; and (4) eastern gray wolves. Before the Canada lynx ( Lynx canadensis ) was listed in 2000, a federal interagency group began a three-year nationwide survey of habitat in 1999 to detect the presence or absence of Canada lynx, a species then under consideration for ESA listing. This survey annually covered more than 60 sampling areas in several states. Hair samples were collected and analyzed for DNA characteristics to identify the species that left hair samples on rubbing posts. A positive result (i.e., a "hit") of a lynx hair sample in an area already known to be occupied lynx habitat was used to help calibrate survey effectiveness. If a hit came from habitat where lynx occupancy was unknown, tracking surveys in snow and other investigations were conducted to verify the hit. These tracking surveys and associated investigations were intended to help determine the extent and significance of lynx occurrence in the area. A conclusion that wild, resident lynx were present was not automatically made from survey hit information, since the hit could also be from feral lynx (e.g., an escapee from a lynx fur farm), pet lynx, or wild but transient lynx. Controversy arose from media reports of possible irregularities with the collection and testing of lynx survey samples. Several federal and state researchers had submitted hair samples for testing which had not been collected naturally from the wild, to test the capability of the testing procedures. These submissions were not in the planned protocol for the studies. Some individuals feared that unplanned test samples might be used to extend the known range of ESA-protected lynx and impose additional restrictions on land owners. Concerns were also raised that media coverage may have sensationalized the situation beyond its facts. No new habitat was added to the lynx's known range as a result of the irregular samples. Another issue regarding listing of lynx illustrates the difficulty of studying and listing rare or elusive species whose ranges and behaviors are not well understood. With the original listing, no lynx in New Mexico were covered, because FWS did not include states where the population was thought to be transient, or not viable due to an inadequate prey base—in the New Mexico case, too few snowshoe hares. However, further research showed that perhaps lynx were more abundant there than previously thought. On August 8, 2007, Forest Guardians, Sinapu, Center for Native Ecosystems, Animal Protection Institute, Animal Protection of New Mexico, Carson Forest Watch, and Sierra Club, Rio Grande Chapter, petitioned to have the listing changed to include portions of northern New Mexico. One major issue in the boundary change debate was whether any lynx found in northern New Mexico were simply young, dispersing animals that would eventually die out after being unable to find adequate resources or whether these young animals represented a significant part of the population. Eventually, FWS concluded that this portion of the species' range warranted inclusion in the listing, but that the change was precluded by other higher priorities. It assigned the listing decision a priority of 12, the least urgent possible level. Designation of critical habitat for this species has also been controversial on scientific grounds. Defenders of Wildlife sued FWS to force designation of critical habitat. The U.S. District Court for the District of Columbia instructed FWS to propose critical habitat by November 1, 2005, and to issue a final rule for critical habitat by November 1, 2006. On November 9, 2006, FWS designated approximately 1,841 square miles of critical habitat in three states: Minnesota (Koochiching and St. Louis counties), Montana (Flathead and Glacier counties), and Washington (Chelan county). Because boundaries within the chosen states were primarily national parks or other protected areas, and because other states with lynx habitats were omitted, some environmental and scientific groups charged that even these boundaries were inadequate, and another suit was filed to expand designated critical habitat. Among other things, these groups argued that the designation was inadequate on various scientific grounds. On February 25, 2009, FWS determined that the critical habitat should be expanded to approximately 39,000 square miles in portions of Maine, Minnesota, western Montana, northeastern Idaho, north-central Washington, and northwestern Wyoming. FWS also acknowledged that a former deputy assistant secretary at the Department of the Interior, Julie MacDonald, may have inappropriately reduced the earlier designation. The 2009 critical habitat designation was ruled invalid by the Montana federal district court, which found that FWS had not considered the economic impacts adequately. The court halted application of the critical habitat designation in the area in which the economic analysis had been inadequate (a national forest in Washington). An earlier decision, by a different judge of the same court, also found the critical habitat designation flawed, but left the rule in place while FWS considered the features of lynx-occupied areas in certain national forests. Naturally spawned fish are genetically diverse and therefore considered to be more vigorous than the genetically more similar hatchery fish. Consequently, agency scientists have distinguished between hatchery-raised and wild salmon to maximize production of the latter. Over the years, these distinctions have been controversial in several respects. In 1993 NMFS issued its Interim Hatchery Listing Policy on how to consider hatchery fish in listing determinations for Pacific salmon and steelhead species. The interim policy concluded that hatchery fish could be in the same evolutionarily significant unit (ESU) as wild fish. Eventually, a federal court found that the interim policy violated the ESA by listing below the species level. The court found that if hatchery and wild salmon were in the same ESU, they should not have different listing status. NMFS revised the policy to reflect the court's decision. The final hatchery listing policy (HLP) was released four years later, in 2005. The HLP requires NMFS to consider the status of the ESU as a whole, rather than the status of only the wild fish within the ESU, when determining whether to list the species. It also provides that the entire ESU would be listed, rather than just the wild fish. Two suits were filed in two different district courts. One suit challenged how the HLP affected steelhead trout. Two types of groups sued in the steelhead case: groups that wanted wild fish considered as distinct from hatchery fish, and groups that wanted to require NMFS to make no distinction between the origins of fish. The court found the HLP was invalid because it was not based on the best available scientific data. The court found the HLP undermined a fundamental purpose of the ESA—to preserve natural, self-sustaining populations. The court further found it scientifically questionable whether risk assessment criteria developed by NMFS for making status determinations could be applied to fish populations that included both hatchery and wild fish, since the criteria were designed to be applied only to wild fish. NMFS's downlisting of steelhead from endangered to threatened by applying the HLP was ruled invalid. But the court upheld the NMFS decision to include hatchery and wild fish in the same ESU. The Ninth Circuit Court of Appeals upheld only a portion of the steelhead decision. The appellate court distinguished between the two steps of the listing process: defining the species, and then determining whether the species should be listed. The Ninth Circuit agreed with NMFS that the effects of hatchery fish on wild fish could be considered at the listing phase, not the definitional stage. The court gave discretion to NMFS's science, although it noted that there may not be scientific consensus regarding the threat hatchery fish pose to wild fish. The appellate court reversed the lower court's holding that downlisting the fish was invalid, finding that hatchery fish did not necessarily put wild fish at risk. A second suit was based on how the HLP affected salmon. In this case, the court held that NMFS properly considered hatchery and wild fish as having different extinction risks in its listing decision. The court rejected the plaintiffs' argument that special regulations regarding taking salmon had to apply uniformly to hatchery and wild fish. The Ninth Circuit Court affirmed the lower court's decision. The western population of Steller sea lions was listed in 1990 as endangered under the ESA, and their abundance has been declining for several decades. Starting in late 1998, NMFS prepared three biological opinions that were based on the hypothesis that intense fishing for pollock, Pacific cod, and Atka mackerel off Alaska was causing localized depletion of these fish and therefore starving Steller sea lions. Critics among commercial fishermen argued that NMFS based its biological opinion on a scientifically untested hypothesis to make a jeopardy finding on fishing levels and practices under the ESA, while NMFS insisted on a higher standard of certainty for the science under the Magnuson-Stevens Fishery Conservation and Management Act, supporting fishery management measures to address localized fish depletion problems. In a fourth biological opinion on authorization of these fisheries, NMFS took a different approach, after Steller sea lion feeding studies and population trends at some rookery sites raised questions about the localized depletion hypothesis. Litigation on this issue was settled early in 2003. In response, NMFS (1) published an addendum to its 2001 biological opinion to clarify the effects of the fisheries on Steller sea lions and their critical habitat and (2) completed a Final Programmatic Supplemental Environmental Impact Statement and Record of Decision concerning the Alaska groundfish fishery. In early December 2010, NMFS restrictions on commercial Atka mackerel and Pacific cod fishing in the western Aleutians to protect western Steller sea lions reignited this controversy. As a result of litigation challenging the NMFS determination that commercial fishing jeopardized those Steller sea lions, a court ordered NMFS to prepare an environmental impact statement for Steller sea lion protection measures. Wolves are an adaptable species, as shown by their behavior and by their presence in a tremendous variety of ecosystems. Variations in color, size, and bone structure have led some mammalogists to designate wolves in different areas as different subspecies or populations, whereas other experts would recognize only a single species with variability. Biologists commonly describe their colleagues as lumpers or splitters , based on their inclinations in classifying organisms. As the names suggest, lumpers are those who tend to minimize differences, and see one or a few species, perhaps with some variations, while splitters tend to emphasize those differences, dividing a species into many subspecies, or populations. As one well-known mammalogist once stated: "Splitters make very small units—their opponents say that if they can tell two animals apart, they place them in different genera, and if they cannot tell them apart, they place them in different species. Lumpers make large units—their opponents say that if a carnivore is neither a dog nor a bear they call it a cat." For wolves, which are (or were) found in temperate and polar areas throughout the Northern Hemisphere, some observers (splitters) have argued that there are as many as 24 subspecies in North America and 8 in Europe and Asia. More recently, lumpers have had the upper hand in the scientific community. However, that tide may be changing. In May 2011, the U.S. Fish and Wildlife Service (FWS) proposed recognizing a third species of wolf ( Canis lycaon ), in addition to the gray and red wolf. The wolves being considered for this new species designation live (or lived) primarily in the eastern United States. In the ESA context, the academic debate has considerable significance. Under the ESA, if a taxon is listed (for example the genus Hylobates ), then all of the species of gibbons which belong to that genus are all protected. Similarly, if Canis lupus is listed, then all wolves (subspecies, and DPS) belonging to that species are all protected. However, if FWS concludes that there are animals commonly referred to as wolves, but which do not belong to Canis lupus at all, then those wolves would lose their ESA protections unless or until they won ESA protection on their own merits. From a scientific viewpoint, designating wolves found in the eastern United States as a separate species is not assured. For example, the encyclopedic Mammal Species of the World discusses the validity of Canis lycaon as a distinct species and concludes that evidence for separation is equivocal. However, it does not currently consider this wolf in the East to be a distinct species. Moreover, the North American consortium of national professionals who manage the Integrated Taxonomic Information System (ITIS, the source considered authoritative on taxonomy and taxonomic validity in the United States and its territories, Mexico, and Canada) currently considers this wolf as a subspecies (Canis lupus lycaon) . The validity debate considers evidence related to mitochondrial DNA, morphology, evidence of hybridization with coyotes, the natural variability of widely distributed species, and the extremely low population densities that make conclusive evidence difficult to obtain. A change in the taxonomic status would, in effect, de-list any remaining eastern wolves on the basis of that new status, rather than on an assessment of its conservation status. Only a new decision to list would return such wolves to a protected status. In another version of the debate over science and ESA, the focus is less on the use of science in ESA decision-making per se and more on the use of the act to force decisions on a scientific issue. Specifically, some have argued that the ESA might be a suitable tool to restrict greenhouse gas emissions. However, years after the theory was proffered, no published court opinion has considered this issue. The idea, as spearheaded by the Center for Biological Diversity (CBD), is to petition FWS and NMFS to list as endangered or threatened various animals whose habitat is or will be adversely affected by climate change. Once a species is listed, the argument would be made that sources of substantial greenhouse gas emissions, such as coal-fired power plants, cause an unlawful "take" of these species under ESA Section 9 by the effect such emissions have, via climate change, on the species' habitat. This could force negotiation of an incidental take permit for the source, with conditions to limit greenhouse gases. Case law, however, does not demonstrate that the ESA is used as an enforcement tool to make climate change arguments. In three cases where ESA challenges were directed at federal projects related to power plants, only one involved climate change allegations, Palm Beach County Environmental Coalition v. Florida , and it was not clear whether those claims were premised on the ESA or on another legal basis. In an Eighth Circuit case, Sierra Club v. U.S. Army Corps of Engineers , a claim was made that emissions harmed specific species near the power plant, and did not allege global harm. A similar claim was made in Palm Beach County . Neither court reviewed the ESA claims, finding procedural reasons. In the third case, United States v. Pacific Gas and Electric , the court held that the ESA had not been violated; also, the claims of harm to species related to a power plant were not based on GHGs. Despite the apparent lack of litigation premised on climate change taking species, some regulatory changes were made to limit lawsuits based on that cause of action. In December 2008, FWS changed the regulations that dictated how a Service considered impacts of federal projects on listed species. Those regulations were effective only from January 15, 2008, to May 5, 2008, after Congress acted to halt them in P.L. 111-8 . During that period of regulatory change, definitions related to the effects of an action were modified to "reinforce the Services' current view that there is no requirement to consult on [greenhouse gas] emissions' contribution to global warming and its associated impacts on listed species." Despite the revocation of those changes, it does not appear that the scope of effects has expanded, likely due to the fact that the regulations already limited review to those effects with a reasonable certainty to occur. Another regulatory change of the same time period is still in place. It restricts lawsuits claiming incidental takes of polar bears to instances where the agency action occurs in the state of Alaska. The polar bear was listed under the act primarily due to shrinking habitat caused by changing climate. The polar bear regulation prevents a lawsuit claiming that a power plant in any state other than Alaska harmed the polar bear by indirectly causing its ice floe habitat to diminish. The law that authorized revocation of the regulations discussed above, P.L. 111-8 , also authorized revocation of the polar bear rule, but the Secretary of the Interior and the Secretary of Commerce did not act to revoke that rule. On December 7, 2010, FWS designated approximately 187,000 square miles offshore and onshore in Alaska as critical habitat for the species (75 Federal Register 76085). In addition to specific claims of poor science such as those cited above, there have been claims of more general interference in scientific decisions under ESA. Among the high-profile claims were charges that a former deputy assistant secretary at the Interior Department, as well as other DOI officials, were responsible for changing a number of decisions that had been supported by career staff. The DOI Inspector General (IG) found that the official, Julie MacDonald, had interfered with scientific determinations regarding endangered species. Ms. MacDonald resigned shortly thereafter. In a hearing before the House Committee on Natural Resources on July 31, 2007, the DOI deputy inspector general, Mary Kendall, added that DOI did not investigate allegations of then-Vice President Cheney's involvement in some of the decisions, but would have done so if it had been aware of the allegations at the time. Some Republican members of the committee argued that even if the involvement occurred, the contacts would not have been improper. As a result of the IG investigation and the resignation, FWS reconsidered decisions concerning eight species: white-tailed prairie dog, Preble's meadow jumping mouse, two Hawaiian picture-wing flies, arroyo toad, southwestern willow flycatcher, California red-legged frog, and Canada lynx. The reconsideration came after FWS regional directors reported that Ms. MacDonald influenced the outcome without a scientific basis. On August 30, 2007, the Center for Biological Diversity filed a notice of intent to sue DOI, claiming interference with decision-making concerning 55 listed species. Claims concerned primarily FWS elimination of designated critical habitat in a number of states, but also decisions to de-list or down-list some species, and not to list others. Pressure cited for the decisions was primarily from Ms. MacDonald, but other DOI officials were also named in the notice. In addition to these reviews, which cite previous specific interference in scientific analysis, FWS announced other reviews or changes in previous ESA decisions. Examples included a review of the proposed listing of Gunnison sage grouse; and a re-examination of the recovery plan and the reduction in designated critical habitat for the northern spotted owl. Some federal courts rejected FWS determinations in part because of Ms. MacDonald's influence. For example, the timeline for determining bull trout critical habitat was adjusted by the District Court of Oregon because of her input. Listing determinations for the greater sage grouse and the Sonoma and Santa Barbara salamander were sent back to the agency by two other courts. "Science" or "sound science" is held up as desirable by all sides of the ESA debate. Some studies are seen as supporting a certain action by one party, and as insufficient for decision-making by another. And at times, other studies are held up as supporting opposing sides. With these apparent contradictions, it is useful to examine, in an ESA context, (a) what is "science;" (b) what is the scientific method; and (c) how do science and public policy interact? The National Academy of Sciences has given a fairly typical definition of science: "Science is a particular way of knowing about the world. In science, explanations are limited to those based on observations and experiments that can be substantiated by other scientists. Explanations that cannot be based on empirical evidence are not a part of science." Science therefore is not simply an aggregation of facts unconnected with each other; rather, science is a way of examining phenomena to produce explanations of the "why" and "how" of these phenomena. Terms used in describing the nature of science include scientific fact, scientific hypotheses, and scientific laws and theories. Scientific knowledge is dynamic, changing as new information becomes available. In this sense, science does not reveal "truth," so much as produce the best available or most likely explanation of natural phenomena, given the information available at the time; in many cases, analysis of the data may even give an estimate of the degree of confidence in the explanation. Moreover, scientific conclusions naturally depend on the questions that are asked. For instance, the question of whether an action is likely to jeopardize the continued existence of a species in the next 10 years might have a different answer than if the time in question is the next 100 years. The scientific method is the heart of science, and has been defined as [i]nvestigating a system by formulating hypotheses (educated guesses based on initial observations) about the behavior of the system, then making predictions based upon these hypotheses, and finally designing experiments (or making observations) to test these predictions. After several tests validate different predictions, a hypothesis becomes a scientific theory or law. This process is the basis of western science. Scientific methods may vary based on the objective and the nature of the subject matter. Usually, the scientific investigation begins after some casual observation about the real world (e.g., dairy maids who have had cowpox rarely contract smallpox) and an observer who wonders "why?" It begins then with a hypothesis based on observations (e.g., humans who have had cowpox are immune to smallpox). Testable predictions are made based on the hypothesis (e.g., inoculation with cowpox will prevent smallpox). Data are systematically collected and classified to test the predictions (e.g., patients were first inoculated with cowpox and then exposed to smallpox). The data are interpreted and a conclusion is drawn based on the outcome of the experiment (e.g., since the patients inoculated with cowpox did not contract smallpox, cowpox inoculations will prevent smallpox). Models (e.g., epidemiological or microbiological) may be developed to describe the phenomenon or help make predictions (e.g., the spread of the disease). Noteworthy results are often published, which usually requires scientific peer review. Once the hypothesis is considered to be thoroughly tested, it is considered or contributes to a "theory" or "law" and becomes part of the body of scientific knowledge. Even accepted theories and laws remain open to re-examination if new information arises. It is through these methods that science gives weight to the viewpoints of one scientist versus another. The work of a scientist that has not survived (or even been submitted to) this process is given less weight than the work of one that has. Several of these elements—data collection, models, and scientific peer reviews—have become important in legislative discussions. Scientific peer reviews generally evaluate the analysis, interpretations, and conclusions developed from the data, and sometimes review the data (observable facts). Models have long been part of the scientific method; models include physical models (e.g., DNA strands or various sizes of balls to represent the solar system), mathematical formulas, computer simulation programs, and many more. Models are based on stated or implicit assumptions that can usually be applied to predict outcomes based on changing different variables. As new information becomes available, models can be confirmed, modified, or discarded. With this definition, models are a seamless part of the scientific process, and science without models and modeling would be difficult to imagine. The models as well as the facts and scientific theories may in turn be cited by decision-makers. The scientific method is not the only way of "knowing." Traditional knowledge and common sense also play an important role. For instance, elders among Native groups may report that whales have calved in a certain lagoon as far back as their own grandparents can remember, or that certain springs in the desert have never before gone dry until recent decades. A scientist's decades of experience with a particular species sometimes also falls into this category. Although such information has often been disregarded in the past, greater attention is now paid to it. In addition, many common sense observations (e.g., that salmon cannot jump up rivers that contain long stretches of dry creek bed or that heavy rain across bare slopes produces sediment runoff) might merit study to quantify the observation, but not to verify it. Experience and common sense, especially when supported by scientific analyses tending in the same direction, can provide important input for ESA-related (and other) decisions. The scientific method has, at its heart, two values that are strongly implied (as in the description above) but not often stated: (1) a transparent approach in which both new and old data are available to all parties; and (2) a continuing effort to update data, and therefore modify, and even reject, previously accepted hypotheses in light of new information. Together, transparency and updating are the cleansing mechanism that gradually sweeps away scientific misunderstandings and errors—a sine qua non for scientific advancement. Logically, then, policy decisions based on science would include a mechanism providing for a transparent policy process, and a commitment not only to review such decisions, but actually to gather new information to assure that decisions remain consistent with the best available science. On the one hand, the speed of data-gathering sometimes may exceed that of the slow regulatory process. On the other hand, lack of funding may stop data-gathering altogether. And a lack of transparency (e.g., due to fear of lawsuits or to hidden assumptions that may affect decision-making) can also lead to decisions based on science that does not meet the best-available standard. Scientists and policy-makers typically ask different kinds of questions. On the one hand, scientists deal with facts and observations along with the models and hypotheses to explain them (with some of the latter potentially useful for predicting likely future events, such as volcanic eruptions, solar flares, nuclear hazards, and rates of extinction). On the other hand, decision-makers often seek to affect how the world "ought to" or "should" be. Annually, science is the major or only input for dozens or hundreds of listing determinations and permit actions, and for thousands of interchanges (both formal and informal) on interagency consultation under Section 7. The great majority of these actions generate little or no controversy, but these non-controversial actions are overshadowed by the much smaller number of actions which may produce headlines. The complexity, uncertainty, and risk associated with many ESA issues, and the predictive nature of science with its emphasis on the probability of various outcomes rather than on absolute certainty, can make the interaction of scientists and decision-makers frustrating for both. The ESA specifies that "solely" scientific criteria may be considered in a listing decision, but it does not specify the guidelines agencies (NMFS and FWS) should follow in assessing risk. As a result, choices may not be consistent between, or even within, the agencies. Similarly, when federal agencies consult with FWS or NMFS on the effects of their proposed actions (under Section 7 of ESA), FWS or NMFS must determine whether the proposed action is likely to jeopardize the continued existence of the species or lead to adverse modification of its critical habitat. How are decision-makers to respond to a forecast that the chance of a hurricane coming ashore in a particular place in the next 24 hours is 20%? That the risk of heart disease is an additional 8 women in 10,000? That a species has a 60% chance of becoming extinct in the next 100 years? The ESA itself does not provide clear guidance to agencies on how to address questions of risk. In the example of salmon, scientists have provided a quantitative response. However, should a salmon run with a particular level of risk be listed as endangered, threatened, a low-priority candidate, or not at all? In all of these matters, different parties may have different risk tolerances. In the context of such decisions, where does science stop and policy begin? The indistinct boundary between science and policy can be further obscured by some scientists (usually associated with particular positions) or decision-makers who want science to provide certainty for complex policy decisions. As a result, policy questions (e.g., how much risk to bear?) may be cast as science questions, and decision-makers may ask scientists to make what are essentially policy choices. At first glance, it might appear that science could be completely objective and neutral. And the usual protocols of science are likely to produce objectivity through peer review and efforts to reproduce (or not) the results of other scientists. Errors found through these and other means will usually weed out incorrect conclusions. Yet some scientists may have personal values that might influence (consciously or unconsciously) the questions they ask, the models or experiments used, the assumptions made, and the interpretation of the results of an experiment. Scientists working for various agencies, companies, tribes, and other interest groups may be influenced by policy positions of their employer. Vigorous debate is part of the essence of science, but the result can be difficult for courts and policy-makers to assess. The influence can be quite subtle, and two examples may illustrate the problem. In a controversy over national forest management policy in Wisconsin, assumptions were incorporated into "diversity indices," which were to be used to create a baseline against which various alternative forest plans could be measured. This seemingly simple exercise, apparently grounded in science, contained an assumption which facilitated an outcome that would produce moderate to high levels of timber harvest. Specifically, the diversity indices stressed populations of habitat generalists (e.g., ruffed grouse, ground squirrels, common yellowthroats (a bird), and pileated woodpeckers, species commonly found in Wisconsin's second growth, suburbia, and cut-over areas). By choosing such species as the measure of the alternatives, then alternatives that produced more of them would be "preferred." Timber harvest was a major tool to promote this type of habitat, and an alternative featuring fairly high harvest levels and little old growth was chosen as the preferred option—an outcome to be expected based on the initial choice of species. Inclusion of other species dependent on deep forests (e.g., northern goshawks and barred owls) would have resulted in a different "preferred" option. A second example, even more subtle, of the risks of unstated assumptions in scientific inquiry concerns the initial discovery of the snail darter in the Little Tennessee River. This fish was discovered by Dr. David Etnier of the University of Tennessee in August 1973, as the controversy over the ESA and the building of the Tellico Dam was growing. He recognized it at the time as a species new to science, and not known from other locations. Two years later, the fish was listed as endangered by FWS. Eventually, the fish lay at the heart of one of the biggest controversies in the history of the ESA. The area of the fish's discovery was searched, in part, because of the proposed substantial change in the riverine habitat through the construction of a large dam. Years later, after the dam was completed, this species was found in small numbers at nine additional locations and in 1984 was reclassified as threatened. The subtle bias (searching that specific area rather than some others) produced a result (major controversy and ground-breaking lawsuits) that might not have occurred had all similar habitats been equally searched. Yet such problems are well known in science: one makes discoveries in the places one examines, and not in the places one doesn't. Federal statutes have affected the information federal agencies gather and use, and have located significant oversight powers in the Office of Management and Budget (OMB) through the Office of Information and Regulatory Affairs (OIRA). Section 515 of Appendix C of the Treasury and General Government Appropriations Act for FY2001, generally known as the Information Quality Act (IQA) or the Data Quality Act, directs OMB to (1) issue government-wide guidelines to federal agencies to ensure and maximize the quality, objectivity, utility, and integrity of information disseminated by federal agencies; (2) establish a procedure for people to seek corrections of agency information; and (3) require periodic reports to the Director of OMB of complaints regarding agency information. OMB published final guidelines on February 22, 2002. Departments and agencies were required to issue their own guidelines to achieve the information quality goals, and to establish administrative mechanisms to allow persons to request correction of information maintained and disseminated by the agency; and to report periodically on the number and nature of complaints received and how such complaints were handled. Some have applauded the IQA as likely to result in better procedures and more credible information. Others have expressed concerns that the act may be used to stymy agency action through the "correction" procedures, and that the OMB oversight might result in more political input into scientific decisions. The OMB guidelines set out the entities to which the guidelines apply and define basic terms. Government information means information that is created, collected, processed, disseminated, or disposed of by an agency. Disseminated means that the agency initiated or sponsored distribution of information to the public, as opposed to another agency or in response to a Freedom of Information Act request, for example. The purpose of the guidelines was to develop a process for reviewing the quality of information before it is disseminated. Quality includes the objectivity, utility, and integrity of information. Objectivity involves presentation and substance: whether information is presented in an accurate, clear, complete, and unbiased manner, and whether the information is accurate, reliable, and unbiased. Some of the elaboration on objectivity is very significant to the ESA context. For example, the OMB guidelines address peer review as contributing to objectivity, stating that if: data and analytic results have been subjected to formal, independent, external peer review, the information may generally be presumed to be of acceptable objectivity. However, this presumption is rebuttable based on a persuasive showing by the petitioner in a particular instance. If agency-sponsored peer review is employed to help satisfy the objectivity standard, the review process employed shall meet the general criteria for competent and credible peer review recommended by OMB-OIRA to the President's Management Council (9/20/2001) ... , namely "that (a) peer reviewers be selected primarily on the basis of necessary technical expertise, (b) peer reviewers be expected to disclose to agencies prior technical/policy positions they may have taken on the issues at hand, (c) peer reviewers be expected to disclose to agencies their sources of personal and institutional funding (private or public sector), and (d) peer reviews be conducted in an open and rigorous manner." The element of integrity of information is relevant to current ESA issues and accusations in that integrity refers to "the security of information-protection of the information from unauthorized access or revision, to ensure that the information is not compromised through corruption or falsification." Although this guideline seems to refer to unauthorized alteration of information, it may be relevant in that various sides of recent issues have accused others of changing information to serve political ends. The information quality directives and policies of FWS and NMFS that predated the IQA and those that have been adopted since that act are discussed under " Agency Regulatory Requirements and Policies ," below. OMB also plays a role under the Paperwork Reduction Act in that OMB must review and approve all efforts of an agency to collect information from nonfederal sources. Since enactment, the IQA has had little effect on ESA court cases. In one, the U.S. Air Force challenged a 2003 FWS decision that slickspot peppergrass should be protected under the ESA. FWS withdrew its listing decision for reconsideration. Ultimately, the peppergrass was listed, but the listing was vacated based on a non-scientific dispute. In another action, a farming association claimed that the biological opinion of FWS regarding delta smelt violated the IQA. The court ruled that the claim was moot. The ESA agencies have adopted various policies over the years to interpret the use of science in implementing the ESA. In addition, new policies have been established since the enactment of the IQA. The Department of the Interior promulgated information quality guidelines that are available on the FWS website (see http://www.fws.gov/informationquality/ ), along with specific FWS guidelines. As discussed above, an important issue has been what to do when the available scientific information is not complete. Various FWS documents addressed this and other issues before the IQA guidelines were issued. The precautionary principle "to save all the pieces" is the position taken in the Endangered Species Consultation Handbook . The handbook states that efforts should be made to develop information, but if a biological opinion must be rendered promptly, it should be based on the available information, "giving the benefit of the doubt to the species," with consultation possibly being reinitiated if additional information becomes available. This phrase is drawn from the conference report on the 1979 amendments to the ESA, which states that the "best information available" language was intended to allow FWS to issue biological opinions even when inadequate information was available, rather than being forced by that inadequacy to issue negative opinions, thereby unduly impeding proposed actions. But the conference report also states that if a biological opinion is rendered on the basis of inadequate information, the federal agency proposing the action has the duty to show its actions will not jeopardize a species and a continuing obligation to make a reasonable effort to develop additional information, and that the statutory language "continues to give the benefit of the doubt to the species." In 1994, long before the enactment of the IQA, FWS and NMFS developed several interagency ESA-related cooperative policies on information standards under the ESA. Under these policies, FWS and NMFS receive and use information from a wide variety of sources, including individuals. Information may range from the informal—oral or anecdotal—to peer reviewed scientific studies, and hence the reliability of the information can also vary. Federal biologists are to review and evaluate all information impartially for listing, consultation, recovery, and permitting actions, and to ensure that any information used by the two agencies to implement the ESA is "reliable, credible, and represents the best scientific and commercial data available." Agency biologists are to document their evaluations of all information and, to the extent consistent with the use of the best scientific and commercial data available, use primary and original sources of information as the basis of recommendations. In addition, documents developed by agency biologists are reviewed to "verify and assure the quality of the science used to establish official positions, decisions, and actions." The extent to which agency decisions rest on adequate and objective scientific information has usually been debated. Agencies deal with the scientific bases for decisions in other ways as well. Another joint policy notes that, in addition to the public comments received on proposed listing rules and draft recovery plans, FWS and NMFS are also to solicit expert opinions and peer review to ensure the best biological and commercial information. With respect to listing decisions, the agencies solicit the expert opinions of three specialists and summarize these in the record of final decision. Special independent peer reviews can be used when it is likely to reduce or resolve a high level of scientific uncertainty. OMB issued its Final Information Quality Bulletin for Peer Review on December 15, 2004. The Bulletin sets out a gradation of peer review procedures depending on the degree to which the information in question is influential—stricter minimum requirements for peer review of highly influential scientific assessments are required, but significant discretion is still left to the agency in formulating peer review plans. In some instances, FWS and NMFS procedures instituted before the Bulletin were considered to have satisfied the IQA. For example, in publishing its listings of Pacific salmon as threatened or endangered, NMFS referred to the 1994 joint NMFS/FWS policy on peer review, which requires those agencies to solicit independent expert review from at least three qualified specialists, concurrent with the public comment period. With respect to the proposed salmon listings, NMFS sought technical review of the listing determinations "from over 50 independent experts selected from the academic and scientific community, Native American tribal groups, Federal and state agencies, and the private sector." NMFS asserted that the 1994 peer review policy and the comments received from several academic societies and expert advisory panels collectively satisfy the requirements of the OMB Peer Review bulletin. A scientific integrity policy (hereinafter "the Policy") for the Department of the Interior (DOI), including FWS, was announced by Secretary Ken Salazar on February 1, 2011. It will be updated as warranted. According to the Secretary's statement, it applies to departmental employees who engage in or supervise research, or communicate publicly on scientific or scholarly information or "use this information to make policy, management or regulatory decisions." There are provisions applying to contractors and other persons working on scientific research on the Department's behalf. Some DOI agencies have had a policy on scientific integrity (or some similar term) for many years. The Fish and Wildlife Service (FWS) has had a Scientific Code of Professional Conduct for the Service for many years; its provisions are similar to those long in use as DOI's primary science agency, the U.S. Geological Survey, and to the new Policy. Salient provisions of the Policy include the following: facilitation of "the free flow of scientific and scholarly information, consistent with privacy and classification standards"; provision of "information to employees on whistleblower protections"; definitions of conflict of interest and of scientific and scholarly misconduct; duties of various DOI officials; a stated code of conduct for all persons generally engaged in scientific or scholarly pursuits, for scientists and scholars specifically, and for decision makers; procedures for reporting and resolving allegations of misconduct; specified corrective or disciplinary actions; and rules for participation as an officer or board member of professional societies or other non-federal organizations. Because these policies already existed for some, if not all, DOI agencies, the new department-wide code may result in little practical change. A court described the FWS IQA Guidelines as not imposing any substantive standards, but instead requiring a narrative discussing the strengths and the weakness of the data. Accordingly, the guidelines did not provide a basis for suit. If scientific misconduct at FWS is alleged, according to the Policy's specified procedures, the FWS Director establishes a Scientific Integrity Review Panel (SIRP; slightly different procedures apply if the allegation is against an agency head or the Office of the Secretary). The SIRP investigates the allegation and addresses the significance of the alleged misconduct, its severity and deviance from accepted scientific practice, and intent. Misconduct is defined to include fabrication, falsification, or plagiarism, but explicitly excludes honest error, difference of opinion, and difference from a management decision. The chair of the panel is appointed by the director. The chair, with the concurrence of the director, appoints three additional members with subject matter expertise from any part of DOI. In addition, the agency's human resources officer is an ad hoc member of the panel. The panel is encouraged to seek a consensus decision. The SIRP report is pre-decisional and is sent to the Departmental Scientific Integrity Officer (DSIO), the FWS SIO, and the relevant manager. The reports are to provide advice and recommendations, among other things. If misconduct is found, the DSIO or FWS Scientific Integrity Officer (SIO) is to work with the responsible manager and the human resources officer to determine corrective or disciplinary action. If no misconduct is found by the SIRP, the manager is directed to send a memo to the accused, with a copy to the DSIO or SIO, saying there will be no further action, and closing the case. From the thousands of interactions among FWS scientists that might fall under the purview of a SIRP, Scientific Integrity investigations were conducted seven times during FY2012; three investigations were closed with no finding of misconduct. Two are still open due to associated actions in court or in the office of the DOI Inspector General. One investigation found that some allegations were verifiable and some were not. One found misconduct and is in the hands of the DOI Solicitor. In addition, ten informal queries to the FWS SIO in FY2012 resulted in two cases that are still open, and no misconduct in the remaining eight cases. The National Oceanic and Atmospheric Administration (NOAA), including NMFS, released a final Scientific Integrity Policy on December 7, 2011, as NOAA Administrative Order 202-735D. These are the major provisions of the NOAA Scientific Integrity Policy: establish NOAA's Principles of Scientific Integrity and the general NOAA Policy on Integrity of Scientific Activities; define the reciprocal responsibilities among scientists, their managers and supervisors, and policy makers by establishing a Code of Scientific Conduct and a Code of Ethics for Science Supervision and Management; provide for compliance training and maintenance of a NOAA Scientific Integrity Commons website for its employees; and set procedures for resolving allegations of misconduct and consequences for misfeasance by adopting an associated Procedural Handbook. This policy is applicable to all NOAA employees who are engaged in, supervise, or manage scientific activities, analyze or publicly communicate information from scientific activities, or use scientific information or analyses in making policy, management, or regulatory decisions. In addition, all contractors who engage in these activities and recipients of NOAA financial assistance are also covered. If scientific or research misconduct is alleged, a finding of misconduct requires a determination based on a preponderance of the evidence and must have been engaged in intentionally, knowingly, or in reckless disregard of NOAA's Scientific Integrity Policy. In response to any allegation of misconduct, NOAA's Deputy Undersecretary for Operations (DUS/O) will assess and determine if the allegation is sufficiently credible and specific to warrant an inquiry. If an inquiry is warranted, the DUS/O appoints an Integrity Review Panel Chair and a Determining Official, and proposes appointments to the Review Panel. The Review Panel collects evidence and receives written testimony in order to prepare an inquiry report. Based on the inquiry report, the Determining Official will decide whether an investigation is warranted. After any investigation, the Review Panel prepares an investigation report. Upon review of the investigation report, the Determining Official may specify appropriate institutional administrative actions. Upon receipt of the Determining Official's report, if misconduct is deemed to have occurred, the DUS/O refers the matter to an appropriate manager for consideration of possible administrative action. Like FWS, NOAA (which includes NMFS) has had few allegations of scientific misconduct, among the thousands of interactions among scientists. During the period beginning December 7, 2011, when NOAA's Scientific Integrity Policy came into effect and the end of the FY2012 on September 30, 2012, NOAA received three allegations of scientific and research misconduct. Two of these cases are still in process and one (which did not involve NMFS or ESA) was dismissed. For some obscure groups of organisms (e.g., freshwater clams, small freshwater fish species, and many insects), it may prove difficult to find sufficient experts to provide peer reviews, and these specialists often have other duties and may not be available (or willing) to serve governmental regulators in a timely manner. Also, there is the issue of compensating scientists who participate in peer reviews: currently, academic scientists reviewing documents for their eligibility for grants or for publication receive little, if any, compensation. Reviews are generally accomplished by mail, and are (by design) normally anonymous. Grafting such a system onto a contentious area which may require extensive meetings, lost time from primary research and teaching activities, and potentially the polar opposite of academic anonymity could prove difficult, or further limit the pool of willing reviewers. In addition, achieving peer review by impartial, scientists may also be an issue if the listing or action being reviewed could involve major economic factors in which the scientists have an interest (e.g., research funding, employment, etc.). In 1998-1999, the Society for Conservation Biology (SCB), in cooperation with FWS, performed a national review of 135 recovery plans, covering 181 species listed under the ESA. The National Center for Ecological Analysis and Synthesis at the University of California, Santa Barbara, reviewed the database resulting from this study. It found among other things that a relatively low proportion (30%-40%) of recovery criteria were clearly based on biological information, that inclusion of academic scientists on recovery teams led to more explicit use of biological information in recovery plans, and that recovery plans developed with federal scientists only were less likely to reflect adequate attention to species biology. FWS responded to this study with 10 action items to strengthen recovery planning by increasing efforts to expand the diversity of recovery plan contributors, improving the internal consistency of recovery plans, continuing to expand ties to academic and professional communities, etc. Property rights advocates, business interests, environmentalists, scientific organizations, and federal agencies have all decried, at various times, the scientific basis of various ESA decisions. This seeming consistency is misleading, since the reasoning and objectives of the groups may be diametrically opposed. To some extent, the debate over the application of science in ESA is predictable, given the scarcity of information on many wild species and the even higher likelihood of very limited data on rare species. Some examples of questions that turn on matters at the dividing line between science and policy are: If a species' distribution is poorly known (as is the case with Canada lynx), should it be listed? If a species' taxonomic status is a matter of dispute (as with the FWS proposal to change the taxonomic status of remaining wolves in the eastern United States and thereby remove them from their current protection under ESA), should it be protected under ESA? If a species is wide-ranging and begins, on its own, to reappear in an area it once occupied (as with a few wolves in Yellowstone in the late 20 th century), should these animals be regarded as a "resident population" for purposes of ESA? Should a formerly widely distributed species (such as bald eagles) warrant protection in parts of its range, when it is still or has again become fairly abundant in other parts of its range? Should a species that is possibly "contaminated" with genes from other populations (as with Florida panthers) warrant protection? More broadly, how should the federal government regulate in the inevitable absence of complete information, and what is the current posture of the ESA in this regard? Different constituencies react to decisions under ESA based on a number of factors. People who face job loss, or communities fearing economic instability, would probably respond that the federal government should be quite certain that the species is present (as with Canada lynx and Alabama sturgeon), is valid taxonomically (as with eastern wolves and northern goshawks), is protected over no wider an area than necessary (as with Rocky Mountain wolves), and is delisted as soon as possible (as with bald eagles and Florida panthers). Representatives of many scientific or environmental organizations would probably counter that the federal government should provide a margin of safety to recognize both the irreversibility of extinction and the frequent lack of complete information. This can best be achieved, they might add, by beginning to protect species when their populations are still sufficient to avoid drastic and expensive measures (e.g., the extensive efforts necessary for whooping cranes and Florida panthers), and by seeking to promote and protect ecological balance wherever possible. In effect, it is the precautionary principle that is being invoked by these various interests. This principle, exemplified in the expression "better safe than sorry," can be loosely defined as applying to situations when potential harm is serious and irreversible, though full scientific certainty is lacking. The precautionary principle would have regulators act to reduce (or eliminate) the harm while weighing the probable costs and benefits of acting or not acting. The precautionary principle is not the sole purview of one side of the debate: scientists would invoke it in some debates to be certain of protecting a species or its habitat, while those fearing job loss would invoke it to protect their livelihoods. At this philosophical level, the scientific questions shade into law and policy: how should regulations be administered and on which side should the "burden of proof" lie for protection? That is, should a project be allowed to go ahead because it cannot be proven harmful to a listed species? Or should it be stopped because it cannot be proven to avoid jeopardy? For example, a dam may be proposed whose reservoir would replace some miles of rapids with still water, thereby substantially altering a large portion of some listed species' known habitat. All sides may agree that construction of the dam would have this effect. FWS might issue a jeopardy opinion on the dam's construction—knowing that the listed fish is found only in areas with rapids and that fish rarely tolerate this much change. FWS would argue that not only is it fulfilling its statutory obligation to "ensure" that the action would not jeopardize the species, but also that it is basing its decision on sound science—using the precautionary principle because there is not enough information to show that dam construction would be safe for the species. Supporters of the dam may ask for proof that the listed fish could not survive in the new reservoir or argue that this particular fish might not respond in the same manner as other related species that had been studied more extensively. They may further argue that FWS's decision is based on "bad science"—that in the face of such uncertainty, the precautionary principle would have the agency construct the dam and benefit those dependent on the reservoir's water, rather than allow the threat to the listed fish to stop construction. Yet the underlying science is the same. In this example, the same scientific information is being used to justify opposite positions, based on different applications of the precautionary principle. And both positions would be based on the (usually false) hope that scientific certainty is even possible in policy decisions. For many of the species facing extinction, there may be little or no information and insufficient personnel or funds available to study them, especially those species with little charisma or known economic value. What should be done in such instances? Should decisions be weighted in favor of the species, or of the users (e.g., irrigators, ranchers, builders)? The ESA does not expressly address this balancing act (and certainly not quantitatively), but considering the strongly protective purpose of the ESA—to save and recover species—and considering the statutory requirement to use the "best scientific ... data available," arguably the ESA intends that all declining species should be given the benefit of the doubt and a margin of safety provided. Many scientists feel this is the appropriate stance—that we should apply the precautionary principle to "save all the pieces (species)" since we lack the knowledge to pick and choose among species. Others counter that such protection may prove unnecessary while imposing substantial economic injury. The National Research Council concluded that the current balance between these two views in the agencies leans toward less protection: "[T]he structure of hypothesis testing related to listing and jeopardy decisions can make it more likely for an endangered species to be denied needed protection than for a non-endangered species to be protected unnecessarily." The ESA requires that decisions to list a species be made "solely on the basis of the best scientific and commercial data available" and after reviewing the status of the species and taking into account those efforts being made by states, political subdivisions of states, or foreign nations to protect the species. The word solely was added in the 1982 amendments to the ESA, to clarify that the determination of endangered or threatened status was intended to be a biological decision made without reference to economic or other "non-biological" factors which could be considered in fashioning responses once a species is listed. There is no elaboration on the meaning of the phrase elsewhere in the ESA itself or in agency regulations. Incomplete data, different interpretations among scientists, and evolving disciplines in science can make the consideration of relevant science challenging for the regulatory agencies. The decision of whether to list a species can be compared to diagnosing versus treating cancer: whether a patient has cancer should be a strictly medical decision; other factors—whether the patient can afford treatment, whether the cancer can be treated effectively, etc.—can be considered in deciding how (or even whether) to treat the cancer. Similarly, Congress provided that scientific data alone should be the basis for listing decisions, but other factors are to be considered in other decisions and actions under the act. Science can also play a role in post-listing decisions and procedures under the ESA. For example, scientific information is used in designating critical habitat for listed species. Science also is heavily involved in the "consultation" process under Section 7 of the act. During this process, an agency proposing an action ascertains whether the proposed action might affect a listed species. If the proposed action might adversely affect a listed species, FWS or NMFS renders a biological opinion on whether the action might jeopardize the continued existence of a species or result in destruction or adverse modification of critical habitat of a listed species. If so, FWS or NMFS suggests "reasonable and prudent alternatives" to the proposed agency action so as to avoid those outcomes. The science that underlies these opinions and recommended alternatives must be summarized and frequently has been challenged. Science also is used to develop habitat conservation plans and incidental take permits under Section 10 of the ESA, and also is a part of the development of recovery plans to bring the species to the point where the protections of the ESA are no longer needed. As a general matter, judicial review can help ensure that agency decisions and use of scientific data are sound. Under the Administrative Procedure Act (APA), a court may set aside an agency's decision if it is "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law." The Supreme Court has described circumstances in which a rule would normally be found arbitrary and capricious: "if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." The agency must "examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made." In reviewing an agency action, the courts generally are "highly deferential" to the agency. This is especially true with respect to matters, such as scientific issues, that involve the agency's particular expertise, but the presumption of agency expertise may be rebutted where the agency decision is not reasoned and the agency fails to articulate a rational relation between the facts found and the decision made. In the ESA context, the APA standards may require that regulations or agency actions be rationally related to the problems causing the decline of a species, especially when other interests are adversely affected. Courts have elaborated on the use of science in general, and on the best data available language within the ESA. One court has held that the statutory phrase does not require, and hence a court cannot order, FWS or NMFS (the Services) to conduct additional studies to obtain missing data, and that the agency must rely on even inconclusive or uncertain information if that is the best available at the time of a listing decision. The relevant agency cannot ignore available biological information, especially if that information is the most current or is scientifically superior to that on which the decision-maker relied. A federal agency requesting consultation under Section 7 of the ESA cannot refuse to provide FWS with the "most relevant scientific data available from reputable scientists on the ground that it was not perfect" or its methodology could be criticized, because doing so would eviscerate the statutory requirement that the best available science be used. However, if there is a lack of science, the agency cannot rely on data that its own scientists unanimously agree is inaccurate. Courts have addressed how the Services should consider future actions in listing decisions. A Service may not postpone listing a declining species until it is on the brink of extinction in reliance on uncertain, future actions of another agency. The Services must rely on existing regulatory mechanisms in their listing determinations, and not on future, uncertain, or voluntary actions to justify a decision not to list a species, although cooperative efforts may be considered. A court also has said that "the 'best scientific and commercial data available' is not a standard of absolute certainty, and [is] a fact that reflects Congress' intent that the FWS take conservation measures before a species is 'conclusively' headed for extinction." If FWS does not base its listings on speculation, or disregard superior data, the fact that the studies on which it does rely are imperfect does not undermine those authorities as the best scientific data available—"the Service must utilize the best scientific ... data available , not the best scientific data possible " (emphasis added). On the other hand, an agency's response must be appropriate to the problem that needs to be solved. One case struck down regulations that totally banned duck hunting in an area to protect one species of duck. Another case stated that low numbers of a particular species alone did not necessarily warrant listing—other factors must be considered, such as the reasons for the low numbers, whether the numbers are declining, and how experts view the population numbers. Another court stated that the bar FWS has to clear in terms of evidence is very low, but it must at least clear it. In the context of issuing Incidental Take Permits under Section 10 of the ESA, this means the Service must demonstrate that a species is or could be in an area before regulating it, and must establish the causal connection between the land use being regulated and harm to the species; mere speculation of potential harm is not sufficient. One court held that a biological opinion that was not "coextensive in scope" with the agency action failed to consider important aspects of the problem and was therefore arbitrary and capricious. In the last decade, several bills have been introduced to address the role of science in ESA decisions. Although committee hearings have been held and some bills have been reported, none have been enacted. Some bills address very specific aspects of science in the ESA context; others concern the fundamental treatment of scientific matters under the ESA. No bills have been introduced to date in the 113 th Congress to amend the ESA. In the 112 th Congress, among the bills addressing specific science questions, H.R. 909 , S. 706 , and S. 1720 would have prohibited consideration of the climate change-related impact of a greenhouse gas upon any species of fish, wildlife, or plant. H.R. 1837 would have prohibited the Secretaries of the Interior and Commerce from distinguishing between natural-spawned and hatchery-spawned, or otherwise artificially propagated strains of a species, in making any determination under ESA that relates to any anadromous fish species that are present in the Sacramento and San Joaquin Rivers or their tributaries. Other bills take on more generic matters, though few recent bills have taken this broader approach. Proponents of "sound science" legislation believe that ESA amendments are necessary to rein in the perceived extremism of the ESA that allowed federal agencies to use "shoddy science." Furthermore, supporters believe amendments are needed to help those who have to deal with an "unreasonable" ESA. They claim that private property rights would be helped by these proposals because a species would have to actually be endangered to be listed and that the proposals would make it more difficult to use falsified data, which they charged was being done by government agencies. Also, they see this legislation as improving recreational and commercial access to public lands. They claim that access to public lands is improved when ESA decisions use peer-reviewed science to protect "truly endangered species." Opponents voice concerns that "sound science" legislation is a misnomer and would substantially weaken the "best available science" used to implement the ESA and undermine the precautionary approach to protecting imperiled plants and animals. They are concerned that such legislation might weaken the ESA by putting in place requirements for studies and processes that are impossible to achieve, radically weakening America's ability to protect its threatened and endangered species and wildlands. They further believe that legislation, using the mask of "sound science," would result in special rights for industry, and increase the costs, delays, and bureaucracy associated with implementing the nation's most important wildlife conservation law. They further claim widespread support among scientists for their views. In July 2002, a letter from more than 300 scientists was sent to members of Congress requesting that the "current debate over science in the ESA not lead to changes that could weaken the ESA's provisions to stem the loss of biological resources." They were concerned that adding requirements would cause additional delays and increase bureaucratic procedures for crucial decisions, that added peer review requirements were unnecessary, that new statutory limits on the use of scientific methods (e.g., analysis of population viability) for the collection and analysis of scientific data would reduce protection, and that policy-makers should follow the precautionary principle and take "the most prudent course of action by choosing alternatives that are not likely to harm listed species." FWS raised concerns about "sound science" legislation when testifying before the 107 th Congress: [W]e have concerns with the structural and budgetary impacts of enacting this legislation. We also believe that the Department has existing authority to implement improvements that will greatly enhance the science we use.... We believe that the additional processes added by the two bills would be costly to implement.... We are concerned that the considerable new process required in both bills will impact the Fish and Wildlife Service's ability to provide consultations and other decisions in a timely manner and, in some cases, may compromise the Fish and Wildlife Service's ability to meet statutory deadlines. The application of science under the ESA is periodically controversial in debates over the act. Yet of the thousands of science-based decisions involved in administration of the law, relatively few become controversial or generate headlines. When they do, there are those who argue that actions by FWS or NMFS provide more protection than necessary at some cost to economic welfare; others assert that insufficient attention is paid to science, resulting in insufficient or delayed protections of species that warrant more concern. To date, the relatively low number of actions judged under the two agencies' Scientific Integrity Policies suggests that outright scientific misconduct is exceedingly rare. Whether all the remaining science-based actions (both controversial and non-controversial) under ESA reach a substantially higher standard is uncertain; the debate concerning under- or over-protection based on science continues.

The adequacy of the science supporting implementation of the Endangered Species Act (ESA) has received considerable congressional attention over the years. While many scientific decisions pass unremarked, some critics accuse agencies responsible for implementing the ESA of using "junk science," and others counter that decisions that should rest on science are instead being dictated by political concerns. Under the ESA, certain species of plants and animals (both vertebrate and invertebrate) are listed as either endangered or threatened according to assessments of the risk of their extinction. Once a species is listed, powerful legal tools are available to protect the species and its habitat. Efforts to list, protect, and recover threatened or endangered species under the ESA can be controversial. Some of this controversy stems from the substantive provisions of this law, which can affect the use of both federal and nonfederal lands. The scientific underpinnings of decisions under the ESA are especially important, given their importance for species and their possible impacts on land use and development. The Fish and Wildlife Service in the Department of the Interior and the National Marine Fisheries Service in the Department of Commerce administer the ESA, and each agency has policies and requirements to ensure the integrity and objectivity of the science that underlies ESA decisions. The Information Quality Act (P.L. 106-554, IQA or Data Quality Act) also imposes general requirements and has resulted in agency changes to carry out the goals of that act to maximize the quality, objectivity, utility, and integrity of information disseminated by the agencies. In several situations, economic and social disputes have resulted from actions taken to list, protect, and recover species under the ESA. Critics in some of these disputes assert that the science supporting ESA actions is insufficiently rigorous. Others assert that in some instances decisions were political rather than scientific. Controversy has arisen over what might be the essential elements of "sound science" in the ESA process and whether the ESA might benefit from clarification of how science is to be used in its implementation. The courts have had occasion to review the use of science by the agencies, which generally must show their decisions were not arbitrary and that they rest on credible science. For some purposes, if that science is the best available, even if it is considered imperfect or incomplete, it still may be used. Several bills affecting science as used in the ESA were introduced in recent Congresses, but to date none have been enacted. Legislative activity in the 112th Congress is summarized in CRS Report R41608, The Endangered Species Act (ESA) in the 112th Congress: Conflicting Values and Difficult Choices, by [author name scrubbed] et al. No bills concerning ESA and science have yet been introduced in the 113th Congress. This report provides a context for evaluating legislative proposals through examples of how science has been used in selected cases, a discussion of the nature and role of science in general, and its role in the ESA process in particular, together with general and agency information quality requirements and policies, and a review of how the courts have viewed agency use of science.

The Philippine Islands became a U.S. possession in 1898, when they were ceded from Spain following the Spanish-American War (1898-1902). In 1934, Congress passed the Philippine Independence Act (Tydings-McDuffie Act, P.L. 73-127), which set a 10-year timetable for the eventual independence of the Philippines and in the interim established a Commonwealth of the Philippines vested with certain powers over its internal affairs. In 1935, the Philippine Constitution was adopted and the first President of the Philippines was elected. The granting of full independence was ultimately delayed until 1946 because of the Japanese occupation of the Islands from 1942-1945. Among other things, P.L. 73-127 reserved to the United States the power to maintain military bases and armed forces in the Philippines and, upon order of the President of the United States, the right to call into the service of the U.S. Armed Forces all military forces organized by the Philippine government. On July 26, 1941, President Franklin D. Roosevelt issued an executive order inducting all military forces of the Commonwealth of the Philippines under the command of a newly created command structure called the United States Armed Forces of the Far East (USAFFE). These units remained under USAFFE command through the duration of World War II (WWII), until authority over them was returned to the Commonwealth at the time of independence. From time to time since 1946, Congress has passed laws providing, and in some instances repealing, benefits to Filipino veterans. This report, which will be updated as legislative events warrant, provides an overview of major Filipino veterans legislation enacted by Congress since 1946. The report begins by defining the specific groups of Filipino nationals who served under the command of the United States, outlines the Rescission Acts of 1946, the changes to benefits for Filipino veterans since 1946, and recent legislative proposals. Table 1 , at the end of this report, shows the current benefits for Filipino veterans and survivors. These were soldiers who enlisted as Philippine Scouts prior to October 6, 1945. They were members of a small, regular component of the U.S. Army that was considered to be in regular active service. The Regular Philippine Scouts were part of the U.S. Army throughout their existence, and are entitled to all benefits administered by the Department of Veterans Affairs (VA) by the same criteria that apply to any veteran of U.S. military service. These soldiers enlisted in the organized military forces of the Government of the Philippines under the provisions of the Philippine Independence Act of 1934. They served before July 1, 1946, while such forces were in the service of the U.S. Armed Forces pursuant to the military order of the President of the United States dated July 26, 1941. These were individuals who served in resistance units recognized by, and cooperating with, the U.S. Armed Forces during the period April 20, 1942, to June 20, 1946. They served primarily during the Japanese occupation of the Islands. Following reoccupation of the Islands by the U.S. Armed Forces, they became a recognized part of the Commonwealth Army of the Philippines by order of the President of the Philippines. These were Philippine citizens who served with the U.S. Armed Forces with the consent of the Philippine government between October 6, 1945, and June 30, 1947, and who were discharged from such service under conditions other than dishonorable. Since these scouts were recruited as a result of the Armed Forces Voluntary Recruitment Act of 1945 (P.L. 79-190), they are referred to as "New" Scouts. In 1946, Congress passed the first Supplemental Surplus Appropriation Rescission Act (P.L. 79-301) and the second Supplemental Surplus Appropriation Rescission Act (P.L. 79-391), which came to be commonly known as the "Rescission Acts of 1946." It should be noted that the Rescission Acts of 1946 applied only to Filipino veterans who were members of the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, or the New Philippine Scouts. Veterans who served as Regular, or "Old," Philippine Scouts were categorized as U.S. veterans. They were, and remain, generally entitled to all veterans' benefits for which any other U.S. veteran is eligible. Enacted on February 18, 1946, P.L. 79-301 authorized a $200 million appropriation to the Commonwealth Army of the Philippines with a provision limiting benefits for these veterans to: (1) compensation for service-connected disabilities or death; and (2) National Service Life Insurance contracts already in force. Furthermore, this provision included bill language stating that Service before July 1, 1946, in the organized military forces of the government of the Commonwealth of the Philippines while such forces were in the service of the Armed Forces of the United States pursuant to the military order of the President, dated July 26, 1941 ... shall not be deemed to have been active military, naval or air service for the purposes of any law of the United States conferring rights, privileges, or benefits upon any person by reason of the service of such person or the service of any other person in the Armed Forces. Because of differences between economic conditions and living standards in the United States and the Philippines, P.L. 79-301 also provided that any benefits paid to Commonwealth Army veterans would be paid at the rate of one Philippine peso to each dollar for a veteran who was a member of the U.S. Armed Forces, with the assumption that one peso would obtain for Philippine veterans in the Philippine economy the equivalent of $1 of goods and services for American veterans in the American economy. Prior to the enactment of P.L. 79-301, Commonwealth Army veterans were determined by the then Veterans' Administration to be eligible for U.S. veterans' benefits. Enacted on May 27, 1946, P.L. 79-391 provided that service in the Philippine Scouts (the New Philippine Scouts) under Section 14 of the Armed Forces Voluntary Recruitment Act of 1945 (P.L. 79-190) shall not be deemed to have been active military or air service for the purpose of any laws administered by the Veterans' Administration. There is little background information on the intent of Congress in passing the first Rescission Act, as it affects veterans of the Commonwealth Army. However, statements made by Senator Carl Hayden during hearings on the second Rescission Act, which affected New Philippine Scouts, provide some indication of legislative intent in the passage of the first Rescission Act, and to the subsequent passage of the second Rescission Act. Furthermore, other events at the time may provide some context in which the Rescission Acts were considered. At the end of World War II, when Congress was considering a $200 million appropriation for the support of the Philippine Army, Senator Carl Hayden of the Senate Committee on Appropriations sent a letter to General Omar Bradley, then Director of the Veterans' Administration, requesting information concerning the status of the Filipino servicemen and the potential cost of their veterans benefits. In his response to the committee, General Bradley indicated that the total cost of paying veterans' benefits to members of the Philippine Commonwealth Army and their dependents, under then existing veterans' laws, would amount in the long run (75 years) to about $3 billion. It seems clear from Senator Hayden's statements that the passage of the first Rescission Act was meant to balance competing financial interests by providing some benefits, such as pensions for service-connected disability or death, while at the same time reducing the U.S. liability for future benefits. To accomplish this, Senator Hayden, Senator Russell and Senator Brooks included language by way of an amendment to the first Rescission bill stating that service by members of the Commonwealth Army was not considered active military, naval, or air service in the U.S. Armed Forces. Furthermore, hearings on the second Rescission Act also clearly indicate that it was Congress's intent to limit wartime benefits given to New Philippine Scouts: Because neither the President nor the Congress has declared an end to the war, a [New] Philippine Scout upon separation from service would be entitled to the same benefits as an American soldier who served in time of war. Unless this amendment [to the second Rescission Act] is adopted, a [New Philippine] Scout would be entitled to claim every advantage provided for the G.I. bill of rights such as loans, education, unemployment compensation, hospitalization, domiciliary care and other benefits provided by the laws administered by the Veterans' Administration. Because hostilities have actually ceased, the amendment makes it perfectly clear that these wartime benefits do not apply and that the 50,000 men now authorized to be enlisted in the [New] Philippine Scouts will be entitled only to pensions resulting from service-connected disability or service-connected death. In addition, the passage of the Rescission Acts may have been influenced by other bills under consideration by Congress at that time. In 1946, Congress passed the Philippine Rehabilitation Act (P.L. 79-370) and the Philippine Trade Act (P.L. 79-371). The terms of the Rehabilitation Act required the United States to pay claims for rehabilitation of the Philippines and war damage claims up to $620 million. Of this sum, $220 million was allocated for repair of public property. The remaining $400 million was allocated for war damage claims of individuals and associations. The Philippine Trade Act provided for free trade between the United States and the Philippines until July 3, 1954. These bills under consideration at the time would have provided economic stability to the newly emerging nation. According to Senator Hayden: As I see it, the best thing the American government can do is to help the Filipino people to help themselves. Where there was a choice between expenditures for the rehabilitation of the economy of the Philippine Islands and payments in cash to Filipino veterans, I am sure it is better to spend any equal sum of money, for example, on improving the roads and port facilities. What the Filipino veteran needs is steady employment rather than to depend for his living upon a monthly payment sent from the United States. Therefore, it seems clear that Congress considered the Rescission Acts in the context of providing for the comprehensive economic development of the soon to be sovereign Republic of the Philippines. Enacted on July 1, 1948, P.L. 80-865 authorized aid not to exceed $22.5 million for the construction and equipping of a hospital in the Philippines to provide care for Commonwealth Army veterans and Recognized Guerrilla Forces. P.L. 80-865 also authorized $3.3 million annually for a five-year grant program to reimburse the Republic of the Philippines for the care and treatment of service-connected conditions of those veterans. In 1951, plans for a new hospital were completed, and construction of a new hospital began in 1953. Work was completed at a total cost of $9.4 million, and the hospital was dedicated on November 20, 1955. This facility came to be known as the Veterans Memorial Medical Center (VMMC), and the facility was turned over to the Philippine government. The hospital is now organized under the Philippine Department of National Defense. Enacted on April 9, 1952, P.L. 82-311 authorized the President to transfer the United States Army Provisional Philippine Scout Hospital at Fort McKinley, Philippines, including all the equipment contained in the hospital, to the Republic of the Philippines. P.L. 82-311 also authorized a five-year grant program to reimburse the Republic of the Philippines for the medical care of Regular Philippine Scouts undergoing treatment at the United States Army Provisional Philippine Scout Hospital. Enacted on June 18, 1954, P.L. 83-421 extended the five-year grant program for an additional five years, through June 30, 1958, and authorized payments of $3 million for the first year, and then payments decreasing by $500,000 each year. No change was made to the provision stating that funds could be used for either medical care on a contract basis or for hospital operations. The VMMC was originally intended to provide care for service-connected conditions only. However, P.L. 85-461 enacted on June 18, 1958, expanded its use to include veterans of any war for any nonservice-connected disability if such veterans were unable to defray the expenses of necessary hospital care. The VA was authorized to pay for such care on a contract basis. P.L. 85-461 also authorized the President, with the concurrence of the Republic of the Philippines, to modify the agreement between the United States and the Philippines with respect to hospital and medical care for Commonwealth Army veterans, and Recognized Guerrilla Forces. The law stated that in lieu of any grants made after July 1, 1958, the VA may enter into a contract with the VMMC under which the United States would pay for hospital care in the Republic of the Philippines for Commonwealth Army veterans and Recognized Guerrilla Forces determined by the VA to need such hospital care for service-connected disabilities. P.L. 85-461 also required that the contract must be entered into before July 1, 1958, would be for a period of not more than five consecutive fiscal years beginning July 1, 1958, and shall provide for payments for such hospital care at a per diem rate to be jointly determined for each fiscal year by the two governments to be fair and reasonable. P.L. 85-461 also authorized the Republic of the Philippines to use at their discretion beds, equipment, and other facilities of the VMMC at Manila, not required for hospital care of Commonwealth Army veterans with service-connected disabilities, for the care of other persons. Enacted on June 13, 1963, P.L. 88-40 extended the grant program for another five years, through June 30, 1968. Under provisions of P.L. 88-40, costs for any one fiscal year were not to exceed $500,000. Enacted on September 30, 1966, P.L. 89-612 expanded the grant program to include hospital care at the VMMC for Commonwealth Army veterans, determined by the VA to need such care for nonservice-connected disabilities if they were unable to defray the expenses of such care. P.L. 89-612 also authorized the provision of hospital care to New Philippine Scouts for service-connected disabilities, and for nonservice-connected conditions if they were enlisted before July 4, 1946, the date of Philippine independence. P.L. 89-612 also authorized $500,000 for replacing and upgrading equipment and for restoring the physical plant of the hospital. P.L. 89-612 also provided an annual appropriation of $100,000 for six years, beginning in 1967, for grants to the VMMC for medical research and training of health service personnel. Enacted on August 1, 1973, P.L. 93-82 authorized nursing home care for eligible Commonwealth Army veterans and New Philippine Scouts. P.L. 93-82 also provided that available beds, equipment, and other facilities at the VMMC could be made available, at the discretion of the Republic of the Philippines, for other persons, subject to: (1) priority of admissions and hospitalizations given to Commonwealth Army veterans or New Philippine scouts needing hospital care for service-connected conditions; and (2) the use of available facilities on a contract basis for hospital care or medical services for persons eligible to receive care from the VA. P.L. 93-82 also authorized funding of up to $2 million annually for medical care, and provided for annual grants of up to $50,000 for education and training of health service personnel at the VMMC, and of up to $50,000 for replacing and upgrading equipment and maintaining the physical plant. Enacted on November 3, 1981, P.L. 97-72 made substantial changes to then existing law. P.L. 97-72 amended section 632 [now 1732] of Title 38 "to make it explicitly clear that it is the position of the United States that the primary responsibility for providing medical care and treatment for Commonwealth Army veterans and New Philippine Scouts rests with the Republic of the Philippines." The committee report accompanying P.L. 97-72 stated the long-standing position of Congress with regard to health care for Filipino veterans: There is little doubt that in 1948 when Congress enacted P.L. 80-865, authorizing a 5-year grant program to provide medical benefits to Filipino veterans with service-connected illnesses, including the authorization for constructing and equipping a hospital in Luzon, it intended that this program be temporary and that the Philippine government would eventually assume responsibility for funding the program and operations of the hospital.... These grants were renewed for an additional 5 years in 1954, but on a decreasing annual scale of payments (P.L. 83-421). The Committee report on this bill stated that progressively reducing these grants over five years was to make clear the intent of Congress that the Philippine government would be expected to gradually assume full responsibility for the hospital.... However, because of the moral obligation of the United States to provide care for Filipino veterans and the concern that the Philippine government would not be able to maintain a high standard of medical care to these veterans if assistance by the United States were withheld, this program was extended in 5-year increments through [FY] 1978. P.L. 89-612, enacted in September 1966, expanded the program to include medical care for nonservice-connected disabilities if the veteran were unable to defray the expense of medical care and included New Philippine Scouts in the coverage. Furthermore, P.L. 97-72 gave the VA the authority to contract for the care and treatment of U.S. veterans in the VMMC, and to provide grant authority of $500,000 per year for a period of five years for making grants to the VMMC to assist in the replacement and upgrading of equipment and the rehabilitation of the physical plant and facilities of the center. The grant program was further authorized by making amendments to the grant amount and the time frame for entering into contracts by the following acts: P.L. 100-687 , enacted on November 18, 1988; Department of Veterans Affairs Health-Care Personnel Act of 1991 ( P.L. 102-40 ), enacted on May 7, 1991; Veterans' Benefits Improvement Act of 1991 ( P.L. 102-86 ), enacted on August 14, 1991; and Veterans Health Care Act of 1992 ( P.L. 102-585 ), enacted on November 4, 1992. In 1993, the VA discontinued referrals of U.S. veterans to the VMMC, because the VA determined that the VMMC was not providing a reasonable standard of care. Until this time, the VMMC had been the primary contract hospital for the VA in the Philippines. Because of this change in the referral process, the grant-in-aid funding for the VMMC was last authorized by P.L. 102-585 through September 30, 1994, and the program was allowed to expire. However, Congress continued to appropriate funds for the program through September 30, 1996. During a tour of the VMMC in May 2006, the VA Secretary announced that "the VMMC will receive a grant of $500,000, or approximately 25.5 million pesos, from the U.S. government to help the institution purchase additional equipment and materials for the treatment of Filipino veterans." The VA currently provides grants of equipment under the authority of 38 U.S.C. §1731. Enacted on April 25, 1951, P.L. 82-21 authorized funeral and burial benefits, including burial flags, for Commonwealth Army veterans residing in the Philippines (at half the rate of U.S. veterans). These benefits were not extended to New Philippine Scouts. Enacted on September 30, 1966, P.L. 89-613 extended dependents' and survivors' education assistance to include children of Commonwealth Army veterans and New Philippine Scouts. These benefits were made payable at half the rate of the benefits for children of U.S. veterans. As a result of a Joint Republic of the Philippines-U.S. Commission study of Philippine veterans' problems, P.L. 89-641, enacted on October 11, 1966 changed how benefits were to be computed by providing for the payment of benefits in pesos based on pesos being equal in value to U.S. 50 cents for each U.S. dollar authorized. In 1978, testifying before the Senate Committee on Appropriations, the General Accounting Office (now the Government Accountability Office) stated that [T]he intent of the 1966 law was apparently to restore Philippines beneficiaries to approximately their situation in 1946, taking into account the changes occurring in the economies and living standards in the Philippines and the U.S. since 1946. Since the law was enacted, however, legislative increases and devaluations of the peso have provided Filipino veterans with undue increases in benefits and has resulted in Filipino veterans achieving much higher levels of benefits than their counterparts in the U.S. Enacted on December 12, 1999, P.L. 106-169 expanded U.S. income-based benefits to certain World War II veterans, including Filipino veterans, who served in the organized military forces of the Philippines while those forces were in the service of the U.S. Armed Forces. Until the enactment of this act, recipients of Supplemental Security Income (SSI) were generally required to reside in the United States to maintain their eligibility. This law enabled eligible Filipino veterans to return to the Philippines and retain 75% of their SSI benefits. Enacted on October 27, 2000, P.L. 106-477 changed the rate of compensation payments to veterans of the Commonwealth Army of the Philippines and veterans of Recognized Guerrilla Forces who lawfully reside in the United States. P.L. 106-377 also authorized the VA to provide hospital care, medical services, and nursing home care to these two veterans groups, similar to care and services available to U.S veterans. In order to receive these benefits, they were required to be legal permanent residents of the United States and be receiving VA disability compensation. P.L. 106-377 , also authorized outpatient care at the Manila VA Outpatient Clinic to service-connected U.S. veterans for their nonservice-connected disabilities. Prior to the enactment of P.L. 106-377 , the VA was limited to providing outpatient treatment for U.S. veterans in the Philippines only for their service-connected conditions. Enacted on November 1, 2000, P.L. 106-419 changed the amount of monetary burial benefits that the VA will pay to survivors of veterans of the Philippine Commonwealth Army and Recognized Guerrilla Forces who lawfully reside in the United States at the time of death. Enacted on December 6, 2003, P.L. 108-170 authorized the VA to provide hospital care, nursing home care, and outpatient medical services to Filipino Commonwealth Army veterans, veterans of Recognized Guerrilla Forces, and New Philippine Scouts. Currently, these groups of veterans are eligible for hospital care, nursing home care, and outpatient medical services within the United States. Enacted on December 16, 2003, P.L. 108-183 added service in the New Philippine Scouts as qualifying service for payment of disability compensation, dependency, and indemnity compensation (DIC) and monetary burial benefits at the full-dollar rate, and provided for payment of DIC at the full-dollar rate to survivors of veterans of the Philippine Commonwealth Army and Recognized Guerrilla Forces who lawfully reside in the United States. It should be noted that veterans of the U.S. Armed Forces have the same entitlement to monetary benefits in the Philippines that they would have in the United States, with the exception of home loans and related programs, which are not available in the Philippines. Table 1 provides a summary of benefits currently available to Filipino veterans and survivors by category of service (Regular Philippine Scouts, Commonwealth Army of the Philippines, Recognized Guerilla Forces, and New Philippine Scouts). H.R. 760 and S. 57 would have eliminated the distinction between the Regular or "Old" Philippine Scouts and the other three groups of veterans—Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts—making them all fully eligible for VA benefits similar to those received by U.S. veterans. H.R. 760 was reported out of committee. S. 66 would have required the Secretary of the Army to validate claims by Filipinos that they performed military service in the Philippine Islands during World War II that would qualify them for benefits under U.S. law and issue a certificate of service. S. 1315 , as passed by the Senate, incorporated provisions from S. 57 . S. 1315 would have altered current law to deem certain service with Philippine forces during World War II as active service and establish rates for the Improved Pension and the Death Pension for veterans who served with the Philippine forces and their survivors living outside the United States. Under the provisions of S. 1315 , single Filipino veterans living outside the United States would receive $3,600 a year, married veterans would receive $4,500 a year, and veterans' survivors would receive $2,400 a year. However, under the bill, veterans living outside the United States who are eligible for, or receiving, the Social Security benefit for World War II veterans living overseas would not be not eligible for the new Improved Pension rates. The bill also would not have applied the current income or net worth limitations for the Improved Pension and the Death Pension for veterans who served with the Philippine forces and their survivors living outside the United States. In addition, the bill would not have required any veteran who served with the Philippine forces or their survivors receiving other federal benefits at the time of enactment to apply for the Improved Pension or the Death Pension if receiving the new benefits would have made them ineligible for their other federal benefits or reduced the amount of their other federal benefits. S. 1315 provided that disability compensation (for service-connected disabilities) would be paid to all recipients at the same rate regardless of residence, while maintaining the general payment rate of 50 cents per dollar for other benefits to Filipino veterans and survivors living outside the United States. On September 22, 2008, the House passed an amended version of S. 1315 that did not contain the Filipino benefit provisions. H.R. 6897 , as passed by the House on September 23, 2008, would have provided a one-time payment to Filipino veterans who served in the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts. The payment would be $15,000 for U.S. citizens and $9,000 for non-U.S citizens. Payments are made from the Filipino Veterans Equity Compensation Fund and are subject to funds being available (appropriated). P.L. 110-329 appropriated $198 million for the Filipino Veterans Equity Compensation Fund. The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) authorizes a one-time payment from the Filipino Veterans Equity Compensation Fund to Filipino veterans who served in the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts. The one-time payment is $15,000 for U.S. citizens and $9,000 for non-U.S citizens. Filipino veterans currently receiving benefits will continue to receive those benefits. The one-time payment does not impact eligibility for federally assisted programs. The one-time payment is considered a settlement for all future claims for benefits based on service in the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts. The exception is that a veteran may receive benefits that the veteran would have been eligible for based on the laws in effect on the day before enactment (September 17, 2009).

The United States has had a continuous relationship with the Philippine Islands since 1898, when they were acquired by the United States as a result of the Spanish-American War. Filipinos have served in, and with, the U.S. Armed Forces since the Spanish-American War, and especially during World War II. The Islands remained a possession of the United States until 1946. Since 1946, Congress has passed several laws affecting various categories of Filipino veterans. Many of these laws have been liberalizing laws that have provided Filipino World War II veterans with medical and monetary benefits similar to benefits available to U.S. veterans. However, not all veterans' benefits are available to veterans of the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts. In the 110th Congress, two measures, H.R. 760 and S. 57, have been introduced that would eliminate the distinction between the Regular, or "Old," Philippine Scouts and the other three groups of veterans—the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts—making them all fully eligible for veterans' benefits similar to those received by U.S. veterans. This report defines the four specific groups (Regular Philippine Scouts, Commonwealth Army of the Philippines, Recognized Guerilla Forces, and New Philippine Scouts) of Filipino nationals who served under the command of the United States, outlines the Rescission Acts of 1946, benefit changes since 1946, current benefits for Filipino veterans by group, and recent legislative proposals and legislation, including the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). It will be updated as legislative events warrant.

The Constitution requires a count of the U.S. population every 10 years. Based on the census, the number of seats in the House of Representatives is reapportioned among the states. Thus, at least every 10 years, in response to changes in the number of Representatives apportioned to it or to shifts in its population, each state is required to draw new boundaries for its congressional districts. Although each state has its own process for redistricting, congressional districts must conform to a number of constitutional and federal statutory standards, including the Voting Rights Act (VRA) of 1965. The VRA was enacted under Congress's authority to enforce the 15 th Amendment, which provides that the right of citizens to vote shall not be denied or abridged on account of race, color, or previous servitude. In a series of cases and evolving jurisprudence, the U.S. Supreme Court has interpreted how the VRA applies in the context of congressional redistricting. These decisions inform how congressional district boundaries are drawn, and whether legal challenges to such redistricting plans will be successful. This report provides a legal overview of Section 2 of the VRA, a key provision affecting congressional redistricting, and selected Supreme Court case law. It discusses Sections 4 and 5, and the recent Supreme Court decision holding Section 4(b) unconstitutional, Shelby County v. Holder . Section 4 contained a coverage formula that identified states and jurisdictions that were required to gain federal approval or "preclearance" to proposed redistricting plans under Section 5. The report also provides an overview of selected legislation in the 113 th and 114 th Congresses that would establish additional requirements and standards for congressional redistricting, and amend the VRA to, among other things, reinstitute a coverage formula for Section 5 preclearance. Congressional district boundaries in every state are required to comply with Section 2 of the VRA. Section 2 provides a right of action for private citizens or the government to challenge discriminatory voting practices or procedures, including minority vote dilution, the diminishing or weakening of minority voting power. Specifically, Section 2 prohibits any voting qualification or practice—including the drawing of congressional redistricting plans—applied or imposed by any state or political subdivision that results in the denial or abridgement of the right to vote based on race, color, or membership in a language minority. The statute further provides that a violation is established if: based on the totality of circumstances, it is shown that the political processes leading to nomination or election in the State or political subdivision are not equally open to participation by [members of a racial or language minority group] in that its members have less opportunity than other members of the electorate to participate in the political processes and to elect representatives of their choice. Under certain circumstances, the creation of one or more "majority-minority" districts may be required in a congressional redistricting plan. A majority-minority district is one in which a racial or language minority group comprises a voting majority. The creation of such districts can avoid racial vote dilution by preventing the submergence of minority voters into the majority, which can deny minority voters the opportunity to elect a candidate of their choice. In the landmark decision Thornburg v. Gingles , the Supreme Court established a three-prong test that plaintiffs claiming vote dilution under Section 2 must prove: First, the minority group must be able to demonstrate that it is sufficiently large and geographically compact to constitute a majority in a single-member district.... Second, the minority group must be able to show that it is politically cohesive.... Third, the minority must be able to demonstrate that the white majority votes sufficiently as a bloc to enable it—in the absence of special circumstances, such as the minority candidate running unopposed—usually to defeat the minority's preferred candidate. The Court also discussed how, under Section 2, a violation is established if based on the "totality of the circumstances" and "as a result of the challenged practice or structure plaintiffs do not have an equal opportunity to participate in the political processes and to elect candidates of their choice." In order to facilitate determination of the totality of the circumstances the Court listed the following factors, which originated in the legislative history accompanying enactment of Section 2: 1. the extent of any history of official discrimination in the state or political subdivision that touched the right of the members of the minority group to register, to vote, or otherwise to participate in the democratic process; 2. the extent to which voting in the elections of the state or political subdivisions is racially polarized; 3. the extent to which the state or political subdivision has used unusually large election districts, majority vote requirements, anti-single shot provisions, or other voting practices or procedures that may enhance the opportunity for discrimination against the minority group; 4. if there is a candidate slating process, whether the members of the minority group have been denied access to that process; 5. the extent to which members of the minority group in the state or political subdivision bear the effects of discrimination in such areas as education, employment and health, which hinder their ability to participate effectively in the political process; 6. whether political campaigns have been characterized by overt or subtle racial appeals; 7. the extent to which members of the minority group have been elected to public office in the jurisdiction. Further interpreting the Gingles three-prong test, in Bartlett v. Strickland , the Supreme Court ruled that the first prong of the test—requiring geographical compactness sufficient to constitute a majority in a district—can only be satisfied if the minority group constitutes more than 50% of the voting population if it were in a single-member district. In Bartlett , it had been argued that Section 2 requires drawing district lines in such a manner to allow minority voters to join with other voters to elect the minority group's preferred candidate, even where the minority group in a given district comprises less than 50% of the voting age population. Rejecting that argument, the Court found that Section 2 does not grant special protection to minority groups that need to form political coalitions in order to elect candidates of their choice. To mandate recognition of Section 2 claims where the ability of a minority group to elect candidates of choice relies upon "crossover" majority voters would result in "serious tension" with the third prong of the Gingles test. The third prong of Gingles requires that the minority be able to demonstrate that the majority votes sufficiently as a bloc to enable it usually to defeat minority-preferred candidates. Congressional redistricting plans must also conform with standards of equal protection under the 14 th Amendment to the U.S. Constitution. According to the Supreme Court, if race is the predominant factor in the drawing of district lines, above other traditional redistricting considerations—including compactness, contiguity, and respect for political subdivision lines—then a "strict scrutiny" standard of review is applied. In this context, strict scrutiny review requires that a court determine that the state has a compelling governmental interest in creating a majority-minority district, and that the redistricting plan is narrowly tailored to further that compelling interest. Case law in this area demonstrates a tension between compliance with the VRA and conformance with standards of equal protection. In Easley v. Cromartie (Cromartie II) , the Supreme Court upheld the constitutionality of the long-disputed 12 th Congressional District of North Carolina against the argument that the 47% black district was an unconstitutional racial gerrymander. In this case, North Carolina and a group of African American voters had appealed a lower court decision holding that the district, as redrawn by the legislature in 1997 in an attempt to cure an earlier violation, was still unconstitutional. The Court determined that the basic question presented in Cromartie II was whether the legislature drew the district boundaries "because of race rather than because of political behavior (coupled with traditional, nonracial redistricting considerations)." In applying its earlier precedents, the Court determined that the party attacking the legislature's plan had the burden of proving that racial considerations are "dominant and controlling." Overturning the lower court ruling, the Supreme Court held that the attacking party did not successfully demonstrate that race, instead of politics, predominantly accounted for the way the plan was drawn. In a recent case, Alabama Legislative Black Caucus v. Alabama , the Court clarified that in determining whether race is a predominant factor in the redistricting process, a court must engage in a district-by-district analysis instead of analyzing the state as an undifferentiated whole. It further confirmed that in calculating the predominance of race, a court is required to determine whether the legislature subordinated traditional race-neutral redistricting principles to racial considerations. The "background rule" of equal population, however, is not a traditional redistricting principle and therefore should not be weighed against the use of race to determine predominance, the Court held. In other words, the Court explained, if 1,000 additional voters need to be moved to a particular district in order to achieve equal population, ascertaining the predominance of race involves examining which voters were moved, and whether the legislature relied on race instead of other traditional factors in making those decisions. In Shelby County v. Holder the U.S. Supreme Court invalidated Section 4(b) of the VRA. Section 4(b) contained a formula prescribing which states and jurisdictions with a history of discrimination were required to obtain federal approval or "preclearance" under Section 5 before changing any voting law, including redistricting plans. Section 5 and the Court's ruling in Shelby County are discussed below. As a result of the Court's decision, the nine states, and jurisdictions within six states, that were previously covered under the formula are no longer subject to the VRA's preclearance requirement. The covered states were Alabama, Alaska, Arizona, Georgia, Louisiana, Mississippi, South Carolina, Texas, and Virginia. The six states containing covered jurisdictions were California, Florida, Michigan, New York, North Carolina, and South Dakota. It does not appear, however, that the Court's decision affected Section 3(c) of the act, known as the "bail in" provision, under which jurisdictions can be ordered to obtain preclearance of voting laws if a court finds that violations of the 14 th or 15 th Amendment justifying equitable relief have occurred. Specifically, the formula contained in 4(b) provided that any state or political subdivision was subject to the Section 5 preclearance requirement if: it maintained a "test or device" as a condition for voting or registering to vote on November 1 of 1964, 1968, or 1972, and either less than 50% of citizens of legal voting age were registered to vote or less than 50% of such citizens voted in the presidential election held in the year in which it used such a test or device. The VRA definition of "test or device" for the 1964 and 1968 dates that triggered coverage included requirements of literacy, educational achievement, good moral character, or proof of qualifications by the voucher of registered voters or others, as a prerequisite for voting or registration. For the 1972 date that triggered coverage, the definition of "test or device" was amended to also include the providing of any election information only in English in those states or political subdivisions where members of a single language minority constitute more than 5% of the citizens of voting age. Section 4(a) of the VRA set forth a procedure whereby covered states or political subdivisions, as defined in Section 4(b), could be released from coverage under the Section 5 preclearance provision. Specifically, a covered jurisdiction had to demonstrate, in an action for declaratory judgment in the U.S. District Court for the District of Columbia, that during the previous 10 years and during the pendency of the action: (A) "no ... test or device has been used within such State or political subdivision for the purpose or with the effect of denying or abridging the right to vote on account of race or color"; (B) "no final judgment of any court of the United States, other than the denial of declaratory judgment under this section, has determined that denials or abridgements of the rights to vote on account of race or color have occurred anywhere in the territory of such State or political subdivision"; (C) "no Federal examiners or observers under this Act have been assigned to such State or political subdivision"; (D) "such State or political subdivision and all governmental units within its territory have complied with section 5 of this Act, including compliance with the requirement that no change covered by section 5 has been enforced without preclearance under section 5, and have repealed all changes covered by section 5 to which the Attorney General has successfully objected or as to which the United States District Court for the District of Columbia has denied a declaratory judgment"; (E) "the Attorney General has not interposed any objection (that has not been overturned by a final judgment of a court) and no declaratory judgment has been denied under section 5, with respect to any submission by or on behalf of the plaintiff or any governmental unit within its territory under section 5, and no such submissions or declaratory judgment actions are pending; and (F) "such State or political subdivision and all governmental units within its territory—(i) have eliminated voting procedures and methods of election which inhibit or dilute equal access to the electoral process; (ii) have engaged in constructive efforts to eliminate intimidation and harassment of persons exercising rights protected under this Act; and (iii) have engaged in other constructive efforts, such as expanded opportunity for convenient registration and voting for every person of voting age and the appointment of minority persons as election officials throughout the jurisdiction and at all stages of the election and registration process." Section 5 of the VRA was enacted to eliminate possible future denials or abridgements of the right to vote. It required prior approval, known as "preclearance," of a proposed change to any voting qualification, standard, practice, or procedure, including congressional redistricting plans. It applied only to those states or political subdivisions that, as specified by the formula invalidated by the Supreme Court in Shelby County , were considered "covered" jurisdictions. Although the Court invalidated only the coverage formula in Section 4, by extension, Section 5 has been rendered currently inoperable. Before implementing a change to "any voting qualification or prerequisite to voting, or standard, practice, or procedure with respect to voting" —which includes congressional redistricting plans—Section 5 required a covered jurisdiction to obtain "preclearance" approval for the proposed change. Covered jurisdictions could seek preclearance from either the U.S. Attorney General or the U.S. District Court for the District of Columbia. In order to be granted preclearance, the covered jurisdiction had the burden of proving that the proposed voting change "neither has the purpose nor will have the effect of denying or abridging the right to vote on account of race or color," or membership in a language minority group. Moreover, as amended in 2006, the statute expressly provided that its purpose was "to protect the ability of such citizens to elect their preferred candidates of choice." Unlike certain other provisions of the VRA, the preclearance requirements were enacted to be temporary. From its original date of enactment in 1965, and with each subsequent reauthorization in 1970, 1975, 1982, and 2006, the preclearance requirements have contained expiration dates. As a result of the 2006 amendments to the act, the preclearance requirements were scheduled to expire in 2031. According to the Supreme Court, a redistricting plan would be determined to have a discriminatory effect—and accordingly, preclearance would be denied—if it would lead to retrogression in minority voting strength. In Beer v. U.S. , the Court found that a plan that increased the number of African American city council majority districts from one to two enhanced the voting strength of racial minorities and therefore, could not have the effect of diluting voting rights due to race under Section 5. According to the Court, Section 5 is intended to prevent changes in voting procedures that would lead to a diminishing in the ability of racial minorities to exercise their right to vote effectively. Clarifying the retrogression standard, in City of Lockhart v. U.S. the Court approved an electoral change that, although it did not improve minority voting strength, did not result in retrogression. Invoking its decision in Beer , the Court found that if a new redistricting plan does not diminish the voting strength of African Americans, it would be entitled to preclearance under Section 5. Likewise, in Reno v. Bossier Parish School Board (Bossier Parish I) , the Supreme Court affirmed the retrogression standard for Section 5 preclearance when it refused to replace it with a standard of racial vote dilution, which is the standard contained in Section 2 of the VRA. According to the Court, "a violation of § 2 is not grounds in and of itself for denying preclearance under § 5." When it amended Section 5 in 2006, Congress added a provision expressly stating that its purpose was "to protect the ability of such citizens to elect their preferred candidates of choice." According to the legislative history, this amendment was made to address a 2003 Supreme Court decision, Georgia v. Ashcroft . In Georgia , a Senate report noted, the Court determined that preclearance would be permitted under Section 5 in cases where majority-minority districts, in which minorities had the ability to elect a candidate of choice, were replaced with "influence districts," in which minorities could impact an election, but not necessarily play a decisive role. Calling the standard established by the Court in Georgia "ambiguous," the Senate report indicated that the intent of the amendment was to restore Section 5 to the "workable" standard that the Court espoused in Beer . In Beer , the Court inquired whether, under the proposed redistricting plan, the ability of minority groups to elect candidates of choice is diminished. In Alabama Legislative Black Caucus v. Alabama , the Court held that the non-retrogression standard of Section 5 does not require a covered jurisdiction to maintain a particular numerical percentage of minority voters when drawing new district boundaries. Instead, it requires maintaining the minority voters' ability to elect a preferred candidate of choice. Notably, the Court opted not to decide whether continued compliance with Section 5 remains a compelling governmental interest in light of its 2013 ruling, discussed below, invalidating the VRA's coverage formula. Congress also amended Section 5 of the VRA in 2006 with the intent of expanding the definition of "purpose." Specifically, the law was changed to provide that "[t]he term 'purpose' ... shall include any discriminatory purpose." The legislative history indicates that this amendment was made in response to the 2000 decision in Reno v. Bossier Parish School Board (Bossier Parish II ) where the Supreme Court found that "§ 5 does not prohibit preclearance of a redistricting plan enacted with a discriminatory but non-retrogressive purpose." A Senate report accompanying the legislation to amend Section 5 observed that under the standard articulated in Bossier Parish II , preclearance could be granted to redistricting plans enacted with a discriminatory purpose, so long as the purpose was only to perpetuate unconstitutional circumstances, and not to make them worse. According to the Senate report, The Supreme Court's decision in Bossier Parish II has created a strange loophole in the law: it is possible that the Justice Department or federal court could be required to approve an unconstitutional voting practice ... [and the] federal government should not be giving its seal of approval to practices that violate the Constitution. Under this amendment, which forbids voting changes motivated by 'any discriminatory purpose,' it will not do so. By a 5 to 4 vote, in Shelby County v. Holder , the U.S. Supreme Court decided that Congress's decision in 2006 to reauthorize the Section 5 preclearance requirement, without modifying the coverage formula in Section 4(b), was unconstitutional. The Court determined that the coverage formula's application to certain states and jurisdictions departed from the principle of equal sovereignty among the states without justification in light of current conditions. According to the Court, the coverage formula was "based on 40-year old facts having no logical relation to the present day." Therefore, it concluded that the coverage formula could no longer be used as a basis for subjecting certain states and jurisdictions to the Section 5 preclearance requirement. Shelby County appears against a historical backdrop of cases in which the Supreme Court repeatedly upheld the constitutionality of the Section 5 preclearance regime. Following enactment of the VRA in 1965, in South Carolina v. Katzenbach , the Supreme Court upheld Section 5's constitutionality. Rejecting an argument that it supplants powers that are reserved to the states, the Court found the law to be "a valid means for carrying out the commands of the Fifteenth Amendment." Following the 1975 reauthorization of Section 5, in City of Rome v. United States, the Court reaffirmed its holding in Katzenbach, and likewise upheld its constitutionality. Similarly, in Lopez v. Monterey County , the Court upheld the constitutionality of Section 5 after its 1982 reauthorization, finding that although "the Voting Rights Act, by its nature, intrudes on state sovereignty," nonetheless, "[t]he Fifteenth Amendment permits this intrusion." More recently, however, the Supreme Court had expressed concerns with the constitutionality of Section 5. In the wake of the 2006 reauthorization and amendments to Section 5, a municipal utility district in Texas filed suit asking to be released from Section 5 preclearance requirements. In the alternative, the utility district challenged the law's constitutionality, arguing that Congress had exceeded its enforcement power under the 15 th Amendment. In the resulting 2009 decision of Northwest Austin Municipal Utility District Number One (NAMUDNO) v. Holder , while the Supreme Court did not answer the question of Section 5's constitutionality, it did caution that the VRA's preclearance requirement and coverage formula "raise serious constitutional questions." On the one hand, the Court acknowledged that while some of the conditions it had relied upon in upholding Section 5 in Katzenbach and City of Rome had improved, such improvements may be insufficient, thereby continuing to justify the need for preclearance. On the other hand, the Court announced that the law "imposes current burdens and must be justified by current needs." By deciding that the utility district was eligible to be released from coverage, in NAMUDNO, the Court avoided the constitutional question. In an early 2012 decision on redistricting, the Supreme Court reiterated its observation from NAMUDNO that Section 5's intrusion on state sovereignty "raises serious constitutional questions." Building on concerns it had articulated in recent cases, in June 2013, the Supreme Court issued its decision in Shelby County v. Holder, holding that the coverage formula in Section 4(b) was unconstitutional. Authored by Chief Justice Roberts, the majority opinion began by invoking its determination in NAMUDNO that the preclearance regime imposes current burdens that must be justified by current needs, and that departing from the fundamental principle of equal sovereignty among the states requires a showing that disparate geographic imposition of the preclearance requirement must be "sufficiently related to the problem it targets." Contrasting voting conditions in 1966 with the current day, the Court observed that when it upheld the constitutionality of the preclearance regime, it was justified by the presence of extensive racial discrimination in voting. At that time, the Court said, the coverage formula made sense because it tailored the preclearance requirement to those geographical areas where there was evidence of voting discrimination. Therefore, the Court had concluded that the coverage formula was "rational in both practice and theory." Almost 50 years later, however, the Court observed that "things have changed dramatically," largely due to the effectiveness of the Voting Rights Act. According to the Court, continuing to base coverage on locales where literacy tests were once imposed, and on low voter registration and turnout statistics from the 1960s and early 1970s, does not make sense. Characterizing the coverage formula as relying on "decades-old data and eradicated practices" that do not reflect current conditions, the Court pointed out that literacy tests have been banned for over 40 years, and that voter registration and turnout statistics in covered jurisdictions now approach parity with non-covered jurisdictions. While such factors could appropriately be used to divide the country in 1965, the Court in Shelby County observed that the country is no longer divided along those lines. In order for Congress to divide the states in such a manner that some are subjected to preclearance, while others are not, the Court ruled that it must do so on a basis that makes sense "in light of current conditions." Writing for the dissent, Justice Ginsburg criticized the Court's opinion, arguing that the current coverage formula still accurately identifies the jurisdictions with the worst conditions of voting discrimination, and therefore, Congress should not need to redraft it. The dissent further maintained that second-generation barriers to minority voting rights—such as racial gerrymandering, the redrawing of legislative districts in order to segregate the races for the purposes of voting, and the adoption of at-large voting—have emerged in the covered jurisdictions, thereby continuing to necessitate preclearance. The dissent concluded that the 2006 reauthorization of the VRA satisfied the constitutional standard that Congress may choose any means "appropriate" and "plainly adapted to" a legitimate constitutional end, and therefore, the Court should have deferred to Congress. Justice Thomas wrote a concurrence stating that for the same reasons articulated in the majority opinion, in addition to the coverage formula, he also would have invalidated Section 5. As a result of the Supreme Court's decision to invalidate the coverage formula, the Section 5 preclearance requirement has been rendered inoperable. Should Congress decide to draft a new coverage formula in order to reinstate Section 5 preclearance, the Court cautioned it to ground the formula in current voting conditions, and not rely on the past. The Court further emphasized that any formula that distinguishes among the states must be "sufficiently related" to the problem the law seeks to address. The Court's inquiry into whether the coverage formula comports with the principle of equal sovereignty among the states seems to represent a shift from its earlier decisions upholding Section 5 where it considered the extent to which the preclearance requirement infringed on state sovereignty. In the current term, the U.S. Supreme Court is considering a case involving redistricting commissions. In Arizona State Legislature v. Arizona Independent Redistricting Commission , the Supreme Court is evaluating whether the Elections Clause of the Constitution, Article I, Section 4, and a federal law, codified at 2 U.S.C. Section 2a(c), permit a commission—instead of a state legislature—to draw congressional district boundaries. A ruling is expected by June 2015. The following provides an overview of selected legislation that would establish additional requirements and standards for congressional redistricting. H.R. 75 , the "Coretta Scott King Mid-Decade Redistricting Prohibition Act of 2015," would prohibit the states from carrying out more than one congressional redistricting following a decennial census and apportionment, unless a state is ordered by a court to do so in order to comply with the Constitution or to enforce the VRA. H.R. 219 and H.R. 1347 , the "John Tanner Fairness and Independence in Redistricting Act," would prohibit the states from conducting more than one congressional redistricting following a decennial census and apportionment, unless a state is ordered by a court to do so in order to comply with the Constitution or to enforce the VRA, and would require the states to conduct redistricting through independent commissions. H.R. 934 , the "Redistricting and Voter Protection Act of 2015," would require any state that, after enacting a congressional redistricting plan following a decennial census and apportionment, enacts a subsequent congressional redistricting plan prior to the next decennial census and apportionment, to obtain a declaratory judgment or preclearance as provided under Section 5 of the VRA in order for the subsequent plan to take effect. H.R. 1346 , the "Redistricting Transparency Act of 2015," would require the states to conduct the process of congressional redistricting in such a manner that the public is informed about proposed redistricting plans through a public Internet site, and has the opportunity to participate in developing congressional redistricting plans before they are adopted. H.R. 223 and H.R. 278 , the "John Tanner Fairness and Independence in Redistricting Act," would have prohibited the states from conducting more than one congressional redistricting following a decennial census and apportionment, unless a state is ordered by a court to do so in order to comply with the Constitution or to enforce the VRA, and would have required the states to conduct redistricting through independent commissions. H.R. 337 , the "Redistricting Transparency Act of 2013," would have required the states to conduct congressional redistricting in such a manner that the public is informed about proposed congressional redistricting plans through a public Internet site, and has the opportunity to participate in developing congressional redistricting plans before they are adopted. H.R. 2490 , the "Coretta Scott King Mid-Decade Redistricting Prohibition Act of 2013," would have prohibited the states from conducting more than one congressional redistricting following a decennial census and apportionment, unless a state is ordered by a court to do so in order to comply with the Constitution or to enforce the VRA. H.R. 2756 , the "Redistricting and Voter Protection Act of 2013," would have required any state, after enacting a congressional redistricting plan following a decennial census, that enacts a subsequent redistricting plan prior to the next decennial census, to obtain a declaratory judgment or preclearance under Section 5 of the VRA prior to the plan taking effect. H.R. 2758 , the "Redistricting Reform Act of 2013," would have prohibited the states from conducting more than one congressional redistricting following a decennial census and apportionment, unless a state is ordered by a court to do so in order to comply with the Constitution or to enforce the VRA, and would require the states to conduct redistricting through independent commissions. H.R. 2928 , the "Fair and Independent Redistricting (FAIR) Act," would have required the Election Assistance Commission to publish a report containing the commission's best practice recommendations that states may use in establishing and operating independent commissions to develop congressional redistricting plans, to be developed in consultation with states that have implemented, or are considering implementing, such independent commissions. H.R. 2978 , the "Let the People Draw the Lines Act of 2013," would have prohibited the states from conducting more than one congressional redistricting following a decennial census and apportionment, unless a state is ordered by a court to do so in order to comply with the Constitution or to enforce the VRA. It would have required states to conduct redistricting through independent commissions in accordance with certain criteria, including equality among districts, compliance with the VRA, and contiguity, without taking into consideration the political party affiliation of the district's population or the residence of any House Member or candidate, and with public notice and input; and would have provided payments to states for carrying out redistricting. H.R. 3906 , the "Fixing America's Inconsistent Redistricting (FAIR) Act," would have required the states to conduct congressional redistricting through a plan developed by a nonpartisan agency of the legislative branch of the state government in accordance with certain criteria. S. 2910 , the "Fairness and Independence in Redistricting Act," would have prohibited the states from carrying out more than one congressional redistricting after a decennial census and apportionment, unless a state is ordered by a court to do so in order to comply with the Constitution or to enforce the VRA, and would have required states to conduct such redistricting through independent commissions. The following provides an overview of selected legislation that would amend the Voting Rights Act. H.R. 885 , the "Voting Rights Amendment Act of 2015" would: Modify the current "bail in" provision in Section 3(c) of the VRA. Under current law, Section 3(c) generally provides that if a court finds that violations of the 14 th or 15 th Amendment justifying equitable relief have occurred in a state or political subdivision, the court shall retain jurisdiction for a period of time that it deems appropriate and during that period, no electoral change can be made until the court determines that the change neither has the purpose, nor will it have the effect, of denying or abridging the right to vote based on race, color, or language minority status; in addition, if the state or political subdivision submits a proposed electoral change to the Attorney General, and the Attorney General has not issued an objection within 60 days, the new electoral procedure may be enforced. The legislation would add to the types of violations that would qualify for "bail in." Under the legislation, violations of the following would qualify for "bail in": the 14 th or 15 th Amendment; the VRA, with the exception of violations of Section 2(a) that are based on a requirement that an individual provide photo identification as a condition of receiving a ballot; or any federal voting rights law that prohibits discrimination on the basis of race, color, or membership in a language minority group. Establish a new coverage formula for Section 5 preclearance. The formula would cover any state, and all its political subdivisions, that during the past 15 years had five or more voting rights violations, at least one of which was committed by the state itself (as opposed to a political subdivision within the state). It would also cover specific political subdivisions that during the past 15 years had three or more voting rights violations, or one or more voting rights violations and "persistent, extremely low minority turnout," to be determined by specified voter turnout data from the past 15 years. Each calendar year, the Attorney General would be required to update the list of voting rights violations attributable to each state and political subdivision for the previous calendar year. The legislation would provide that a voting rights violation occurred in a state or political subdivision if, in a final judgment: any court of the United States determined that a denial or abridgment of the right to vote on account of race, color, or membership in a language minority group in violation of the 14 th or 15 th Amendment occurred; or any court of the United States determined that a voting qualification or standard, practice, or procedure was imposed "in a manner that resulted or would have resulted in the denial or abridgement of the right to vote based on race or color, or in contravention of the guarantees set forth in subsection (f)(2), in violation of Section 2" of the VRA; or any court of the United States denied a request for a declaratory judgment under Section 3(c) or 5 of the VRA; or the Attorney General interposed an objection under Section 3(c) or 5, other than an objection to a voting qualification requiring photo identification Require public notice of voting changes. Within 180 days of an election, if a state or political subdivision changes any prerequisite to voting or standard, practice, or procedure that affects voting in federal elections, the legislation would require the state or political subdivision, within 48 hours of such change, to provide reasonable public notice in the state or political subdivision, and on the Internet. It would require public notice of the allocation of polling place resources, and changes relating to demographics and electoral districts, including redistricting and changing from district-based elections to at-large elections. Provide authority to assign observers. The legislation would amend Section 8(a)(2)(B) of the VRA to provide that observers could be assigned if, in the Attorney General's judgment, the assignment is necessary to enforce, in addition to the 14 th or 15 th Amendment, any provision of the VRA or any other federal law protecting the right of citizens to vote. It would amend Section 8(a) of the VRA to provide that observers could be assigned if the Attorney General certifies, with respect to a political subdivision, receipt of meritorious complaints that efforts to violate Section 203 of the VRA, (bilingual election requirements), are likely to occur or, in the Attorney General's judgment, such assignment is necessary to enforce the guarantees of Section 203. Modify standards under which a court can grant injunctive relief. Under current law, the Attorney General can institute an action for injunctive relief in cases where there has been or is about to be a violation of Section 2, 3, 4, 5, 7, 10, 11, or 12(b) of the VRA. The legislation would amend Section 12(d) in such a manner to permit, in addition to the Attorney General, an aggrieved person to institute an action for injunctive relief; and that violations of the following would qualify for injunctive relief: the 14 th or 15 th Amendment, the VRA, or any federal voting rights law that prohibits discrimination on the basis of race, color, or membership in a language minority group. It would require a court to grant relief if it determines that, on balance, the hardship imposed on the defendant by the relief will be less than the hardship imposed on the plaintiff if the relief were not granted. In making its determination, a court would be required to consider several factors, including whether the qualification, prerequisite, standard, practice, or procedure in effect prior to the change was adopted as a remedy for a federal court judgment, consent decree or admission, or served as a ground for dismissal or settlement of a claim, regarding discrimination based on race or color in violation of the 14 th or 15 th Amendment, a violation of the VRA, or voting discrimination based on race, color, or membership in a language minority group in violation of any other federal or state law; the change was adopted less than 180 days prior to the election; and the defendant failed to provide adequate notice of the change as required under federal or state law. H.R. 3899 and S. 1945 , the "Voting Rights Amendment Act of 2014," were identical to the bill introduced in the 114 th Congress, discussed above.

The Constitution requires a count of the U.S. population every 10 years. Based on the census, the number of seats in the House of Representatives is reapportioned among the states. Thus, at least every 10 years, in response to changes in the number of Representatives apportioned to it or to shifts in its population, each state is required to draw new boundaries for its congressional districts. Although each state has its own process for redistricting, congressional districts must conform to a number of constitutional and federal statutory standards, including the Voting Rights Act (VRA) of 1965. The VRA was enacted under Congress's authority to enforce the 15th Amendment, which provides that the right of citizens to vote shall not be denied or abridged on account of race, color, or previous servitude. Section 2 of the VRA prohibits the use of any voting qualification or practice—including the drawing of congressional redistricting plans—that results in the denial or abridgement of the right to vote based on race, color, or membership in a language minority. The statute further provides that a violation is established if, based on the totality of circumstances, it is shown that political processes are not equally open to members of a racial or language minority group in that its members have less opportunity than other members of the electorate to participate and to elect representatives of choice. In decisions including Thornburg v. Gingles and Bartlett v. Strickland, the Supreme Court further interpreted the requirements of Section 2. In its 2013 decision, Shelby County v. Holder, the U.S. Supreme Court invalidated Section 4(b) of the VRA. Section 4(b) contained a formula prescribing which states and jurisdictions with a history of discrimination were required to obtain prior approval or "preclearance" under Section 5 before changing any voting law, including congressional redistricting plans. Section 5 required those "covered" jurisdictions to preclear their redistricting plans with either the Department of Justice or the U.S. District Court for the District of Columbia before implementation. In order to be granted preclearance, the covered jurisdiction had the burden of proving that the proposed voting change neither had the purpose, nor would it have the effect, of denying or abridging the right to vote on account of race or color, or membership in a language minority group. Although the Court invalidated only the coverage formula in Section 4, by extension, Section 5 has been rendered currently inoperable. As a result, the nine states and jurisdictions in six other states previously covered under the formula are no longer subject to the VRA's preclearance requirement. Section 2 of the VRA, which applies in all jurisdictions, was not at issue in this case. In the 114th Congress, H.R. 885, the "Voting Rights Amendment Act of 2015," has been introduced. This bill is identical to companion bills H.R. 3899 and S. 1945, the "Voting Rights Amendment Act of 2014," which were introduced in the 113th Congress. Among other things, the legislation would amend the VRA to reinstitute a coverage formula for Section 5 preclearance. Bills have also been introduced that would establish certain standards and requirements for congressional redistricting, including H.R. 75, the "Coretta Scott King Mid-Decade Redistricting Prohibition Act of 2015"; identical bills, H.R. 219 and H.R. 1347, the "John Tanner Fairness and Independence in Redistricting Act"; H.R. 934, the "Redistricting and Voter Protection Act of 2015"; and H.R. 1346, the "Redistricting Transparency Act of 2015."

The Department of Veterans' Affairs (VA), previously named the Veterans Administration, has been providing veterans' educational assistance (GI Bill®) benefits since 1944. In general, the benefits provide payments to eligible veterans and servicemembers and their families enrolled in approved programs of education to help them afford postsecondary education. In FY2017, the VA is estimated to distribute over $14 billion in GI Bill benefits to over 1 million eligible participants. Since 1947, State Approving Agencies (SAAs) have been an important component in the administration of GI Bill benefits, along with the VA, educational institutions, and training establishments. SAAs are responsible for approving programs of education, conducting VA-assigned compliance visits, providing technical assistance, providing liaison assistance with related organizations and stakeholders and conducting outreach. The SAA role was originally intended to ascertain the quality of on-the-job training establishments and has now expanded to ensuring that veterans and other GI Bill participants have access to a range of high-quality education and training programs at which to use their GI Bill benefits. This report provides an overview of state approving agencies (SAAs). It highlights their roles and responsibilities in the administration of GI Bill benefits and the processes through which they fulfill those roles. Because work processes and responsibilities are variable and subject to regular adjustment, the descriptions herein are accurate as of the date of publication. Additionally, in a limited number of instances the report identifies some divergent depictions of work processes from difference sources, but it does not attempt to evaluate or reconcile differences in the accounts. The original GI Bill, as enacted in 1944, relied on state agencies to establish standards for and to approve programs of education at which eligible individuals could use GI Bill benefits. The Department of Veterans' Affairs (VA) had authority to approve programs that were outside the scope of state agency approval. In part, as a consequence of the large numbers of veterans using the GI Bill, newly created educational institutions, and possible abuses among on-the-job training providers, the state agencies were unable to establish adequate standards for the approval of programs of education. In addition, because the state agencies were unable to provide the resources necessary for approval and oversight activities, several well-publicized abuses occurred. Additionally, there was considerable variation in standards between states. As such, the state approving agencies (SAAs), as currently structured, were authorized as a means to provide consistency, guidance, and financial resources in the approval process from the federal government. More recently, in response to publicized abuses of established educational institutions, the VA and Congress sought ways to improve the oversight of programs of education previously approved for GI Bill purposes. In addition, a 2007 report by the Government Accountability Office (GAO) recommended that the VA coordinate with the Departments of Education and Labor to reduce duplicative approval activities and measure the spending, effectiveness, and performance of SAAs. Congress enacted the Post-9/11 Veterans Educational Assistance Improvements Act of 2010 ( P.L. 111-377 ) to, among other purposes, modify specific SAA responsibilities related to approval and oversight. Specifically, P.L. 111-377 was intended to provide additional resources and focus on program oversight (compliance surveys) in order to reduce "the possible misuse of benefits and instances of fraud, misrepresentation, and abuse." The bill expected to accomplish this by reducing SAA approval activities (i.e., deeming some programs approved) and utilizing SAAs for program oversight. Statutory provisions "request" that each state create or designate a state department or agency as its SAA. The VA contracts (or enters into agreement) with each SAA annually to provide approval, oversight, training, and outreach activities by qualified personnel as specified in the contract to ensure the quality of programs of education and proper administration of GI Bill benefits. In exchange, the VA pays the reasonable and necessary expenses of salary and travel incurred by SAA employees and an allowance for administrative expenses. In the event that a state fails to create or designate an SAA or fails to enter into a contract/agreement with the VA, the VA fulfills the duties that would have been the responsibility of the SAA in that state. Forty-eight states and Puerto Rico have SAAs; while Alaska, Washington D.C., Hawaii, and the U.S. Virgin Islands do not have SAAs. At least five of the states with SAAs have two SAAs—each specializing in different types of education. Almost half of SAAs are organized within the state department of veterans' affairs. The other SAAs are within one of the state's higher education authorities, the state department of labor or workforce development, or the state elementary and secondary education authority. A VA Education Liaison Representative (ELR) is the VA regional office representative responsible for education liaison, education program approval functions, and informing educational institutions, training establishments, and testing organizations (hereafter, collectively referred to as facilities) of pertinent VA policies and procedures. ELRs work directly with the facilities and SAAs in their region. In addition to these responsibilities, an ELR acts as the SAA for Alaska, Washington D.C., Hawaii, and the U.S. Virgin Islands. Statutory provisions prevent the VA and any other federal entity or individual from exercising any supervision or control over SAAs except in specified incidences. The VA provides direction to each SAA through the contract. The Secretary of Veterans' Affairs (the Secretary) is authorized to enter into contracts or agreements with SAAs to approve programs of education, supervise such programs of education, and furnish related services as requested by the Secretary in exchange for the payment of expenses and travel. Each such contract or agreement must be conditioned upon compliance with the standards and provisions of the GI Bill statutes. The relevant statutes establish the approval and compliance standards for programs of education (see Appendix ), SAA personnel standards, SAA evaluation standards (see subsequent section entitled SAA Accountability to the VA ), SAA reimbursement amounts (see subsequent section entitled Reimbursement of SAA Expenses ), and other administrative requirements. The VA primarily establishes the terms of the contracts. Statutory provisions require that prototype SAA personnel qualifications and performance standards be developed by the VA, in conjunction with the SAAs. The SAA may, with VA assistance if requested, develop and apply the personnel qualifications and performance standards in consideration of the state's merit system requirements and other state and local requirements and conditions. Although statutory provisions make the VA accountable for the overall administration of GI Bill benefits, statutory provisions also, in some instances, differentiate the responsibilities between the VA and SAAs, while simultaneously requiring coordination and cooperation between the entities. Statutory language also includes provisions that make the distinctions in responsibilities between SAAs and the VA less clear. The VA oversees the processes for approving and reviewing approved programs of education, educating the entities and individuals involved in GI Bill claims processing, and increasing awareness among potential GI Bill participants. The VA is responsible for coordinating approval activities to avoid duplicative efforts by the VA, SAAs, Department of Labor (DOL), Department of Education (ED), and other entities. The VA may request that an SAA provide services to aid the VA in its approval of programs of education and to aid the VA in administering GI Bill benefits. The VA is required to provide SAAs with informational and instructional materials to aid them in carrying out their duties. In practice, while the VA provides the federal structure and interprets federal statutory provisions, the SAAs apply and interpret the standards and processes at the local level. The VA, through the ELR, provides regulations, policy advisories, and other information to help clarify the standards, processes, and activities. The SAAs communicate with their ELR in a close working relationship to interpret the federal and state requirements and apply them to actual practice. The SAA brings knowledge of the state and local environment and needs of the state. For example, reviewing programs of education that are not easily categorized within the current structure and typography requires considerable communication between the SAA and ELR. For eligible individuals to receive GI Bill benefits, they must be enrolled in approved programs of education. Approval is intended to ensure that each program can meet the needs of GI Bill participants pursuing the program, including by being a quality program, and properly administer GI Bill benefits. Educational institutions (including locations of educational institutions with separate administrative capability, e.g., applicable branch campuses), training establishments (e.g., an entity providing on-the-job training such as a police department), and testing organizations (e.g., an entity offering an approved test such as a state bar organization) must submit a state application to their SAA to have new programs of education approved for GI Bill purposes. The application contents differ depending on the type of program of education (e.g., licensing test, on-the-job training (OJT), etc.) (see Appendix for required content). There are a few practices that may direct a new program toward the initial approval process. First, a facility, such as one with approved programs of education, may initiate the approval process on its own by contacting its SAA. Alternatively, an individual who wants to use GI Bill benefits for a program of education offered by a facility that has never had a GI Bill approved program of education may alert the facility to the existence of GI Bill benefits so that the facility can contact its SAA and submit an application to have the program of education approved. If an individual applies to use GI Bill benefits for an unapproved program, the VA would send a "Denial of Benefits" letter, and the SAA would contact the facility in an attempt to encourage the submission of an application for approval, if appropriate. SAAs may receive new program applications daily. Once the SAA or the VA completes the initial approval review in accordance with the program of education approval standards (see Appendix ), the SAA or VA issues an approval or disapproval letter to the facility naming the approved or disapproved programs of education and any specific requirements or limitations. Finally, the SAA sends a copy of the approval or disapproval letter and substantiating documents (approval package) to the ELR for review and approval for GI Bill funding, if appropriate. If the ELR determines that more information or review is required before accepting the approval or disapproval or disagrees with the SAA's determination, the ELR and SAA will resolve the differences. The VA maintains the compiled list of approved programs of education. Once the program is on the VA list of approved programs for GI Bill purposes, individuals may begin receiving GI Bill benefits while pursuing the program. There are three main processes used for initially approving programs of education for GI Bill purposes. One is for programs "deemed approved," usually applicable to certain education and training programs already approved for participation in other government programs. The others are more comprehensive SAA and VA approval processes. The following sections describe the responsibility and general procedures for the three processes. More specific approval requirements for each type of program of education are outlined in the Appendix . Prior to 2011, SAAs and the VA conducted the initial approval of programs of education through in-depth reviews. P.L. 111-377 established "deemed approved" programs that do not require an in-depth review because another agency with an established process and related mission has approved them. The following programs are deemed approved: College degree programs offered directly by a public or private nonprofit educational institution that is accredited by an agency recognized by the U.S. Department of Education (ED); Flight training courses approved by the Federal Aviation Administration (FAA) and offered by a certified pilot school that possesses a valid FAA pilot school certificate; Department of Labor (DOL) Registered Apprenticeship programs; Apprenticeship programs approved by a state apprenticeship agency recognized by the DOL Office of Apprenticeship; Programs leading to a secondary school diploma offered by a secondary school approved by the state in which it is operating; and Licensure or certification tests offered by a federal, state, or local government. Following enactment of P.L. 111-377 , the VA reinterpreted which programs are deemed approved and the process for their approval. In 2015, the VA required that deemed approved programs undergo an abbreviated approval process. Such deemed approved programs undergo an abbreviated approval process that reduces duplicative approval efforts by multiple federal agencies. The abbreviated approval process requires the SAA to determine that the program meets criteria concerning the program objectives, mode of delivery, the 85-15 rule, and contractual arrangements, and that the institutions/establishments offering the program meet criteria concerning adequate and appropriate recordkeeping; enrollment reporting; duration of operation; and advertising, sales, and enrollment practices (see Appendix for more information). The Jeff Miller and Richard Blumenthal Veterans Health Care and Benefits Improvement Act of 2016 ( P.L. 114-315 ) codifies the VA process by requiring that SAAs, or the VA when acting as an SAA, determine which programs meet the statutory definition of deemed approved and approve them. SAAs are responsible for conducting a full approval process on most programs of education that are not deemed approved and that are located in their respective state. These include but are not limited to non-college degree (NCD) programs; programs at private, for-profit educational institutions; programs at educational institutions that are not accredited by an agency recognized by ED; and on-the-job training programs. NCD programs are programs of education that do not lead to a degree and are not on-the-job training, apprenticeship, correspondence, or vocational flight programs. The VA may also request that SAAs approve licensing and certification tests (e.g., the Professional Paralegal exam provided by the NALS-The Association for Legal Professionals in Oklahoma) that are not deemed approved. As part of the application review, SAAs coordinate and share information related to the applicant and its programs of education with several state partners and relevant accrediting agencies, as appropriate. The partners may include, as appropriate, state departments of labor or workforce development, licensing boards, vocational rehabilitation offices, departments of higher education, and departments of economic development. The information may alert the SAA, state partner, and accrediting agency to potential issues. It also helps the SAA avoid duplicative efforts. SAA personnel may use professional judgement and the expertise of state partners to guide their review of new programs beyond what is established in law and regulations. The application review is generally completed within 30 days but may require as long as 90 days, depending on the thoroughness and level of detail in the application; the level of cooperation, expertise, and resources of the applying facility, and the nature of the program of education. New programs of education at established and well-resourced educational institutions with several approved programs of education often require the least effort. Programs of education that use innovative mediums of delivery or are offered by facilities that do not have approved programs of education often require more time, research, interpretation, coordination, and review. The SAA will often conduct a site visit to verify the application and that the approval requirements may be met. The SAA works with the facility to complete the application review with sufficient evidence proving that the facility and program meet the approval requirements (see Appendix ). The VA approves programs of education that are outside the purview of SAAs. For example, the VA approves programs offered in foreign countries, by the federal government, and in states that do not have an SAA, and approves programs that help dependents participating in the Survivor's and Dependent's Educational Assistance program (38 U.S.C., Chapter 35; DEA) overcome a physical or mental disability. The VA also approves apprenticeship programs operated by interstate training establishments that are not registered with DOL. Following initial approval, specific changes to the program of education or facility require review and approval. The facility may contact the SAA in anticipation of a change in order to avoid a potential approval issue after the change. A revision to the initial approval is required when the facility revises its catalogs, handbooks, schedules, or policies; the name, curriculum, or delivery of a program of education changes; the tuition and fee charges change; a new school certifying official (SCO) is named; the location of the program of education changes; the facility changes ownership; or the facility or program of education changes accreditation or state licensure status. The level of review is in proportion to the change and may require a site visit. Failure to obtain approval in a timely manner may result in suspension or disapproval of a program of education. Following an approval review, the SAA reports the review and notifies the VA of any change to the approval and the reasons. Supervisory visits allow the SAA to ensure facilities and their programs of education are in compliance with law, regulations, guidance, and policy advisories through a review of the approval requirements and student records. The visits may include interviews with faculty and students; a review of GI Bill participant files for attendance, transfer credit, student transcripts, and enrollment status; a review of correspondence with the VA and SAA to ensure currency; a review of state licensure or accreditation for currency; a review of advertising materials; a review of distance learning policies and programs; a review of instructor qualifications and evaluations; and a review of the adequacy of facility resources. These visits allow SAAs to uncover issues, including overpayments, and provide additional training to the facility and SCOs, as necessary. Prior to October 1, 2011, SAAs were contractually required to conduct annual supervisory visits, examining at least 80% of active facilities (facilities with GI Bill participants) and their programs of education. They are no longer required to conduct annual supervisory visits; however, some SAAs continue to conduct supervisory visits. Some SAAs have indicated that supervisory visits serve the valuable purpose of "fulfill[ing] the SAA's historic role of providing training and supervision to facilities on broader education issues." According to testimony by the Student Veterans of America and SAA interviews, the professional qualifications, traditional training, and local focus of SAAs are well suited to the expectations of supervisory visits. In addition, supervisory visits can be conducted annually to ensure all facilities are reviewed often and regularly. Compliance surveys are designed to ensure that each facility and its approved programs are in compliance with all applicable statutory, regulatory, and policy provisions and that the facility understands the provisions. In practice, these reviews focus on reviewing student records to ensure proper payments through a financial accountability perspective. Prior to 2011 and enactment of P.L. 111-377 , in accordance with statute, compliance surveys were conducted by VA Education Compliance Survey Specialists. P.L. 111-377 granted the VA authority to utilize SAAs for compliance surveys and other oversight activities. SAAs assumed responsibility for VA-assigned compliance surveys in FY2012. The number of projected compliance surveys is established in each annual contract. To support the new responsibility, the VA and National Association of State Approving Agencies (NASAA) formed a joint Compliance Survey Redesign Work Group to improve the compliance survey process. NASAA is the voluntary organization of SAAs founded to coordinate their efforts. Statutory provisions establish the nature and targeting of compliance surveys. Prior to passage of the Jeff Miller and Richard Blumenthal Veterans Health Care and Benefits Improvement Act of 2016 ( P.L. 114-315 ), the VA, with the assistance of SAAs as appropriate, was required to conduct annual compliance surveys of educational institutions enrolling at least 300 GI Bill or Vocational Rehabilitation & Employment program (VR&E) participants and institutions offering NCDs. The requirement was not contingent on whether programs of education are deemed approved or are approved by an SAA or the VA. The Secretary may waive the requirement based on an institution's demonstrated record of compliance. Statutory provisions also require one SAA or VA employee for each 40 compliance surveys. Some evidence suggests that the VA, with the assistance of SAAs, has insufficient resources to complete the requisite surveys. P.L. 114-315 changed the criteria for determining at which institutions to conduct annual compliance surveys and modified the nature of the survey. P.L. 114-315 requires annual compliance surveys at educational institutions and training establishments enrolling at least 20 GI Bill or VR&E participants. P.L. 114-315 further authorizes the Secretary, in consultation with SAAs, to revise the compliance survey parameters annually. The VA determines the list of facilities to be reviewed for the year and assigns the reviews to either the VA or appropriate SAAs. On-site compliance surveys are preferable; however, some may be conducted remotely. Per statute, the compliance survey is intended to assure that each facility and each program of education meets all statutory requirements. VA policy indicates that the two primary purposes of compliance survey visits are to assist school or training establishment officials and veterans or potential GI Bill recipients in understanding the provisions and requirements of the law; and to verify and assure the propriety of VA educational benefit payments to veterans and other eligible persons. The policy of the VA is to establish annual priorities in order to conduct compliance surveys of higher risk programs, institutions, and establishments. For example, the FY2017 strategy will ensure compliance surveys of all IHLs with flight programs, and further prioritize private for-profit and nonaccredited institutions and federal on-the-job and federal non-registered apprenticeship establishments. The compliance survey follows procedures prescribed by the VA. The aspects reviewed and required standards are the same regardless of whether the program was deemed approved or approved by the VA or an SAA and regardless of whether the VA or SAA conducts the survey. Besides selecting the facilities, the VA also determines the number of student files that will be reviewed at each facility during the compliance survey based on the GI Bill participant population. The scope of the review of student files and the number of files reviewed are the major differences between supervisory visits and compliance surveys. The SAAs review the VA database to select the requisite number of students and may select a representative sample that is not duplicative of prior year surveys. The recent certification history of each selected student's enrollment, entrance, reentrance, change in hours of credit or attendance, pursuit, and interruption and termination of attendance as recorded in the database are noted. The selected student names are provided to the facility's SCO when the compliance survey visit is scheduled by the VA or SAA and SCO. During the on-site visit, the SAA will compare the facility's student files to the students' VA enrollment and certification history to verify that GI Bill payments have been made properly and that the institution is following the approval standards and published policies. The facility's student files include, as appropriate, transcripts, prior credit evaluations, financial accounts of charges and refunds, courses taken, attendance records, circumstances for withdrawal, relevant VA forms, student aid received, academic progress, and other pertinent records. In addition to reviewing student records, compliance surveys also include student interviews (as applicable), various verifications, and a review of additional documents and areas outlined on the compliance survey checklist. The review may also include a classroom visit, if appropriate. As of FY2015, SAAs must also assess the number of complaints in the VA GI Bill Feedback System. The compliance survey will verify the SCO as named to the VA, the SCO's understanding of the job requirements, fund transfers, the school catalog, tuition and fees charges, relevant school policies, procedures for ensuring timely and accurate certifications, and other administrative actions. The areas of review on the checklist include, but are not limited to, establishing compliance with the 85-15 rule, independent study requirements, private pilot's license requirements, and nonaccredited school enrollment limitations. Some statutory standards such as those related to curriculum quality and faculty qualifications are not reflected on the compliance checklist. Finally, SCOs are given an opportunity to ask questions and address their problems/issues, and the SAA has the opportunity to provide training and technical assistance. Initial survey results, including discrepancies, are shared with the facility prior to the end of the visit, and any discrepancies that may be addressed easily are resolved immediately. Following the compliance survey, the compliance survey report and any referrals are shared with the facility, SAA, and ELR. Referrals are discrepancies discovered during the review of student files that may create a student or school GI Bill debt or payment. Follow-up and corrective action will be initiated by the SAA if required. Although compliance surveys are more focused on proper administration and controls of federal funds than supervisory visits, there are concerns with their implementation. One concern suggested by the VA is that its capabilities in uncovering educational and financial noncompliance may not be strong. Another concern raised by the National Association of Veterans' Program Administrators (NAVPA), a professional organization of SCOs and their facilities, is that "diverting [SAA] resources to [compliance surveys] has proven problematic, however, and leaves no one to fulfill the SAA's historic role of providing training and supervision to facilities on broader education issues." Compliance surveys have different foci compared to training and supervisory visits, but each serves an important purpose. The two approaches may also require different skill sets and training that are not currently optimized. In addition, NASAA has expressed concerns that many facilities are not reviewed regularly as it estimates that as of 2016 SAAs conduct compliance visits of approximately 15% of active institutions/establishments annually. In 2016, the VA reported that the VA and SAAs complete approximately 5,000 compliance surveys annually. In addition to visits to complete compliance surveys, the SAA may conduct technical assistance visits to provide information on the facility's responsibilities, help the facility provide services to veterans and GI Bill participants, and provide information on non-GI Bill veterans' benefits; inspection visits within approximately 30 days of the initial approval of a program at a new facility to train the SCO and ensure the facility and program may remain approved; visits, at the request of the VA, to investigate third party information (e.g, media, GI Bill participant complaint, ED, or other state agency) that suggests noncompliance with the approval standards; and visits motivated by SAA professional judgment. For example as of December 30, 2015, seventy-nine risk-based program reviews had been conducted based on complaints submitted through its GI Bill Feedback System. Also for example, after Corinthian Colleges, Inc. (CCI) filed with the U.S. Securities and Exchange Commission (SEC) indicating fiscal instability and an intention to sell or close some of its institutions and to "teach out" students currently enrolled in their programs, the VA requested that all SAAs review CCI facilities in their state. At the conclusion of a visit, the SAA submits a visit report and any referrals to the VA. Statutory provisions authorize the VA or SAAs to immediately disapprove any program of education that does not meet the approval criteria. Statutory provisions also provide specific circumstances in which the VA may suspend GI Bill payments to those enrolled or pursuing an approved program of education, disapprove new enrollments in a program of education, or disapprove one or more programs of education: The VA may disapprove new GI Bill enrollments at a facility if the facility charges a GI Bill participant more than another similarly circumstanced individual. The VA may discontinue GI Bill benefits to an individual who receives benefits for which the individual is not eligible when the program of education or providing facility fails to meet any statutory requirements. The VA may suspend GI Bill benefits to individuals and disapprove new enrollments using GI Bill benefits in a program of education that demonstrates a substantial pattern of individuals receiving GI Bill benefits for which they are not eligible because the program does not meet the statutory approval requirements or the facility is not fulfilling its recordkeeping and reporting requirements. Prior to suspension, the VA must notify the facility and SAA, the facility must fail to take corrective action within 60 days, and the VA must notify the GI Bill participants 30 days prior to the suspension. The VA must disapprove a program of education and discontinue any Post-9/11 GI Bill or Montgomery GI Bill-Active Duty (38 U.S.C., Chapter 30; MGIB-AD) payments thereafter in the event that a public institution of higher learning (IHL) charges tuition and fees above the in-state rate for that course to a qualified Post-9/11 GI Bill or MGIB-AD participant who is living in the state in which the IHL is located. The VA or SAA must disapprove an unaccredited course designed to lead to state licensure or certification or to prepare an individual for an occupation that requires such approval or licensure if the educational institution does not publicly disclose any additional conditions required to obtain licensure, certification, or approval. In practice, the SAAs fulfill the initial responsibility of suspending or disapproving a program of education. SAAs, or the VA acting in capacity of an SAA, may determine that the facility or program is not in compliance with the law or regulations during a compliance survey, supervisory visit, or other interaction. SAAs indicate that interactions other than compliance surveys are more likely to uncover compliance issues. The SAA may provide training and technical assistance to resolve the issue and then follow up to ensure compliance. Additionally, the SAA may suspend a program of education from new enrollments of GI Bill recipients for up to 60 days if it fails to meet any of the approval requirements. During the up to 60-day period, the SAA will provide assistance to help the facility resolve the issue and may provide outreach and technical assistance to GI Bill participants to mitigate any potential educational disruptions. If the institution/establishment fails to resolve the issue during the suspension, the SAA will disapprove the program(s) of education. Program disapproval affects GI Bill participants currently pursuing the program as well as prospective participants. Any suspension or disapproval by the SAA will be communicated through a registered or certified letter with return receipt to the facility and through written notice to the ELR. The ELR will review the action and supporting documentation to ensure the action is in accordance with statutory provisions. The VA has indicated, however, that it does not have the legal authority to override an SAA decision on approval, suspension, or withdrawal. Facilities that disagree with an SAA suspension or disapproval decision have some recourse. Although statutory provisions do not require that the SAA permit an appeal, some SAAs allow facilities to appeal to their parent agency (e.g., a state department of education). Otherwise, the institution/establishment may write an informal letter to the SAA or its parent agency if it disagrees with the actions being taken by the SAA, and the SAA or parent agency may consider the letter. A testing organization may appeal a decision to the VA Education Service Director (or the VA Under Secretary of Benefits, if the VA disapproved the test). On occasion, the VA may reverse the SAA decision based on additional information. In addition, the facility may litigate against the SAA. For example, the California SAA was forced by court order to reverse its suspension of courses at ITT Educational Services, Inc. (ITT) in 2015. Also for example in 2015, ECPI University's Medical Careers Institute (MCI) filed a lawsuit against the Virginia SAA following the disapproval of all programs at one of its campuses and the suspension of all programs at three campuses. After disapproval, the facility may apply for initial program approval after a reasonable time period. If the VA finds that a facility has willfully submitted a false or misleading claim, or that an individual, with the complicity of a facility, has submitted such a claim, the Secretary shall notify the appropriate SAA and, as appropriate, the Attorney General of the United States. The SAA would then conduct an investigative visit and determine the next steps accordingly. Executive Order 13607, Establishing Principles of Excellence for Educational Institutions Serving Service Members, Veterans, Spouses, and Other Family Members, signed April 27, 2012, was intended to help veterans and servicemembers and their families pursue a high-quality education and make more informed decisions about their VA and Department of Defense (DOD) educational assistance benefits. The Executive Order provides a designation for educational institutions to distinguish themselves as an informative, supportive, and protective environment for veterans and servicemembers and their families and requires the VA to strengthen enforcement and compliance. The Executive Order also describes roles for the SAAs. These roles are described below. The Executive Order encourages educational institutions receiving veterans and military educational benefits, to the extent permitted by law, to abide by the Principles of Excellence. Schools that agree to abide by the principles may be perceived by veterans and servicemembers and their families as providing a more supportive environment compared to other institutions and thus may experience higher enrollments. The principles encourage educational institutions to "provide meaningful information to service members, veterans, spouses, and other family members about [the institution's] financial cost and quality"; end fraudulent, abusive, deceptive, and aggressive recruiting practices of potential GI Bill participants and DOD Tuition Assistance recipients; gain accreditation for new programs of education before enrolling students; provide high-quality academic and student support services to veterans and servicemembers and their families; readmit and accommodate servicemembers forced to suspend their studies or be absent while fulfilling service obligations; establish an institutional refund policy for course withdrawals aligned with that required for Department of Education student financial aid programs; provide a timeline and education plan for graduation; and designate a point-of-contact for academic and financial advising and career services. As of FY2015 for those institutions that voluntarily agree to abide by the principles, the SAA will review their voluntary compliance during any initial approval, compliance visit, or other visit. If the institution is not in compliance, the SAA will notify the VA to remove the institution from the list of schools adhering to the Principles of Excellence. The VA also reviews institutions' voluntary compliance during compliance surveys that it conducts and takes action, as required. Among the efforts to strengthen compliance mechanisms, the Executive Order required the VA to use the SAAs to improve information sharing among educational stakeholders that oversee institutional and program quality. Specifically the VA was required to institute uniform procedures for receiving and processing complaints across SAAs; provide a coordinated mechanism across SAAs to alert the VA to any complaints that have been registered at the state level; and create procedures for sharing information about complaints with the appropriate state officials, accrediting agency representatives, and the Secretary of Education. The VA was also tasked with establishing procedures for targeted risk-based program reviews of institutions to ensure compliance with the Principles. SAA personnel must meet the qualification standards established in the contract with the VA. As an example, the standard language in the FY2016 contracts describes the minimum qualification standards for personnel approving and supervising courses offered by job training establishments as a bachelor's degree with two years of related experience (or the equivalent) in education and/or related work experience totaling six years. However, there are several opportunities for new and continuing SAA employees to receive training on their responsibilities. The SAAs indicate that new employees benefit from mentoring and job shadowing. Contractually, the only training required of SAA employees is the annual privacy and information security awareness training required of federal employees. The VA, in coordination with the SAAs, develops a training curriculum to train new and continuing SAA employees on the performance of their functions. In accordance with the VA's responsibility to ensure SAAs have the informational materials necessary to fulfill their obligations, the VA makes available to SAAs a variety of other professional development materials. VA employees attend and provide training at National Association of State Approving Agencies (NASAA) conferences. NASAA conducts the national training institute (NTI), which offers several opportunities for SAA training, and provides a manual, the National Training Curriculum (NTC). The NTI provides an overview of SAA responsibilities and activities. The October 2015 three-day NTI agenda included information on public laws, accreditation, GI Bill approval criteria, satisfactory academic progress, inspection visits, technical assistance, outreach, compliance surveys, self-evaluation, and key partners such as the ELR. Most new SAA employees attend the NTI within the first year of employment. The NTC is provided to all SAA employees. The VA also makes its Education Compliance Survey Specialist (ECSS)/ELR training module available to train new SAA employees in performance of their compliance survey work. The course requires approximately 64 hours to complete. Ongoing professional development is offered to SAA employees through several options. Refresher training and timely topics are incorporated into NASAA mid-winter and summer conferences and VA and National Association of Veterans' Program Administrators (NAVPA) conferences. In FY2014, VA in conjunction with the SAAs, developed an SAA Training Performance Support System module that updated and encompassed the information from the NTC. In 2014, the VA and NASAA held a joint training conference focused on critical issues related to program approvals, compliance surveys, VA training and liaison activities with SCOs and ELRs, and the achievement of contractual requirements. The VA also holds regional conferences throughout the year. Finally in September 2014, the VA and NASAA formed a Joint Advisory Committee to resolve issues in VA/SAA responsibilities. In order to ensure proper administration of GI Bill benefits, SAA employees provide training to SCOs on their responsibilities. The VA, SAAs, NASAA, National Association of Veterans' Program Administrators (NAVPA), and other organizations offer various formal and informal training opportunities. SAAs offer formal training programs, on-site training, and as-needed technical assistance to SCOs. The SAA training may be offered jointly with the ELR, or the ELR may be asked to participate and present. SAAs make an effort to provide formal training opportunities to new institutions/establishments. They provide refresher and update training to experienced and new SCOs. SCOs at smaller schools and schools with few GI Bill participants are less likely to attend formal training and thus often require additional in-person training. In addition, SCO staff at smaller schools often perform several administrative roles that may be unrelated to the GI Bill. SAAs and ELRs conduct informal, in-person training of SCOs during most site visits. The 2007 GAO report indicated that facilities value the training provided by SAAs because it ensures proper administration of GI Bill benefits and, by extension, timely payments. Outreach is an "activity designed to promote increased participation and utilization by eligible [individuals] of VA or [DOD] educational assistance programs" and includes any activity, which encourages facilities to obtain approval of programs for GI Bill purposes. In addition to outreach, SAAs liaise "with other education and training professionals [to] promote and encourage [an] exchange of information and support, and integrate the SAA into associations that will serve the interest of the GI Bill programs." SAAs cooperate with the VA to promote, conduct, and support several outreach efforts. SAAs are generally tasked, in conjunction with the VA and also independently, to conduct outreach programs and provide outreach services to eligible persons and veterans about federal and state veterans' education and training benefits. SAAs help veterans and their families navigate VA benefits generally through information and referrals. For example, the SAA may brief transitioning servicemembers about GI Bill benefits during DOD sponsored events, attend events sponsored by educational institutions, and participate in community or employment fairs. SAAs are in a unique position to counsel veterans and their families on the use of GI Bill benefits in area facilities. The VA and SAAs are required, in accordance with statutory provisions, to actively promote the development and use of apprenticeship and on-the-job training programs. Such efforts utilize the services of disabled veterans' outreach program (DVOP) personnel. DVOP is part of the Department of Labor's (DOL's) Jobs for Veterans State Grants (JVSG) program, which provides formula grants to states to hire staff to provide a range of intensive services to veterans with service-connected disabilities as well as other veterans with multiple barriers to employment. It is NASAA's assertion that prior to 2012, when the VA began utilizing SAAs for compliance surveys, SAA outreach efforts contributed to increasing the number of active training establishments; whereas since 2012, outreach activities have been curtailed in order to fulfill SAA compliance survey obligations. The VA contends that time spent on compliance surveys replaced time spent on supervisory visits and not outreach activities. SAAs are required to meet biennially with the Local Veterans Employment Representatives (LVERs) or the equivalent to ensure that students who have graduated are aware of employment resources and opportunities. LVERs are state employees located in state employment offices who conduct outreach to employers on behalf of veterans and facilitate employment, training, and placement services through the state workforce system. The SAA ensures that appropriate referrals are made to relevant employment resources and opportunities. The VA holds SAAs accountable for fulfilling their contractual obligations through regular reporting, annual evaluation, contract monitoring, and the reimbursement of expenses. The contract specifies that SAAs must perform duties necessary for the inspection, approval, compliance, and supervision of programs of education; process initial program approval applications in a timely and thorough manner; conduct and follow up on a specified number of compliance visits; conduct and report on inspection and other visits as requested by the VA; comply with and enforce requirements of the Principles of Excellence, as appropriate; provide technical assistance to SCOs; provide specified trainings to SCOs; conduct and report informational outreach sessions to key stakeholders and through various mechanisms; liaise with veterans, the ELR, NASAA, and VA; submit quarterly reimbursement and activity reports; submit an annual self-evaluation and receive a satisfactory rating; use fully qualified personnel; complete required SAA employee training; and comply with other contractual responsibilities and obligations. The contract terms are the same for each SAA except that the types of programs for which an SAA is responsible, the funding allocation, business plan, and the number of required compliance surveys may differ. The number of required compliance visits is proportional to the number of full-time equivalent professional SAA staff. The state determines the number of personnel required to fulfill the contract obligations. The contract includes a business plan and performance measures with targets for each activity and subactivity. The business plan comprises the SAA's goals, which are based on the performance standards. The performance measures and targets focus on the percentage of required activities completed within specified time periods and are consistent across SAAs. For example in FY2016, SAAs were expected to visit facilities for initial program approval within 30 days of request in 90% of cases. Periodic SAA/ELR meetings are required under the contract. SAAs are required to submit monthly or quarterly reports to the VA on their activities, including services performed and decisions made regarding programs of education. This includes a quarterly report of the number of approval actions, technical assistance interactions, compliance survey visits, facility visits, staff development activities, and outreach activities, and detailed monthly or quarterly reports for reimbursement claims for operational costs. The VA, in conjunction with SAAs, evaluates each SAA annually to inform subsequent contract negotiations. The evaluation is based on the contract terms. The evaluation begins with a self-evaluation allowing the SAA to describe actual personnel utilization, activities completed, outstanding activities, effective practices, resources used, and the degree to which it achieved its performance standards and business plan. In addition to the self-evaluation, the VA ELR who is also the Contracting Officer Representative (COR) completes an evaluation and submits an assessment report. The self-evaluation and assessment are then reviewed and rated by a Joint Peer Review Group (JPRG) for contract compliance. The JPRG comprises four NASAA members and four VA representatives. SAAs may be given a rating of satisfactory, minimally satisfactory, or unsatisfactory. The SAA may appeal the rating to both the VA Education Service Director and the President of NASAA for a joint decision. If the VA and the President of NASAA do not reach a joint decision, the VA makes the final determination on the appeal. The VA must take into consideration the annual evaluation of each SAA when negotiating a new contract, but not necessarily the JPRG rating. Although SAAs are state agencies or organizations and the employees are state employees, the VA pays the "reasonable and necessary expenses" required for the SAA to fulfill its contractual obligations and as specified in the contractual agreement. Current law has provided $19 million in mandatory funds annually for SAAs since FY2006. Actual expenditures have increased from approximately $17 million in FY2006 to approximately $19 million since FY2013. The SAAs have indicated that the VA reimbursement may not cover actual agency costs. NASAA has requested additional funds to offset increased SAA responsibilities of approval, outreach and marketing, and technical assistance. The reimbursable expenses include salaries and benefits, necessary travel, and administrative expenses but exclude administrative overhead expenses. SAA salaries and benefits must be commensurate with the salaries of other state employees with comparable qualifications and responsibilities. Allowable travel expenses are those for inspection, approval or oversight of programs of education, compliance surveys, outreach activities, and professional development. Travel expense amounts are limited by state laws and regulations. "Administrative expenses may include, but are not limited to, outreach events and supplies, rental, repair, fees, maintenance, utility, and insurance expenses for agency facilities; postage; costs of office equipment and supplies, educational supplies, freight and delivery services; in-state and out-of-state non-reimbursed travel expenses; and other miscellaneous operating expenses." The administrative expense allowance is specified in current law and is calculated based on the reimbursable salary costs. The contract determines each SAA allocation by estimating travel costs, calculating reimbursable salary and fringe benefits, and calculating administrative expenses. Funds are allocated to the individual SAAs in accordance with the weighted number of active facilities (facilities with GI Bill participants) for which each is responsible, and then smoothed using a three-year rolling average. The weighting is based on the type of institution. The state determines the number of personnel required to fulfill the contractual obligations. At the end of the fiscal year, the VA may redistribute funds that were not used by SAAs as supplementary awards to support contracted salary or travel that was not able to be reimbursed within the SAA's fiscal year allocated contract amount. If the VA determines that the SAA is not complying with statutory provisions or the contract, it may require the SAA to conform to the contractual requirements and/or withhold reimbursement. In the event that reimbursement is withheld, the SAA may ask the VA to reconsider its decision or may initiate action under the Disputes clause of the contract and the Contract Disputes Act of 1978 (41 U.S.C. §601-613). The standards that facilities and programs of education must meet to receive and maintain GI Bill approval are specified in 38 U.S.C., Chapter 36, regulations, and Department of Veterans' Affairs (VA) policies. Generally, the standards and requirements provide limited opportunity for the Secretary of Veterans' Affairs (the Secretary) alone, or in collaboration with the State Approving Agencies (SAAs), or through negotiated rulemaking, to develop additional criteria or modify the existing criteria to ensure the integrity and quality of approved programs of education. SAAs are authorized to adopt state regulations and policies in addition to the federal statutory standards and requirements. Some of the federal statutory language and standards do not reflect current educational practice. For example, statutory provisions relating to distance education requirements have not been updated since 2001 despite changes in the nature and extent of distance education. The regulations have not been updated since 2009 to include substantial amendments to the approval process in 2011 by P.L. 111-377 . The following describes the general approval and compliance requirements for programs of education. First, it describes the initial approval standards for deemed approved programs. It then describes additional approval and compliance requirements applicable to specific types of programs. Programs that are deemed approved have an abbreviated set of approval standards, but the compliance standards are the same as for programs that are not deemed approved. Initial Approval Standards for Programs Deemed Approved The abbreviated initial approval process requires the SAA to determine the following: The educational institution keeps adequate records to show GI Bill participant progress and grades and to show that satisfactory standards relating to progress and conduct are enforced. The educational institution maintains a written record of each GI Bill participant's previous education and training that clearly indicates that appropriate credit has been given and the training period shortened proportionately. The facility reports GI Bill participant enrollment or change in enrollment in a timely manner to the VA in accordance with regulations. The facility does not utilize advertising, sales, or enrollment practices of any type that is erroneous, deceptive, or misleading, either by actual statement, omission, or intimation. The facility does not provide a commission, bonus, or other incentive payment for securing enrollments or financial aid to any persons or entities engaged in student recruiting or admission activities or in making decisions regarding the award of student financial assistance. The programs are not avocational and recreational. If offered in part or exclusively through independent study, the program leads to either a college degree or a certificate that reflects educational attainment offered by an IHL. If the program includes flight training, the program is offered by an IHL for credit toward a standard college degree sought by the GI Bill participant; or by a non-IHL flight school that has an FAA pilot school certificate, has an FAA provisional pilot school certificate, is exempt from FAA certification but permitted to offer flight simulator training, or has an FAA training center certificate. Courses are not offered via radio. Unless waived or exempt, the program meets the 85-15 rule, which requires that the Secretary disapprove new enrollments in all courses if more than 85% of the enrolled students have all or part of their educational charges paid to or for them by the educational institution or by VR&E or a GI Bill. For NCD programs, the private not-for-profit or for-profit educational institution or its branch campus has been in operation for at least two years. For NCD programs, the private not-for-profit or for-profit educational institution either retains substantially the same faculty, student body, and courses following a change in ownership or a complete move outside its original general locality or has been in operation for at least two years following the change or move. For programs offered in part or exclusively through contractual agreements, the contracted courses are approved for GI Bill purposes. The program is not offered under a contract by another entity. If the program is designed to lead to state licensure or certification, the courses must meet state instructional curriculum licensure or certification requirements, unless waived. If the program is designed to prepare an individual to practice law, the courses must be accredited by an ED-recognized accrediting agency, unless waived. If the program is designed to prepare an individual for employment in an occupation that requires such state approval, licensure, or certification, the courses must meet the standards developed by the relevant state board or agency if, unless waived. Following initial approval during compliance surveys, deemed approved programs must be able to demonstrate that they meet the same standards as programs that are not deemed approved. Initial Approval Standards for Programs Not Deemed Approved and Compliance Standards for All Programs Federal law and regulations establish the standards that must be met by programs of education to remain approved for GI Bill purposes. These same standards must be met by programs that are not deemed approved during the initial approval process. In addition to program-specific approval standards, there are criteria that all programs and program providers must meet. These are as follows: Avocational and recreational programs are not approved. Courses offered via radio are not approved. Unless waived or exempt, the program must meet the 85-15 rule, which requires that the Secretary disapprove new enrollments in all courses if more than 85% of the enrolled students have all or part of their educational charges paid to or for them by the educational institution or by VR&E or a GI Bill. The program provider does not enroll GI Bill participants in courses for which the individual is already qualified, unless the course is required for an individual to pursue an approved program of education, is needed to update knowledge and skills, or is needed for instruction in the technological advances that have occurred in the veteran's field of employment. The facility does not utilize advertising, sales, or enrollment practices of any type that is erroneous, deceptive, or misleading, either by actual statement, omission, or intimation. The facility does not provide a commission, bonus, or other incentive payment for securing enrollments or financial aid to any persons or entities engaged in student recruiting or admission activities or in making decisions regarding the award of student financial assistance. The facility designates an SCO. The facility reports GI Bill participant enrollment or change in enrollment in a timely manner to the VA in accordance with regulations. For NCD programs, the private not-for-profit or for-profit educational institution or its branch campus have been in operation for at least two years. For NCD programs, the private not-for-profit or for-profit educational institution either retains substantially the same faculty, student body, and courses following a change in ownership or a complete move outside its original general locality or has been in operation for at least two years following the change or move. For programs offered in part or exclusively through contractual agreements, the contracted courses are approved for GI Bill purposes. For programs offered by public IHLs, the public IHL does not charge tuition and fees above the in-state rate for that course to a qualified Post-9/11 GI Bill or MGIB-AD participant who is living in the state in which the IHL is located. Unless waived, SAA and VA employees do not receive any remuneration from or have an interest in a private for-profit educational institution at which a GI Bill participant is pursuing a program of education. For purposes of the Montgomery GI Bill—Selected Reserve (MGIB-SR) and Reserve Educational Assistance Program (REAP), programs of education are further limited to those at institutions of higher education that participate in Title IV programs, as defined in the Higher Education Act; licensure or certification programs that meet state requirements; and state approved or licensed programs leading to state licensure or certification. For programs designed to lead to state licensure or certification, the courses must meet state instructional curriculum licensure or certification requirements, unless waived. For programs designed to prepare an individual to practice law, the courses must be accredited by an ED-recognized accrediting agency, unless waived. For programs designed to prepare an individual for employment in an occupation that requires such state approval, licensure, or certification, the courses must meet the standards developed by the relevant state board or agency if, unless waived. Such additional criteria as may be deemed necessary by the SAA as long as such criteria are in accordance with VA regulations; are deemed necessary by the VA; and treat public, private not-for-profit, and private for-profit educational institutions equitably. Apprenticeships Apprenticeships offer individuals the opportunity to earn a salary while learning the skills necessary for full employment in a career. Apprenticeships are DOL Registered Apprenticeship programs and apprenticeship programs approved by a state apprenticeship agency recognized by the DOL Office of Apprenticeship. Apprenticeships are deemed approved if the job does not require a wage subsidy. In the application, apprenticeship programs must provide information on the job objective, length of the training period, approximate schedule for achievement of learning objectives, number of hours of supplemental instruction, and other information requested by the SAA. The training establishment must certify that the program will be pursued full-time. To maintain approval, the training establishment must provide a training agreement, including the training program and wage scale, to each GI Bill participant and the VA. On-the-Job Training (OJT) OJT provides progression and appointment to the next higher classification based upon skills learned through organized and supervised training on the job. OJT excludes apprenticeships and may not be deemed approved. Along with meeting the same requirements as apprenticeship programs, OJT must meet several additional requirements. The training content must qualify the trainee for the specified job objective, and the job must not require a wage subsidy. The job must customarily require full-time training for a period of not less than six months and not more than two years, and the length of the training period must not be longer than that customarily required by training establishments in the community. The training establishment must provide for related instruction when needed and have adequate space, equipment, instructional material, and instructor personnel to provide satisfactory training on the job. The training establishment must keep adequate records showing trainee progress, and the training must not be offered to GI Bill participants who are already qualified by training and experience for the job. To maintain approval, the training establishment must provide a training agreement to each GI Bill participant and the VA. Finally, the SAA may establish additional criteria. OJT establishments must certify that the wages meet approval criteria and that there is a high likelihood that the job will be available. Starting OJT wages must be at least 50% of journeyman wages and not less than wages paid nonveterans, and wages must increase in regular periodic increments until, not later than the last full month of the training period, they must be at least 85% of journeyman wages. Federal, state, and local governments are not required to provide the final 85% wage. Programs of Education that Are Offered by Accredited Educational Institutions and that Are Not Deemed Approved Programs of education that are offered by accredited educational institutions and that are not deemed approved include courses offered by a private for-profit educational institution that is accredited by an ED-recognized accrediting agency, non-college degree programs (NCDs) at accredited public and private not-for-profit educational institutions, courses accepted by the state department of education for credit for a teacher's certificate or a teacher's degree, and courses approved by the state as meeting the requirement of regulations prescribed by the Secretary of Health and Human Services for skilled nursing facilities. Each institution must submit its catalog or bulletin describing graduation requirements, policies regarding standards of academic progress, policies regarding student conduct and dismissal for unsatisfactory progress, and attendance standards. The institution must be able to demonstrate that it keeps adequate records to show the progress and grades of GI Bill participants; keeps adequate records to show enforcement of its policies on student conduct and academic progress standards; maintains a written record of GI Bill participants' previous education and training, credit awarded, and the effect on the training period; has courses, curriculum, and instruction consistent in quality, content, and length with similar courses in public schools and other private schools in the state with recognized accepted standards; has adequate space, equipment, instructional material, and instructor personnel to provide training of good quality; and has directors, administrators, and instructors with adequate qualifications. If offered in part or exclusively through independent study, the program must lead to either a college degree or a certificate that reflects educational attainment offered by an IHL. Correspondence Courses Correspondence courses usually provide lessons through the mail and have a limited time period for their completion. A program of education offered exclusively or partially by correspondence must be offered by an educational institution accredited by an ED-recognized accrediting agency. In addition, at least 50% of those pursuing the correspondence program or course for six months or more must complete the program or course. The program or course must meet the aforementioned requirements for accredited programs and additional requirements: A program of education offered exclusively by correspondence must provide an enrollment agreement to each GI Bill participant. The enrollment agreement describes the obligations of each party, the processes for affirming and terminating the agreement, the refund policy, and requirements to receive GI Bill benefit payments. The GI Bill participant must sign the agreement and affirm such agreement to the VA. A program pursued in part by correspondence must offer the residence and correspondence portions sequentially (not concurrently), must not award more credit for the correspondence portion than required to complete the program, and must grant credit toward program completion for the correspondence portion. Entrepreneurship Programs An entrepreneurship course is a non-credit NCD course of business education that enables or assists a person to start or enhance a small business concern (as defined pursuant to section 3(a) of the Small Business Act (15 U.S.C. 632(a))). Entrepreneurship courses must be offered by a qualified provider of entrepreneurship courses. A qualified provider of entrepreneurship courses is any small business development center described in section 21 of the Small Business Act (15 U.S.C. 648), insofar as such center offers, sponsors, or cosponsors an entrepreneurship course. The provider must be able to demonstrate that it can maintain adequate records to comply with VA reporting requirements; has adequate space, equipment, instructional material, and instructor personnel to provide training of good quality; and has directors, administrators, and instructors with adequate qualifications. Nonaccredited Programs Nonaccredited programs are programs offered by educational institutions that are not accredited by ED-recognized entities but exclude entrepreneurship programs. Each institution must submit a catalog or bulletin, which must include identifying data, such as volume number and date of publication; names of the institution and its governing body, officials, and faculty; a calendar of the institution showing legal holidays, beginning and ending date of each quarter, term, or semester, and other important dates; institution policy and regulations on enrollment related to enrollment dates and specific entrance requirements for each course; institution policy and regulations related to leave, absences, class withdrawals, makeup work, tardiness, and interruptions for unsatisfactory attendance; institution policy and regulations related to academic standards of progress; institution policy and regulations relating to student conduct and conditions for dismissal for unsatisfactory conduct; detailed schedules of fees and charges; institution policy and regulations relative to the refund of the unused portion of charges in the event the student does not enter the course or withdraws or is discontinued therefrom; a description of the available space, facilities, and equipment; a course outline for each course for which approval is requested, showing subjects or units in the course, type of work or skill to be learned, and approximate time and clock hours to be spent on each subject or unit; and institutional policy and regulations related to granting credit for previous educational training. In addition, the institution must demonstrate the following: The courses, curriculum, and instruction are consistent in quality, content, and length with similar courses in public schools and other private schools in the state, with recognized accepted standards; There is adequate space, equipment, instructional material, and instructor personnel to provide training of good quality; Educational and experience qualifications of directors, administrators, and instructors are adequate; The institution maintains a written record of the previous education and training of the eligible person and clearly indicates that appropriate credit has been given by the institution for previous education and training, including a record of a proportional reduction in required training for such credit received and notification of such reduction to the eligible person; The GI Bill participant will receive a copy of the course outline, schedule of tuition, fees, and other charges, regulations pertaining to absence, grading policy, and rules of operation and conduct; Upon completion of training, the GI Bill participant is given a certificate by the institution indicating the approved course and indicating that training was satisfactorily completed; Adequate records as prescribed by the SAA are kept to show attendance and progress or grades, and satisfactory standards relating to attendance, progress, and conduct are enforced; The institution complies with all local, city, county, municipal, state, and federal regulations, such as fire, building, and sanitation codes. The SAA may require such evidence of compliance as is deemed necessary; The institution is financially sound and capable of fulfilling its commitments for training; The institution does not exceed its enrollment limitations as established by the SAA; The institution's administrators, directors, owners, and instructors are of good reputation and character; Unless waived, the institution has and maintains a policy for the refund of the unused portion of tuition, fees, and other charges in the event the eligible person fails to enter the course or withdraws or is discontinued therefrom at any time before completion and 1. in the case of a private institution, such policy provides that the amount charged to the eligible person for a portion of the course shall not exceed the approximate pro rata portion of the total charges for tuition, fees, and other charges that the length of the completed portion of the course bears to its total length; or 2. in the case of a nonaccredited public educational institution, the institution has and maintains a refund policy regarding the unused portion of charges that is substantially the same as the refund policy followed by accredited public educational institutions located within the same state as such institution; and The institution publicly discloses any additional conditions required to obtain licensure, certification, or approval for unaccredited courses designed to lead to state licensure or certification or to prepare an individual for an occupation that requires such approval or licensure. Finally, the program of education offered by the institution must meet the following criteria: The courses, curriculum, and instruction are consistent in quality, content, and length with similar courses with recognized accepted standards in public schools and other private schools in the state; and The programs are not offered in whole or in part by independent study. Flight Training Programs Flight training programs lead to Federal Aviation Administration (FAA) certifications or ratings to operate aircraft. Three types of flight training programs may be approved for GI Bill purposes: 1. Flight training offered in-house by an IHL for credit toward a standard college degree sought by the GI Bill participant; 2. Flight training that is offered by an IHL through a contract and that provides credit toward a standard college degree sought by the GI Bill participant; and 3. Flight training offered by a non-IHL flight school that has an FAA pilot school certificate, has an FAA provisional pilot school certificate, is exempt from FAA certification but permitted to offer flight simulator training, or has an FAA training center certificate. For flight training that is offered by an IHL through a contract, the contracted entity must be approved to offer the program and the individual must be eligible to enroll as a GI Bill participant in the contracted program. The IHL must document any mandatory fees and the number of required flight training hours for each course. The program of education that includes flight training must otherwise meet the general approval requirements and the standards for accredited or nonaccredited programs, as applicable. In addition, GI Bill benefits are only available for approved aircraft and a maximum number of hours that are established relative to FAA regulations. For flight training that is not part of a degree program at an IHL, the flight courses must be FAA approved. Nonaccredited flight courses must meet additional criteria: All ground school training is in residence; and The flight school maintains records of the students' private pilot certificate, prior training, medical certificate, flight log, ground school record, progress log, and other flight-related information. Unless the GI Bill participant is enrolled in a ground instructor certification course or flight training offered in-house by an IHL leading to a degree, the participant must have a valid private pilot certificate (or higher pilot certificate) and the requisite medical certificate. Licensing and Certification Tests That are Not Deemed Approved The SAAs and VA approve licensing and certification tests. Tests are either required under federal, state, or local law or regulation for an individual to enter into, maintain, or advance in employment in a predetermined and identified vocation or profession; or generally accepted, in accordance with relevant government, business, or industry standards, employment policies, or hiring practices, as attesting to a level of knowledge or skill required to qualify to enter into, maintain, or advance in employment in a predetermined and identified vocation or profession. There are several requirements of all organizations offering such tests: It maintains appropriate records with respect to all candidates who take the test. It promptly issues test results. It has in place a process to review complaints with respect to the test or the process for obtaining a license or certificate required for vocations or professions. It furnishes to the Secretary information as necessary to ensure proper payments. It furnishes a description of the licensing or certification test offered, the purpose of the test, required prerequisites for taking the test, the entities that recognize the test, the license or certificate issued upon successful completion of the test, the period for which the license or certificate awarded is valid, and the requirements for maintaining or renewing the license or certificate. There are several additional requirements of nongovernmental organizations offering such tests: It certifies that the test meets generally accepted employment requirements. It is licensed, chartered, or incorporated in a state and has offered such test, or a test to certify or license in a similar or related occupation, for a minimum of two years before applying for approval. It employs, or consults with, individuals with expertise or substantial experience with respect to all areas of knowledge or skill that are measured by the test and that are required for the license or certificate issued. It has no direct financial interest in the outcome of the test or organizations that provide the education or training of candidates for licenses or certificates required for vocations or professions. It provides sufficient information to compare the test with the level of knowledge or skills that a license or certificate attests and the applicability of the test, as requested by the Secretary.

State Approving Agencies (SAAs) play an important role in the administration of GI Bill® benefits. GI Bill benefits provide educational assistance payments to eligible veterans and servicemembers and their families enrolled in approved programs of education. The SAA role is intended to ensure that veterans and other GI Bill participants have access to a range of high-quality education and training programs at which to use their GI Bill benefits. In FY2017, the Department of Veterans' Affairs (VA) is estimated to distribute over $14 billion in GI Bill benefits to over 1 million eligible participants. Statutory provisions provide for the establishment of SAAs and describe their role in administering GI Bill benefits. Each state is "requested" to create or designate a state department or agency as its SAA. The VA contracts (or enters into agreement) with each SAA annually to provide approval, oversight, training, and outreach activities by qualified personnel as specified in the contract to ensure the quality of programs of education and proper administration of GI Bill benefits. The VA oversees the processes for approving and reviewing approved programs of education, educating the entities and individuals involved in GI Bill claims processing, and increasing awareness among potential GI Bill participants. The VA and any other federal entity or individual is prohibited from exercising any supervision or control over SAAs except as specifically provided in statutory provisions. For example, 38 U.S.C. §3674 requires the VA take into consideration an annual evaluation of each SAA's performance on its contractual standards when negotiating a new contract. One of the key SAA roles is to initially approve programs of education for GI Bill purposes. Each sponsoring facility (e.g., educational institutions and training establishments) must submit an application to its SAA. Approval is intended to ensure that each program of education and sponsoring facility meets all applicable statutory and regulatory requirements, including proper benefit administration and program of education quality. The approval process and requirements vary depending on the program's educational objective (e.g., non-college degree or flight training) and existing government oversight. For example, some programs that are approved by other government programs or processes are "deemed approved" and require a less in-depth review. The remaining programs undergo more comprehensive approval processes that may include the SAA reviewing institutional policies, staff qualifications, and academic curriculum. The SAA may conduct a site visit. Once the SAA completes the initial approval review in accordance with the approval standards, the SAA issues an approval or disapproval letter to the facility. The VA maintains the compiled list of all approved programs of education. Another key SAA role is to conduct compliance surveys. Compliance surveys are designed to ensure that the facility and approved programs are in compliance with all applicable statutory, regulatory, and policy provisions and the facility understands the provisions. Statutory provisions establish the number of institutions requiring annual compliance surveys. The VA conducts compliance surveys but also assigns some of the required compliance surveys to SAAs. During the onsite compliance survey visit, the SAA reviews student files to verify that GI Bill payments have been made properly, conducts student interviews, verifies institutional operations, and reviews additional documents and areas as outlined on the compliance survey checklist. Discrepancies uncovered during the compliance survey may be resolved immediately, may result in the creation of a GI Bill debt or payment, or may result in the suspension or disapproval of a program of education. The SAA may suspend a program of education from new enrollments for up to 60 days while the SAA provides assistance to help the facility resolve the issue. The SAA may disapprove the program of education such that no GI Bill payments may be made based on an individual's pursuit of the program of education.

Congress established a statutory formula governing distribution of financial aid for municipal wastewater treatment in the Clean Water Act (CWA) in 1972. Since then, Congress has modified the formula and incorporated other eligibility changes five times, actions which have been controversial on each occasion. Federal funds are provided to states through annual appropriations according to the statutory formula to assist local governments in constructing wastewater treatment projects in compliance with federal standards. Congress has appropriated more than $91 billion since 1972. The formula originally applied to the act's program of grants for constructing such projects. That grants program was replaced in the law in 1987 by a new program of federal grants to capitalize state revolving loan funds (SRFs) for similar activities. The most recent formula change, also enacted in 1987, continues to apply to federal capitalization grants for clean water SRFs. The current state-by-state allotment is a complex formulation consisting basically of two elements, state population and "need." The latter refers to states' estimates of capital costs for wastewater projects necessary for compliance with the act. Funding needs surveys have been done since the 1960s and became an element for distributing CWA funds in 1972. The Environmental Protection Agency (EPA), in consultation with states, has prepared 15 clean water needs surveys since then to provide information to policymakers on the nation's total funding needs, as well as needs for certain types of projects. Legislation to fund water infrastructure projects has been on Congress's agenda regularly since the 107 th Congress. The 113 th Congress enacted some changes to the SRF provisions of the CWA in Title V of the Water Resources Reform and Development Act of 2014 (WRRDA, P.L. 113-121 ). These amendments did not modify the existing allotment formula, but requested EPA to conduct a review of the current allotment formula and submit a report to Congress. In part because the formula is more than 25 years old, while needs and population have changed, the issue of state-by-state distribution of funds remains an important topic. This report describes the formula and eligibility changes adopted by Congress since 1972, revealing the interplay and decisionmaking by Congress on factors to include in the formula. Two types of trends and institutional preferences can be discerned in these actions. First, there are differences over the use of need and population factors in the allocation formula itself. During the 1970s, the Senate strongly favored reliance on use of population factors in the allocation formula, while the House strongly advocated a needs-based approach. During the 1980s, the period when categorical eligibilities were restricted in order to emphasize water quality benefits, the Senate favored needs as the basis for grants distribution, while the House position generally was to retain formulas used in prior years, which incorporate both needs and population elements. When population has been used as a factor, differences have occurred over whether a current or future year population estimate is appropriate, but there is no clear trend on this point. Second, until recently, there have been gradual increases in restrictions on types of wastewater treatment projects eligible for federal assistance. Beginning with a limitation that denied use of federal funds for stormwater sewer projects in 1977, debate over categorical eligibility has had two elements. One has been fiscal: a desire to not fund types of projects with the highest costs and often the most unreliable cost estimates. The other focus has been environmental: a desire to use federal resources to assist projects which benefit water quality protection most directly. While some of these eligibility restrictions presented Congress with rather straightforward choices, others have been more complex. Some continue to be debated, such as whether certain types of projects should be fully eligible for federal aid or should be the responsibility of state and local governments. The 2014 CWA amendments enacted as part of WRRDA revised the list of project categories that are SRF-eligible to include some that have been eligible by practice, such as stormwater management and treatment, and to identify newly-eligible categories, such as decentralized wastewater treatment systems. The following table provides a generalized summary of the components of the allocation formula since 1972. Details discussed below should be consulted, because a summary table such as this cannot fully reflect factors such as "hold harmless" or "minimum share" provisions frequently included in the state-by-state distribution scheme to protect states with small allocations or to minimize potential disruptions when formula changes were adopted. The term "total needs" refers to funding needs identified by states for all categories of projects and water quality activities eligible for assistance. The term "partial needs" refers to a subset of eligible project categories, primarily construction or upgrades to comply with the act's minimum requirement that municipalities achieve secondary treatment of wastewater. Prior to enactment of the Federal Water Pollution Control Act Amendments in 1972 (FWPCA, P.L. 92-500), the federal government administered a comparatively small program of aid for constructing municipal wastewater treatment plants. Under the prior program, assistance was allocated to states on the basis of population. There was no statutory formula. Nor was there a systematic process for the federal government or states to estimate and report on funding needs for sewage treatment. Needs surveys had been developed by the Conference of State Sanitary Engineers, which reported generally (but not rigorously) on estimated construction costs of municipal waste treatment facilities planned by communities to meet water quality standards or other standards or enforcement requirements. They lacked both consistent definitions of objectives and consistent reporting requirements. Moreover, these surveys tended to be based on needs of larger municipalities, so needs in small or rural communities were underrepresented. The first funding needs survey undertaken by the federal government was published in 1968, in response to a general requirement in the 1966 Clean Water Restoration Act for an annual report on "the economics of clean water," but it was a considerably more modest effort than followed enactment of P.L. 92-500. These early documents reported state-by-state and national total needs over a given period of time but did not estimate or report needs for particular categories of waste treatment projects, such as secondary treatment. Annual surveys were published each year through 1974; Congress then changed the reporting requirement to biennial. In P.L. 92-500 Congress provided the first statutory formula, governing state-by-state allocations in fiscal years 1973 and 1974. It was entirely needs-based and contained no categorical limitations. Despite weaknesses of the prior surveys, they were the only tool available to guide Congress when the decision was made in the 1972 legislation to move away from a population-based distribution of grants. The 1972 survey estimated total needs, from 1972 through 1976, to be $18.1 billion. Estimated construction costs for the first three years of that period were reported to be $14.6 billion. The rationale for changing to a needs basis for grants allocation despite limitations of available needs information was explained in the House Public Works Committee's report on the 1972 legislation. This needs formula is a sound basis for allotting funds since our experience to date clearly demonstrates that there is no necessary correlation between the financial assistance needed for waste treatment works in a given State and its population. The Committee is fully aware that at the present time there is no satisfactory estimate of the total funds required by the States for construction of publicly owned treatment works... However [the 1972 Needs Survey] report does provide some measure of the relative needs of the various States and in the absence of any better measure has been incorporated in the bill for the determination of the State allotments for the fiscal years 1973 and 1974. The Senate favored retaining population as the basis for grants allocation, and the available public records—committee reports and Senate debates—give no indication whether an alternative approach, such as one based on needs, was considered. The 1972 FWPCA incorporated a statutory formula for distributing grants that was derived from the 1972 survey for the period 1972 through 1974. It covered reported needs in the 50 states and territories, with little categorical restriction. Some limitation was included on use of federal funds for new collector sewers (which collect and carry wastewater from an individual house or business to a major, or interceptor, sewer that conveys the wastewater to a treatment facility). In addition, eligibility for funds was limited to communities in existence when P.L. 92-500 was enacted and could only be provided if the treatment plant had sufficient existing or planned capacity to treat sewage collected by such sewers. Section 205(a) of the FWPCA cross-referenced a table in a House Public Works and Transportation Committee Print that identified each state's percentage share under the legislation. The percentages would apply to total grant amounts made available through annual congressional appropriations. The statute provided that this distribution formula would apply for two years; in Section 516 of the act, EPA was directed to prepare a new needs survey that would govern distribution in FY1975. In response to the 1972 statutory directive, EPA undertook a new method of preparing the needs survey, and the 1973 Needs Survey was the first effort to report and evaluate needs for categories of waste treatment projects, as well as state and national totals. This survey reported costs for the following categories: I—Secondary treatment required by the 1972 act II—Treatment more stringent than secondary required by water quality standards III—Rehabilitation of sewers to correct infiltration and inflow IV—New collector and interceptor sewers V—Correction of overflows from combined stormwater and sanitary sewers (CSOs) This original categorization was subsequently refined. Category III was subdivided to include category IIIA—correction of infiltration and inflow in existing sewers; and category IIIB—replacement or rehabilitation of structurally deteriorating sewers. Category IV was subdivided to include category IVA—new collector sewers; and category IVB—new interceptor sewers. Needs surveys have continued to be based on this same categorical arrangement since the mid-1970s. However, from an initial estimate of $63 billion in the 1973 survey, the survey figure for wastewater treatment and collection system projects went to a high of $342 billion in 1974, dropped to $96 billion in 1976, rose to $106 billion in 1978, $120 billion in 1980, declined to $80 billion in 1990, and was assessed at $67 billion in 2000, the 13 th and most recent survey. Since the 1992 survey, states also have assessed needs for projects to address nonpoint pollution from sources such as agriculture, silviculture, and urban runoff. In the 2000 survey, needs for these types of projects were an additional $14 billion. Over time, inconsistencies and variations in the surveys have been ascribed to several factors, including the lack of precision with which needs for some project categories could be assessed and the desire of state estimators to use the needs survey as a way of keeping their share of the federal allotment as high as possible. In December 1973, Congress enacted P.L. 93-243 , Waste Treatment Fund Allocations, providing the Section 205(a) allocation formula for FY1975. As enacted, the formula was based on EPA's November 1973 Needs Survey, with a formula that split the difference between total needs and partial needs. The formula was one-half of amounts reported in the 1973 Needs Survey for all categories (secondary treatment, more stringent than secondary, sewer rehabilitation to correct infiltration and inflow, new collector sewers, new interceptor sewers, and CSO correction, but not separate stormwater sewers), and one-half of amounts just for categories including secondary treatment, more stringent than secondary and new interceptor sewers. The formula also included a hold harmless provision, under which no state would receive less in construction grant funds than it was allotted under the previous formula. Use of the partial needs categories was based on EPA's recommendation to the Congress that the allocation formula should only include the costs of providing treatment works to achieve secondary treatment (the basic national treatment requirement mandated in the 1972 act), treatment more stringent than secondary as required by water quality standards, and eligible new interceptor sewers, force mains, and pumping stations (categories I, II, and IVB, respectively). These were the core categories representing projects to comply with the basic water quality objectives of the Clean Water Act. EPA's basis for this recommendation was the agency's assessment that the data for the other categories, as reported by the states, were limited and considerably less reliable than for these three categories. In the 1973 survey, EPA reported that total needs nationwide were $60.1 billion (1973 dollars), but that reported costs probably underestimated actual expenditures—by half—due to underreporting of CSO needs and failure of states to report all needs in categories I and II. EPA reported that estimates from only 15 states included cost surveys of all communities in the state; data from the remaining 35 states represented all urban areas plus a sample of communities of less than 10,000 persons located outside urban areas. The Senate Committee on Public Works found that EPA's recommendations would lead to inequities affecting a number of states. In its version of legislation to establish an allocation formula for 1975 ( S. 2812 ), it recommended distribution based 75% on partial needs and 25% on 1972 population (i.e., the ratio of a state's 1972 population compared to the population of all states). The formula recommended by the House, in its version of the legislation ( H.R. 11928 ), was the same as the version finally agreed to: one-half partial needs, and one-half total needs, based on the 1973 EPA Needs Survey. The House committee's actions were explained by the chairman of the Public Works and Transportation Committee. The Environmental Protection Agency proposed two tables for allocation of the grant funds to the States. One was based on all of the needs of the States ... The other table was based on only part of the needs ... The committee heard testimony from several States, some of which would receive more funds under one table and some of which would receive more under the other table. In addition, some States found that under the needs concept they would receive less than they had previously when funds were allocated on the basis of population. The primary reason for this appears to be that these States have not yet accurately identified their true needs for wastewater treatment facilities. The committee is very much committed to the allocation of funds on the basis of need. After much consideration, we determined that the most equitable solution would be to allocate the funds for the next 2 fiscal years on the basis of 50 percent of each of the two tables, with no State receiving less than its allocation of 1972. While some States may receive a little less under the committee's solution, all States will benefit greatly in the long run. Although the House-passed bill called for a two-year allocation formula, the enacted legislation applied only to FY1975. Nevertheless, the formula continued to apply through FY1976, because Congress did not enact legislation to modify it until 1977. Appropriations in FY1977 were provided under two appropriations acts, the Public Works Employment Appropriations Act of 1976 and the Fiscal Year 1977 supplemental appropriations act, each using a different allocation formula. The 1973 allocation legislation, P.L. 93-243 , required EPA to prepare a new, comprehensive needs survey no later than September 3, 1974, and directed that it include all of the categories included in the 1973 survey, plus costs to treat separate storm water flows. In response, the next wastewater needs survey (the 1974 survey) was transmitted to Congress in February 1975. Based on that survey, EPA recommended that future formulas focus on needs reported for categories I, II, and IVB. This recommendation came from the agency's conclusion that data and cost estimates for other categories submitted in prior surveys had been of poor and inconsistent quality and had resulted in an inequitable allocation formula, as expressed by EPA Administrator Russell Train. There is serious doubt, however, that we will be able to provide accurate estimates of the total national needs, or of needs for each State, which would form an equitable basis for allocation of construction grant funds. Even categories I, II, and IV(b) will be very difficult to refine for purposes of allocation because of the large variations in approach used by the States in estimating needs in these categories. I believe that the fundamental differences in reported cost estimates for the construction of publicly owned wastewater treatment facilities highlighted by the last two surveys confirms our concerns about basing the allocation of Federal funds on "needs," at least as they are currently reported. Congress adopted EPA's recommendation to limit the use of "total needs" in connection with the allotment formula that governed distribution of $700 million in authorized monies under the Public Works Employment Act of 1976, P.L. 94-369 , but in so doing, it reintroduced a population factor. This act, commonly referred to as the Talmadge-Nunn Act, authorized funds for a number of public works programs, including wastewater treatment construction, in order to counter unemployment conditions in certain regions of the country. Under the statutory language, the wastewater treatment monies authorized in P.L. 94-369 were to be allocated just to the 33 states and 4 territories that had received inequitable allocations as a result of the prior two needs surveys. The action in this legislation is significant, because it restored population as a factor in the construction grants allocation formula. The formula in P.L. 94-369 was used to govern the distribution of $480 million in FY1977 construction grants to the 33 states and 4 territories identified in that act. The formula provided under P.L. 94-369 was 50% partial needs, as reported in the 1974 needs survey, and 50% 1990 projected population. The second portion of funds provided in Fiscal Year 1977, totaling $1 billion, was governed by the formula that Congress enacted in the FY1977 supplemental appropriations act, P.L. 95-26 . That legislation directed that construction grants allocation be according to the 25-50-25 formula contained in the table on page 16 of S.Rept. 95-38, which was 25% total needs from the EPA 1974 needs survey, 50% partial needs from the 1974 survey, and 25% 1975 population. The needs factors used in this formula were the same as had been in use since FY1975 (derived from the 1974 needs survey), but the population basis was different—population in 1975, rather than projected 1990 population, as under the formula that applied in 1976 under Talmadge-Nunn. The next Clean Water Act amendments that addressed the allocation formula were in the 1977 amendments ( P.L. 95-217 ); these amendments provided the distribution formula for FY1978 through FY1981. The final version of the formula was based 25% on total needs (excluding costs of treating separate stormwater flows), 50% on partial needs (categories I, II, and IVB), and 25% on population. The resulting distribution, on a percentage basis, was summarized in tables included in a House Public Works and Transportation Committee print; the allocation provided in table 3 from that report is referenced in Section 205(a) of the Clean Water Act, as amended by P.L. 95-217 . (As discussed below, this same formula was subsequently extended to 1982.) Documents in the legislative history do not indicate clearly either which year's needs survey or which population year were reflected in the final formula. The formula provided in the House version of the 1977 legislation ( H.R. 3199 ) contained a ratio similar to the final version and was based on data from EPA's 1974 needs survey and 1990 estimated population (the factors also used under the Public Works Employment Act of 1976). The Senate version of the legislation, S. 1952 , contained a formula based on 1975 population and needs reported in the 1976 survey for categories I, II, III, IVB, and V. The committee formula utilized the higher of the two percentages each state would receive under the two formulas and then reduced the total (which added up to 117.34%) to 100%. In addition, no state would receive less than one-half of one percent of total funds. Although the 25-50-25 ratio in the final formula was the same as under the House bill, the state-by-state percentages were not identical, so it appears that, although conferees endorsed the basic House approach, they made some changes, as well. Neither the conference report nor House and Senate debates on the final legislation provides sufficient explanation to determine which population year (1990 or 1975) or needs survey (1974 or 1976) was used in the final allocation formula. Beyond the question of which categories should be included for purposes of the allocation formula, the 1977 amendments presented the first explicit restrictions on categories eligible for federal grant assistance. Based on provisions in the Senate bill (the House version had no similar provisions), the 1977 amendments made one categorical restriction. The legislation prohibited use of federal funds for projects to control pollutant discharges from separate storm sewer systems, category VI in the EPA needs survey. The concerns here were fiscal (the 1974 survey estimated category VI costs at $235 billion, or double all other costs in total) and environmental. The committee sought to assure that federal funds would be used for facilities most critical to reducing pollutant discharges, according to the report on the Senate bill, S. 1952 . The cost of controlling stormwater is substantial even after consideration of other options such as land use controls which may be more cost-effective in some situations. The Federal share for stormwater projects is beyond the reach of the limitations of the Federal budget. It is, furthermore, a cost for which water quality benefits have not been sufficiently evaluated, particularly since stormwater discharges occur on an episodic basis during which water use is minimal. Senate-proposed restrictions on new collector sewer systems and rehabilitation of existing collectors were not included in the final 1977 amendments. Like its proposal concerning stormwater sewers, the committee had contended that the costs of all such projects were excessive, while the water quality benefits were less significant than other core projects, such as constructing secondary treatment plants. P.L. 97-117 , passed in 1981, contained the formula governing distribution of construction grant funds from 1982 through 1985. It was subsequently extended through 1986. These amendments included a number of eligibility restrictions, as well. The House bill, H.R. 4503 , proposed to extend the existing formula through FY1982 only. The position of the House Public Works Committee was that it would address multi-year funding issues in a comprehensive review of the Clean Water Act in 1982. In S. 1716 , the Senate adopted a new formula based on 1980 population; backlog needs for categories I, II, and IVB, as reported in the 1980 needs survey; plus a minimum state share and "hold harmless" provisions to protect states in order to alleviate disruption of state programs, by minimizing potential loss of funds under a new formula. Backlog needs, used for the first time in connection with this legislation, were defined as facility requirements to meet the needs of the 1980 population—rather than 20 years' future growth, as had been customary in previous needs surveys and allotment formulas. The Senate formula would apply through FY1984. EPA was directed to conduct a new needs survey placing greater emphasis on public health and water quality needs; that survey would be the basis for allocation beginning in FY1985. As enacted, P.L. 97-117 incorporated the House formula for 1982. For 1983 through 1985, the legislation used the average of the House formula and the Senate formula for 1984—which was 1980 population, backlog partial needs (for categories I, II, IVB, and IIIA), and a hold harmless provision that no state would receive less than 80% of what it would have received under the 1977 amendments formula. These four categories were those which were to be fully eligible for federal grants, under categorical restrictions included in the legislation (see below). Because of delays in enacting a reauthorization bill in the mid-1980s, Congress extended this formula through 1986, as well. The 1981 legislation put in place several eligibility restrictions intended to restructure the grants program. The Senate committee explained the rationale in its report on the legislation. The members of this Committee, the Administration, and the majority of the witnesses who came before the Committee agree that the time has come to provide priority funding to those parts of the program which provide the greatest water quality benefit. The Committee bill reflects this principle. In the future, only treatment facilities and the necessary interceptor sewers associated with those plants will be eligible for Federal assistance. Two broad points were made by those who advocated restrictions: (1) current budgetary problems made it necessary to focus limited federal resources on the highest priority environmental problems; and (2) the Administration believed that the federal government's funding responsibilities had largely been met, and remaining water quality needs were local, not national, in scope. Based on these issues, the Reagan Administration proposed a number of program changes that Congress endorsed with some modifications: The Administration recommended eliminating eligibility for new collector sewers, sewer rehabilitation, infiltration and inflow correction, and combined sewer overflow projects. The 1981 amendments retained full eligibility for infiltration and inflow projects, on the basis that they can reduce the need for additional sewage treatment plant capacity. The amendments made the other categories (new collector sewers, sewer rehabilitation, and combined sewer overflows) generally ineligible for federal grants, but allowed governors to use up to 20% of their annual allotment for such projects. The general prohibition on use of federal funds for separate storm sewer projects, established in the 1977 legislation, was continued. The Administration recommended eliminating eligibility for reserve capacity to meet future population growth and recommended that the allotment formula be based only on backlog needs. The legislation provided that, after October 1, 1984, no grant would be made for reserve capacity in excess of that needed when an actual construction grant is awarded and in no event in excess of needs existing on October 1, 1990. The Administration recommended eliminating "hold harmless" and minimum allocation provisions of the formula which were not related to water quality benefits. Congress did not adopt these recommendations. Finally, although not part of the Administration's recommendations, the enacted legislation reduced the federal share for eligible projects from 75% to 55%, to extend limited federal funds to more projects. In the 1987 amendments, P.L. 100-4 , Congress adopted the allocation formula that has been in effect since then. Unlike the 1981 legislation, Congress did not make fundamental changes in eligibility—there were no further limitations on types of projects eligible for federal assistance. The prohibition on federal funding for separate storm sewers was continued. The bigger policy issues debated in this legislation concerned establishing state revolving funds as the future funding mechanism, thus replacing the previous construction grants program. Congress directed that the act's statutory allotment formula would govern the new SRF program (Title VI of the act) and also would continue to govern construction grants allotment during the transition from the old funding program to the new one in 1991. Nowhere in the legislative history of Congress's final action on the 1987 amendments is there a clear statement about the weighting or factors that went into the final allocation formula—it is even difficult to guess. The conference report on the final legislation merely states: "The conference substitute adopts a new formula for distributing construction grant funds and the state revolving loan fund capitalization grants among states for fiscal years 1987 through 1990. The allotment formula for FY1986 is the same as under current law." It is clearer, however, where the two houses began. During consideration of the legislation, the House favored retaining the formula adopted in 1981. The Senate proposed an entirely new formula. The Senate formula was based on partial needs (year 2000 needs—not backlog needs, as in the 1981 formula) reported in the 1984 needs survey for the 4 categories which are fully eligible for federal funds: I, II, IIIA (made eligible in 1981), and IVB. As reported by the committee, the formula was essentially based on needs for these categories. There was no explicit population factor—but an implicit population factor was incorporated in reverse, because 21 small states were allotted a slightly larger share in order to be able to maintain viable programs, according to the committee report. In addition, the formula in the Senate-reported bill included an 80% hold harmless provision for 11 large states that were expected to experience greater changes in eligibility because of the revised formula, compared with the average. The formula adopted by the Senate was different still: it provided that the full extent of formula changes would apply to the last three of the five years covered by the reauthorization and that a modified version would govern during the first two years. The two-year modified version gave the large states an 85% hold harmless by holding down the amount of increased share that the smaller states would receive—so that large states would lose less, and smaller states would gain less, at least in the first two years. Accordingly, the Senate formula was essentially needs-based, with an unquantifiable population factor apparently included, as well. It was merged—in ways that are not clear from available public documents—with the House formula, which had total needs, partial needs, and 1980 population factors. The revised formula is contained in CWA Section 205(c)(3) (33 U.S.C. § 1285(c)(3)). Since 1987, Congress has on several occasions considered CWA reauthorization legislation that would have modified the allotment formula that was adopted in P.L. 100-4 . In each Congress since the 107 th , House and Senate committees approved legislation to reauthorize water infrastructure financing programs, including a revised allocation formula. The House has twice passed reauthorization bills (in 2007 and 2009), but none has received further action. Allotment formula issues were again under consideration in the 111 th Congress, but no legislation was enacted. H.R. 1262 , passed by the House in March 2009, and S. 1005 , approved by the Senate Environment and Public Works Committee in May 2009, would have revised the current allotment for clean water SRF monies, but in different ways. The House bill would have extended the current formula in full for two years. Under that legislation, beginning in the third year and thereafter, distribution would be determined under a hybrid approach: for appropriated funds up to $1.35 billion, the current formula would apply, and for appropriated funds in excess of that amount, allotment would be done in accordance with funding needs as reported in the most recent clean water needs survey conducted by EPA and states. The Senate bill in the 111 th Congress proposed a new state-by-state allotment for clean water SRF capitalization grants that was based on the 2004 needs survey (which was the survey available at the time of the committee's consideration). The revised formula in S. 1005 included certain adjustments, for example, guaranteeing small states a minimum 0.75% share (rather than 0.5% as under current law), and generally insuring that no state would "gain" more than 50% compared with its current percentage share or "lose" more than 25% compared with its current allotment. In 1996, Congress amended the Safe Drinking Water Act and established a drinking water state revolving loan fund program modeled after the clean water SRF. However, in that act ( P.L. 104-182 ), Congress took a different approach from that in the CWA and directed that drinking water SRF capitalization grants be allotted among the states by EPA based on the proportional share of each state's needs identified in the most recent national drinking water needs survey, not according to a statutory allotment formula. While the clean water and drinking water SRFs represent significant amounts of federal financial assistance, Congress has provided other assistance, as well, in the form of grants earmarked in EPA appropriations acts for specific communities, both small and large. For a number of years, congressional appropriators had dedicated a portion of annual water infrastructure assistance as earmarked special project grants which are not subject to any statutory or other allotment formula. For example, for FY2010 ( P.L. 111-88 ), Congress appropriated $2.1 billion for clean water SRF capitalization grants, $1.4 billion for drinking water SRF capitalization grants, and $187 million in earmarked grants for projects in 319 designated communities or areas. Since the first of these earmarks in EPA appropriations in FY1989, Congress provided $7.5 billion for special project grants. Congress imposed a moratorium on earmarking in FY2011, but could restore it in the future. In 2014, as part of CWA amendments enacted in the Water Resources Reform and Development Act of 2014 (WRRDA, P.L. 113-121 ), Congress directed EPA to prepare a report to Congress "to determine whether [the current allotment] formula adequately addresses the water quality needs of eligible States, territories, and Indian tribes." The EPA report, completed in May 2016, concludes that the current allotment formula does not adequately reflect reported water quality needs or current population for the majority of states. For example, EPA's analysis found that the current formula adequately reflects the water quality needs for only 17 states, compared with an allotment based on the most recent needs survey. Similarly, the current formula reflects the water quality needs for only 14 states, compared with an allotment calculated using 2010 population data. The report provides several possible options for updating the allocation formula, without recommendation, based on needs survey data, population data, and other elements, such as the extent of a state's reported water quality impairment. Some of the options described in the EPA report include "hold harmless" factors that could constrain potential percentage decreases or increases in funding to individual states. Because the CWA SRF program is the principal source of federal financial assistance for wastewater infrastructure projects, pressure has grown to expand the categories eligible under the program to include additional types needed by communities to meet a wider range of water quality objectives. Congress responded to these concerns in the CWA amendments that were included in WRRDA 2014. These amendments did not modify the existing state-by-state allotment formula or reauthorize SRF capitalization grant funds, but they revised the statutory list of SRF-eligible projects to expressly include some types of projects that have been SRF-eligible by practice (such as measures to manage, reduce, treat, or recapture stormwater; wastewater facility security projects; and reusing or recycling wastewater or stormwater), as well as a number of newly identified categories that now may be assisted by an SRF. These include— decentralized wastewater treatment projects (e.g., individual onsite systems), measures to reduce demand for wastewater treatment works capacity through water conservation or reuse, or to reduce the energy consumption needs of wastewater treatment works, development and implementation of watershed projects, and assistance to small and medium wastewater treatment facilities to develop and obtain project financing and to assist such facilities in complying with the CWA (assistance recipients must be a nonprofit entity). Arguably, these less-traditional types of projects could benefit water quality protection and improvement, as do traditional infrastructure investments, and supporting them through the SRF would help ensure comparatively secure funding. But expanding the scope of eligibility also arguably dilutes the historic focus of the CWA SRF program, at a time when needs for core projects—wastewater treatment facilities and sewers—are estimated to be more than $195 billion. Since adoption of the allocation formula that has governed distribution of Clean Water Act assistance since 1987, EPA and the states have produced seven updated needs surveys (in 1988, 1992, 1996, 2000, 2004, 2008, and 2012). In addition, updated population information became available through three subsequent decennial Censuses (in 1990, 2000, and 2010). Although population changes have occurred during that time, and needs for water quality projects also have changed (total needs increased 17% between the 2004 and 2008 surveys, but decreased 20% between the 2008 and 2012 surveys), none of this more recent information is reflected in the currently applicable distribution formula. The recent needs surveys have included estimates of needs for traditional wastewater project categories, but they also have included estimates for newer categories, such as stormwater management—now identified separately from combined sewer overflow correction—recycled water distribution, and decentralized wastewater treatment systems (e.g., onsite and clustered community systems often found in rural areas). Crafting an allotment formula has been one of the most controversial issues debated during reauthorization of the Clean Water Act. The dollars involved are significant, and considerations of "winner" and "loser" states bear heavily on discussions of policy choices reflected in alternative formulations. This is likely to be the case again, when Congress reauthorizes the wastewater infrastructure funding portions of the act. In part because the current allocation formula is now more than 25 years old, the issue of how to allocate state-by-state distribution of federal funds remains an important topic of interest to policymakers and state and local officials.

Congress established a statutory formula governing distribution of financial aid for municipal wastewater treatment in the Clean Water Act (CWA) in 1972. Since then, Congress has modified the formula and incorporated other eligibility changes five times. Federal funds are provided to states through annual appropriations according to the statutory formula to assist local governments in constructing wastewater treatment projects in compliance with federal standards. The most recent formula change, enacted in 1987, continues to apply to distribution of federal grants to capitalize state revolving loan funds (SRFs) for similar activities. The current state-by-state allotment is a complex formulation consisting basically of two elements, state population and "need." The latter refers to states' estimates of capital costs for wastewater projects necessary for compliance with the act. Surveys of funding needs have been done since the 1960s and became an element of distributing CWA funds in 1972. The Environmental Protection Agency (EPA) in consultation with states has prepared 16 clean water needs surveys since then (the most recent was released in 2016) to provide information to policymakers on the nation's total funding needs, as well as needs for certain types of projects. This report describes the formula and eligibility changes adopted by Congress since 1972, revealing the interplay and decisionmaking by Congress on factors to include in the formula. Two types of trends and institutional preferences can be discerned in these actions. First, there are differences over the use of "need" and population factors in the allocation formula itself. Over time, the weighting and preference given to certain factors in the allocation formula have become increasingly complex and difficult to discern. Second, until recently, there was a gradual increase in restrictions on types of projects eligible for federal assistance. However, amendments adopted in 2014 expanded eligibilities, adding eligibility for such measures as water conservation, efficiency, or reuse in order to reduce demand for capacity of wastewater treatment facilities. Crafting an allotment formula has been one of the most controversial issues debated during past reauthorizations of the Clean Water Act. The dollars involved are significant, and considerations of "winner" and "loser" states bear heavily on discussions of policy choices reflected in alternative formulations. This is likely to be the case again, when Congress considers legislation to reauthorize the act. Because the current allocation formula is now more than 25 years old, while needs and population have changed, the issue of how to allocate state-by-state distribution of federal funds remains an important topic. In May 2016, EPA issued a report requested by Congress on the allotment of CWA water infrastructure funding. It concludes that, for the majority of states, the current allotment does not adequately reflect reported water quality needs or the most recent Census data on population. It provides several possible options to update the allotment in the future, but does not recommend or identify a preferred option.

Although the appointment of the chairman of the National Intelligence Council (NIC) does not require the advice and consent of the Senate, the planned designation of retired Ambassador Charles Freeman to the position in March 2009 focused attention on the NIC by Members of Congress and by many in the public. Most believe congressional criticism was undoubtedly a factor in Mr. Freeman's ultimate decision to withdraw his name from consideration. In May 2009, then-Director of National Intelligence Dennis C. Blair announced the appointment of Christopher A. Kojm as NIC chairman. Mr. Kojm had earlier served as deputy director of the National Commission on Terrorist Attacks Upon the United States (the 9/11 Commission), in the State Department's Bureau of Intelligence and Research, and as a professor of international affairs practice at George Washington University. The NIC is responsible for the U.S. intelligence community's most authoritative assessments of major issues affecting the national security. The NIC is a component of the U.S. intelligence community that is not well known even though it is less shrouded in secrecy than most other intelligence offices. Inherent to intelligence efforts is analysis of data collected. The first statutory responsibility of the DNI is to ensure that national intelligence is provided to the President, department heads, military commanders, and the Congress. Although this responsibility along with intelligence appropriations is sufficient to permit the DNI to establish analytical offices, the National Security Act also specifically establishes the NIC and defines its role at the center of the government's intelligence analysis efforts. By law, the NIC is to consist of "senior analysts within the intelligence community and substantive experts from the public and private sector, who shall be appointed by, report to, and serve at the pleasure" of the DNI. The senior analysts are known as National Intelligence Officers (NIOs). There is no statutory requirement that a chairman of the NIC be designated. The NIC is to produce "national intelligence estimates for the United States Government, including alternative views held by elements of the intelligence community." National intelligence estimates and other NIC products are defined as setting forth the judgment of the intelligence community as a whole on a matter covered by such product. Members of the NIC serve on a full-time basis as the senior intelligence advisers of the intelligence community to the rest of the federal government. They are part of the Office of the DNI (ODNI) and are not assigned to any other intelligence agency. By law the ODNI cannot be co-located with any other element of the intelligence community; currently the ODNI headquarters is located in a separate building in the Virginia suburbs of Washington, DC. In 2011 the NIC consisted of a chairman, vice chairman, counselor, chief of staff, director of a strategic futures groups, and a senior advisor on global health security, in addition to some 14 NIOs. Currently, NIO positions are responsible for the following geographic and functional areas: Africa Cyber issues East Asia Economic issues Europe Military issues Near East North Korea Russia and Eurasia Science and Technology South Asia Transnational Threats Weapons of Mass Destruction and Proliferation Western Hemisphere At present, the National Security Act, as amended, provides that the DNI appoints the members of the NIC and they serve at his pleasure, unlike the preponderance of career analysts in the various agencies. In recent years these appointments have been balanced among individuals who have served in the Foreign Service, the Defense Department, and the intelligence community, along with a number of persons from academic life or nongovernmental organizations. None of the NIC appointments require the advice and consent of the Senate. The responsibilities of the NIC are further set forth in intelligence community Directive Number 207, National Intelligence Council . Directive 207 requires that the NIOs, acknowledged experts in their areas of responsibility, provide intelligence assessments to the National Security Council, military decision-makers, and Congress. To accomplish this, NIOs may task agencies to provide analytical support. They may also work with officials in the ODNI to establish requirements for collection efforts by the various agencies (changing collection efforts can involve the major realignments of technical systems such as satellites). The NIC provides necessary preparatory and briefing materials for the DNI in his capacity as head of the intelligence community. There can be tension among these duties; involvement in preparing National Intelligence Estimates (NIEs) and other assessments requires wide-ranging substantive expertise, participating in managing the collection effort requires detailed understanding of sophisticated technical systems, and providing staff support to the DNI can be time-consuming. In the past 15 years there has been a tendency to include more NIOs who have served in non-governmental positions in think tanks or universities along with ambassadors and retired military leaders. Some argue that such backgrounds help ensure the relevance of analytical products but do not necessarily provide the detailed understanding of the limitations of collection capabilities. Others maintain that it is only essential that NIOs understand which intelligence collection disciplines are most useful in answering which analytical questions and that detailed knowledge of technical systems is not required. Another potential danger is that the NIOs might become so committed to supporting the DNI in meetings and testimony that they have insufficient time for more detailed analytical work. The NIC produces coordinated assessments of the intelligence community's views, including NIEs, the NIC's "flagship product," that "provides the authoritative written judgments of the [Intelligence community] on national security issues for the United States Government." NIEs are initiated by senior civilian or military policymakers, Congress (by request or mandated in legislation), or by the NIC itself. After terms of reference are approved, the NIC assigns analysts to produce a draft. The NIC evaluates the draft, which is subsequently forwarded to intelligence agencies. Representatives from the agencies then meet "to hone and coordinate line-by-line the full text of an NIE." NIEs are reviewed by the DNI and the heads of relevant intelligence community agencies. Once approved, NIEs are disseminated to the President and to senior executive branch officials and Congress. In general, the members of the NIC are not public spokesmen for the intelligence community. They may testify before congressional committees and give occasional public talks to think tanks or academic meetings, but they are not policymakers and are not charged with informing the public. Their work is essentially internal to the federal government. On occasion some NIEs or specially prepared summaries are released to the public and become part of policy debates. In December 2007, an unclassified summary of an NIE on Iran's nuclear programs was released inasmuch as it included judgments at variance with an earlier assessment. Older NIEs of historical interest are occasionally published by CIA's Center for the Study of Intelligence or are included in the State Department's Foreign Relations of the United States series. Long before establishment of the NIC, during World War II, the Office of Strategic Services (OSS) included a large number of eminent scholars who prepared reports based on all available intelligence. After the war, these functions and some of the scholars were eventually transferred to the Central Intelligence Agency (CIA). In 1950 an Office of National Estimates (ONE) was established in the CIA. The office included a Board of National Estimates (BNE) consisting of some 5-12 experts, chaired by former Harvard historian William L. Langer. The BNE's estimates were to reflect the views of the entire intelligence community, not just the CIA; the goal was to ensure that the President and other senior officials had the collective wisdom of all agencies based on all evidence to avoid the mistakes that were made prior to Pearl Harbor. The then-Director of Central Intelligence (DCI), Walter Bedell Smith, personally selected experts in the field in strategy, political science, economics, and other social sciences along with individuals with broad experience in intelligence. Among those selected was a Yale historian, Sherman Kent, who succeeded Langer in 1952 and remained as head of the BNE until 1967. Eventually the ONE had a professional staff of 25-30 specialists and a support staff. At first members of the board were expected to be generalists; later on, elements of specialization developed. They had access to CIA products but also to intelligence produced in other intelligence agencies. Although the members of the BNE worked directly for the DCI, the relationship of the Office of National Estimates with the CIA's analytical component, the Directorate of Intelligence (DI), varied over the years. In 1952 the ONE was subordinated to the DI; in 1966 it became directly under the supervision of the DCI. The BNE set the pattern for NIEs and other less formal inter-agency assessments. The analytical standards were high and conclusions focused on issues that analysts believed policymakers would confront. NIEs became integral parts of most national security policymaking efforts, and more than 1,500 NIEs were published over the 23 years of the BNE's existence. Inasmuch as the estimates (drafted by the BNE and later by the NIC) were considered the DCI's estimates, they did not necessarily reflect the views of CIA analysts or those of analysts in other agencies. BNE estimates such as those addressing the Soviet Union's strategic capabilities provided the foundation for U.S. defense planning and arms control negotiations during the length of the Cold War. NIEs during the Vietnam War tended to be more pessimistic in regard to South Vietnam's capabilities than were assessments from Defense Department analysts. A major embarrassment was the board's judgment in September 1962 that the Soviet Union would be unlikely to deploy offensive missiles to Cuba. The following month photographic evidence revealed that missile bases were in fact being installed, a revelation that led to the Cuban Missile Crisis. Over time there were concerns that the board had become too inward-directed and had lost contact with policymakers. In 1973 DCI William Colby abolished the board and established a number of positions designated National Intelligence Officers (NIOs). Colby later wrote: I had sensed an ivory-tower mentality in the Board [of National Estimates]; its composition had tended to shift to a high proportion of senior analysts who had spent most of their careers at [CIA] and who had developed a "mind-set" about a number of the issues in opposition to the views of the Pentagon and because of the way [President Richard] Nixon and [National Security Adviser Henry] Kissinger had excluded them from some of the White House's more sensitive international dealings. Furthermore: I was troubled over how badly the machinery was organized to serve me. If I wanted to know what was happening in China, for example, I would have to assemble individual experts in China's politics, its economics, its military, its personalities, as well as the clandestine operators who would tell me things they would tell no one else. Or I could commission a study that would, after weeks of debate, deliver a broad set of generalizations that might be accurate but would be neither timely nor sharp…. Thus, I created the positions of National Intelligence Officers, and I told the eleven men and one woman whom I chose for the jobs that they were to put themselves in my chair as DCI for their subject of specialization.... They were chosen from the intelligence community and private life as well as the CIA, and they served as the experts I needed in such subjects as China, Soviet affairs, Europe, Latin America, strategic weaponry, conventional forces, and economics, ranging throughout the intelligence community and out into the academic world to bring to me the best ideas and press the different disciplines to integrate their efforts. From 1973 until 1979, there was a position of Deputy to the DCI for the NIOs. In 1979, the NIOs were formally organized into a National Intelligence Council by the then-DCI Stansfield Turner. The NIC, along with the CIA's DI, were integrated in a newly created National Foreign Assessment Center (a name that endured only until the end of 1981). Unlike the members of the BNE, the NIOs had specific areas of geographic or functional responsibilities. The NIOs, like the members of the BNE, reported directly to the DCI, but administratively they had a complicated relationship with the DI; DCI William Casey appointed Robert Gates to head both the DI and NIC. Later he would recall, "some on the outside thought one person should not be the head of the Council and also head of CIA's analytical component. They were right." Subsequent observers would share the view that the NIOs need to be separated from the management of CIA's DI to permit a certain distance from institutionalized analytical viewpoints and to ensure that they have equal access to the conclusions of other intelligence agencies. Out of the recurring concern that the intelligence community had "grown too isolated from the consumer it was established to serve," the Intelligence Authorization Act for FY1993 ( P.L. 102-496 ) provided a statutory authorization for the NIC. The provision, which originated in the Senate Select Committee on Intelligence, was intended to elevate the institutional status of the NIC both within the government and in the private sector. The Senate Intelligence Committee anticipated that the NIC would include substantive experts from within and outside the government. The Senate-passed version of the legislation had included a provision that the NIC would have a designated chairman and two deputy chairmen, one of whom was to be from the private sector. This provision was not, however, adopted in the conference report as a result of objections from the George H. W. Bush Administration that it would restrict the flexibility of the DCI. However, the conferees emphasized that they shared the Senate determination to include outside experts in the NIC; "the conferees believe that effective use of individuals from outside of government in the NIC is absolutely essential to creating and maintaining the expertise, objectivity, and independence so critical to the production of national intelligence estimates." After the Soviet collapse, the NIC prepared estimates dealing with a multitude of post-Cold War issues and, especially during the Clinton Administration, there was emphasis on non-traditional issues such as the effects of environmental change on national security policy. Although the relevant NIOs coordinated a 1995 NIE predicting terrorist threats against the United States and in the United States, the NIC was criticized in December 2002 by the joint inquiry of the two congressional intelligence committees for not having prepared an NIE on the threat to the United States posed specifically by Al Qaeda. The NIE process was a source of widespread concern in the aftermath of the NIE on Iraqi weapons of mass destruction (WMD) prepared in September 2002 at the request of Members of Congress. The estimate that Baghdad was hiding large numbers of WMDs was not borne out by a field investigation undertaken after the collapse of Saddam Hussein's regime and called into question the basic competence of the intelligence community in general. A subsequent investigation by the Senate intelligence committee and by an independent presidential commission found that the NIE reflected a number of substantive problems in both collection and analytical efforts. In 2004 the 9/11 Commission, in reviewing the role of intelligence agencies prior to the September 2001 attacks on the Pentagon and the World Trade Center, concluded that there was insufficient coordination across the agencies and a weak capacity to set priorities and move resources. Accordingly, the Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 ), enacted in the wake of the 9/11 Commission's recommendations and in view of widespread congressional concern about the quality of analytical products, created the position of Director of National Intelligence, and the NIC and the NIOs were transferred to the Office of the DNI (ODNI). The chairman of the NIC has been "double-hatted" as a Deputy DNI for Analysis (one of four deputies that the DNI is authorized to establish). As noted above, this legislation placed the NIC directly under the DNI and reiterated its statutory responsibilities. Most observers believe that congressional committees benefit from the testimony of NIC members either in open or closed sessions. When Congress requests NIEs or other intelligence assessments, the NIC is responsible for ensuring they are prepared. Congressional intelligence committees conduct oversight of all intelligence activities and have, on occasion, focused on analytical efforts, including NIEs. Publically available documents do not, however, include oversight hearings of the NIC and its work. There are a number of ways that oversight of the NIC might be changed. Congress might choose to pass legislation to establish the position of NIC chairman and require that appointments to this position be made by the President subject to the advice and consent of the Senate. NIOs are not policymakers; they share the intelligence community's mandate to produce intelligence "independent of political considerations." On the other hand, NIOs are not simply technical experts inasmuch as they are required to be substantive experts in fields that are often very controversial and directly related to policymaking. Requiring confirmation of NIOs would permit the Senate to assure itself that nominees were fully qualified and prepared to uphold the statutory obligations of providing intelligence that is "timely, objective, independent of political considerations, and based upon all sources available to the intelligence community and other appropriate entities." The Senate could satisfy itself that the NIC was not being affected by too many NIOs with similar perspectives on national security issues. The confirmation process would provide an oversight opportunity, including the chance to obtain a promise by the nominee to testify in the future. Some might argue that the confirmation process tends to delay appointments and that Senate confirmation might also add a partisan component to filling a position specifically designed to be nonpartisan. Some might also argue that Senate confirmation is inappropriate since the work of the NIC does not involve policymaking or extensive managerial responsibilities, unlike the work of many officials so appointed. Another consideration is that adding a requirement for Senate confirmation for all NIOs would absorb additional administrative resources both in the executive and legislative branches. Another approach would include greater congressional oversight of the NIC's activities and its products. Much of such oversight would necessarily have to be in closed sessions, but in the past there have been a number of public reviews of the intelligence community's analytical efforts that have resulted in a number of modifications to NIC practices. On one occasion the NIC acknowledged that it had taken several steps in accordance with specific congressional recommendations, viz .: Created new procedures to integrate formal reviews of source reporting and technical judgments. The Director CIA, as the National HUMINT [human intelligence] Manager, as well as the Directors of NSA [National Security Agency], NGA [National Geospatial-Intelligence Agency], and DIA [Defense Intelligence Agency], and the Assistant Secretary/INR [Assistant Secretary of State for Intelligence and Research] are now required to submit formal assessments that highlight the strengths, weaknesses, and overall credibility of their sources used in developing the critical judgments of the NIE. Applied more rigorous standards. A text box is incorporated into all NIEs that explains what is meant by such terms as "we judge" and that clarifies the difference between judgments of likelihood and confidence levels. The NIC sought to make a concerted effort to not only highlight differences among agencies but to explain the reasons for such differences and to display them prominently in the Key Judgments. Questions have been raised about the role of NIOs, and the NIC generally, within the government, some arguing that the NIC "has become the administrative support staff for the [DNI] as he prepares for high-level meetings, assembling briefing books for him." A number of observers point to the time consumed in preparing NIEs and other products that may not provide the best source of intelligence support for policymakers. Others believe that the NIOs and the NIC chairman have not commanded significant influence among executive branch agencies or in Congress. On the other hand, it is also acknowledged that the positions are sufficiently unstructured as to allow well qualified appointees to recast the position to ensure they have a thorough knowledge of the intelligence community and not become entangled in any bureaucratic procedures. Key factors remain the capabilities of the appointees and the interest and support of the DNI—factors over which at present Congress has little influence. The ultimate goal of the nation's intelligence effort is to assist policymakers in understanding conditions affecting our national security. This is an achievable goal. It is also to be hoped that analysts can provide warning of imminent threats, but this is not always achievable given the multitude of players and the variety of threats. Nevertheless, the members of the NIC serve as "the senior intelligence advisors of the intelligence community for purposes of representing the views of the intelligence community." As such they have access to the full extent of information obtained by all U.S. intelligence agencies and they have access to all intelligence analysts in the government. They will in addition hopefully have understanding of ways that a particular issue fits into the entire international environment. Although any able analyst who spends years on a narrow issue may have unique insights, the NIOs should be able to provide the sense of context and a degree of perspective that comes from the service on the NIC. Most observers would probably agree that the role and missions of the NIC and of the national estimative process have not yet been fully developed. The NIC supports the DNI and reflects the views of the intelligence community in interagency discussions. They keep abreast of the work of intelligence agencies in their subject areas. They must avoid the classic temptations of either preparing academic treatises unrelated to policymaker concerns or becoming so close to the policy dialogue that they are unable to provide perspective or to offer evidence that might undermine the chosen policies of a given Administration. Few NIOs or chairs of the NIC in recent years have fully met the outlines of the position as envisioned by earlier intelligence leaders or by the drafters of statutory language regarding the NIC. As issues become more challenging and interrelated, the role of the NIC may grow. In addition, Congress may perceive a need for increased scrutiny of NIC products and for more extensive legislative branch oversight of the intelligence community's analytical efforts. Arguably Congress can have a broadened role in supporting the NIC. Congressional oversight can test analysts' conclusions from the multiple perspectives usually found within congressional committees. The back-and-forth that may result from oversight hearings may be uncomfortable for analysts and NIOs, but, given the inherent uncertainties in most intelligence analysis and the importance of the issues at stake, some observers suggest that rigorous exchanges can serve the national interest and maintain that their absence in the past led to policy errors or unfairly exposed the intelligence community to ex post facto criticism. All should recognize, however, that all intelligence is an intellectual activity that inevitably carries with it some degree of uncertainty. Appendix A. 50 U.S.C. 403-3b (extract) (a) National Intelligence Council There is a National Intelligence Council. (b) Composition (1) The National Intelligence Council shall be composed of senior analysts within the intelligence community and substantive experts from the public and private sector, who shall be appointed by, report to, and serve at the pleasure of, the Director of National Intelligence. (2) The Director shall prescribe appropriate security requirements for personnel appointed from the private sector as a condition of service on the Council, or as contractors of the Council or employees of such contractors, to ensure the protection of intelligence sources and methods while avoiding, wherever possible, unduly intrusive requirements which the Director considers to be unnecessary for this purpose. (c) Duties and responsibilities (1) The National Intelligence Council shall - (A) produce national intelligence estimates for the United States Government, including alternative views held by elements of the intelligence community and other information as specified in paragraph (2); (B) evaluate community-wide collection and production of intelligence by the intelligence community and the requirements and resources of such collection and production; and (C) otherwise assist the Director of National Intelligence in carrying out the responsibilities of the Director under section 403-1 of this title. (2) The Director of National Intelligence shall ensure that the Council satisfies the needs of policymakers and other consumers of intelligence. (d) Service as senior intelligence advisers Within their respective areas of expertise and under the direction of the Director of National Intelligence, the members of the National Intelligence Council shall constitute the senior intelligence advisers of the intelligence community for purposes of representing the views of the intelligence community within the United States Government. (e) Authority to contract Subject to the direction and control of the Director of National Intelligence, the National Intelligence Council may carry out its responsibilities under this section by contract, including contracts for substantive experts necessary to assist the Council with particular assessments under this section. (f) Staff The Director of National Intelligence shall make available to the National Intelligence Council such staff as may be necessary to permit the Council to carry out its responsibilities under this section. (g) Availability of Council and staff (1) The Director of National Intelligence shall take appropriate measures to ensure that the National Intelligence Council and its staff satisfy the needs of policymaking officials and other consumers of intelligence. (2) The Council shall be readily accessible to policymaking officials and other appropriate individuals not otherwise associated with the intelligence community. (h) Support The heads of the elements of the intelligence community shall, as appropriate, furnish such support to the National Intelligence Council, including the preparation of intelligence analyses, as may be required by the Director of National Intelligence. (i) National Intelligence Council product intelligence For purposes of this section, the term "National Intelligence Council product" includes a National Intelligence Estimate and any other intelligence community assessment that sets forth the judgment of the intelligence community as a whole on a matter covered by such product. Appendix B. Heads of the Board of National Estimates and the National Intelligence Council Chairmen of the Board of National Estimates William Langer 1950-1952 Sherman Kent 1952-1967 Abbot Smith 1968-1971 John Huizenga 1971-1973 Deputies to the DCI for National Intelligence Officers George Carver 1973-1976 Richard Lehman 1976-1977 Robert Bowie 1977-1979 Chairmen of the National Intelligence Council Richard Lehman 1979-1981 Henry Rowen 1981-1983 Robert Gates 1983-1986 Frank Horton III, 1986-1987 Fritz Ermarth, 1988-1993 Joseph Nye 1993-1994 Christine Williams 1994-1995 Richard Cooper 1995-1997 John Gannon 1997-2001 John Helgerson 2001-2002 Robert Hutchings 2002-2005 C. Thomas Fingar 2005-2008 Peter Lavoy 2008-2009 Christopher Kojm 2009- (Source: National Intelligence Council )

The National Intelligence Council (NIC), composed of some 18 senior analysts and national security policy experts, provides the U.S. intelligence community's best judgments on crucial international issues. NIC members are appointed by the Director of National Intelligence and routinely support his office and the National Security Council. Congress occasionally requests that the NIC prepare specific estimates and other analytical products that may be used during consideration of legislation. It is the purpose of this report to describe the statutory provisions that authorize the NIC, provide a brief history of its work, and review its role within the federal government. The report will focus on congressional interaction with the NIC and describe various options for modifying congressional oversight.

On August 31, 2010, President Obama announced that the U.S. combat mission in Iraq had ended. More than 100,000 troops have been withdrawn from Iraq, and a transitional force of U.S. troops has remained in Iraq with a different mission: "advising and assisting Iraq's Security Forces, supporting Iraqi troops in targeted counterterrorism missions, and protecting our civilians." This mission is called Operation New Dawn (OND). Table 1 provides statistics on fatalities and wounds in OND. All troops are slated for withdrawal from Iraq by the end of 2011. Table 2 provides statistics on fatalities and wounds during Operation Iraqi Freedom, which began on March 19, 2003, and ended August 31, 2010. Statistics may be revised as circumstances surrounding a servicemember's death or injury are investigated and as all records are processed through the U.S. military's casualty system. More frequent updates are available at DOD's website at http://www.defense.gov/news/casualty.pdf . A detailed casualty summary that includes data on deaths by cause, as well as statistics on soldiers wounded in action, is available at DOD's website at http://siadapp.dmdc.osd.mil/personnel/CASUALTY/castop.htm . According to the United Nations Assistance Mission for Iraq's (UNAMI's) tally, 2,953 Iraqi civilians were killed and 10,434 were injured during 2010. In comparison, according to the same source, 3,056 civilians were killed and 10,770 civilians wounded in 2009. UNAMI also reports figures provided to UNAMI from the Iraq Ministry of Human Rights. According to these figures, 3,254 Iraqi civilians died and 13,788 were wounded in 2010. A separate report from the Iraq Ministry of Human Rights, published in October of 2009, gave figures of 85,694 civilian deaths from 2004 to 2008. The 2009 report specified that it included only those deaths due to terrorist attacks, defined as "direct bombings, assassinations, kidnappings, and forced displacement of the population." In other words, the Iraq Ministry of Human Rights did not include in its 2009 total any civilian deaths that may have been due to coalition occupation or fighting between militias within Iraq. It is not clear whether this distinction was made with the 2010 data reported by UNAMI. Added together, the Iraq Ministry of Human Rights would seem to have a tally of 88,948 Iraqi civilian deaths from 2004 through 2010. Along with the Iraq Ministry of Human Rights, other Iraqi ministries also have kept data on civilian deaths. The Iraq Health Ministry releases data on civilian deaths and the Iraq Ministries of the Interior and Defense release data on police and security forces deaths. Each of these ministries releases their data to the press on a monthly basis. According to their totals, 9,466 civilians and 2,238 Iraqi police and security forces have died since January 2008. Figure 1 charts the deaths of civilians and police and security forces as reported by the Iraq Ministry of Health. The Iraq Body Count (IBC) website bases its casualty estimates on media reports of casualties, some of which may involve security forces as well as civilians. Using media reports as a base for casualty estimates can entail errors: some deaths may not be reported in the media, whereas other deaths may be reported more than once. The IBC documents each of the civilian casualties it records with a media source and provides a minimum and a maximum estimate. As of November 21, 2011, the IBC estimated that between 103,640 and 113,230 civilians had died as a result of military action. In a separate analysis of its data, the IBC also estimated that, between January 2006 and November 2008, 4,884 Iraqi police had been killed. A separate analysis used IBC data to look at Iraqi civilian deaths caused by perpetrators of armed violence during the first five years of the Iraq War. The researchers found that coalition forces caused 12% of civilian deaths, anti-coalition forces caused 11%, and unknown perpetrators caused 74%. In addition, they applied a "Dirty War Index" (DWI) and found that the most indiscriminate effects on women and children were from unknown perpetrators firing mortars, non-suicide vehicle bombs, and coalition air attacks. They concluded that "coalition forces had a higher DWI than anti-coalition forces for all weapons combined, with no decrease over the study period." The Iraq Coalition Casualty Count (ICCC) is another nonprofit group that, like the IBC, tracks Iraqi civilian and Iraqi security forces deaths using media reports of deaths. ICCC is also prone to the kind of errors likely to occur when using media reports for data: some deaths may not be reported, whereas other deaths may be reported more than once. The ICCC estimates that there were 50,152 civilian deaths from March 2005 through July 2011, and 8,825 security forces were killed from January 2005 to July 2011. Earlier studies include "the Lancet study." In 2006, researchers from Johns Hopkins University and Baghdad's Al-Mustansiriya University published their most recent cluster study on Iraqi civilian casualties, commonly referred to in the press as "the Lancet study" because it was published in the British medical journal of that name. The study surveyed 47 clusters and reported an estimate of between 426,369 and 793,663 Iraqi civilian deaths from violent causes since the beginning of Operation Iraqi Freedom to July 2006. In a more recent cluster study, a team of investigators from the Federal Ministry of Health in Baghdad, the Kurdistan Ministry of Planning, the Kurdistan Ministry of Health, the Central Organization for Statistics and Information Technology in Baghdad, and the World Health Organization formed the Iraq Family Health Survey (IFHS) Study Group to research violence-related mortality in Iraq. In their nationally representative cluster study, interviewers visited 89.4% of 1,086 household clusters; the household response rate was 96.2%. They concluded that there had been an estimated 151,000 violence-related deaths from March 2003 through June 2006 and that violence was the main cause of death for men between the ages of 15 and 59 during the first three years after the 2003 invasion. This study seems to be widely cited for violence-related mortality rates in Iraq. Neither the Lancet study nor the IFHS study distinguish among different victims of violence, such as civilians versus police or security force members. The studies do not reflect trends that occurred during the period of the most intense civil violence from early 2006 through the end of 2008. In 2007, a British firm, Opinion Research Business (ORB), conducted a survey in Iraq in which it asked 2,411 Iraqis, "How many members of your household, if any, have died as a result of the conflict in Iraq since 2003 (i.e., as a result of violence rather than a natural death such as old age)? Please note that I mean those who were actually living under your roof?" Extrapolating from its results, OBR estimated "that over 1,000,000 Iraqi citizens have died as a result of the conflict which started in 2003." Finally, the Brookings Institution has used numbers from the following sources to develop its own composite estimate for Iraqi civilians, police, and security forces who have died by violence: the U.N. Human Rights Report , the Iraq Body Count, the U.S. Central Command's General David Petraeus's congressional testimony given on September 10-11, 2007, Iraqi government sources, and other sources. By combining all of these sources by date, the Brookings Institution estimates that between May 2003 and July 2011, 115,515 Iraqi civilians died and between June 2003 and July 2011, 10,125 Iraqi police and security forces died. Table 4 provides Iraqi civilian, security forces, and police officers casualty estimates from nongovernmental sources. These estimates are based on varying time periods and have been created using differing methodologies, and therefore readers should exercise caution when using and comparing these statistics.

This report presents U.S. military casualties in Operation Iraqi Freedom (OIF) and Operation New Dawn (OND) as well as governmental and nongovernmental estimates of Iraqi civilian, police, and security forces casualties. For several years, there were few estimates from any national or international government source regarding Iraqi civilian, police, and security forces casualties. Now, however, United Nations Assistance Mission for Iraq (UNAMI) is reporting civilian casualty estimates. In addition, several Iraqi ministries have released monthly or total casualty statistics. Nongovernmental sources also have released various estimates of Iraqi civilian, police, and security forces casualties. This report includes estimates from Iraq Body Count (IBC), the Iraq Coalition Casualty Count (ICCC), Iraq Family Health Survey (IFHS), the most recent study published in the Lancet, the Brookings Institution, and the British survey firm, Opinion Research Business (ORB). Because the estimates of Iraqi casualties contained in this report are based on varying time periods and have been created using differing methodologies, readers should exercise caution when using them and should look to them as guideposts rather than as statements of fact. This report will be updated as needed.

The Establishment Clause of the First Amendment provides that "Congress shall make no law respecting an establishment of religion...." The U.S. Supreme Court has construed the Establishment Clause, in general, to mean that government is prohibited from sponsoring or financing religious instruction or indoctrination. But the Court has drawn a constitutional distinction between aid that flows directly to sectarian schools and aid that benefits such schools indirectly as the result of voucher or tax benefit programs. With respect to direct aid, the Court has typically applied the tripartite test it first articulated in Lemon v. Kurtzman . The Lemon test requires that an aid program (1) serve a secular legislative purpose; (2) have a primary effect that neither advances nor inhibits religion; and (3) not foster an excessive entanglement with religion. Because education is an important state goal, the secular purpose aspect of this test has rarely been a problem for direct aid programs. But prior to the Court's latest decisions, both the primary effect and entanglement prongs were substantial barriers. To avoid a primary effect of advancing religion, the Court required direct aid programs to be limited to secular use and struck them down if they were not so limited. But even if the aid was so limited, the Court often found the primary effect prong violated anyway because it presumed that in pervasively sectarian institutions it was impossible for public aid to be limited to secular use. Alternatively, it often held that direct aid programs benefiting pervasively sectarian institutions were unconstitutional because government had to so closely monitor the institutions' use of the aid to be sure the limitation to secular use was honored that it became excessively entangled with the institutions. These tests were a particular problem for direct aid to sectarian elementary and secondary schools, because the Court presumed that such schools were pervasively sectarian. It presumed to the contrary with respect to religious colleges. The Court's decisions in Agostini v. Felton and Mitchell v. Helms , however, have recast these tests in a manner that has lowered the constitutional barriers to direct aid to sectarian schools. The Court has abandoned the presumption that sectarian elementary and secondary schools are so pervasively sectarian that direct aid either results in the advancement of religion or fosters excessive entanglement. It has also abandoned the assumption that government must engage in an intrusive monitoring of such institutions' use of direct aid. The Court still requires that direct aid serve a secular purpose and not lead to excessive entanglement. But it has recast the primary effect test to require that the aid be secular in nature, that its distribution be based on religiously neutral criteria, and that it not be used for religious indoctrination. The Court's past jurisprudence imposed fewer restraints on indirect aid to sectarian schools such as tax benefits or vouchers. The Court still required such aid programs to serve a secular purpose; but it did not apply the secular use and entanglement tests applicable to direct aid. The key constitutional question was whether the initial beneficiaries of the aid (i.e., parents or schoolchildren) had a genuinely independent choice about whether to use the aid for educational services from secular or religious schools. If the universe of choices available was almost entirely religious, the Court held the program unconstitutional because the government, in effect, dictated by the design of the program that a religious option be chosen. But if religious options did not predominate, the Court held the program constitutional even if parents chose to receive services from pervasively sectarian schools. Moreover, in its decision in Zelman v. Simmons-Harris , the Court legitimated an even broader range of indirect aid programs by holding that the evaluation of the universe of choice available to parents is not confined to the private schools at which the voucher aid can be used but includes as well all of the public school options open to parents. In Everson v. Board of Education , the Court held it to be constitutionally permissible for a local government to subsidize bus transportation between home and school for parochial schoolchildren as well as public schoolchildren. The Court said the subsidy was essentially a general welfare program that helped children get from home to school and back safely. In Wolman v. Walter , on the other hand, the Court held the Establishment Clause to be violated by the public subsidy of field trip transportation for parochial schoolchildren on the grounds field trips are an integral part of the school's curriculum and wholly controlled by the school. In several decisions, the Court has upheld as constitutional the loan of secular textbooks to children in sectarian elementary and secondary schools, and in Wolman v. Walter , it upheld the inclusion in such a textbook loan program of related manuals and reusable workbooks. The Court has reasoned that the textbooks are by their nature limited to secular use and that the loan programs are general welfare programs that only incidentally aid sectarian schools. In contrast, the Court in Meek v. Pittenger and Wolman v. Walter held the provision of instructional materials other than textbooks, such as periodicals, photographs, maps, charts, films, sound recordings, projection and recording equipment, and lab equipment, to sectarian schools or sectarian school children to be unconstitutional because such aid provides substantial aid to the sectarian enterprise as a whole and inevitably has a primary effect of advancing religion. But in Mitchell v. Helms , the Court overturned those aspects of Meek and Wolman and held it to be constitutional for government to include sectarian schools in a program providing instructional materials (including computer hardware and software) on the grounds: (1) the aid was secular in nature; (2) was distributed according to religiously neutral criteria; and (3) could be limited to secular use within the sectarian schools without any intrusive government monitoring. In Lemon v. Kurtzman , the Court held it to be unconstitutional for a state to subsidize parochial school teachers of such secular subjects as math, foreign languages, and the physical sciences, either by way of a direct subsidy of such teachers' salaries or by means of a "purchase of secular services" program. The Court reasoned that the state would have to engage in intrusive monitoring to ensure that the subsidized teachers did not inculcate religion; and it held such monitoring to excessively entangle government with the schools. For a similar reason in Meek v. Pittenger , the Court struck down a program of "auxiliary services" to children in nonpublic schools which included enrichment and remedial educational services, counseling and psychological services, and speech and hearing therapy by public personnel. And in Aguilar v. Felton , it held unconstitutional the provision of remedial and enrichment services to eligible children in sectarian schools by public school teachers under the Title I program if they were provided on the premises of the sectarian schools. Finally, in City of Grand Rapids v. Ball , the Court also struck down a similar state program of remedial and enrichment services as well as a program in which the school district hired parochial school teachers to provide after-school extracurricular programs to their students on the premises of their sectarian schools. But in Agostini v. Felton , the Court overturned the Aguilar decision and the pertinent parts of Meek and Ball and upheld as constitutional the provision of remedial and enrichment educational services to sectarian schoolchildren by public teachers on the premises of sectarian schools. In addition, the Court in Zobrest v. Catalina Foothills School District upheld as constitutional the provision at public expense under the Individuals with Disabilities Education Act (IDEA) of a sign-language interpreter for a disabled child attending a sectarian secondary school. In both cases, the Court reasoned that the programs were general welfare programs available to students without regard to whether they attended public or private (sectarian) schools; and in Zobrest , it reasoned as well that the parents controlled the decision about whether the assistance took place in a sectarian school or a public school. In Levitt v. Committee for Public Education , the Court struck down a program reimbursing sectarian schools for the costs of administering and compiling the results of teacher-prepared tests in subjects required to be taught by state law because the teachers controlled the tests and might include religious content in them. In contrast, in Wolman v. Walter , the Court upheld a program in which a state provided standardized tests in secular subjects and related scoring services to nonpublic schoolchildren, including those in religious schools. Similarly, in Committee for Public Education v. Regan , the Court upheld a program that reimbursed sectarian schools for the costs of administering such state-prepared tests as the regents exams, comprehensive achievement exams, and college qualifications tests. In both cases, the Court reasoned that such tests were limited by their nature to secular use. In Regan , the Court also upheld as constitutional a program that reimbursed sectarian and other private schools for the costs of complying with state-mandated record-keeping and reporting requirements about student enrollment and attendance, faculty qualifications, the content of the curriculum, and physical facilities. The Court reasoned that the requirements were imposed by the state and did not involve the teaching process. In Committee for Public Education v. Nyquist , the Court struck down as unconstitutional a state program subsidizing some of the costs incurred by sectarian schools for the maintenance and repair of their facilities, including costs incurred for heating, lighting, renovation, and cleaning, on the grounds the subsidy inevitably aided the schools' religious functions. In Committee for Public Education v. Nyquist and Sloan v. Lemon , the Court held unconstitutional programs which provided tuition grants and tax benefits to the parents of children attending private schools, most of which were religious. In both instances, the Court found that the programs benefited only those with children in private schools, that most of those schools were sectarian, and that the programs had a primary purpose and effect of subsidizing such schools. In three other decisions, however, the Court upheld voucher and tax benefit programs where the benefits were available to children attending public as well as private schools or their parents. Mueller v. Allen involved a state program giving a tax deduction to the parents of all elementary and secondary schoolchildren for a variety of educational expenses, including tuition. Witters v. Washington Depa rtment of Services for the Blind involved a grant to a blind person who wanted to attend a religious college to prepare for a religious vocation under a state vocational rehabilitation program which provided educational assistance for a wide variety of vocations. In Zelman v. Simmons-Harris , the Court upheld a voucher program that assisted parents in failing public schools in Cleveland to send their children to private schools, most of which were sectarian. In each instance, the Court's rationale in upholding the programs was that the benefits were available on a religiously neutral basis and that sectarian schools benefited only indirectly as the result of the independent choices of students or their parents. In Zelman , the Court further held that the universe of choice open to parents was not limited to the private schools where the vouchers could be used, but included the full range of public school options open to them as well. The Court has in dicta repeatedly affirmed the constitutionality of the public subsidy of physician, nursing, dental, and optometric services to children in sectarian schools; and in Wolman v. Walter , it specifically upheld the provision of diagnostic speech, hearing, and psychological services by public school personnel on sectarian school premises. In addition, the Court has repeatedly in dicta affirmed the constitutionality of the public subsidy of school lunches for eligible children in sectarian schools. In dicta in Everson v. Board of Education , the Court affirmed as constitutional the provision of such general public services as police and fire protection, connections for sewage disposal, highways, and sidewalks to sectarian schools. According to the Court, the Establishment Clause does not require that religious schools be cut off from public services "so separate and so indisputably marked off from the religious function...." In Roemer v. Maryland Board of Public Works , the Court upheld a state program of noncategorical grants to all private colleges in the state, including ones that were church-affiliated, because the program included a statutory restriction barring the use of the funds for sectarian purposes. The Court stressed that the church-related colleges that benefited were not "pervasively sectarian" and that the aid was statutorily restricted to secular use. In Tilton v. Richardson , the Court upheld as constitutional a federal program that provided grants to colleges, including church-affiliated colleges, for the construction of needed facilities, so long as the facilities were not used for religious worship or sectarian instruction. The statute provided that the federal interest in any facility constructed with federal funds would expire after 20 years, but the Court held that the nonsectarian use requirement would have to apply so long as the buildings had any viable use. Subsequently, in Hunt v. McNair , the Court upheld a program in which a state issued revenue bonds to finance the construction of facilities at institutions of higher education, including those with a religious affiliation. The program barred the use of the funds for any facility used for sectarian instruction or religious worship. In Rosenberger v. The Rector and Board of Visitors of the University of Virginia , the Court held that it would be constitutional for a state university to subsidize the printing costs of an avowedly religious student publication. The university made the subsidy available to non-religious student publications as a way of fostering student expression and discussion, and the Court held that it would constitute viewpoint discrimination in violation of the free speech clause of the First Amendment to deny the subsidy to a student publication offering a religious perspective. In two summary affirmances, the Court has upheld the constitutionality of programs providing grants to students attending institutions of higher education, including religiously affiliated colleges. Both Smith v. Board of Governors of the University of North Carolina and Americans United for the Separation of Church and State v. Blanton involved grants given on the basis of need for students to use in attending either public or private colleges, including religiously affiliated ones. In affirming the decisions, the Supreme Court issued no opinion in either case, but the lower courts reasoned that the religious colleges benefited from the programs only if the students independently decided to attend. In Locke v. Davey , the Court considered the constitutionality of a state scholarship program that included a restriction on recipients that prohibited the use of scholarship funds to pursue devotional theological degrees. The Court noted that, because the recipient would make an independent choice regarding how to spend the funds, the federal Establishment Clause would not be violated by such a program.

A recurring issue in constitutional law concerns the extent to which the Establishment Clause of the First Amendment imposes constraints on the provision of public aid to private sectarian schools. The U.S. Supreme Court's past jurisprudence construed the clause to impose severe restrictions on aid given directly to sectarian elementary and secondary schools but to be less restrictive when given to colleges or indirectly in the form of tax benefits or vouchers. The Court's later decisions loosened the constitutional limitations on both direct and indirect aid. This report gives a brief overview of the evolution of the Court's interpretation of the Establishment Clause in this area and analyzes the categories of aid that have been addressed by the Court. The report explains which categories have been held to be constitutionally permissible or impermissible, both at the elementary and secondary school level and at the postsecondary level.

The Defense Base Closure and Realignment Act of 1990 (Base Closure Act), as amended,generally governs the military base realignment and closure (BRAC) process. (2) After three previous BRACrounds, Congress authorized a fourth round for 2005, which is now underway. (3) The BRAC process involves a complex statutory scheme, under which numerousgovernmental entities play a role in recommending bases to be closed or realigned. A brief summaryof the major steps in the process is illustrated in Figure 1 on the following page. In addition toestablishing the basic framework for the BRAC process, the Base Closure Act sets forth a varietyof selection criteria and mandatory procedures, such as the requirements that certain information bedisclosed and that certain meetings be made open to the public This report analyzes whether judicial review is available when plaintiffs allege that theDepartment of Defense (DOD), the independent BRAC Commission (Commission), or the Presidenthas either (1) failed to comply with procedural requirements of the Base Closure Act or (2) failedto properly apply specified selection criteria in making BRAC determinations. Congress couldemploy numerous strategies to attempt to "enforce" the Base Closure Act. (4) However, this report focuseson the effect a failure to comply would have if Members of Congress or other parties sued based onan alleged failure to comply with the Act's provisions. (5) In particular, the report synthesizes key federal court decisions thataddress three potential bases for judicial review of BRAC-related actions: the AdministrativeProcedure Act (APA), the Base Closure Act, and the U.S. Constitution. Figure 1: The BRAC Process (6) Additional CRS reports addressing a variety of BRAC issues are also available. (7) The Administrative Procedure Act (APA) provides for judicial review of "final agencyaction," (8) unless either oftwo exceptions applies: (1) when a statute precludes judicial review or (2) when "agency action iscommitted to agency discretion by law." (9) In Dalton v. Specter , Members of Congress and other plaintiffs sought to enjoin the Secretaryof Defense (Secretary) from closing a military installation during a previous BRAC round becauseof alleged substantive and procedural violations of the Base Closure Act. (10) Specifically, plaintiffsalleged that the Secretary's report and the Commission's report were subject to judicial review underthe APA. (11) In Dalton , the Supreme Court held that the issuances of the Secretary's report and theCommission's report were not judicially reviewable actions under the APA because they were not"final agency action[s]." (12) The Court explained that "'[t]he core question' for determiningfinality [of agency action under the APA is] 'whether the agency has completed its decisionmakingprocess, and whether the result of that process is one that will directly affect the parties.'" (13) Because the Base ClosureAct established a process under which the President takes the final action that affects militaryinstallations (see Figure 1 on the previous page), the actions of the Secretary and the Commissiondid not directly affect the parties. (14) Thus, the Court held that they were unreviewable under theAPA. (15) The Dalton decision affirmed the analysis in Cohen v. Rice , in which the First Circuit statedthat the President's statutory right to affect the BRAC process meant that previous steps of the BRACprocess were not final. (16) As the Cohen court explained: Under the 1990 Act, the President is not required tosubmit the Commission's report to Congress. In addition, the 1990 Act gives the President the powerto order the Commission to revise its report, and, in the final analysis, the President has the powerto terminate a base closure cycle altogether via a second rejection of a Commission report. (17) In addition, a subsequent Supreme Court decision described the BRAC reports as "purely advisory"and subject to the "absolute discretion" of the President, thus making them non-final agency actionfor APA purposes. (18) Importantly, the Dalton Court applied its analysis of finality under the APA to bothsubstantive claims (applying improper selection criteria) and procedural claims (e.g., failing to makecertain information public). (19) Therefore, the lack of finality in BRAC actions taken by theSecretary or the Commission bars judicial review of such actions under the APA. (20) Four Justices concurred in the Dalton Court's judgment that judicial review was not availableunder the APA, but argued in a separate concurring opinion that the Court should not have decidedthe issue of whether the agency actions were final. (21) The foundation for this argument is that under the APA, judicialreview is not available if statutes preclude judicial review. (22) Justice Souter -- writing for these four Justices -- argued that "the text, structure, and purposeof the Act compel the conclusion that judicial review of the Commission's or the Secretary'scompliance with it is precluded" (except for certain environmental objections to base closureimplementation plans). (23) Souter's opinion concluded that Congress intended for BRACactions to be "quick and final, or [for] no action [to] be taken at all." (24) Souter cited a variety of evidence to support the contention that Congress generally intendedto preclude judicial review under the Base Closure Act: (25) statutorily-mandated strict time deadlines for making and implementing BRACdecisions "the all-or-nothing base-closing requirement at the core of theAct" congressional frustration resulting from previous attempts to close militarybases "nonjudicial opportunities to assess any procedural (or other) irregularities,"(i.e., the opportunities for the Commission and the Comptroller General to review the Secretary'srecommendations, the President's opportunity to consider procedural flaws, and Congress'sopportunity to disapprove the recommendations) "the temporary nature of the Commission" the fact that the Act expressly provides for judicial review regarding objectionsto base closure implementation plans under the National Environmental Policy Act of 1969 (NEPA)that are brought "within a narrow time frame," but the Act does not explicitly provide for any otherjudicial review Importantly, whether the Supreme Court applies the rationale of the Dalton majority orJustice Souter's Dalton concurrence, the Court would likely decide not to review the BRAC actionsof the Secretary or the Commission under the APA in the 2005 round. Under the APA, judicial review of agency action is not available if "agency action iscommitted to agency discretion by law." (26) Even if the actions of the Secretary or the Commission were heldto be final agency action (which would be unlikely, given the Dalton decision), courts might considerthose agency actions to be committed to agency discretion by law -- thus making them judiciallyunreviewable. (27) Because there is a "strong presumption that Congress intends judicial review of administrativeaction," "clear and convincing evidence" of contrary congressional intent must exist in order for thisexception to judicial review to apply. (28) The issue of whether actions of the Secretary or the Commission under the Base Closure Actare committed to agency discretion by law has not been adjudicated by the Supreme Court. Instead,several Supreme Court cases have addressed this issue in non-BRAC contexts and one D.C. Circuitcase addressed the applicability of the exception to the Base Closure Act. These cases are analyzedin the following paragraphs. In Heckler v. Chaney , the Supreme Court explained that the exception for agency actionbeing committed to agency discretion applies if "a court would have no meaningful standard againstwhich to judge the agency's exercise of discretion." (29) The Court continued, saying that "if no judicially manageablestandards are available for judging how and when an agency should exercise its discretion, then itis impossible to evaluate agency action for 'abuse of discretion,' [as provided for in 5 U.S.C. §706]." (30) In National Federation , the D.C. Circuit found that the criteria DOD and the Commissionuse for making BRAC determinations do not provide judicially manageable standards, as requiredby the Heckler test. (31) The D.C. Circuit articulated the rationale for its finding: [T]he subject matter of those criteria is not 'judiciallymanageable' . . . . [because] judicial review of the decisions of the Secretary and the Commissionwould necessarily involve second-guessing the Secretary's assessment of the nation's military forcestructure and the military value of the bases within that structure. We think the federal judiciary isill-equipped to conduct reviews of the nation's military policy. (32) Based on this finding, the National Federation court held that application of the selection criteriato military installations during the BRAC process is agency action committed to agency discretionby law, thus making it judicially unreviewable under the APA. (33) More recently, the Supreme Court observed that this exception has generally applied in threecategories of cases: (1) cases involving national security; (2) cases where plaintiffs sought judicial review of an agency's refusal to pursue enforcementactions; and (3) cases where plaintiffs sought review of "an agency's refusal to grant reconsideration of anaction because of material error." (34) Although the Base Closure Act may not fit squarely within any of those three categories, theSupreme Court might adopt the D.C. Circuit's construction of the exception from NationalFederation were it to construe the exception in the context of BRAC. In Dalton , the Supreme Court held that the President's approval of the Secretary's BRACrecommendations was not judicially reviewable under the APA, because the President is not anagency. (35) Althoughthe APA's definition of an "agency" does not explicitly include or exclude the President, (36) the Court had previouslyheld that the President is not subject to the APA, due to separation of powers principles. (37) The Dalton Court distinguished between two types of potential claims: (1) claims that thePresident exceeded his statutory authority and (2) claims challenging the constitutionality of thePresident's actions. (38) The Court stated that not every case of ultra vires conduct by an executive official was ipso facto unconstitutional. (39) In Dalton , the lower court had held that the President would be acting in excess of his statutoryauthority under the Base Closure Act if the Secretary or the Commission had failed to comply withstatutorily-required procedures during previous stages of the BRAC process. (40) On appeal, the SupremeCourt characterized this claim as a statutory claim -- not as a constitutional claim. (41) The Court assumed arguendo that some statutory claims against the President could bejudicially reviewable apart from the APA. (42) However, it stated that statutory claims are not judiciallyreviewable apart from the APA "when the statute in question commits the decision to the discretionof the President." (43) According to the Court, the Base Closure Act did not limit the President's discretion in anyway. (44) Thus, thePresident's authority to approve the BRAC recommendations was "not contingent on the Secretary'sand Commission's fulfillment of all the procedural requirements imposed upon them by the [BaseClosure] Act." (45) Therefore, the issue of how the President chose to exercise his discretion under the Base Closure Actwas held to be judicially unreviewable. (46) Justice Blackmun, concurring in part and concurring in the judgment, attempted to narrowlydefine the scope of the Dalton decision. (47) He considered the decision to be one that would allow judicialreview of a claim (1) if the President acted in contravention of his statutory authority (e.g., addinga base to the Commission's BRAC recommendations list) or (2) if a plaintiff brought "a timely claimseeking direct relief from a procedural violation" (e.g., a claim that a Commission meeting shouldbe public or that the Secretary should publish proposed selection criteria and allow for publiccomment). (48) However, Justice Blackmun's argument that plaintiffs could seek relief from a proceduralviolation of the Base Closure Act appears to directly conflict with Chief Justice Rehnquist's opinionon behalf of the Dalton majority, which stated: The President's authority to act is not contingent on theSecretary's and Commission's fulfillment of all the procedural requirements imposed upon them bythe [Base Closure] Act. Nothing in § 2903(e) requires the President to determine whether theSecretary or Commission committed any procedural violations in making their recommendations,nor does § 2903(e) prohibit the President from approving recommendations that are procedurallyflawed. (49) As mentioned in the preceding section of this report, the Dalton Court explained that claims thatthe President acted in excess of his statutory authority differ from claims that the Presidentunconstitutionally acted in the absence of statutory authority. (50) Specifically, the Courtdistinguished the issues in Dalton from those in Youngstown Sheet & Tube Co. v. Sawyer , alandmark case on presidential powers. (51) The Court said that Youngstown "involved the conceded absence of any statutory authority, not a claim that the President acted in excess of such authority." (52) Because the Base ClosureAct provides statutory authority to the President, the Dalton Court did not find it necessary toexamine the constitutional powers of the President (e.g., the President's powers asCommander-in-Chief). A litigant could also challenge the constitutionality of the Base Closure Act itself. For example,in National Federation , plaintiffs unsuccessfully argued that the 1988 Base Closure Act violated thenon-delegation doctrine and the separation of powers doctrine. (53) However, the BaseClosure Act has not yet been held unconstitutional by any federal appellate courts.

The 2005 round of military base realignments and closures (BRAC) is now underway. TheDefense Base Closure and Realignment Act of 1990 (Base Closure Act), as amended, establishesmandatory procedures to be followed throughout the BRAC process and identifies criteria to be usedin formulating BRAC recommendations. However, judicial review is unlikely to be available toremedy alleged failures to comply with the Base Closure Act's provisions. A synopsis of the relevantlaw regarding the availability of judicial review in this context is included below: The actions of the Secretary of Defense (Secretary) and the independent BRACCommission (Commission) are not considered to be "final agency action," and thus cannot bejudicially reviewed pursuant to the Administrative Procedure Act (APA). Even if a court determined that the actions of the Secretary and the Commission were "final agency action," the court would likely consider the case to fall under oneof two APA exceptions to judicial review: (1) when statutes preclude judicial review or (2) whenagency action is committed to agency discretion by law. The President's actions cannot be judicially reviewed under the APA, becausethe President is not an "agency" covered by the statute. A claim that the President exceeded his statutory authority under the BaseClosure Act has been held to be judicially unreviewable, because the Base Closure Act gives thePresident broad discretion in approving or disapproving BRACrecommendations. Thus, courts would likely allow the BRAC process to proceed even if the Department ofDefense, the Commission, or the President did not comply with the Base Closure Act's requirements. This report was prepared by [author name scrubbed], Law Clerk, under the general supervision of[author name scrubbed], Legislative Attorney. It will be updated as case developments warrant.

The Federal Reserve's (Fed's) responsibilities as the nation's central bank fall into four main categories: monetary policy, provision of emergency liquidity through the lender of last resort function, supervision of certain types of banks and other financial firms for safety and soundness, and provision of payment system services to financial firms and the government. The 114 th Congress is considering a number of bills that would affect the Fed's monetary policy, lender of last resort, and regulatory responsibilities. Although these bills contain a number of wide-ranging provisions, most provisions can be grouped into four broad categories: Changes to Fed g overnance. Some proposals would change the Fed's institutional structure—how officials are selected, how policy decisions are reached, and so on. Changes to oversight and disclosure. Some proposals aim to make the Fed more accountable to Congress by increasing congressional oversight or requiring the Fed to disclose more information to Congress and the public. Changes i nvolving policy rules (i.e., the Taylor Rule ) . Some proposals would require the Fed to compare its monetary policy decisions to those prescribed by a Taylor Rule (described below) and report those findings to Congress. Changes to the Fed's emergency lending powers. Some proposals would reduce the Fed's discretion to provide emergency assistance under Section 13(3) of the Federal Reserve Act. This report analyzes these provisions and the policy debate surrounding them. It does not cover legislation that would change regulations administered by the Fed; for more information on those proposals, see CRS Report R44035, "Regulatory Relief" for Banking: Selected Legislation in the 114th Congress , coordinated by [author name scrubbed]. The following bills affecting the Federal Reserve have seen committee or floor action in the 114 th Congress. The Fed Oversight Reform and Modernization Act (FORM Act; H.R. 3189 ) and the Centennial Monetary Commission Act, H.R. 2912 , were ordered to be reported by the House Financial Services Committee on July 29, 2015. After H.R. 2912 and H.R. 3189 were reported, H.R. 2912 was added to H.R. 3189 before the latter passed the House on November 19, 2015. Many of the provisions of H.R. 3189 as passed were then included in the Financial CHOICE Act ( H.R. 5983 ), which was ordered to be reported by the House Financial Services Committee on September 13, 2016. The Financial Regulatory Improvement Act ( S. 1484 ) was reported by the Senate Banking Committee on June 2, 2015. Title 5 includes provisions related to the Fed. S. 1484 was then included, along with other provisions related to financial regulation, in the FY2016 Financial Services and General Government Appropriations Act ( S. 1910 ), which was reported by the Senate Appropriations Committee on July 30, 2015. On January 12, 2016, the Senate voted not to invoke cloture on a motion to proceed to debate on the Federal Reserve Transparency Act ( S. 2232 ). In the House, a similar bill, the Federal Reserve Transparency Act ( H.R. 24 ), was ordered to be reported by the House Oversight and Government Reform Committee on May 17, 2016. Provisions that modify the Fed were also included in two unrelated bills that became law: the Terrorism Risk Insurance Program Reauthorization Act ( H.R. 26 / P.L. 114-1 ), which was signed into law on January 12, 2015, and the Fixing America's Surface Transportation Act ( H.R. 22 / P.L. 114-94 ), which was signed into law on December 4, 2015. The following table summarizes the provisions of these bills according to the four categories above. The remainder of the report analyzes the provisions in these bills affecting the Fed. The Federal Reserve Act (12 U.S.C. §221 et seq.) created the Fed as the nation's central bank in 1913. The basic governance structure is largely unchanged in recent decades. The Fed is composed of 12 regional Federal Reserve banks overseen by a Board of Governors in Washington, DC. The board is composed of seven governors nominated by the President and confirmed by the Senate. The President selects (and the Senate confirms) a chair and two vice chairs from among the governors. The governors serve nonrenewable 14-year terms, but the chair and vice chairs serve renewable 4-year terms. Board members are chosen without regard to political affiliation. In general, policy is formulated by the board and carried out by the regional banks. Monetary policy decisions, however, are made by the Federal Open Market Committee (FOMC), which is composed of the seven governors, the president of the New York Fed, and four other regional bank presidents. Representation for these 4 seats rotates among the other 11 regional banks. The FOMC meets at least every six weeks to set monetary policy. Aside from its permanent seat on the FOMC, the New York Fed has no special role in the Federal Reserve Act compared to other Fed regional banks. Nevertheless, it has taken on certain prominent roles within the system. It carries out the open market operations that implement the FOMC's monetary policy decisions. During the financial crisis, many of the Fed's emergency programs (discussed in the section below entitled " Emergency Lending ") were run by the New York Fed. It supervises many of the largest banks because they are headquartered in the New York Fed's District. The New York Fed is responsible for conducting foreign exchange transactions on behalf of the government, and storing the gold of foreign central banks and international agencies. In all of these instances, it is executing, not formulating, policy. By tradition, the FOMC elects the New York Fed president to be its vice chair, a position with no formal powers. The Fed's capital is comprised of paid-in capital issued to member banks and retained earnings deposited in its surplus account. Private banks regulated by the Fed buy stock in the Fed to become member banks. Membership is mandatory for national banks, but optional for state banks. To finance the creation of the Fed, the Federal Reserve Act required member banks to purchase stock issued by the Fed. Member banks are required to purchase ("pay in") stock equal to 3% of their capital, and the Fed has the option to call in an additional 3%. The stock can be thought of as a risk-free investment; it pays dividends, which was fixed by statute at 6% from 1913, until modified in 2015 (as discussed in the next section). Ownership of stock in the Fed confers more limited rights than common stock in a private corporation. For example, stockholders have no control over Fed policy. Stockholders choose two-thirds of the board of directors at the regional Fed banks, however. Each regional Fed bank has a board that is composed of three Class A directors, required to be representatives of the banking industry chosen by member banks; three Class B directors, representatives of the public chosen by member banks; and three Class C directors, representatives of the public chosen by the Board of Governors. A chairman and deputy chairman of the board are selected from among the Class C directors. The other main difference between the classes of directors is their role in choosing the regional bank presidents. Regional bank presidents are chosen by the Class B and C directors of their boards, not by the President, with the approval of the Board of Governors. The Fed's budget is not subject to congressional appropriations. The Fed is self-funded by fees and the income generated by securities it owns. Its income exceeds its expenses, and it remits most of its net income to the Treasury, where it is used to reduce the federal debt. The Fed uses a small portion of its net income to pay dividends to member banks and to add to its surplus when necessary. Voting on the FOMC. H.R. 3189 and H.R. 5983 would change the voting membership of the FOMC to increase the number of regional bank presidents from five to six and allow them each to vote every other year. To accomplish this, it would reduce the frequency of the New York Fed's voting rights on the FOMC from every year to every other year and increase the frequency of voting rights for 9 of the other 11 banks from every third year to every other year. Blackout Period. H.R. 3189 and H.R. 5983 would mandate a media blackout period lasting from one week before to one day after a meeting of the FOMC, where monetary policy decisions are made. Selection of New York Fed President. S. 1484 / S. 1910 would require the President of the New York Fed to be appointed by the President and confirmed by the Senate. Currently, all of the regional bank presidents are selected by certain members of the regional banks' boards, subject to the approval of the Board of Governors. The New York Fed President would be required to testify annually before the committees of jurisdiction. Interest Paid on Reserves. H.R. 3189 , H.R. 5983 and S. 1484 / S. 1910 would shift responsibility for setting the interest rate paid to banks on reserves from the Board of Governors to the FOMC. The Fed uses this interest rate to help it achieve its federal funds rate target, which is set by the FOMC, in the presence of the Fed's large balance sheet. Staff for Governo rs. Currently, the Board's professional staff are shared by the Board's governors. H.R. 3189 and H.R. 5983 would allow each board member to hire at least two personal staff. S. 1484 / S. 1910 would allow each board member to hire no more than four personal staff. Congressional Commission. H.R. 2912 was ordered to be reported by the House Financial Services Committee on July 29, 2015. It then was included in the version of H.R. 3189 that passed the House and in H.R. 5983 . It would create a commission whose voting members are composed of four Members of the House from the majority party, two Members of the House from the minority party, four Members of the Senate from the majority party, and two Members of the Senate from the minority party. The commission would examine and make recommendations on monetary policy, the dual mandate, macroprudential regulation, and lender of last resort functions. The commission is authorized to be funded through appropriations. S. 1484 / S. 1910 would create a commission composed of two Members of the House selected by the Speaker and one Member appointed by the Minority Leader, two Members of the Senate selected by the Majority Leader and one selected by the Minority Leader, and one member selected by the President. The commission would be tasked with studying and recommending whether the 12 Federal Reserve districts should be restructured. The commission is to be funded out of the earnings of the Fed. Reduction in Dividend to Member Banks. H.R. 22 ( P.L. 114-94 ), which was signed into law on December 4, 2015, reduced the dividend that the Fed pays on stock held by member banks with more than $10 billion in assets from 6% to the lower of 6% or the most recent yield on 10-year Treasury securities. (For banks with less than $10 billion in assets, the dividend continues to be 6%.) The market yield on 10-year Treasury securities has been below 6% since 2000, and the Congressional Budget Office (CBO) projects it will remain below 6% over the next 10 years. Because the Fed's profits are used to pay both dividends to member banks and remittances to Treasury, a reduction in dividends would presumably increase remittances. Thus, the provision was included in "Title XXXII-Offsets" of the act and CBO estimated that this provision will raise revenues by $6.9 billion over 10 years. Based on Fed data, 47 national banks and 22 state-member banks have more than $10 billion in assets as of March 31, 2016. Reduction or Elimination of Fed Surplus. "Title XXXII-Offsets" of H.R. 22 ( P.L. 114-94 ) included a provision that capped the Fed's surplus (comprised of retained earnings) at $10 billion and required funds in excess of that amount to be remitted to Treasury, where they become general revenues. At the time of enactment, the Fed's surplus was equal to $29.4 billion. CBO estimated that this provision will increase revenues by $53.3 billion over 10 years. CBO assumed that the Fed will finance the transfer by selling Treasury securities, which otherwise would have earned income that would have been remitted to the Treasury in future years. Thus, the provision can be thought of as shifting Fed remittances from the future to the present. H.R. 3189 , as passed by the House, would permanently eliminate the Fed's surplus and transfer its balance to the Treasury. Qualifications for Fed Leadership Positions . H.R. 26 ( P.L. 114-1 ) required the President to "appoint at least one member with demonstrated primary experience working in or supervising community banks having less than $10,000,000,000 in total assets" to the Board of Governors. As a result, community banks are the only interest group specifically required to have a representative nominated as a member of the Board. Previously, in making nominations, the President was only required to give "due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country." Currently, Class B and C directors of the Fed's regional bank boards are "elected without discrimination on the basis of race, creed, color, sex, or national origin, and with due but not exclusive consideration to the interests of agriculture, commerce, industry, services, labor, and consumers." H.R. 3189 , as passed by the House, would add "traditionally underserved communities and populations" to the list of considerations. Critics of the Federal Reserve have long argued for more congressional oversight, Fed transparency, and Fed disclosure. Criticism intensified following the extensive assistance provided by the Fed during the financial crisis. Some critics have downplayed the degree of oversight and disclosure that already takes place. For congressional oversight, the Fed has been required by statute to report to and testify before the House and Senate committees of jurisdiction semiannually since 1978. At these hearings, which take place in February and July, the Fed chairman presents the Fed's Monetary Policy Report to the Congress , testifies, and responds to questions from committee members. In addition, these committees periodically hold more focused hearings on Fed topics. On January 25, 2012, the Fed began publishing forecasts for its federal funds rate target and announced a longer-run goal of 2% for inflation. According to the Fed, it hopes greater transparency about its intentions will strengthen financial market participants' understanding of its actions, thereby making those actions more effective. Contrary to popular belief, the Government Accountability Office (GAO) has conducted audits of the Fed's regulatory and payment activities regularly since 1978, subject to statutory restrictions. In addition, private-sector auditors audit the Fed's financial statements and the Fed has an Office of Inspector General. The Dodd-Frank Wall Street Reform and Consumer Protection Act ( P.L. 111-203 ) required an audit of the Fed's emergency activities during the financial crisis, released in July 2011, and an audit of Fed governance, released in October 2011. The effective result of the audit restrictions remaining in law is that GAO can audit the Fed's monetary policy decisions or operations, transactions with foreign central banks and governments, discount window operations, or policies related to bank reserves or securities credit for waste, fraud, and abuse, but cannot evaluate the economic merits of these actions. For Fed disclosure, the Fed has publicly released extensive information on its operations, mostly on a voluntary basis. It is statutorily required to release an annual report and a weekly summary of its balance sheet. The expanded scope of its lending activities during the financial crisis eventually led it to release a monthly report that offered more detailed information. In December 2010, the Fed released individual lending records for emergency facilities, revealing borrowers' identities and loans' terms, as required by the Dodd-Frank Act. Going forward, individual records for discount window and open market operation transactions have been released with a two-year lag. More recently, some Members of Congress have sought greater disclosure of information related to regulation (including international agreements), and salary and financial information about Fed officials and employees. In its rule-making, the Fed follows the standard notice and public comment process and must consider the burdens and benefits for depository institutions, but is not required to conduct formal or quantitative cost-benefit analysis. The Fed has an ombudsman and an appeals process for its supervisory decisions, such as exam results. The Dodd-Frank Act created a vice chair for supervision who is required to testify before the committees of jurisdiction semiannually; that position has not yet been filled, however. For more information, see CRS Report R42079, Federal Reserve: Oversight and Disclosure Issues , by [author name scrubbed]. Although oversight and disclosure are often lumped together, they are separate issues and need not go together. Oversight relies on independent evaluation of the Fed; disclosure is an issue of what internal information the Fed releases to the public. Contrary to a common misperception, a GAO audit would not, under current law, result in the release of any confidential information identifying institutions that have borrowed from the Fed or the details of other transactions. A potential consequence of greater oversight is that it could undermine the Fed's political independence. Most economists believe that the Fed's political independence leads to better policy outcomes and makes policy more effective by enhancing the Fed's credibility in the eyes of market participants. The Fed has opposed legislation removing remaining GAO audit restrictions on those grounds. Disclosure helps Congress and the public better understand the Fed's actions. Up to a point, this makes monetary and regulatory policy more effective, but too much disclosure could make both less effective because they rely on market-sensitive and confidential information. The challenge for Congress is to strike the right balance between a desire for the Fed to be responsive to Congress and for the Fed's decisions to be immune from political calculations and pressure. GAO Audit. H.R. 3189 , as passed by the House, and H.R. 5983 would remove statutory restrictions on GAO audits of monetary policy and would require an annual audit that is not subject to current statutory provisions, such as confidentiality requirements. Effectively, this would expand GAO's powers to allow it to evaluate the economic merits of Fed policy decisions. In the past two Congresses, the House passed bills similar to this provision. H.R. 24 and S. 2232 would require a one-time GAO audit of the Fed that is not subject to statutory restrictions. GAO Studies /Fed Reports on Large Financial Institutions . S. 1484 / S. 1910 would require a one-time GAO study and a report by the Fed to Congress every 2 years for the next 10 years on the Fed's enhanced prudential regulation of banks with more than $50 billion in assets and nonbank financial institutions designated as systemically important (SIFIs). The bill requires the GAO study to evaluate whether there are conflicts of interest between the Fed and the large institutions it regulates. Testimony and Report to Congress on Monetary Policy . S. 1484 / S. 1910 , H.R. 3189 , and H.R. 5983 would increase the frequency of the Fed's required reports to Congress on monetary policy from semiannually to quarterly. H.R. 3189 and H.R. 5983 would also require the chair to testify on monetary policy quarterly instead of semiannually before the committees of jurisdiction. S. 1484 / S. 1910 would also change the required contents of the report to Congress. It adds three economic variables—inflation expectations, credit conditions, and interest rates—to the list of items that the Fed should discuss in the report. It would also require the report to include economic and monetary policy projections and information related to the Taylor rule (discussed in the next section entitled " Rules-Based Monetary Policy (The Taylor Rule )"). It would allow any member of the FOMC to include a statement of dissent in the report to Congress. Vice C hair of Supervision. The Dodd-Frank Act created the position of vice chair of supervision on the Board of Governors and required the vice chair to testify on Fed supervision semiannually. H.R. 3189 and H.R. 5983 would change the frequency of testimony to quarterly and require a written report on ongoing rule-making to accompany that testimony. The position, which is subject to presidential nomination and Senate confirmation, has been vacant since it was created in 2010, so no testimony has taken place to date. S. 1484 / S. 1910 , H.R. 3189 , and H.R. 5983 would require the Fed chair to testify when the position of vice chair is vacant. Release of FOMC Transcripts. Currently, the Fed voluntarily releases FOMC transcripts to the public with a five-year lag and notes on FOMC meetings with a six-week lag. S. 1484 / S. 1910 would require the lagged release of FOMC transcripts after three years. H.R. 3189 , as passed by the House, and H.R. 5983 would require the transcripts to be made publicly available. Appropriations. H.R. 5983 would subject the non-monetary policy functions of the Fed's Board of Governors and 12 privately owned regional banks to the congressional appropriations process. The portion of the Fed's profits not used for other designated purposes would become offsetting collections to these appropriations in the federal budget. Enforcement Actions. S. 1484 / S. 1910 would require a publicly recorded vote by the Board on bank enforcement actions exceeding $1 million. Disclosure of Supervisory Information. H.R. 3189 and H.R. 5983 would require the Fed to determine its stress test scenarios through the public rule-making process and provide those scenarios to GAO and CBO's Panel of Economic Advisers. Currently, the scenarios are not disclosed to the banks or the public, but the stress test process was publicly described through the standard rule-making process. It would require the Fed to publicly disclose the total number of supervisory letters sent to bank holding companies with more than $50 billion in assets or non-banks designated as systemically important. Cost-Benefit Analysis Requirements . H.R. 3189 would require the Fed's public rule-making to include quantitative and qualitative cost-benefit analysis and a post-adoption impact assessment. H.R. 5983 did not include the provision from H.R. 3189 requiring the Fed to conduct cost-benefit analysis, but instead would require all federal financial regulators to be subject to cost-benefit analysis. Disclosure of International Negotiations. H.R. 3189 and H.R. 5983 would require the Fed (and other federal banking regulators) to notify the committees of jurisdiction and the public and solicit public comment at least 30 days before it enters into and at least 90 days before it completes international negotiations on financial standards. Disclosure of Salaries and Financial Information . H.R. 3189 and H.R. 5983 would require the public disclosure of salary and personal finances for all Fed governors, officers, and employees of the Federal Reserve Board of Governors with a salary above the equivalent of GS-15 on the government scale. Impact of Export Credit on the Industrial Production Index. H.R. 3189 , as passed by the House, would require the Fed to include an estimate of the impact of the Export-Import Bank and foreign export credit agencies on the Industrial Production Index in that release, which is prepared monthly by the Fed. Currently, Congress has granted the Fed broad discretion to conduct monetary policy as it sees fit as long as it strives to meet its statutory mandate. This discretion includes autonomy over what policy tools to use (e.g., whether policy should be carried out by targeting the federal funds rate) and what the stance of monetary policy should be (e.g., at what level should the federal funds rate target be set?). Some Members of Congress, dissatisfied with the Fed's conduct of monetary policy, have looked for alternatives to the current regime. Some opponents of Fed discretion argue for a rules-based regime. One example of a monetary policy rule is the Taylor rule, which was developed by economist John Taylor to describe and evaluate the Fed's interest rate decisions. Normally, the Fed carries out monetary policy primarily by setting a target for the federal funds rate, the overnight inter-bank lending rate. The Taylor rule is a simple mathematical formula that, in the best-known version (described in the text box below), relates interest rate changes to changes in the inflation rate and the output gap. These two factors directly relate to the Fed's statutory mandate to achieve "maximum employment and stable prices." Taylor rules are currently used in economic analysis to explain the Fed's past actions or to offer a baseline in an evaluation of what the Fed has done or should do in the future. A Taylor rule (although with different parameters from this example) has been demonstrated to track actual policy relatively well for the period lasting from after inflation declined in the 1980s to the beginning of the financial crisis in 2007. Thus, it can be used in an economic model (which offers a simplified version of the actual economy) to represent the Fed's decisions under normal economic conditions. A limitation of the Taylor rule is that it was designed only to be used with the federal funds rate, which was the Fed's primary monetary policy instrument from roughly the early 1990s to late 2008. From December 2008 to October 2014, the Fed did not use the federal funds rate as its primary policy tool because the rate was at the "zero lower bound"—it was set near zero, and thus could not be lowered further. Instead, the Fed created new policy tools such as "quantitative easing" (QE) to stimulate the economy. The Taylor rule cannot make policy prescriptions at the zero lower bound—different combinations of deflation (falling prices) and output gaps would prescribe a negative federal funds rate under the Taylor rule, but that prescription would not be actionable because the federal funds rate is a market rate. The Taylor rule was devised at a time when interest rates had never fallen to the zero bound before, and it arguably seemed reasonable at the time to assume that the rule would not need to cover this contingency. Economists and policy analysts have debated whether basing monetary policy decisions on a Taylor rule would lead to better economic outcomes than the status quo. The Fed already uses the Taylor rule as a reference tool to help inform its policy decisions. Proponents would like the Taylor rule to have a more formal role in policymaking, either requiring policy to be set by a Taylor rule or requiring the Fed to explain its decisions relative to a Taylor rule. If the Fed desired, it could arguably adopt these proposals voluntarily under current law (e.g., the FOMC could agree to base their vote on a Taylor rule's prescription). Legislative changes would be needed to require the Fed to adopt these proposals, however. The desirability of basing policy on a Taylor rule (whether it takes the form presented above or an alternative form) can be viewed through the prism of the economic debate about the superiority of rules versus discretion in policymaking. Economists who favor the use of rules argue that policy is more effective if it is predictable and transparent. They argue that unpredictable policy results in financial and economic instability. For example, there can be large movements in financial prices when the Fed makes a policy change that "surprises" financial markets. A formal role for a Taylor rule could also potentially help Congress in its oversight capacity by providing a clear benchmark against which the Fed's decisions could be evaluated. Economists favoring discretion argue that policymakers need flexibility to manage an inherently complex economy that is regularly hit by unexpected shocks. For example, rules might have hindered the Fed's ability to respond to the housing bubble and the financial crisis in the late 2000s. In principle, a Taylor rule need not be limited to inflation and the output gap, but making it more complex would reduce the perceived benefits of transparency and predictability. Likewise, periodically modifying the form that the Taylor rule takes in response to unforeseen events would reduce predictability and increase discretion. Further, how could a Taylor rule incorporate amorphous concerns about, say, financial stability or asset bubbles when there is no consensus on how to quantify them? A Taylor rule requires data points that are easy to measure and accurately embody a larger economic phenomenon of concern. Using forecasts would probably be preferable to using actual data in the Taylor rule since monetary policy affects the economy with lags, but would potentially reintroduce policy discretion (since the Fed would produce the forecast). Further, if perceived policy errors by the Fed were mainly caused by forecasting errors (e.g., the failure to identify the housing bubble), then using a Taylor rule based on forecasts would probably not have prevented them. Any of these issues could be addressed by modifying the Taylor rule, but this would arguably reduce the perceived benefits of a rules-based regime. Other practical challenges with formalizing use of the traditional Taylor rule in policymaking include (1) the requisite data are released with lags and later revised; (2) the neutral rate of interest and potential output growth cannot be directly observed and may vary over time, making them difficult to estimate accurately in real time; (3) basing the FFR on only inflation and the output gap would make it more volatile; (4) public comprehension; and (5) addressing the zero bound issue. Rules were originally favored by economists who believed that Fed discretion was responsible for high inflation, but inflation has been low since the 1990s and below 2% by the Fed's preferred measure since 2013. Recently, Taylor rules have been used to support criticism that the Fed has engaged in too much stimulus. Policy rules in general do not inherently have a pro- or anti-stimulus bias, however, as their parameters can be adjusted to meet policymakers' goals. Policymakers who emphasize price stability could put a relatively high weight on the inflation parameter. Alternatively, policymakers who want the Fed to be responsive to (high or low) growth could put a relatively high weight on the output gap parameter. Since the form that a Taylor rule takes involves, in part, value judgments about the goals of monetary policy and the best way to achieve those goals, choosing its form involves political tradeoffs as well as economic modeling. As mentioned above, as long as the Fed prefers discretionary policy, it can only be forced to adopt rules-based policy through legislation. It would arguably be difficult, however, for Congress to determine what would be the best form of Taylor rule for the Fed to follow or when the Fed should be allowed to deviate from the rule's prescription. It needs the Fed's cooperation to devise and implement a rules-based policy, but the Fed has little incentive to tie its own hands. If Congress wanted the Fed to adhere to both the spirit and letter of any law that reduced the Fed's discretion, it may need to find legal carrots or sticks to succeed. But exposing the Fed to negative consequences when it does not follow the monetary policy that Congress prefers would be antithetical to the Fed's independence from Congress. It would provide Congress a new avenue to potentially apply political pressure on the Fed's monetary policymaking, even if that is not the proponents' intent. Thus, the challenge for proponents of rules-based policy is how to ensure less discretion without compromising the Fed's independence. S. 1484 / S. 1910 would require the Fed to include in a quarterly report to Congress on monetary policy and the economy a discussion of any mathematical rules or other strategies it uses in monetary policy deliberations and how policy has deviated from those rules and strategies. A monetary policy rule like the Taylor rule would presumably meet this requirement. H.R. 3189 and H.R. 5983 would require the Fed to formulate a mathematical rule (called the "Directive Policy Rule") that would instruct it how to set monetary policy (e.g., prescribe the current level of the federal funds rate) that would achieve its mandate of stable prices and maximum employment based on macroeconomic variables. It would be required to publish a five-year projection of inflation under its rule. It would also require the Fed to calculate a traditional Taylor Rule (called the "Reference Policy Rule" in the bill), as described in the text box, and compare it to the Directive Policy rule. Within 48 hours of a policy decision, the Fed would be required to submit the prescription of its rule to GAO and the committees of jurisdiction. GAO would report to Congress if the Fed was in compliance with the requirements of the act, and if it was not, it would trigger a GAO audit that was not subject to the normal statutory restrictions (described above) and testimony by the Fed chair before the committees of jurisdiction. Under normal authority, the Fed faces statutory limitations on whom it may lend to, what it may accept as collateral, and for how long it may lend. If the Fed wishes to extend credit that does not meet these criteria, it can turn to emergency lending authority found in Section 13(3) of the Federal Reserve Act. The worsening of the financial crisis in 2008 led the Fed to revive this obscure provision to extend credit to nonbank financial firms for the first time since the 1930s. Using this authority, the Fed created six broadly based facilities (of which only five were used) to provide liquidity to "primary dealers" (i.e., certain large investment firms) and to revive demand for commercial paper and asset-backed securities. More controversially, the Fed provided special, tailored assistance exclusively to four firms that the Fed considered "too big to fail"—AIG, Bear Stearns, Citigroup, and Bank of America. Credit outstanding (in the form of cash or securities) authorized by Section 13(3) peaked at $710 billion in November 2008. At present, all credit extended under Section 13(3) has been repaid with interest and all Section 13(3) facilities have expired. Contrary to popular belief, under Section 13(3), the Fed earned income of more than $30 billion and did not suffer any losses on those transactions. These transactions exposed the taxpayer to greater risks than traditional lending to banks through the discount window, however, because in some cases the terms of the programs had fewer safeguards. The restrictions in Section 13(3) placed few limits on the Fed's actions in 2008. However, in 2010, the Dodd-Frank Act added more restrictions to Section 13(3), attempting to ban future assistance to failing firms while maintaining the Fed's ability to create broadly based facilities. The Dodd-Frank Act also required records for actions taken under Section 13(3) to be publicly released with a lag and required the GAO to audit those programs for operational integrity, accounting, financial reporting, internal controls, effectiveness of collateral policies, favoritism, and use of third-party contractors. For more information, see CRS Report R44185, Federal Reserve: Emergency Lending , by [author name scrubbed]. The Fed's use of Section 13(3) in the crisis raised fundamental policy issues: Should the Fed be lender of last resort to banks only, or to all parts of the financial system? Should the Fed lend to firms that it does not supervise? How much discretion does the Fed need to be able respond to unpredictable financial crises? How can Congress ensure that taxpayers are not exposed to losses? Do the benefits of emergency lending, such as quelling liquidity panics, outweigh the costs, including moral hazard? How can Congress ensure that Section 13(3) is not used to "bail out" failing firms? Should the Fed tell Congress and the public to whom it has lent? A Fed governor has opposed further reducing the Fed's discretion under Section 13(3) on the grounds that the Fed needs "to be able to respond flexibly and nimbly" to future threats to financial stability. Although Section 13(3) must be used "for the purpose of providing liquidity to the financial system," some Members of Congress have expressed interest in—while others have expressed opposition to—the Fed using Section 13(3) to assist financially struggling entities, including states, municipalities, and territories of the United States. Some Members of Congress believe that the Dodd-Frank Act did not sufficiently limit the Fed's discretion. H.R. 3189 and H.R. 5983 would amend Section 13(3) to limit the Fed's discretion to make emergency loans. The proposals would limit 13(3) to "unusual and exigent circumstances that pose a threat to the financial stability of the United States" and would require "the affirmative vote of not less than nine presidents of Federal reserve banks" in addition to the current requirement of the affirmative vote of five Fed governors. They would forbid the Fed from accepting as collateral equity securities issued by a borrower. They would require the Fed to issue a rule establishing how it would determine sufficiency of collateral; acceptable classes of collateral; any discount that would be applied to determine the sufficiency of collateral; and how it would obtain independent appraisals for valuing collateral. They would eliminate the current language permitting the Fed to establish the solvency of a borrower based on the borrower's certification and would specify that before a borrower may be eligible for assistance, the Fed's Board and any other federal banking regulator with jurisdiction over the borrower must certify that the borrower is not insolvent. They would limit assistance to institutions "predominantly engaged in financial activities" and preclude assistance to federal, state, and local government agencies and government-controlled or sponsored entities. They would require the Fed to issue a rule establishing a minimum interest rate on emergency loans based on the sum of the average secondary discount rate charged by the Federal Reserve banks over the most recent 90-day period and the average of the difference between a distressed corporate bond index (as defined by a rule issued by the Fed) and the Treasury yield over the most recent 90-day period. The various proposals reviewed in this report are wide ranging and diverse; many are united by the goals of increasing the Fed's accountability to Congress and decreasing Fed discretion. Whereas some provisions make very minor changes, taken together the proposals would arguably somewhat reduce the Fed's independence from Congress. There is a long-standing policy debate about how independent regulatory agencies should be from Congress and the Administration, with proponents of independence arguing that it will lead to more technocratic decisionmaking and opponents arguing it leads to opaque, undemocratic, and unresponsive decisionmaking. For decades, the Fed has enjoyed an unusual degree of independence from Congress and the President compared with other government agencies, which has typically been justified in terms of insulating its monetary policy decisions from political pressures. To some extent, a tradeoff between independence and accountability is unavoidable. Besides the Taylor Rule, few of the provisions reviewed here directly relate to monetary policy, but may indirectly influence monetary policy through changes in how decisions are made, who makes decisions, and Congress's oversight of those decisions.

The Federal Reserve (Fed) is the subject of legislation being considered in the 114th Congress. These bills contain wide-ranging provisions that can be grouped into four broad categories: Changes to Fed governance. Some proposals would change the Fed's institutional structure. H.R. 22 (P.L. 114-94) reduced the dividend paid by the Fed to large commercial banks that hold stock in the Fed and permanently capped the Fed's surplus at $10 billion. H.R. 3189 would permanently eliminate the Fed's surplus. H.R. 26 (P.L. 114-1) required at least one nominee for the Fed's board of governors to have community banking experience. S. 1484/S. 1910 would make the New York Fed President a presidentially appointed position. H.R. 3189 and H.R. 5983 would increase the voting weight of regional Fed presidents on the FOMC. S. 1484/S. 1910, H.R. 3189, H.R. 5983, and H.R. 2912 would create a congressional commission to recommend reforms to the Fed. Changes to oversight and disclosure. Some proposals aim to make the Fed more accountable to Congress by increasing congressional oversight or requiring the Fed to disclose more information to Congress and the public. H.R. 24, S. 2232, H.R. 3189, and H.R. 5983 would require Government Accountability Office (GAO) audits of the Fed that are not subject to current statutory restrictions. H.R. 3189 and H.R. 5983 would subject the Fed's rulemakings to cost-benefit analysis requirements and require the Fed to publicly disclose information on international negotiations and the salaries and personal finances of certain officials and employees. H.R. 3189, H.R. 5983, and S. 1484/S. 1910 would require the FOMC to publicly release meeting transcripts. H.R. 5983 would subject the Fed's non-monetary policy functions to the congressional appropriations process. Changes involving monetary policy rules (the Taylor Rule). H.R. 3189, H.R. 5983, and S. 1484/S. 1910 would require the Fed to compare its monetary policy decisions to those prescribed by a policy rule (Taylor Rule) and report those findings to Congress. Policy deviations from the rule would trigger GAO audits and congressional testimony in H.R. 3189 and H.R. 5983. Changes to the Fed's emergency lending powers. H.R. 3189 and H.R. 5983 would reduce the Fed's discretion to make emergency loans under Section 13(3) of the Federal Reserve Act. The Fed used this authority to extend credit to non-bank financial firms during the financial crisis. The proposals reviewed in this report are wide ranging and diverse; many are united by the goals of increasing the Fed's accountability to Congress and decreasing Fed discretion. Although some provisions make very minor changes, taken together the proposals would arguably somewhat reduce the Fed's independence from Congress. The Fed is more independent than most other agencies, which has traditionally been justified by its monetary policy responsibilities. Most research has found a positive relationship between monetary policy independence and economic outcomes. To some extent, a tradeoff between independence and accountability is unavoidable. This report analyzes bills that have seen committee or floor action and the policy debate surrounding them.

Illegal drugs refer to narcotic, psychotropic, and related substances whose production, sale, and use are restricted by domestic law and international drug control agreements. Common illegal drugs trafficked internationally include cocaine and heroin, as well as psychotropic substances, such as methamphetamine and ecstasy. Cannabis, or marijuana, is also internationally proscribed. The illegal trade in these drugs represents a lucrative and what at times seems to be an intractable transnational criminal enterprise. According to the U.S. Department of Justice (DOJ), the United States is particularly affected by this criminal activity. Describing the illicit narcotics trade as a "challenging, dynamic threat to the United States," DOJ concluded in 2011 that the drug threat to the United States "will not abate in the near term and may increase." Both cocaine and heroin are plant-derived drugs, cultivated and harvested by farmers in typically low-income countries or in regions of the world with uneven economic development and a history of conflict. The U.S. government monitors drug cultivation and production trends in key countries as part of its efforts to evaluate global trends in drug supply. As of mid-March 2015, data for 2014 and 2013 are partially available. Coca bush, the plant from which cocaine is derived, is mainly cultivated in three South American countries: Colombia, Peru, and Bolivia (see Figure 1 ). Since 1997, Colombia has been the primary source of coca bush cultivation. Colombia's proportion of the global total illegal coca bush cultivation, however, has declined in the past decade—from approximately 77% in 2001 (221,800 total hectares worldwide) to 51% in 2012 (153,500 hectares), according to U.S. estimates. Estimates of harvestable coca bush are used to calculate how much pure cocaine could theoretically be produced each year, taking into consideration the potency of sampled coca leaves, the amount of eradication that took place, and the efficiency of clandestine labs, where the leaves are chemically processed into cocaine. According to U.S. estimates, the global total potential manufacture of pure cocaine in 2012 was approximately 620 metric tons (see Figure 2 ). Cocaine production trends in the past decade, which were dominated by Colombia until 2010, are in flux. In 2012, Colombia ranked second in global cocaine production, behind Peru. This continues a trend begun in 2010, when Peru resumed its top spot in global cocaine production—a position it had lost to Colombia after 1996. The Drug Enforcement Administration (DEA), however, reported in 2014 that the vast majority of cocaine available in the United States continues to be produced in Colombia. Opium poppy, the plant from which opiates such as heroin are derived, is cultivated in Southwest and Southeast Asia, as well as in Latin America (see Figure 3 ). Opium poppy from Latin America, including from Mexico, Colombia, and Guatemala, is cultivated almost exclusively for heroin consumption in the United States. Over the past decade, Afghanistan has risen to prominence as the primary global source of illicit opium poppy cultivation, supplanting Burma, where the majority of opium poppy cultivation took place in the 1990s. Most of Afghanistan's opiates are destined for Europe, Asia, and to a lesser extent Africa. Laos and Pakistan also cultivate opium poppy for the illicit global trade in opiates. Similar to calculations used to measure how much pure cocaine could theoretically be produced each year, estimates of potential production of opium and heroin can be derived from opium poppy crop harvests and other factors. According to U.S. law enforcement data, the threat posed by heroin is increasing in the United States. Heroin availability and demand in the United States are on the rise, due in part to a switch among prescription drug abusers to heroin. Heroin overdose deaths are also increasing in many parts of the United States. Mexican transnational criminal organizations (TCOs) appear to be increasingly involved in heroin production and transportation into the United States. Although Afghanistan dominates global potential opium production (see Figure 4 ), an estimated 4% of heroin available in the United States is sourced from Southwest Asia. Global illegal synthetic drug production is difficult to estimate because it is widespread and production sites can vary significantly in size. In general, the underlying chemicals needed for the production of synthetic drugs such as amphetamine, methamphetamine, and ecstasy may be legally manufactured and internationally exported for legitimate commercial and pharmaceutical purposes. In turn, some portion of the total legal production of these chemicals is clandestinely diverted and misused to manufacture illicit synthetic drugs. Such diverted chemicals typically are processed into illegal synthetic drugs in clandestine laboratories, which can range in size from small residential-sized kitchens to large-scale "superlabs" capable of processing high volumes of synthetic drugs. In recent years, several methamphetamine production labs have been discovered in West Africa, previously known primarily as a transit point for cocaine and heroin. DEA assesses that the majority of methamphetamine available in the United States in 2014 was produced in Mexico. Major trafficking routes connect drug producers with drug consumers, with often sophisticated drug trafficking organizations (DTOs) and transnational criminal organizations (TCOs) controlling various aspects of the supply chain. Significant drug transit pathways flow through Mexico and Central America (for drugs produced in Latin America and destined for the United States), West Africa (for South American cocaine destined for Europe and Afghan heroin en route to Europe and the United States), and all the countries surrounding Afghanistan (heroin destined to Europe, Eurasia, Asia, and Africa). Traffickers employ a wide range of land, air, and maritime methods for transporting illicit narcotics to include go-fast boats, shipping containers, self-propelled semi- and fully submersible vessels, non-commercial aircraft, commercial airlines, global mail delivery services, and private and commercial ground transportation. Globally, the United Nations estimated that in 2012 some 162 million to 324 million people, aged 15 to 64, used illicit substances, including cannabis, at least once in the past year. In recent years, the global cocaine market has been stable, largely due to declines in consumption in the United States over the past decade. UNODC, however, cautions that consumption trends may shift toward other regions, particularly those experiencing population growth, in South America, Africa, and Asia. According to the State Department, one of the most significant and troubling developments in international drug trafficking trends is the spread of synthetic drug consumption. In the Middle East and in some parts of Asia, for example, synthetic drugs have become the primary drug threat. Drug overdoses associated with heroin and other opioid use continues to remain the primary contributor to drug-related deaths. The global illegal drug trade represents a multi-dimensional challenge that has implications for U.S. national interests as well as the international community. In 2012, some 95,000 to 226,000 deaths worldwide were reported to have occurred as a result of drug use. Drug use and addiction have been said to negatively affect the social fabric of communities, hinder economic development, and place an additional burden on national public health infrastructures. Intravenous drug users are at particular risk of contracting diseases such as Hepatitis B, Hepatitis C, and HIV/AIDS. Observers suggest that drug trafficking also represents a systemic threat to international security. Revenue from the illegal drug trade provides international drug traffickers with the resources to evade government detection; undermine and co-opt legitimate social, political, and economic systems through corruption, extortion, or more violent forms of influence; penetrate legitimate economic structures through money laundering; and, in some instances, challenge the authority of national governments. In the process, some warn that transnational networks of criminal safe havens exist in which drug traffickers operate with impunity. As highlighted by the use of West Africa as a major cocaine transit hub for Latin American drug traffickers, criminal actors prey on states with low capacity for effective governance or the enforcement of the rule of law. This can exacerbate preexisting political instability, post-conflict environments, and economic vulnerability. By many accounts, drug trafficking, state weakness, political corruption, and powerful criminal organizations are part of a seemingly self-perpetuating cycle. On the one hand, a drug trafficking presence in a country can increase corruption and undermine political stability, while on the other hand, social and political instability may be causal factors for attracting a thriving drug industry. Further, academic literature on conflict duration indicates that control of a lucrative illegal drug trade in the hands of a particular political actor, rebel, or insurgent group can lengthen a conflict. State powers in the hands of a DTO or TCO through deeply entrenched kleptocracy serve as a force multiplier to enhance a criminal organization's power by harnessing the capacity of a state's infrastructure—roads, seaports, airports, warehouses, security apparatus, justice sector, and international political sovereignty—to further the group's illicit business aims. The consequences of a thriving illicit drug trade co-located in a conflict zone are illustrated today in Afghanistan, where some portion of drug-related proceeds annually help facilitate the current insurgency. In other regions, such as in the Western Hemisphere, Americans have been murdered, attacked, taken hostage, and tortured for their involvement in counternarcotics operations—highlighting the past and ongoing dangers associated with the international drug trade. In addition, some observers are concerned about the potential spread of DTO- and TCO-related violence from Mexico into the United States. Moreover, several groups listed by the U.S. Department of State as foreign terrorist organizations (FTOs) are known to be involved in drug trafficking. James R. Clapper, the Director of National Intelligence, presented the intelligence community's annual threat assessment to Congress in early 2015 and highlighted, among other issues, drug trafficking as a major transnational organized crime threat to the United States. Mexico in particular was identified as the largest foreign producer of marijuana, methamphetamine, and heroin consumed in the United States, as well as a primary conduit for U.S.-bound cocaine from South America. According to Clapper, the drug trade affects U.S. interests in parts of Africa, Central America, and the Caribbean. Clapper also identified new psychoactive substances (NPS) as an "emerging and rapidly growing public health threat," reporting that although 348 NPS have been identified worldwide, only 234 are under international controls. Drug trafficking has been an issue of international policy concern for more than a century and a subject of long-standing U.S. and multilateral policy commitment. Yet, tensions continue to appear at times between U.S. foreign drug policy and approaches advocated by independent observers and the international community. Many U.S. policymakers have argued that the confluence of political and security threats surrounding international drug trafficking necessitates a policy posture that emphasizes the disruption and dismantlement of the criminal actors and organizations involved in all aspects of the drug trade. In addition to counternarcotics responses that address public security, other dimensions to international drug control policy emphasize programs that address health consequences of drug abuse; drug demand reduction through treatment, rehabilitation, and social reintegration for drug users; and sustainable and comprehensive alternative livelihood options for impoverished drug crop farmers. Existing approaches to international drug control, however, have long been criticized as ineffective. In 1998, for example, the United Nations committed to "eliminating or reducing significantly" the supply of illicit drugs by 2008. In 2009, when that goal had not been accomplished, U.N. Member States agreed to recommit to achieve this goal in another decade, by 2019. In 2010, the Obama Administration's Director of the Office of National Drug Control Policy (ONDCP) acknowledged to the press that contemporary counternarcotics strategy "has not been successful." He reportedly continued: "Forty years later, the concern about drugs and drug problems is, if anything, magnified, intensified." Moreover, domestic initiatives on marijuana have fueled the debate and increased both domestic and international pressure to reconsider the contours of the current drug control regime. In recent years, some international advocates have called for a fundamental shift of current international drug policies, which are viewed by such observers as encouraging a prohibitionist approach to counternarcotics. In 2009, the Latin American Commission on Drugs and Democracy, co-led by three ex-presidents from Colombia, Mexico, and Brazil, released a report that challenged the international community to reevaluate drug control policies. In 2011, the Global Commission on Drug Policy released a report that expanded the Latin American Commission's drug policy debate. Several sitting presidents have also expressed interest in exploring alternatives to the existing international drug control regime, who raised the topic at the Sixth Summit of the Americas in April 2012 as well as at the annual opening of the U.N. General Assembly in September 2012. In January 2013, the government of Bolivia succeeded in carving out an exception for coca leaf, an internationally regulated substance pursuant to current U.N. drug conventions. After denouncing and withdrawing from the U.N. Single Convention on Narcotic Drugs, as amended, on June 29, 2011, Bolivia successfully rejoined the U.N. drug control regime in January 2013, this time with a specific reservation clause that obviates its requirement to criminalize the domestic personal use, consumption, possession, purchase, or cultivation of coca leaf. Some have criticized the action as contrary to the international convention's spirit, and some are concerned that it may risk the integrity of the global drug control system. Others praise Bolivia's approach as a viable tactic to adapt the U.N. drug control regime, which some have criticized as antiquated. Recognizing the ongoing challenges posed by the global drug problem, many have questioned whether the current international drug control system requires partial or wholesale revisions. To this end, the U.N. General Assembly plans on hosting a Special Session (UNGASS) on the world drug problem in 2016. Experts view the upcoming UNGASS on drugs as an opportunity for the international community to potentially reaffirm the current policy approach to drug control or set the stage for a different path forward. It remains unclear whether such policy debates may translate into lasting improvements to reduce the production, trafficking, use, and consequences of illegal drug trade. However, changes could affect a range of foreign policy considerations for the United States, including foreign aid reform, counterinsurgency strategy (particularly in Afghanistan), the distribution of domestic and international drug control funding, and the relative balance of civilian, law enforcement, and military roles in anti-drug efforts. Reflecting historically broad consensus, international efforts to combat drug trafficking are based on a long-standing and robust set of multilateral commitments. One of the first multilateral efforts to combat drugs began with the International Opium Commission of 1909. Since then, the international community has broadened and deepened the scope of international drug control through several international treaties and monitoring mechanisms. Today, international drug control efforts are grounded on the policy foundations laid by three United Nations treaties: the 1961 Single Convention on Narcotic Drugs, as amended; the 1971 Convention on Psychotropic Substances; and the 1988 Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. More than 95% of U.N. Member States, including the United States, are parties to all international drug control treaties. In combination, these U.N. treaties limit the international production and trade of a defined set of narcotic drugs, psychotropic substances, and the precursor chemicals used to make these substances for primarily medical and scientific purposes. The treaties also establish international mechanisms to monitor treaty adherence—through the International Narcotics Control Board (INCB)—and for the collection of data related to the illicit cultivation, production, and manufacture of proscribed drugs. U.N. policymaking on drug-related matters takes place through the U.N. Commission on Narcotic Drugs, which is a functional commission of the U.N. Economic and Social Council. The U.N. Commission on Narcotic Drugs monitors global drug trends, develops strategies for international drug control, and recommends measures to combat the world drug problem. To support U.N. Member States in combating drugs, UNODC conducts field-based technical assistance projects internationally and conducts research and analysis on current drug market trends. Regional counterdrug-related organizations also supplement multilateral efforts globally. Such efforts include the Inter-American Drug Abuse Control Commission (CICAD), which is the drug control arm of the Organization of American States (OAS) and the Drug Advisory Programme (DAP) of the Colombo Plan. CICAD serves as the regional policy forum for all aspects of Western Hemisphere illegal drug issues. DAP supports drug demand reduction, treatment, and rehabilitation in the Asia and Pacific regions. Other international counternarcotics initiatives include the U.S.-Russia Counternarcotics Working Group, which began in 2011; the Group of Eight Roma-Lyon Group meeting, which addresses a variety of counterterrorism and anti-crime issues, including counternarcotics cooperation; and the U.S.-Sino Joint Liaison Group on Law Enforcement Cooperation, a subset of which includes a Justice Department-led Counternarcotics Working Group. Related international efforts also reinforce counternarcotics policies through their cross-cutting focus on such transnational phenomena as money laundering, drug trafficking-financed terrorism, corruption, organized crime, and global health. The United States has been involved in international drug control since at least the beginning of the 20 th century. Contemporary U.S. counternarcotics efforts were brought to the forefront of U.S. policy debates in the late 1960s. In 1971, President Richard Nixon declared that illicit drugs were America's "public enemy number one." President Ronald Reagan followed with a directive in 1986 that identified narcotics trafficking a threat to U.S. national security. Successive administrations have continued to feature combating the international drug trade prominently among U.S. foreign policy priorities. Since at least the late 1960s, Congress has also been active on drug policy issues, enacting key provisions in U.S. law that define U.S. policies and authorities relating to international narcotics control, exercising oversight responsibilities on U.S. counternarcotics policy, and appropriating funds for international counternarcotics programs. In 1988, Congress established the Office of National Drug Control Policy (ONDCP) to coordinate all U.S. counterdrug policy, both domestically and internationally. ONDCP's Director is the primary advisor to the President on drug policy issues. The State Department is statutorily designated as the lead U.S. agency responsible for international counterdrug foreign assistance, and the Defense Department is the lead in the detection and monitoring of foreign drug flows destined for the United States. The U.S. Drug Enforcement Administration (DEA) is the lead on drug-related law enforcement. Multiple other U.S. agencies are also responsible for various aspects of the U.S. counterdrug response. The following sections describe several of the key U.S. government strategies and initiatives for combating drugs internationally and in specific regions around the world. U.S. involvement in international drug control rests on the central premise that helping foreign governments combat the illegal drug trade abroad will ultimately curb illegal drug availability and use in the United States. To this end, the current Administration maintains the goal of reducing and eliminating the international flow of illegal drugs into the United States through international cooperation to disrupt the drug trade and interdiction efforts. Congress has required that the White House, through ONDCP, submit to Congress a National Drug Control Strategy report each year. This strategy describes the total budget for drug control programs—both domestically and internationally—and outlines U.S. strategic goals for stemming drug supply and demand. The most recent National Drug Control Strategy was released in 2014. The international component of the Administration's 2014 National Drug Control Strategy centers on three specific goals: (1) collaborate with international partners to disrupt the drug trade, (2) support drug control efforts of major drug source and transit countries, and (3) attack key vulnerabilities of drug trafficking organizations (DTOs). Through international counternarcotics efforts—including reducing drug production and trafficking; promoting alternative livelihoods and demand reduction interventions; and strengthening rule of law, democratic institutions, citizen security, and respect for human rights—the Administration intends to protect public health and safety and contribute to overall national security. For FY2016, the Administration has requested from Congress approximately $27.6 billion for all federal drug control programs, of which $1.6 billion is requested for international programs, including civilian and military U.S. foreign assistance. An additional $3.9 billion is requested for interdiction programs related to intercepting and disrupting foreign drug shipments en route to the United States. As required by the Foreign Assistance Act of 1961, as amended, the State Department annually submits to Congress an International Drug Control Strategy Report (INCSR). The INCSR, released in two volumes each year, provides an overview of U.S. counternarcotics policies and programs internationally. It also provides a country-by-country analysis of progress that foreign governments, particularly those of major drug-producing and drug-transit countries, have made in adhering to its international commitments to combat drugs (volume I) and related financial crimes (volume II). The 2015 INCSR report emphasized the U.S. role in international cooperation on drug matters, stating that It took many decades for illicit drugs to develop into the global threat now recognized by all governments. It will take similar long-term perseverance to reduce illegal drug use and the criminal enterprises that promote it, to the point where it no longer threatens the sovereignty of governments or endangers generations of users. Ultimately, success will require the cumulative impact of multiple, incremental steps taken by committed international partners. The United States will continue to provide leadership and assistance to its partners in this ongoing challenge. The majority of U.S. counterdrug efforts internationally are concentrated in the Western Hemisphere, including South America, Central America, and the Caribbean, as well as in Afghanistan. Other geographic regions of emphasis include West Africa, Central Asia, and Southeast Asia. Selected U.S.-funded regional initiatives are described below. Beginning in October 2007, the United States and Mexico sought to reinvigorate bilateral and regional counternarcotics cooperation by announcing the start of a multiyear security agreement called the Mérida Initiative. This initiative aimed to combat drug trafficking and other criminal activity along the U.S.-Mexican border, as well as in Central America. Initial U.S. bilateral assistance to Mexico and Central America under the initiative consisted of a $1.4 billion, three-year security package ending in FY2010 that would provide two main forms of assistance: (1) equipment, including helicopters and surveillance aircraft, and technical resources to combat drug trafficking, and (2) training and technical advice for Mexican and Central American military, judicial, and law enforcement officials. In March 2010, the U.S. and Mexican governments agreed upon a strategic framework for continued cooperation as a follow-on to the Mérida Initiative after it technically ended in FY2010. Follow-on counterdrug support to Central America would be provided through a separate implementation and funding mechanism called the Central American Regional Security Initiative (CARSI). For the next phase in U.S. security assistance to Mexico, the character of U.S. support shifted from a focus on major counternarcotics equipment acquisition that was designed to improve operational ability against drug traffickers to a longer-term emphasis on institutional development and capacity building to the Mexican justice sector. This shift included greater emphasis on social reforms that can galvanize community support to fight organized crime, including drug trafficking. The Mérida strategy has four pillars: (1) disrupt and dismantle organized criminal groups; (2) institutionalize justice sector reforms to sustain the rule of law and respect for human rights; (3) create an efficient, economically competitive border crossing that ensures "secure two-way flows" of travelers and trade; and (4) support Mexican government efforts to build strong and resilient communities through community organizations, civil society participation, sustainable economic opportunities, community cohesion, and violence reduction. From FY2008 through FY2014, Congress appropriated approximately $2.4 billion in U.S. assistance to Mexico for the Mérida Initiative. The prominence of cocaine trafficking through Central America has grown in recent years, particularly in response to heightened counternarcotics pressure in Mexico. According to the State Department, 80% of U.S.-bound cocaine that arrived through Mexico first stopped in at least one Central American country (i.e., Belize, Costa Rica, Honduras, El Salvador, Guatemala, Nicaragua, or Panama). Throughout the region, the confluence of drugs, crime, and violence has strained local law enforcement and justice sector institutions; corruption is perceived as pervasive in many parts of Central America. To address these multidimensional security concerns as well as enhance crime prevention capacities and rule of law institutions in the region, Congress funded the Central America Regional Security Initiative (CARSI) in FY2010 as a follow-on to anti-crime assistance provided originally through the Mérida Initiative, beginning in FY2008. In March 2011, President Obama announced the Central American Citizen Security Partnership as an overarching framework for the implementation of CARSI funds. The five goals of both the Central American Citizen Security Partnership and CARSI funds are to (1) create safe streets and emphasize citizen safety; (2) disrupt the movement of criminals and trafficking of contraband throughout Central America; (3) support the institutional capacity and accountability of governments in the region; (4) reestablish effective state presence, services, and security in communities at risk; and (5) foster enhanced levels of coordination and cooperation among countries in Central America, other international partners, and donors for security and rule of law efforts. From FY2008 through FY2014, Congress appropriated a total of $803.6 million in regional assistance through CARSI. In April 2009, President Obama announced at the Summit of the Americas his intention to reinvigorate U.S. efforts to promote regional cooperation on these crime and security issues through an enhanced security dialogue and assistance package, later described as the Caribbean Basin Security Initiative (CBSI). The Caribbean plays a role in the transit of illicit drugs to the United States, Europe, and Africa. In addition to drug trafficking, the Caribbean region is challenged by high per capita rates for violent crimes and homicide. In May 2010, representatives from 15 Caribbean countries and the United States convened for an inaugural Caribbean-U.S. Security Cooperation Dialogue meeting, where they agreed on a new framework for security cooperation engagement and a plan of action. Stated goals included reducing drug trafficking, advancing public safety and citizen security, and promoting social justice. The State Department officially launched the CBSI in June 2010. CBSI has been described as a multi-year security assistance initiative to promote citizen safety and to combat illicit activity and transnational criminal groups. From FY2010 through FY2014, Congress appropriated a total of $327 million in regional security assistance through the CBSI. Much of contemporary counternarcotics efforts in Colombia stem from a 1999 Colombian government strategy to address security and development issues, called Plan Colombia. It was intended to be a six-year plan, concluding in 2005, to end the country's decades-long armed conflict, eliminate drug trafficking, and promote economic and social development. The plan aimed to curb trafficking activity and reduce coca cultivation in Colombia by 50% over six years. In support of Plan Colombia and its follow-on programs, the U.S. government spent more than $8 billion in security and development assistance between FY2000 and FY2011, to include both civilian and military counterdrug support efforts. As part of Colombia's follow-on security and development initiative after Plan Colombia, several previously U.S.-funded efforts have been nationalized by the Colombian government, including training, equipping, and support for Colombian military programs, such as the counterdrug brigade, Colombian Army aviation, and the air bridge denial program. The State Department coordinates its support for Colombian counternarcotics programming through the Colombia Strategic Development Initiative. Continued U.S. support to Colombia occurs mainly through the U.S.-Colombia Strategic Development Initiative (CSDI), which incorporates traditional counternarcotics assistance for eradication, interdiction, alternative development, and capacity building support for police, military, and justice sector institutions, but also other economic and social development initiatives. Drug control policy in Afghanistan underwent a shift in strategy in June 2009, when the late Ambassador Richard Holbrooke, who at the time was the Obama Administration's Special Representative for Afghanistan and Pakistan, announced a halt to U.S. eradication efforts in Afghanistan and a concurrent increase in priority to agricultural development (or alternative livelihoods) assistance as well as interdiction. The drug policy shift was formalized with the release of the Afghanistan and Pakistan Regional Stabilization Strategy in January 2010, which connected U.S. counternarcotics policy with U.S. counterinsurgency goals in the region. The January 2010 Regional Strategy had sections on combating the Afghan narcotics trade and disrupting illicit financial flows, among others. In March 2010, the State Department released an updated U.S. Counternarcotics Strategy for Afghanistan. It outlined two strategic goals—(1) counter the narcotics-insurgency nexus and (2) counter the narcotics-corruption nexus—coupled with several related objectives. Reiterating the January 2010 Regional Strategy, the March 2010 Counternarcotics Strategy confirms the U.S. government's decision to "no longer fund or support large-scale eradication of poppy fields," while condoning Afghan-led local eradication. The March 2010 Counternarcotics Strategy also emphasized the need to improve the connection between the U.S. government's counternarcotics goals with the U.S. government's counterinsurgency goals. In December 2012, the State Department issued a revised U.S. Counternarcotics Strategy for Afghanistan in order to take into account the transition of security responsibilities to Afghan-led forces and a reduced U.S. and international presence. In the strategy, the Administration commits to building Afghan capacity to disrupt the illicit narcotics trade and to break the narcotics-insurgency nexus. Key goals include (1) strengthening the Afghan government's capacity to combat drugs with increasing degrees of responsibility, ownership, and independence; and (2) countering the narcotics-corruption nexus through and beyond the security transition. Beginning in 2011, the State Department led the development of a five-year, $60 million inter-agency, regional capacity-building program called the West Africa Cooperative Security Initiative (WACSI). WACSI is designed to combat transnational crime in West Africa, including drug trafficking, and mitigate the impact of such illicit activity on the security, stability, and good governance in the region. In 2012, WACSI programming included the creation of a specialized, and DEA-vetted, counternarcotics unit in Ghana. In early 2013, WACSI programming also included the establishment of a U.S.-funded regional training center in Accra, Ghana. WACSI has five strategic pillars, or goals: 1. Support government and civil society institutions through technical assistance and capacity building to prevent impunity from justice by well-connected criminals and acts of corruption by state law enforcement personnel. 2. Establish effective and modern anti-crime policies and legal frameworks through technical assistance to draft new laws, guidance to enact such laws, and support to improve public awareness of anti-crime policies. 3. Strengthen security and law enforcement operations to target illicit networks, including support to elite counternarcotics units, operational and basic law enforcement skills training, provisions of relevant equipment, and institutional capacity building. 4. Reinforce justice sector institutions through technical assistance for prosecutors and judges involved in complex transnational crime cases. 5. Address socioeconomic dimensions of illicit activity, including drug demand reduction and public awareness-raising about transnational organized crime. Several U.S. agencies are involved in implementing U.S. international counternarcotics activities in support of the Administration's National Drug Control Strategy. These agencies include the following: Office of National Drug Control Policy (ONDCP). Located within the Executive Office of the President, ONDCP establishes U.S. counterdrug policies and goals, and coordinates the federal budget to combat drugs both domestically and internationally. Every year, ONDCP's director, sometimes referred to as the U.S. drug czar, produces the National Drug Control Strategy and the federal counterdrug budget summary. Department of State. The Secretary of State is responsible for coordinating all international counterdrug programs implemented by the U.S. government, including foreign counternarcotics assistance. The State Department identifies fighting the production, transportation, and sale of illegal narcotics among its primary goals. Every March, the State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL) produces the International Narcotics Strategy Report (INCSR), which describes the efforts of key countries to attack all aspects of the international drug trade, including anti-money laundering during the previous calendar year. U.S. Agency for International Development (USAID). USAID provides assistance for long-term economic and social development. The USAID Administrator serves concurrently as the State Department's Director of U.S. Foreign Assistance, with a rank equivalent to Deputy Secretary of State. USAID plays a role in counternarcotics development assistance, especially regarding alternative livelihood programs, which are designed to offer alternatives to farmers that will enable and encourage them to discontinue planting poppy and other illicit crops. Department of Defense (DOD). DOD maintains the lead role in detecting and monitoring aerial and maritime transit of illegal drugs into the United States and plays a key role in collecting, analyzing, and sharing intelligence on illegal drugs with U.S. law enforcement and international security counterparts. Notable entities under DOD that focus on international drug control include the Office for Counternarcotics and Global Threats, within the Office of the Under Secretary of Defense; the Defense Intelligence Agency (DIA); and various regional combatant commands and joint interagency task forces. In addition, DOD provides counternarcotics foreign assistance to train, equip, and improve the counternarcotics capacity and capabilities of relevant agencies of foreign governments with its Counternarcotics Central Transfer Account appropriations. Department of Justice (DOJ). The Attorney General is responsible for federal law enforcement and to ensure public safety against foreign and domestic threats, including illegal drug trafficking. This translates into an array of responsibilities that include law enforcement operations, drug-related intelligence analysis, and prosecution and criminal justice activities, as well as police and justice sector training. Primary agencies under DOJ that focus on international drug control include the Drug Enforcement Administration (DEA), the Federal Bureau of Investigation (FBI), the Organized Crime Drug Enforcement Task Force (OCDETF), and the El Paso Intelligence Center (EPIC). Department of Homeland Security (DHS). The Secretary of Homeland Security is responsible for U.S. policies related to interdiction of illegal drugs entering the United States from abroad. The Strategic Plan for DHS identifies securing the U.S. border against illegal drugs as one of its primary objectives. Key offices within DHS that participate in counterdrug activities include the Customs and Border Protection (CBP), U.S. Coast Guard, and Immigration and Customs Enforcement (ICE). Department of the Treasury. The Treasury Department participates in counterdrug efforts as they pertain to targeting the illicit financial proceeds that result from drug trafficking. Key offices that participate in combating drug-related money laundering include the Office of Foreign Assets Control (OFAC) and the Financial Crime Enforcement Network (FinCEN). Central Intelligence Agency (CIA). The CIA's Crime and Narcotics Center (CNC) collects intelligence information and develops intelligence analyses to support or conduct operations countering illicit drug activities, including trends in illegal drug crop cultivation and production. For FY2016, the Administration has requested approximately $27.6 billion for all federal drug control programs (see Table 1 ). Of this, 20%, or $5.5 billion, is requested for international and interdiction programs. Beginning with the FY2012 budget request, ONDCP significantly restructured its budgeting process, resulting in the addition of more agencies and programs to the overall drug budget. According to ONDCP, these additional agencies had not previously been included in the drug budget because the programs were deemed to be "unreliably estimated or were thought to be related to consequences of drug use (as opposed to directly related to drug use reduction)." The addition of these agencies had the effect of increasing the total budget, particularly domestic programs (compare Table 1 with Table 2 ). A large component of the international component of ONDCP's national drug budget, discussed above, is committed to civilian- and military-funded assistance to foreign countries for counterdrug support. Such foreign aid is designed to support foreign countries interdict and eradicate drugs, support the development of alternative livelihoods, and reduce the local demand for drugs. The following sections describe both civilian and military funding and authorities for counternarcotics foreign assistance. The U.S. Department of State and U.S. Agency for International Development (USAID) are the two primary sources of civilian U.S. funding for international counternarcotics assistance. Counternarcotics programs may be implemented by other U.S. government entities or to private contractors. Funding spigots include the foreign aid accounts for Development Assistance (DA); Economic Support Fund (ESF); Assistance for Europe, Eurasia, and Central Asia (AEECA); and International Narcotics Control and Law Enforcement (INCLE). Authority for the U.S. Department of State and USAID is derived from multiple provisions in the Foreign Assistance Act (FAA) of 1961, as amended. Key provisions are located at Chapter 8 of Part I of the FAA, as amended, entitled "International Narcotics Control." Section 481 of the FAA states that the Secretary of State is "responsible for coordinating all assistance provided by the United States Government to support international efforts to combat illicit narcotics production or trafficking." Section 126 of the FAA also directs USAID, when planning programs of assistance for countries in which illicit narcotics cultivation takes place, to "give priority consideration to programs which would help reduce illicit narcotics cultivation by stimulating broader development opportunities." Annual appropriations provide additional direction for the scope and use of counternarcotics funding in specified fiscal years. The U.S. Drug Enforcement Administration (DEA) conducts additional training seminars for foreign law enforcement personnel, as authorized by the Controlled Substances Act, as amended; the FAA; and annual appropriations. The U.S. Department of Defense (DOD) has multiple roles and responsibilities in the area of counternarcotics. Pursuant to 10 U.S.C. 124, DOD is the single lead federal agency for the detection and monitoring of aerial and maritime movement of illegal drugs toward the United States and plays a key role in collecting, analyzing, and sharing intelligence on illegal drugs with U.S. law enforcement and international security counterparts. In addition, Congress authorizes DOD to offer counternarcotics assistance to train and equip foreign countries in their efforts to build institutional capacity and control ungoverned spaces used by drug traffickers. DOD supports foreign counternarcotics activities through several authorities. Included among these are two that authorize certain types of counternarcotics training and provisions of equipment to foreign governments, which originate from Section 1004 of the National Defense Authorization Act (NDAA) for Fiscal Year 1991 ( P.L. 101-510 ) and Section 1033 of the NDAA for FY1998 ( P.L. 105-85 ). Under Section 1004, Congress authorized DOD to provide counterdrug or counter-transnational organized crime training and transport of law enforcement personnel to foreign law enforcement agencies worldwide, among other provisions. Section 1012 of the NDAA for Fiscal Year 2015 extends this authority through FY2017. Section 1033 enables DOD to assist specific countries' counterdrug efforts by providing non-lethal protective and utility personnel equipment, including navigation equipment, secure and non-secure communications equipment, radar equipment, night vision systems, vehicles, aircraft, and boats. Currently, DOD is authorized to provide Section 1033 assistance to 39 countries through FY2016, including (in chronological order) Peru and Colombia (Section 1033, P.L. 105-85 ); Afghanistan, Bolivia, Ecuador, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan (Section 1021, P.L. 108-136 ); Azerbaijan, Kazakhstan, Kyrgyzstan, Armenia, Guatemala, Belize, and Panama (Section 1022, P.L. 109-364 ); Mexico and the Dominican Republic (Section 1022, P.L. 110-181 ); Guinea Bissau, Senegal, El Salvador, and Honduras (Section 1024, P.L. 110-417 ); Benin, Cape Verde, The Gambia, Ghana, Guinea, Ivory Coast, Jamaica, Liberia, Mauritania, Nicaragua, Nigeria, Sierra Leone, and Togo (Section 1006, P.L. 112-81 ); Chad, Libya, Mali, and Niger (Section 1012, P.L. 113-66 ). Two additional provisions authorize DOD to conduct certain types of support for joint counternarcotics and counterterrorism activities. One such provision stems from Section 1022 of the NDAA for Fiscal Year 2004 ( P.L. 108-136 ), which authorized DOD joint task forces that support counternarcotics or counter-transnational organized crime law enforcement activities to also support law enforcement agencies conducting counterterrorism activities. Section 1014 of the NDAA for Fiscal Year 2015 extends this authority through FY2020. The other provision stems from Section 305 of the 2002 Supplemental Appropriations Act for Further Recovery From and Response To Terrorist Attacks on the United States ( P.L. 107-206 ). This provision authorized DOD to use counternarcotics funds designated for Colombia to be available for a unified campaign against both narcotics trafficking and terrorism. Section 1011 of the NDAA for Fiscal Year 2015 extends this authority through FY2016. Over the years, U.S. counterdrug efforts have expanded to include a broad array of tools to attack the drug trade using several foreign policy approaches. Through its appropriations and federal oversight responsibilities, Congress is able to evaluate current efforts, which appear to center around four main drug control policy strategies: (1) combating the production of drugs at the source, (2) combating the flow of drugs in transit, (3) dismantling illicit drug networks, and (4) creating incentives for international cooperation on drug control. The following sections describe and analyze each of these primary strategies and their legislative sources. Major U.S. policy tools for combating the production of illicit drugs, particularly cocaine and heroin, center on the eradication of coca bush and opium poppy crops and the provision of alternative livelihood options to drug crop farmers. Both policy approaches ultimately seek to reduce the amount of illicit drug crops cultivated. Eradication programs seek to combat the flow of plant-based illegal drugs at the root of the supply chain—in the fields where the crops are grown. Crop eradication can take several forms, including (1) aerial fumigation, which involves the spraying of fields with herbicide; (2) manual removal, which involves the physical up-rooting and destruction of crops; and (3) mechanical removal, which involves the use of tractors and all-terrain vehicles to harrow the fields. The United States supports programs to eradicate coca, opium, and marijuana in a number of countries, including primarily Colombia. These efforts are conducted by U.S. government agencies and contractors that administer U.S. eradication programs providing producer countries with support to eradicate drug crops with chemical herbicides, technical assistance, specialized equipment, and spray aircraft. Eradication is a long-standing but controversial U.S. policy regarding international drug control. As recently as 2008, the State Department had considered crop control the "most cost-effective means of cutting supply," because drugs cannot enter the illegal trade if the crops were never planted, destroyed, or left unharvested. Without drug cultivation, the State Department's rationale continued, "there would be no need for costly enforcement and interdiction operations." Proponents of eradication further argue that it is easier to locate and destroy crops in the field than to locate subsequently processed drugs on smuggling routes or on the streets of U.S. cities. Put differently, a kilogram of powder cocaine is far more difficult to detect than the 300 to 500 kilograms of coca leaf that are required to make that same kilogram. Also, because crops constitute the cheapest link in the narcotics chain, producers may devote fewer economic resources to prevent their detection than to conceal more expensive and refined forms of the drug product. Opponents of expanded supply reduction policy generally question whether reduction of the foreign supply of narcotic drugs is achievable and whether it would have a meaningful impact on levels of illicit drug use in the United States. Manual eradication requires significant time and human resources, reportedly involving upward of 20 work-hours of effort to pull up and destroy one hectare of coca plants. Aerial application of herbicide is not legal or feasible in many countries and is expensive to implement where it is permitted. Aerial fumigation in Colombia has also raised allegations that the herbicide chemical used has caused negative human, animal, and environmental consequences. Others question whether a global policy of simultaneous crop control is cost-effective or politically feasible because eradication efforts may also potentially result in negative political, economic, and social consequences for the producing country, especially in conflict or post-conflict environments. Some argue that this has been the case with respect to eradication efforts in Afghanistan, where some U.S. officials have acknowledged that poppy eradication may have caused many poor Afghan farmers to ally with insurgents and other enemies of the Afghan government. In 2009, Richard Holbrooke, who was the Obama Administration's Special Representative for Afghanistan and Pakistan at the time, called Western eradication policies in Afghanistan "a failure" and stated that they have "wasted hundreds and hundreds of millions of dollars." Since 2009, the U.S. government has no long directly participated in eradication operations in Afghanistan. The State Department, however, continues to fund a governor-led eradication program through which the Afghan Ministry of Counternarcotics reimburses governors for expenses incurred from eradicating poppy fields. In Colombia, on the other hand, the U.S. government attributes much of the recent declines in the amount of cocaine produced in Colombia to aerial eradication, describing it as "essential for disrupting today's drug trafficking networks and thwarting cultivation in Colombia's most remote areas." Aerial eradication, however, remains a high-risk activity, as spray planes and their crews are targeted by drug traffickers. In 2003, the Revolutionary Armed Forces of Colombia (FARC), which the State Department lists as a foreign terrorist organization, shot down a U.S. government plane in the Colombian jungle, killing the American pilot and a Colombian air force sergeant and taking three other crew members, all U.S. defense contractors, hostage. They remained FARC hostages until July 2008. U.S. counterdrug policy also includes foreign assistance specifically targeted to illicit drug crop farmers. Alternative development can be viewed as a form of drug crop eradication. The ultimate goal is to convince current farmers to abandon their drug crops and switch to licit, sustainable livelihoods and sources of income. Whereas other eradication methods involve the physical removal or chemical destruction of illicit drug crops, alternative development involves the introduction of crop substitution options, training in sustainable farming techniques, infrastructure development, and other projects that make alternative livelihoods economically more attractive. The U.S. government considers alternative development a key component to drug supply reduction policies and has active programs in Southeast Asia, Southwest Asia, and South America. U.S. alternative development programs, funded and run mainly by the State Department and U.S. Agency for International Development (USAID), support U.S. counternarcotics objectives by helping countries develop economic alternatives to narcotics production, expand legal employment opportunities, and offer other incentives to farmers to discontinue planting illicit drug crops. In theory, this approach is designed to complement law enforcement and eradication efforts to provide both a "carrot and stick" strategy. For several decades, alternative development has been implemented in various forms and with varying success. Since the late 1960s, when alternative development policies were initially conceived as simply crop substitution projects, efforts have somewhat expanded to include a broader concept of alternative development. Current U.S. programs include not only crop substitution projects but also the development of and assistance for roads, infrastructure, and health care. In some cases, as in Afghanistan, some development assistance is tied to local commitments to reduce drug cultivation. Through the U.S.-funded Good Performers Initiative (GPI), for example, Afghan provinces determined to be poppy free or to have reduced cultivation by 10% or more, are eligible to receive development project awards. A frequently cited model of success includes alternative development programming in the San Martin region of Peru. Critics, however, note that localized successes have not necessarily translated into national or global trends. Some observers additionally claim that while current U.S. efforts often aim to achieve this broadened concept of alternative development, they may not always achieve it in practice. Some indicate that a relationship between alternative development projects and a reduction in illicit drug production may be tenuous, as policy coordination between alternative development projects and eradication and interdiction efforts remains limited in some cases. Further, it appears that alternative development projects are not implemented in most regions where illicit crops are grown today. According to reports, approximately 10% to 15% of areas under illicit cultivation are covered by alternative development projects supported by the international community, and, on average, 5% of farmers of illicit crops receive alternative development assistance. Common factors limiting the reach and prevalence of alternative development projects include ongoing security threats in areas of illicit crop cultivation, lack of political will or resources to administer alternative development projects, and local distrust of government or external influences. Interdiction efforts seek to combat the drug trade as traffickers begin moving drug products from source countries to their final destinations. The Department of Defense is the lead federal agency for the detection and monitoring of aerial and maritime movement of illegal drugs toward the United States. Along with the Defense Department, several other U.S. agencies are involved in coordinating operations with foreign government interdiction forces and providing law enforcement training and other forms of assistance to foreign countries in order to deny drug traffickers the use of transit routes. Within the so-called "transit zone"—a vast expanse of land, air, and sea between Central and South America and the U.S. southern borders, including the Caribbean Sea, the Gulf of Mexico, and the eastern Pacific Ocean—a DOD-led interagency group called the Joint Inter-Agency Task Force South (JIATF-South) coordinates interdiction operations across federal agency participants, as well as international liaisons from the United Kingdom, France, the Netherlands, and several Latin American countries. On the high seas, the U.S. Coast Guard is the lead federal agency for interdiction operations and facilitates international maritime counternarcotics operations with partner nations that permit Coast Guard officers to stop, board, and search suspicious vessels. According to the State Department, the U.S. government is party to 45 maritime counterdrug bilateral agreements or operational procedures to coordinate detection, monitoring, interdiction and apprehension activities and joint operations conducted by entities such as the U.S. Coast Guard. Along the borders, the U.S. Customs and Border Protection (CBP) is mandated to secure the United States from a range of foreign threats, including drugs and drug traffickers. CBP also contributes to air and marine interdiction and law enforcement, as well as air domain security through its P-3 air wing program. Outside the transit zone, other international interdiction operations are conducted by U.S. agencies, including DEA. These international programs include Operation Containment, Project Cohesion, and Project Prism. Operation Containment, a multinational law enforcement effort established in 2002 and led by DEA, aims to place a "security belt" around Afghanistan to prevent processing chemicals for converting opium poppy to heroin from entering the country and opium and heroin from leaving. Project Cohesion, an international precursor chemical control initiative established in 2005 and led by the International Narcotics Control Board (INCB), tracks precursor chemicals involved in the production of cocaine and heroin. Project Prism, a U.N.-sponsored initiative, monitors and controls illicit trade in precursor chemicals used in the production of amphetamine-type synthetic drugs. U.S. counternarcotics activities in Afghanistan also emphasize the interdiction and the dismantling of Afghan drug trafficking syndicates. Another initiative involves the Joint Interagency Task Force-West's Illicit Tracking Cell, which contributed to the interdiction of methamphetamine precursor chemicals trafficked in commercial maritime cargo. U.S. interdiction activities in the transit zone, spanning the continental and maritime border areas between the United States and Latin America and the Caribbean, are sometimes considered among the bright spots of U.S. counterdrug efforts. Joint interdiction operations, such as Operation Martillo in Central America, have been highlighted for improving regional cooperation and denying traffickers access to their preferred smuggling routes. A 2005 report released by the Government Accountability Office (GAO), for example, highlighted the role of improved interagency coordination and international cooperation for improvements in transit zone interdiction operations. The State Department reports that its interdiction activities in the Caribbean, including Operation Bahamas Turks and Caicos (OPBAT), contributed to a drop in illegal drug flows from 70% in the 1980s to less than 10% in recent years. Drug trafficking organizations, however, are reportedly growing increasingly sophisticated in their evasion techniques, and some observers are concerned that current interdiction capabilities may not be sufficient for long-term reductions in drug supplies. Proponents of strong drug interdiction policies, for example, have long been concerned that the nation's focus on anti-terrorism objectives will detract from resources and political will needed to combat foreign illicit drug production and trafficking. Similarly, the Defense Department reports that budget pressure may require it to scale back resources available for interdiction operations, potentially allowing as much as 38 extra metric tons of cocaine to reach the United States. Supporting such concerns, the 2005 GAO report states that the commitment of U.S. military assets to Iraq and Afghanistan in the 2000s may have hampered the ability of U.S. law enforcement to intercept drug shipments in the future. Some observers additionally caution that interdiction efforts could raise the retail price of illegal drugs, potentially resulting in a perverse incentive that actually increases the economic rewards to drug traffickers. Vigorous interdiction may also motivate traffickers to devise new and novel tactics to evade detection; one example of this includes the use of self-propelled semi-submersible (SPSS) vessels in the Western Caribbean and Eastern Pacific. Interdiction efforts that appear to be reaping success in dismantling major drug trafficking networks may nevertheless pose the unintended consequence of sparking short-term increases in drug trafficking-related violence, as surviving drug traffickers compete with one another for control—often violently—of drug routes. This appears to have been in part a contributing factor to the ongoing drug-related violence in Mexico—and some observers are raising the concern that similar consequences may occur in Afghanistan under the Obama Administration's renewed emphasis on interdiction efforts to combat the Afghan opiate trade. Some have additionally voiced caution over interdiction operations that involve potentially aggressive tactics. These latter concerns have been expressed with regard to Operation Anvil in Honduras, which in 2012 was associated not only with increased drug seizures, but also several lethal shootouts that variously involved DEA agents and U.S. helicopters. Key U.S. foreign policy tools available for targeting major drug traffickers and their illicit networks include establishing extradition agreements with foreign countries, freezing and blocking foreign criminal assets within U.S. jurisdiction, and building foreign capacity to investigate, arrest, prosecute, and incarcerate drug traffickers domestically. The U.S. government regularly uses extradition as an important judicial tool against suspected drug traffickers located abroad. Extradition refers to the formal surrender of a person by a state to another state for prosecution. Proponents of extradition to the United States argue that suspected criminals are more likely to receive a fair trial in U.S. courts than in countries where the local judicial process may be corrupt and where suspects can use bribes and intimidation to manipulate the outcome of a trial. U.S. bilateral judicial cooperation with Mexico and Colombia is often cited as particularly exemplary, yielding record numbers of extradited traffickers to the United States. Colombia, for example, has extradited more than 1,600 individuals to the United States since December 17, 1997. In 2013, Mexico extradited 54 individuals to the United States, fewer than half of the total extradited in 2012 (115 individuals). Some anecdotal evidence appears to suggest that the threat of extradition has affected the behavior of foreign drug trafficking organizations. For example, some Colombian drug traffickers are reportedly distancing themselves from overt drug distribution activities, which could be used as evidence to trigger extradition. Nevertheless, this counterdrug tool remains controversial and is not universally supported. Afghanistan, for example, does not have a formal extradition or mutual legal assistance arrangement with the United States. Many countries simply refuse to extradite drug traffickers, citing concerns about the potential use of the death penalty in the United States against its citizens and state sovereignty rights. Burma is one such country, which continues to refuse to extradite four suspected drug traffickers under indictment in the United States. Some observers claim that suspected traffickers often take advantage of such limitations in the extradition system and seek safe haven in countries that are unwilling to extradite. To reap the financial benefits of the illegal drug trade, traffickers must launder their illicit profits into the licit economy. As a result, the United States and other members of the international community have sought to use anti-money laundering efforts as a tool to combat this upstream activity in the illegal drug market. Currently, several U.S. agencies are involved in international anti-money laundering efforts designed to enhance financial transaction transparency and regulation, improve cooperation and coordination with foreign governments and private financial institutions, and provide foreign countries with law enforcement training and support. Congress has been active in pursuing anti-money laundering regulations and program oversight. In 1999, Congress passed the Foreign Narcotics Kingpin Designation Act to authorize the President to target the financial profits that significant foreign narcotics traffickers and their organizations (known as "Specially Designated Narcotics Trafficker Kingpins," or SDNTKs) have accumulated from their illicit activities. This tool seeks to deny SDNTKs and their related businesses access to the U.S. financial system and all trade transactions involving U.S. companies and individuals. Following the September 11, 2001, terrorist attacks, Congress further strengthened U.S. measures to combat money laundering by providing the Secretary of the Treasury with new authorities to impose a set of regulatory restrictions, or "special measures," against foreign jurisdictions, foreign financial institutions, and certain classes of financial transactions involving foreign jurisdictions, if deemed by the Treasury Secretary to be "of primary money laundering concern." These anti-money laundering tools are designed not only to address drug trafficking, but also to combat other forms of related criminal activity, including terrorist financing. In addition, Congress requires that the State Department include in its annual International Narcotics Control Strategy Report (INCSR) a separate volume devoted to the state of international money laundering and financial crimes in each country. Among the report's congressionally mandated requirements, the State Department annually identifies the world's "major money laundering countries," defined as those countries "whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking" and other serious crimes. Other agencies involved in targeting drug trafficking-related financial assets include the Department of Justice, through its asset forfeiture activities, and the Department of Homeland Security's Immigration Customs and Enforcement agency, which developed an Illicit Pathways Attack Strategy (IPAS) to target illicit financial activity of transnational organized crime networks operating in the Western Hemisphere. U.S. officials and some observers have highlighted the value of anti-money laundering efforts in combating drug trafficking. In 2007, the Treasury Department's Office of Foreign Assets Control (OFAC) reported that anti-money laundering efforts against Colombian drug cartels have been effective in isolating and incapacitating designated supporters, businesses, and front companies linked to the Cali Cartel and Norte del Valle Cartel. Some observers also describe the Treasury Secretary's additional authorities to designate jurisdictions of primary money laundering concern and apply "special measures" against these jurisdictions as having "potentially profound effects on the financial services industry." Treasury's designation of Banco Delta Asia, for example, successfully resulted in the freezing of some $25 million in North Korean assets—funds that reportedly included counterfeit U.S. currency and profits from other North Korean criminal activity, including drug trafficking. Skeptics of the use of anti-money laundering efforts to combat drug trafficking argue that tracking illicit financial transactions may be more difficult and may yield less success than other counterdrug tools. The same types of money laundering methods—bulk cash smuggling, trade-based money laundering, and others—that the State Department identified as issues of concern more than a decade ago remain among the most used forms of money laundering today. Further, emerging challenges include the growing volume of financial transactions, especially the volume of international electronic transfers, and the movement of illegal money laundering outside formal banking channels, including through "hawala"-type chains of transnational money brokers and through the use of stored-value cards. Another element of U.S. efforts to dismantle foreign drug networks involves providing foreign countries with the tools also improve their domestic efforts to dismantle drug networks. Such assistance, in the form of training, equipping, and other institutional capacity building, ultimately seeks to strengthen foreign judicial and law enforcement institutions and assist in developing host nation administrative infrastructures to combat the illicit drug trade. Institutional development programs focus mainly on fighting corruption and training to support criminal justice system reforms and the rule of law. A variety of U.S. agencies are involved in counterdrug-related capacity building efforts abroad, including the State Department, USAID, the Department of Justice, Department of Homeland Security, and the Department of Defense. For example, the State Department funds a series of International Law Enforcement Academies (ILEAs) and Regional Training Centers (RTCs) that provide training and technical assistance to foreign law enforcement practitioners on a variety of subjects, including counternarcotics. U.S.-funded ILEAs are located in Gabarone, Botswana; Bangkok, Thailand; Budapest, Hungary; Roswell, NM; and San Salvador, El Salvador. RTCs are located in Lima, Peru; and Accra, Ghana. Several U.S. agencies also provide foreign law enforcement training and assistance in order to enhance interdiction efforts abroad. The Department of State, the U.S. Coast Guard, U.S. Customs and Border Protection, the DEA, and the FBI are involved in providing anti-narcotics law enforcement training, technical assistance, and equipment for foreign personnel. For example, the DEA, through its Sensitive Investigative Units overseas, sponsors a range of capacity and coordination projects in countries such as Afghanistan, Colombia, the Dominican Republic, Honduras, Ecuador, Guatemala, Mexico, Nigeria, Panama, Paraguay, Peru, Ghana, and Thailand. Other efforts include the FBI's National Gang Task Force and the State Department's Central American Law Enforcement Exchange program. The U.S. military provides international support for drug monitoring and detection. In addition, the United States regularly contributes funding and expertise to law enforcement assistance activities of the United Nations and other international organizations. According to the State Department, drug trafficking organizations often seek to subvert or co-opt governments in order to guarantee a secure operating environment and essentially "buy their way into power." Anti-corruption efforts thus seek to prevent traffickers from undermining the legitimacy and effectiveness of foreign government institutions. Some observers, however, argue that counterdrug policies are placing too little emphasis on projects that help foreign countries develop a culture supportive of the rule of law. One expert explained in congressional testimony in 2007, "unless foreign police organizations recognize and internalize what the rule of law means, what its key characteristics are, and why the rule of law is necessary to accomplish their mission, no amount of aid will get the job done." Although early efforts to combat the global drug problem focused primarily on supply reduction policies, various international observers and policymakers have called for increased attention to programs that seek to reduce the use and abuse of illicit drugs, treat addiction, and engage local communities in drug prevention and awareness raising campaigns. The State Department funds programs to support foreign countries' efforts to treat and prevent drug dependency in countries where drug use is increasing. The purpose of these programs is to reduce drug use, related crime, and violence in targeted country populations, as well as stop the spread of HIV/AIDS in countries with high numbers of intravenous drug users. In Latin America, for example, the State Department funds drug-free community coalitions and in Afghanistan, it supports the operations of substance abuse treatment centers. Historically, international assistance to reduce drug demand has been limited, partially because a large portion of global demand was located in high income countries, such as the United States and countries in Western Europe. Although this remains the case, increased rates of prevalence and addiction in drug source countries and along transit routes have motivated additional emphasis on demand reduction programming. The International Narcotics Control Board suggests that early interventions in emerging illicit drug markets can be potentially valuable in reducing demand. Some observers note that programs nevertheless are often limited in scope and the desired effects of reduced drug use are rarely apparent in the short term. According to UNODC, approximately one in six "problem drug users"—that is, those who engage in high-risk drug consumption, use drugs on a daily basis, or are diagnosed as drug-dependent—receives treatment globally; even fewer, on average, receive treatment interventions in Africa, Eastern and South-Eastern Europe, and Latin America. Experts further acknowledge that demand reduction policies alone are unlikely to succeed in combating the global drug problem. In an effort to deter foreign governments from aiding or participating in illicit drug production or trafficking, the President may suspend U.S. foreign assistance appropriations to countries that are major illegal drug producers or major transit countries for illegal drugs, known as "drug majors." For FY2015, the President has identified 22 drug majors: Afghanistan, The Bahamas, Belize, Bolivia, Burma, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, India, Jamaica, Laos, Mexico, Nicaragua, Pakistan, Panama, Peru, and Venezuela. Of these, Congress requires that the President certify that the drug majors have not "failed demonstrably" to make at least "substantial efforts" to adhere to their obligations during the previous year under international counternarcotics agreements. Failure to receive a presidential certification of substantial counternarcotics efforts may result in certain foreign assistance prohibitions against those drug majors. Decertified drug majors may continue to receive U.S. foreign assistance, however, if the President determines that assistance is "vital" to U.S. national interests. Alternatively, foreign assistance to drug majors countries may nevertheless be withheld by Congress, despite a presidential certification, if Congress enacts a joint resolution disapproving of the President's certification. For FY2015, the President did not certify three drug majors: Bolivia, Burma, and Venezuela. The President, however, waived the aid sanctions for Burma and Venezuela, permitting the U.S. government to provide assistance that is vital to the national interests of the United States (see Figure 5 ). Since its creation in 1986, the drug majors designation process has garnered significant controversy. Supporters of the process argue that, overall, it is an "effective diplomatic instrument" to enforce international drug control commitments because it holds foreign governments "publicly responsible for their actions before their international peers." However, in a few extreme cases, the drug majors designation does not appear to have much effect on a country's drug control policies. In the case of Bolivia's designation, beginning in 2008, the policy appears to have had the opposite effect, in part causing a rift in counternarcotics policy between Bolivia and the United States, particularly with respect to interdiction cooperation. Observers from many countries criticize the unilateral and non-cooperative nature of the drug certification requirements; such critics recommend moving toward multilateral and regional fora for evaluating governments' counterdrug efforts. Others question the extent to which the process reduces the scope of the illegal drug trade, when many of the world's drug producers and transit areas are located in countries that are not designated as drug majors or decertified by the President. Some have suggested the OAS/CICAD Multilateral Evaluation Mechanism (MEM), a regional system of peer review on drug control policies in OAS countries, could serve as an alternative model to facilitate international drug control cooperation. Many observers highlight the importance of international drug control policy, particularly because of the transnational nature of the drug trade, whereas others continue to criticize existing policies and mechanisms for failing to achieve sufficient progress in combating illegal drugs. The UNODC has reported in recent years that global drug use has stabilized, on average; global opium poppy and coca cultivation is in decline; and global illicit drug seizures are up—and that a major contributing factor has been the continued international support for drug control policies. Global coordination, many say, is vital for lasting success in combating the international drug trade. At the same time, however, others criticize the international drug control system for failing to achieve the United Nations' stated goal of "eliminating or reducing significantly" by 2008 the production and availability of synthetic drugs and precursors, as well as the cultivation of the coca bush, cannabis plant, and opium poppy. In 2009, the U.N.'s Commission on Narcotic Drugs set a new date of 2019 to "eliminate or reduce significantly and measurably" the cultivation of illegal plant-based drugs, the demand for illegal drugs, the production and trafficking of synthetic drugs, the diversion and trafficking of precursor chemicals used in the manufacture of illegal drugs, and drug-related money laundering. Congress may continue to exercise its oversight and assess existing U.S. international drug policy. Emerging questions in the drug policy debate include the following: What is the scope and extent of national flexibility in the interpretation of international drug control treaties? Can the international drug control system endure challenges, including implicit and explicit national and sub-national policies that authorize the use and distribution of marijuana? In what ways are counternarcotics strategies facilitating or driving recent increases in drug trafficking-related violence? Are spikes in drug-related violence common or inevitable consequences of heightened counternarcotics operations? In what ways might governments mitigate or dampen current and potentially future increases in drug-related violence? How do counternarcotics policies interact with counterterrorism, counterinsurgency, and anti-money laundering priorities, particularly in countries such as Afghanistan, where the U.S. government may have an interest in all three issues? What role should the Department of Defense play in providing foreign counternarcotics assistance? How should U.S. policymakers weigh the benefits of aerial eradication as a counternarcotics policy tool with the social, financial, and political costs it may incur? To what extent is it a common phenomenon that human rights are violated over the course of drug-related investigations and operations? In what ways might human rights violations undermine or threaten drug control policies? To what extent should U.S. counternarcotics policy take into account economic development, social development, and health and harm reduction programs, and are such efforts sufficiently coordinated with international and bilateral partners? How do counternarcotics policies interact with related foreign policy goals of anti-corruption, justice sector reform, and improving the rule of law? How might international regulatory and legal constraints limit the reach of U.S. counternarcotics policy and potentially offer drug syndicates foreign safe havens? What legislative options might be available to prevent such legal safe havens from existing?

The global illegal drug trade represents a multi-dimensional challenge that has implications for U.S. national interests as well as the international community. Common illegal drugs trafficked internationally include cocaine, heroin, and methamphetamine. According to the U.S. intelligence community, international drug trafficking can undermine political and regional stability and bolster the role and capabilities of transnational criminal organizations in the drug trade. Key regions of concern include Latin America and Afghanistan, which are focal points in U.S. efforts to combat the production and transit of cocaine and heroin, respectively. Drug use and addiction have the potential to negatively affect the social fabric of communities, hinder economic development, and place an additional burden on national public health infrastructures. International Policy Framework and Debate International efforts to combat drug trafficking are based on a long-standing and robust set of multilateral commitments, to which the United States has committed. U.S. involvement in international drug control rests on the central premise that helping foreign governments to combat illicit drugs abroad will ultimately curb availability and use in the United States. To this end, the current Administration maintains the goal of reducing and eliminating the international flow of illegal drugs into the United States through international cooperation to disrupt the drug trade, interdiction efforts, and support for demand reduction. Despite multilateral commitments to curb the supply of illicit drugs, tensions appear at times between U.S. foreign drug policy and approaches advocated by independent observers and other members of the international community. In recent years, an increasing number of international advocates, including several former and sitting heads of state, have begun to call for a reevaluation of current prohibitionist-oriented international drug policies. Alternatives to the existing international drug control regime may include legalizing or decriminalizing certain drugs. Debates may also focus on shifting priorities and resources among various approaches to counternarcotics, including supply and demand reduction; the distribution of domestic and international drug control funding; and the relative balance of civilian, law enforcement, and military roles in anti-drug efforts. U.S. Counternarcotics Initiatives and Foreign Policy Options Several key U.S. strategies and initiatives outline the foundation of U.S. counternarcotics efforts internationally, including the U.S. National Drug Control Strategy and International Narcotics Control Strategy Report (INCSR), both of which are updated annually and congressionally mandated. Other major country and regional initiatives include the (1) Mérida Initiative and Strategy in Mexico; (2) Central American Citizen Security Partnership; (3) Caribbean Basin Security Initiative (CBSI); (4) U.S.-Colombia Strategic Development Initiative (CSDI); (5) U.S. Counternarcotics Strategy for Afghanistan; and (6) West Africa Cooperative Security Initiative (WACSI). Located within the Executive Office of the President, the Office of National Drug Control Policy (ONDCP) establishes U.S. counterdrug policies and goals, and coordinates the federal budget to combat drugs both domestically and internationally. Within the U.S. government, multiple civilian, military, law enforcement, and intelligence entities contribute to international drug control policy, including the U.S. Department of State, U.S. Agency for International Development, U.S. Department of Defense, U.S. Department of Justice, U.S. Department of Homeland Security, U.S. Department of the Treasury, and the Central Intelligence Agency. As an issue of international policy concern for more than a century, and as a subject of long-standing U.S. and multilateral policy commitment, U.S. counterdrug efforts have expanded to include a broad array of tools to attack the international drug trade, such as the following: reducing drug production at the source, combating drugs in transit, dismantling international illicit drug networks, reducing and preventing drug demand abroad, and creating incentives for international cooperation on drug control. Congress has been involved in all aspects of U.S. international drug control policy, regularly appropriating funds for counterdrug initiatives, as well as conducting oversight activities on federal counterdrug programs and the scope of agency authorities and other counterdrug policies. For FY2016, the Administration has requested from Congress approximately $27.6 billion for all federal drug control programs, of which $1.6 billion is requested for international programs, including civilian and military U.S. foreign assistance. An additional $3.9 billion is requested for interdiction programs related to intercepting and disrupting foreign drug shipments en route to the United States.

T he standing qualifications to be President of the United States are set out in the Constitution, at Article II, Section 1, clause 5, and state three specific requirements: one must be at leas t 35 years old, a resident "within the United States" for 14 years, and a "natural born Citizen." The constitutional provision states as follows: No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been Fourteen Years a Resident within the United States. Questions from time-to-time have arisen concerning whether one who is a U.S. citizen "at birth" because of the operation of federal law , is also a "natural born" citizen for purposes of the presidential eligibility clause. Such questions often concern persons born abroad to parents who are U.S. citizens, or persons born abroad when only one parent is a U.S. citizen who had resided in the United States. Although such individuals born abroad may clearly be U.S. citizens "at birth" by statute, would such persons also be "natural born Citizens," or is eligibility to the Presidency limited only to "native born" citizens? Additionally, questions have been recently raised by some as to whether one born "in" the United States of one or more alien parents—and who is thus clearly a U.S. citizen "at birth" by the Fourteenth Amendment, as well as by federal law and common law—was intended to be considered a "natural born" citizen for purposes of the presidential eligibility clause. The Constitution does not define the term "natural born Citizen," nor are the notes from the debates at the Constitutional Convention of 1787 instructive as to any specific collective intent of the framers concerning the meaning of the term. Furthermore, the Supreme Court has never needed to address this particular issue within the specific context of a challenge to the eligibility of a candidate under Article II, Section 1, clause 5, the only place in the entire Constitution that the phrase appears, although federal courts have discussed the concept extensively with respect to other issues of citizenship. Consequently, although there are numerous Supreme Court cases, as well as other federal and state case law, discussing the phrase and its meaning from which conclusions may be drawn, there has still been certain speculation on the scope of the language. According to the Supreme Court, words and phrases used, but not defined, within the Constitution, should generally "be read in light of British common law," since the U.S. Constitution is "framed in the language of the English common law." Although the English common law is not "binding" on federal courts in interpreting the meaning of words or phrases within the Constitution, nor is it necessarily to be considered the "law" of the United States (as it is for the individual states specifically incorporating it), it can be employed to shed light on the concepts and precepts within the document that are not defined there, but which are reflected in the corpus of British law and jurisprudence of the time. As noted by Chief Justice (and former President) Taft, writing for a unanimous Supreme Court, the framers of the U.S. Constitution "were born and brought up in" the English common law, they "thought and spoke in its vocabulary," and that English common law was thus what the "statesmen and lawyers of the Convention" employed for the meaning of the terms in the Constitution "confident that they could be shortly and easily understood." The term "natural born" in the context of citizenship appears to derive from the British concept that those born with a "natural liege" (allegiance, tie, or connection) to the nation or to the sovereign, were (under English terminology) "natural born" subjects under the law in England and in the American colonies at the time of independence. There appears to be little scholarly debate that the English common law at the time of independence included at least all persons born on the soil of England ( jus soli , that is, "law of the soil"), even to alien parents, as "natural born" subjects (unless the alien parents were diplomatic personnel of a foreign nation, or foreign troops in hostile occupation). As noted by the Supreme Court of the United States, this "same rule" was applicable in the colonies and "in the United States afterwards, and continued to prevail under the Constitution" with respect to "natural born" U.S. citizenship. Although the British common law at the time of independence with regard to jus soli was apparently clear, there were varying opinions as whether those born abroad of English subjects were "natural born" subjects under the common law , or were considered "natural born" subjects merely by long-standing statutory law. Some commentators have claimed that the statutory provisions of English law, first appearing during the reign of Edward III in 1350, were "incorporated" into, or in the alternative, "reflected" the already established English common law. Regardless of the technical state of the common law in England with respect to children born abroad, however, there appear to be significant arguments that the corpus of English law applicable within the American colonies, known to the framers and adopted in the states, was broader than merely the "law of the soil." Legal commentators have contended that the body of English law carried forward in the United States relating to citizenship included both the strict common law notion of jus soli , as well as that part of the law of descent ( jus sanguin i s ) included in long-standing British law (including as "natural born" subjects those born abroad of an English father), and that this was part of the "common understanding" of the term "natural born" to the framers at the time of the drafting of the Constitution. Considering the history of the constitutional provision, the clause's apparent intent, the English common law expressly applicable in the American colonies and in all of the original states, the common use and meaning of the phrase "natural born" subject in England and the American colonies in the 1700s, and the subsequent action of the first Congress in enacting the Naturalization Act of 1790 (expressly defining the term "natural born citizen" to include those born abroad to U.S. citizens), it appears that the most logical inferences would indicate that the phrase "natural born Citizen" would mean a person who is entitled to U.S. citizenship "by birth" or "at birth." Such interpretation, as evidenced by over a century of American case law, would include as natural born citizens those born in the United States and subject to its jurisdiction regardless of the citizenship status of one's parents, and would also appear to include those born abroad of one or more parents who are U.S. citizens (as recognized by statute), as opposed to a person who is not a citizen by birth and is thus an "alien" required to go through the legal process of naturalization to become a U.S. citizen. The weight of scholarly legal and historical opinion, as well as the consistent case law in the United States, also supports the notion that "natural born Citizen" means one who is a U.S. citizen "at birth" or "by birth." The Constitution of the United States of America, Analysis and Interpretation , notes that "[w]hatever the term 'natural born' means, it no doubt does not include a person who is 'naturalized,'" and, after discussing historical and legal precedents and arguments, concludes that "[t]here is reason to believe ... that the phrase includes persons who become citizens at birth by statute because of their status in being born abroad of American citizens." The particular clause concerning presidential eligibility and citizenship was placed in the Constitution and approved at the Convention of 1787 with no debate, objection, or comment. The five-person Committee of Detail, appointed by the Convention delegates to report a draft Constitution containing issues and items agreed upon by the Convention up to that point, was instructed by the Convention, on July 26, 1787, to consider provisions requiring certain qualifications for Congress and the Presidency. Although the subsequent report on August 6 from the Committee of Detail contained qualifications for Senator and Representative, it did not offer qualifications for President. On August 20, the Convention adopted a motion by Mr. Gerry of Massachusetts that the "Committee be instructed to report proper qualifications for the President ...," and on August 22, the Committee of Detail reported its recommendation that several additions be made to the report it had made, including the following concerning the qualifications of the President: "[H]e shall be of the age of thirty five years, and a Citizen of the United States, and shall have been an Inhabitant thereof for Twenty one years." The report of the Committee of Detail was then "considered" and "postponed" on August 22, so "that each member might furnish himself with a copy." In the subsequent days, the provisions for the qualifications of President were not taken up and thus not agreed upon by the whole Convention, and on August 31, 1787, the delegates agreed to "refer such part of the Constitution as have been proposed, and such parts of reports as have not been acted upon to a Committee of a Member from each State," which has been referred to as the (third) "Committee of Eleven," or the "Committee on Postponed Matters." On Tuesday, September 4, 1787, the (third) Committee of Eleven "partially" reported to the Convention several "additions and alterations," including the specific reference for the first time to a presidential qualification to be a "natural born" citizen: No Person except a natural born Citizen, or a Citizen of the U.S. at the time of the adoption of this Constitution shall be eligible to the office of President: nor shall any Person be elected to that office, who shall be under the age of 35 years, and who has not been in the whole, at least 14 years a resident within the U.S. The language proposed on presidential eligibility on September 4 was agreed to without objection and without debate on Friday, September 7, 1787. Stylistic and grammatical changes were made through the Committee of Style to the clause on presidential qualifications to conform to the other phrasing and usage in the document, which resulted in the final language adopted by the delegates and sent to the states for ratification. Tracing the development of this clause through the Federal Convention of 1787 clearly indicates that there were no specific discussions or other explications within the Convention on the meaning of the specific term "natural born" citizen. This does not mean, however, that there were no discussions at all of the concept of a citizenship qualification for federal officers. In fact, the issue of citizenship for Members of Congress was one that garnered much consideration and debate in the Convention of 1787 and, it has been contended, it is within the framework of this discussion that the eventual citizenship eligibility requirement was adopted for President and may be analyzed. In stating concerns regarding the citizenship of congressional officeholders, and the required length of such citizenship, George Mason argued that although he "was for opening a wide door for immigrants; ... [h]e did not chuse to let foreigners and adventurers make laws for us"; nor would he want "a rich foreign Nation, for example Great Britain, [to] send over her tools who might bribe their way" into federal office for "invidious purposes." These arguments were echoed later by delegates at the Convention who were concerned with "admitting strangers into our public Councils," and feared that "foreigners without a long residency in the Country ... bring with them, not only attachments to other Countries; but ideas of Govt. so distinct from ours that in every point of view they are dangerous." Thus, citizenship requirements of seven years for Representatives and nine years for Senators were eventually adopted, although the Convention did not act upon the wishes of Mr. Gerry "that in the future the eligibility might be confined to Natives." When the citizenship eligibility requirements for President were eventually reported and recommended after the debates and discussion of congressional eligibility requirements, there were no further discussions of the issue in Convention. Although there was no discussion concerning the precise meaning or derivation of the term "natural born," there is in the Documentary History of the Convention a possible clue from where the qualification for President to be a "natural born" citizen may have derived. The history of the Convention indicates that George Washington, the presiding officer, received a letter dated July 25, 1787, from John Jay, which appears to raise for the first time the issue of a requirement to be a "natural born" citizen of the United States as a requisite qualification to be President: Permit me to hint, whether it would not be wise & seasonable to provide a strong check to the admission of Foreigners into the administration of our national Government; and to declare expressly that the Command in chief of the american army shall not be given to, nor devolve on, any but a natural born Citizen. There is no specific indication as to the precise role this letter and its "hint" actually played in the adoption by the Convention of the particular qualification of being a "natural born" citizen. However, no other expressions of this particular term are evident in Convention deliberations prior to the receipt of Jay's letter, and the September 4 draft of the Constitution reported from the Committee of Eleven to the delegates, at a time shortly after John Jay's letter had been acknowledged by Washington, contained for the first time such a qualification. The timing of Jay's letter, the acknowledgment of its receipt by Washington on September 2, and the first use of the term in the subsequent report of the Committee of Eleven, on September 4, 1787, may thus indicate more than a mere coincidence. If this were the case, then the concern over "foreigners," without sufficient allegiance to the United States, serving as President and Commander-in-Chief, would appear to be the initial and principal motivating concern of the framers, in a somewhat similar vein as their concerns over congressional citizenship qualifications. Such purpose of the "natural born" citizen qualification was expressed by Justice Joseph Story in his historic treatise on the Constitution in 1833: It is indispensable, too, that the president should be a natural born citizen of the United States ... [T]he general propriety of the exclusion of foreigners, in common cases, will scarcely be doubted by any sound statesman. It cuts off all chances for ambitious foreigners, who might otherwise be intriguing for the office; and interposes a barrier against those corrupt interferences of foreign governments in executive elections, which have inflicted the most serious evils upon the elective monarchies of Europe. "Ambitious foreigners" who may be "intriguing for the office" of head of state, which had been the unfortunate experience in Europe, appeared to be a generalized and widespread concern at the time of the drafting of the Constitution, as was the concern over the possibility of allowing foreign royalty, monarchs, and their wealthy progeny, or other relatives to control the government of the new nation. Max Farrand, in his treatise on the adoption of the Constitution, discussed these concerns and rumors during the Convention of 1787: During the sessions of the convention, but it would seem especially during the latter part of August, while the subject of the presidency was causing so much disquiet, persistent rumors were current outside that the establishment of a monarchy was under consideration. The common form of the rumor was that the Bishop of Osnaburgh, the second son of George III, was to be invited to become King of the United States. Others have noted that rumors were extant concerning colonial statesmen approaching or making inquiries of other foreign royalty about seeking the chief executive's position of the United States, including rumors involving Price Henry of Prussia, and the ascension of King George's second son, Frederick, Duke of York. Presidential scholar Michael Nelson has commented: The presidency they were creating was, the framers realized, the closest analog in the new constitution to a king, just by being a separate, unitary executive. Even before the convention assembled, von Steuben had disseminated a rumor that Nathaniel Gorham, president of Congress under the Articles of Confederation and a convention delegate from New Hampshire, had approached Prince Henry of Prussia about serving as America's King. Similar stories involved the ascendancy of King George's second son, Frederick, Duke of York. During the summer, these rumors gained new currency. The story spread that the convention, whose deliberations were secret, was advancing the plot behind closed doors. The question of not only "foreign influence" of wealthy persons immigrating to the United States to become President, but also the issue of an American monarchy, were thus very real concerns of the populace, as well as the framers, and appeared to establish the context in which the role, qualifications, duties, and powers of an American chief executive were developed. As noted by constitutional scholar Akhil Amar, the concerns and anxieties over ambitious and duplicitous foreigners, and the "possibility that a foreign earl or duke might cross the Atlantic with immense wealth and a vast retinue, and then use his European riches to buy friends on a scale that no home-grown citizen could match," led the framers to incorporate Article II's "most questionable eligibility rule." Amar also agrees that the framers' aversion to hereditary monarchies appeared to play an additional role in erecting a barrier to immigrants being President within the Constitution—a document that was otherwise, for its time, enlightened as permitting immigrants to weave their way into the fabric of American political and social life: These anxieties had been fed by England's 1701 Act, which inclined early Americans to associate the very idea of a foreign-born head of state with the larger issue of monarchial government. Though England banned foreigners from all other posts, it imposed no natural-born requirement on the head of state himself. In fact, the 1701 Act explicitly contemplated foreign born future monarchs—the German House of Hanover, in particular. By 1787 this continental royal family had produced three English kings named George, only the third of whom had been born in England itself. Article II's natural-born language squarely rejected the 1701 idea of future foreign-born heads of state, in no small part because many republicans had come to link the idea (perhaps more sociologically than logically) with hereditary succession and foreign intrigue. Foreign-born princes might be good enough to rule in the Old World but should be kept out of the New World order—or at least the New World presidency. The apparent purposes of this citizenship clause were thus to assure the requisite fealty and allegiance to the nation from the person to be the chief executive of the United States, and to prevent wealthy foreign citizens, and particularly wealthy foreign royalty and their relatives, from coming to the United States, becoming naturalized citizens, and then scheming and buying their way into the Presidency or creating an American monarchy. The possibility of satisfying these purposes would appear to be as likely from an interpretation of the term "natural born" citizen which would include one who is a citizen "at birth" by either common law principles of jus soli , that is, being born on the soil, or by the operation of statutory law of the principles of jus sanguin i s , that is, through the law of descent by being born to U.S. citizens abroad. That is, one who is a citizen of the United States "at birth" by descent under federal law could develop the requisite allegiances and reverences for the United States passed down, inculcated, and taught by one's parent-citizens, and would have a lifetime of allegiance to the United States at least as strong, in a theoretical sense, as one who was born a citizen within the geographic boundaries of the country. Those who are born "in" the country, and who are subject to its jurisdiction, regardless of the nationality or citizenship of their parents, have always under British common law, as well as under the laws of the original states, and then the United States since its founding, been considered to have the "natural" allegiance and ties to the nation. If the term "natural born" with respect to citizenship conveyed a concept clearly within the English common law, there would then be a strong implication that such term and its legal meaning would either have been incorporated into, or at least would strongly influence the framers in using such phrase, as well as subsequent interpretive construction by the courts of the relevant provision of the U.S. Constitution. As noted by the Supreme Court, There is, however, one clear exception to the statement that there is no national common law. The interpretation of the Constitution of the United States is necessarily influenced by the fact that its provisions are framed in the language of the English common law, and are to be read in the light of its history. Many of the terms used in the U.S. Constitution were not specifically defined in that document (such as "natural born" citizen, the privilege of the writ of "habeas corpus," and the prohibitions against "bills of attainder" and "ex post facto" laws, for example), and thus referral to the English common law, "well known" to the framers and applicable in the American colonies, must be made for a definitional reference for such terms. The Supreme Court has explained with reference to the constitutional prohibition on "ex post facto" laws, for example, that the meaning of such term, not defined in the Constitution, requires some explanation, and that "the necessary explanation is derived from English common law well known to the Framers": The proscription against ex post facto laws "necessarily requires some explanation; for, naked and without explanation, it is unintelligible, and means nothing." Calder v. Bull, 3 Dallas 386, 390 (1798) (Chase, J.). In Calder v. Bull, Justice Chase stated that the necessary explanation is derived from English common law well known to the Framers : "The expressions 'ex post facto laws,' are technical, they had been in use long before the Revolution, and had acquired an appropriate meaning, by Legislators, Lawyers, and Authors." Id . at 391; see also id . at 389. Similarly, Chief Justice (and former President) Taft explained (in a Supreme Court decision dealing with the parameters of the offenses to which the "pardon" authority of the President extends) that the meaning of the language and phrases in the Constitution, when they are not specifically defined in that document, can only be discerned and interpreted by reference to the British common law in place at the time of the drafting of the Constitution. The Chief Justice, writing for a unanimous Court, found that the British common law was what the framers "were born and brought up in," that the framers "thought and spoke in its vocabulary," and was thus what the "statesmen and lawyers of the Convention" employed for the meaning of the terms in the Constitution "confident that they could be shortly and easily understood": The language of the Constitution cannot be interpreted safely except by reference to the common law and to the British institutions as they were when the instrument was framed and adopted. The statesmen and lawyers of the Convention who submitted it to the ratification of the Conventions of the thirteen States, were born and brought up in the atmosphere of the common law, and thought and spoke in its vocabulary. They were familiar with other forms of government, recent and ancient, and indicated in their discussions earnest study and consideration of many of them, but when they came to put their conclusions into the form of fundamental law in a compact draft, they expressed them in terms of the common law, confident that they could be shortly and easily understood. Justice Joseph Story explained in his celebrated work on the United States Constitution, Commentaries on the Constitution , that the British common law formed the "foundation" upon which American jurisprudence stands: The universal principle (and the practice has conformed to it) has been that the common law is our birthright and inheritance, and that our ancestors brought hither with them upon their emigration all of it, which was applicable to their situation. The whole structure of our present jurisprudence stands upon the original foundations of the common law. The British common law was, in fact, regularly adopted or recognized as in force expressly in the constitutions, or in the early acts of the legislatures, of the original thirteen states after independence had been declared in July of 1776. The original Constitution of Delaware, for example, stated, The common law of England, as-well as so much of the statute law as has been heretofore adopted in practice in this State, shall remain in force, unless they shall be altered by a future law of the legislature; such parts only excepted as are repugnant to the rights and privileges contained in this constitution, and the declaration of rights, &c., agreed to by this convention. The experience and the wording of the constitutions, or original statutes, adopted in most of the other original states were similar to that of Delaware quoted above. Those immediately involved in framing constitutions for the states in the 1770s, many of whom were also prominent in framing the Constitution for the United States in 1787, were thus not only intimately familiar with, but also expressly recognized the continued application of the British common law within this country. Similar to the concept expressed in the original constitutions and enactments of the new states, Justice Story has also noted in a Supreme Court decision that we did not necessarily, however, adopt all of the British common law, but rather adapted it to our own situation. An analysis of the term "natural born" citizen which begins with the British common law meaning of the phrase might thus not necessarily end there, but must also take into consideration the unique American experience, and the application and interpretation of the underlying concepts involved by the courts in the United States. There appears to be very little scholarly or legal dispute as to the British common law applicable in England and in the American colonies with respect to those born "on the soil." As to those children born in the geographic boundaries of the country, even of alien parents, the Supreme Court of the United States in United States v. Wong Kim Ark , citing the British decision in Calvin's Case reported by Lord Coke, found that such persons were, under British common law, considered "natural born" subjects (with minor exceptions for children born of foreign diplomatic personnel or of hostile military forces in occupation, that is, those not "under the jurisdiction" of that host country). This rule of law, noted the Court, applied to the American colonies at the time of the Declaration of Independence and, significantly, "in the United States afterwards, and continued to prevail under the Constitution ...." The premiere treatise on British law at the time of the drafting of the Constitution, which was well-known and well-used in the colonies, was Blackstone's Commentaries on the Laws of England (1765). Blackstone explained that "[t]he first and most obvious division of the people is into aliens and natural-born subjects," and that the "natural" allegiance due of "natural-born" subjects, as opposed to merely "local" allegiance of aliens and sojourners, "is such as is due from all men born within the king's dominions immediately upon their birth." Blackstone traced the development of the concept of "natural-born" allegiance to the reciprocal duties of protection and allegiance (fealty, or "ligamen" (tie)), that developed concerning land ownership and use under the feudal system, eventually understood to encompass the reciprocal protection/allegiance of all English subjects with respect to the crown. In 1844, in a probate case in New York State, Assistant Vice-Chancellor Lewis Sandford authored a detailed and scholarly opinion, later cited and relied upon by numerous federal courts and legal treatises, on the legal history of natural born citizenship status in the United States. The opinion in Lynch v. Clarke found that one of the litigants, Julia Lynch, who was born in New York to alien parents who were merely on a "temporary sojourn" in this country, was a natural born U.S. citizen who had the legal capacity to inherit. Sandford concluded that all persons born in the United States, even of alien parents who were only here temporarily, had "natural born" citizenship status under English common law, carried forward in the laws in all of the original thirteen states after independence, and then under the laws and constitutional provisions of the United States: My conclusion upon the facts proved is, that Julia Lynch was born in this state of alien parents, during their temporary sojourn. That they came here as an experiment, without any settled intention of abandoning their native country, or of making the United States their permanent home.... It is indisputable that by the rule of the common law of England, if applied to these facts, Julia Lynch was a natural born citizen of the United States. And this rule was established and inflexible in the common law, long anterior to the first settlement of the United States ... By the common law, all persons born within the ligeance of the crown of England, were natural born subjects, without reference to the status or condition of their parents.... *** At the formation of our present national government, the common law prevailed as a system of jurisprudence, in all the thirteen states which then constituted the nation.... I need not dwell more at large upon this unquestionable proposition.... As the common law prevailed in all the colonies, and was the basis of their laws and jurisprudence, it follows that all persons born in the colonies while in the ligeance of the King of England, became subjects of the Crown of England; unless it be made to appear that the rule of the common law was incompatible with the situation with the colonists, or unsuited to their circumstances; or that it was altered by legislation. Instead of abridging the rule, all colonial legislation which has come under my observation, proceeded on the assumption that it was the settled law of the land. *** It may then be safely assumed, that at the Declaration of Independence, by the law of each and all of the thirteen states, a child born within their territory and ligeance respectively, became thereby a citizen of the state of which he was a native. This continued unchanged to the time when our National Constitution went into full operation. There is no evidence of any alteration of the rule of any of the states during the period that intervened.... The Supreme Court of the United States, in its landmark opinion on birthright citizenship authored by Justice Gray in United States v. Wong Kim Ark , citing both the common law and numerous legal precedents in the United States, explained in 1898 that a child born of alien parents within the country and subject to its jurisdiction (that is, whose parents are not diplomatic personnel representing a foreign nation or troops in hostile occupation) is considered a "natural born" citizen (in the United States) or subject (in England), as that term has been used over the centuries in England and the United States: It thus clearly appears that by the law of England for the last three centuries, beginning before the settlement of this country, and continuing to the present day, aliens, while residing in the dominions possessed by the Crown of England, were within the allegiance, the obedience, the faith or loyalty, the protection, the power, the jurisdiction, of the English Sovereign; and therefore every child born in England of alien parents was a natural born subject, unless the child of an ambassador or other diplomatic agent of a foreign State, or of an alien enemy in hostile occupation of the place where the child was born. The same rule was in force in all the English Colonies upon this continent down to the time of the Declaration of Independence, and in the United States afterwards, and continued to prevail under the Constitution as originally established . The Court noted several judicial precedents finding that the clear common law from England, as well as statutory law pertaining to such things as inheritance (which prevailed in the states in this country unless expressly repealed), was that "persons born within the realm, although children of alien parents, were called 'natural-born subjects.'" Citing an earlier precedent, the Court noted Justice Story's opinion that the principles of common law "treated it as unquestionable that by that law a child born in England of alien parents was a natural born subject." The Court referenced with approval an earlier decision of a federal circuit court, written by Supreme Court Justice Swayne sitting on circuit, explaining that "the rule of the common law" of England, and now "of this country, as well as in England," is that " all persons born in the allegiance of the United States are natural born citizens." The Supreme Court in Wong Kim Ark thus concluded that the Fourteenth Amendment "affirms" the common law rule of "citizenship by birth within the territory," even if one is born of alien parents in this country, and approved of the characterization of the children of such resident aliens as "natural born" citizens of the United States. The Fourteenth Amendment further requires that the person born "in" the United States also be "subject to the jurisdiction" of the United States which, as noted, is interpreted to mean that such person is subject to the laws of this country, such that jurisdiction may be exercised over them, and thus would exclude children of foreign diplomats here officially, and those of foreign troops in hostile occupation. Being born within the geographic boundaries of the United States, however, unlike the meaning under British common law, does not necessarily include being born in the unincorporated "territories," possessions, or protectorates of the United States, unless such citizenship "at birth" is otherwise provided by statute. A U.S. Court of Appeals, relying on the "Insular cases," found that birth in an unincorporated territory or possession of the United States, such as the Philippines, did not grant Fourteenth Amendment or common law citizenship as being born "in" the geographic area of the "United States," even though under the British common law one may have been a natural born "subject" of the crown when born within the far-flung dominions ruled by the British Empire. In United States v. Wong Kim Ark , the Supreme Court, in examining an immigration question not dealing specifically with the meaning of the presidential eligibility requirement, provided a lengthy examination of the English common law of citizenship at the time of the drafting of the Constitution, and whether such citizenship was obtained by the place of birth ( jus soli ) only, or also by descent ( jus sanguinis ). As noted above, the Court found that the common law of England was that of jus soli , that is, derived from the feudal notion of the reciprocal responsibilities of allegiance and protection of an individual that was established in England by the place of that person's birth; and that the latter principle of citizenship by descent (because of the citizenship or nationality of one's father— jus sanguinis ) was, as a general matter, the law in England by statute, and thus not necessarily as part of the "common law," even though there existed a long-standing statutory recognition (since 1350) of the rights of "natural-born subjects" who were born abroad to British parents or a British father. As pointed out by the Supreme Court in Wong Kim Ark , however, there was not necessarily unanimity in legal scholarship concerning a narrow reading of the British common law with regard to the children of subjects/citizens born abroad. Some legal scholars in England and in the United States have argued that the long-standing statutory and parliamentary recognition of children born abroad to English subjects as "natural-born" was merely "declaratory" of the existing common law principles and understandings in England, although this was disputed in dicta by the Supreme Court in Wong Kim Ark: It has sometimes been suggested that this general provision of the statute of 25 Edw. III. [1350] was declaratory of the common law. See Bacon, arguendo, in Calvin's Case, 2 How. St. Tr. 585; Westlake and Pollock, arguendo, in De Geer v. Stone, 22 Ch. Div. 243, 247; 2 Kent, Comm. 50, 53; Lynch v. Clarke, 1 Sandf. Ch. 583, 659, 660; Ludlam v. Ludlam, 26 N. Y. 536. But all suggestions to that effect seem to have been derived, immediately or ultimately, from one or the other of these two sources: The one, the Year Book of 1 Rich. III. (1483) fol. 4, pl. 7, reporting a saying of Hussey, C. J., "that he who is born beyond sea, and his father and mother are English, their issue inherit by the common law, but the statute makes clear," etc., - which, at best, was but obiter dictum, for the chief justice appears to have finally rested his opinion on the statute. The other, a note added to the edition of 1688 of Dyer's Reports, 224a, stating that at Trinity term 7 Edw. III. Rot. 2 B. R., it was adjudged that children of subjects born beyond the sea in the service of the king were inheritable, - which has been shown, by a search of the roll in the king's bench so referred to, to be a mistake, inasmuch as the child there in question did not appear to have been born beyond sea, but only to be living abroad. The position of the dissenting Justices in Wong Kim Ark was characterized and discussed by the Court in the later case of Weedin v. Chin Bow : "The attitude of Chief Justice Fuller and Mr. Justice Harlan was, that at common law the children of our citizens born abroad were always natural-born citizens from the standpoint of this Government...." A detailed law review article in 1921 by the assistant solicitor of the Department of State noted that a number of legal scholars and historians contend that the English common law specifically included jus sanguinis , as well as jus sol i , and noted that the "question has been a subject of controversy for six centuries or more…." Other legal scholars have contended that long-standing and commonly accepted principles incorporated into English law by statute over several centuries, even if they did not merely "declare" already-existing English common law, actually modified the corpus of the common law to incorporate such principles, and that this body of law was the one known to the framers, such that the provisions of the Constitution must be interpreted in that light. Charles Gordon, who was then general counsel for the United States Immigration and Naturalization Service, explained in 1968 that in addition to recognizing birthright citizenship as to the place of birth ( jus soli ), "the consistent practice over several centuries, in England and the United States, [was] to recognize citizenship status by descent." Gordon thus concluded that "[t]he common law, as it had developed through the years, recognized a combination of the jus soli and the jus sanguinis , " and that the English common law adopted by the United States had been expanded by the long-standing statutory inclusions over the centuries in England: [T]here were doubts concerning the applicability of the jus sanguinis under the early common law. But those doubts were eliminated by statutes enacted in England before the American Revolution, which became part of the body of law followed in England and passed on to this country. It can be argued ... that this total corpus was the common law which this country inherited, and that it persevered unless specifically modified. This position was further implicated in an 1896 Digest of the Law of England with reference to the Conflict of Laws , by Albert Venn Dicey, as cited by the Supreme Court in Wong Kim Ark . Mr. Dicey states in that treatise that "'Natural-born British subject' means a British subject who has become a British subject at the moment of his birth," which expressly includes those born abroad whose British nationality passes to the child by descent. That the United States was not confined to only the narrowest interpretation of the common law of England in our usages and applications of concepts and terms in this country, was noted by the Supreme Court in an opinion authored by Justice Story in 1829: The common law of England is not to be taken, in all respects, to be that of America. Our ancestors brought with them its general principles, and claimed it as their birthright; but they brought with them and adopted, only that portion which was applicable to their situation. It was, in fact, common in the states after independence, upon the adoption of their constitutions and statutes, to incorporate both the common law of England, as well as the statutory laws adopted by Parliament and applicable in the colonies up until a particular date. There is thus some argument and indication that it was common for a "modified" English common law—modified by long-standing provisions of English statutory law applicable in the colonies—to be among the traditions and bodies of law incorporated into the laws, applications, usages, and interpretations in the beginning of our nation. In addition to examining the common law meaning of the term "natural born" as it related to citizenship, there are other interpretive analyses that might be employed in an attempt to understand the "meaning to the framers" of the term "natural born" citizen when the term was adopted in the Constitution in 1787. If, as noted by the Supreme Court in an opinion authored by Justice Story, the "common law of England is not to be taken, in all respects, to be that of America," there may be accorded some significance to an analysis of what the term "natural born" citizen was commonly understood to mean in the American colonies at the time of the revolution and framing of the Constitution. It is, of course, always a somewhat speculative exercise to attempt to discern the "common understanding" of a group of individuals who may be geographically, professionally, and politically diverse, particularly during a period many years removed from the current time. The fact that no discussion appears in the notes of the Federal Convention of 1787 on the presidential eligibility clause, and the fact that the actual debates and discussions in the Convention were held in secret with no official journal of the debates being kept (other than for recording votes) highlight the problems in such speculation. That being said, however, one might argue that there existed what might be called a "common" or "general understanding," or at least common "usage" of the term "natural born," as it related to those who were considered "natural born" subjects of England in the American colonies at the time of independence, and "natural born" citizens at the time of the adoption of the Constitution. The "state of the law" in colonial America concerning who was a "natural born" subject of England under English laws, both common law as well as statutory laws, was certainly known to the framers since, as noted by the Supreme Court, "These statutes applied to the colonies before the War of Independence." From examination of historical documents, it appears that the term "natural born" as it related to citizenship under English law and jurisprudence was a term widely known and used in the American colonies in the 1700's, and was employed in the context and understanding of British common law as well as British statutory law. For example, more than a decade before John Jay had employed the term in his "hint" to General Washington at the Convention of 1787, the First Continental Congress of the American colonies, meeting in Philadelphia beginning in September of 1774, adopted a resolution asserting that the common law of England was fully applicable to the colonies in America, as were such statutory laws of England as would be relevant to their circumstances, and expressly included in the resolution an assertion of the rights of their ancestors to be considered "natural-born subjects within the realms of England." As noted in Elliot's compilation and analysis of documents related to independence, On the same day [14 th of October, 1774], Congress unanimously resolved, "that the respective colonies are entitled to the common law of England , and more especially to the great and inestimable privilege of being tried by their peers of the vicinage according to the course of that law." They further resolved, "that they were entitled to the benefit of such of the English statutes as existed at the time of their colonization, and which they have, by experience, respectively found to be applicable to their several and local circumstances." They also resolved, that their ancestors, at the time of their immigration, were "entitled to all the rights, liberties, and immunities, of free and natural-born subjects within the realms of England." It is thus clear that the delegates to the First Continental Congress in 1774, among whom were several framers of the Constitution at the Federal Convention of 1787, as well as other notable "founding fathers" (including John Jay), were already familiar with and employed the term "natural born" in the context of and within the understanding of British common law and statutory law concepts of the rights and privileges of citizenship. Of relevance to any meaning and "common understanding" of the term "natural born" within the American colonies and at the time of the drafting of the Constitution is the legal treatise on the laws of England referred to as "Blackstone," for its author William Blackstone. Published in 1765, this treatise was not only available, but was widely known to the framers at the time of the drafting of the Constitution. As noted by the Supreme Court of the United States, "Blackstone's Commentaries was widely circulated in the Colonies ...," and that "undoubtedly the framers of the Constitution were familiar with it." As discussed in the earlier section of this report on the common law, Blackstone explained that "natural born" subjects in England and the American colonies included all those born "in" the lands under British sovereignty. Concerning specifically the issue of children born abroad of English subjects, Blackstone explains clearly that such children are then (in 1765) considered under the law of England as "natural born" subjects, and have been considered as such for most purposes since at least the time of Edward III (1350), because of the development of statutory law in England to "encourage also foreign commerce." As stated by Blackstone in his 1765 treatise, [A]ll children, born out of the king's ligeance, whose fathers were natural-born subjects, are now natural born subjects themselves, to all intents and purposes, without any exception; unless their said fathers were attainted, or banished beyond sea, for high treason; or were then in the service of a prince at enmity with Great Britain. The "commonly understood" meaning of the term "natural born" in the United States at the time of the drafting of the Constitution might thus be broader than the early, strict English "common law" meaning of that term. As noted by Charles Gordon, former Chief Counsel of the Immigration and Naturalization Service, whether the body of English law in the 1770s was from early common law, from statutory law, or from the common law modified over the years by statutory law, these provisions "were part of the corpus of the English law in existence at the time of the Revolution, which was substantially recognized and adopted by our forefathers." This common usage and popular understanding to the framers of the term "natural born" subject (as employed in England), and the term's apparent evolution and broadening of meaning through statutory law, has thus led several other legal commentators and historians to conclude: "The constitutional Framers had a broad view of the term 'natural-born' and considered all foreign- born children of American citizen parents eligible for the Office of the Presidency"; or, as stated by another: "[T]he delegates meant to apply the evolved, broader common law meaning of the term when they included it in the presidential qualifications clause." Presidential historian Michael Nelson has also averred that the term appeared to have a common meaning at the time of the drafting of the Constitution which involved within its concept both the common law definition and mode of acquisition of citizenship (through jus soli ), as well as the common understanding of the long-standing broadening of such term by the operation of English statutory law to include those subjects who may have traveled abroad for purposes of commerce, or otherwise. As noted by Nelson (and pointed out by others), a more restrictive meaning to include only those born within the boundaries of the United States would mean that John Jay, who may have recommended the precise term to the Convention, would have intended to exclude from eligibility his own children who were born in Spain and France while Jay was representing the United States abroad: The provision for "natural born Citizen" probably was aimed at immigrants, although the term is so unusual as to be vague.... [b]ut [it] had deep roots in British common law. In medieval times it had embodied the doctrine of jus soli: a natural born citizen was one born within the realm (on the soil, so to speak). But with increased commerce and travel, Parliament, starting in 1350, seemed to expand the definition of natural born to incorporate the doctrine of jus sanguinis. Now babies born of British citizens abroad or at sea were included as well. One can presume only that Jay and the delegates meant to apply the evolved, broader common law meaning of the term when they included it in the presidential qualifications clause. Certainly Jay did not mean to bar his own children born in Spain and France while he was on diplomatic assignments, from legal eligibility to the presidency. With respect to the common or general meaning of the term "natural born" to the framers of the Constitution in the context of those born abroad to U.S. citizens, it may be significant to note that the first Congress, under its express constitutional authority "to establish an uniform Rule of Naturalization," enacted the Naturalization Act of 1790. The first of several such acts, this 1790 statute stated that [T]he children of citizens of the United States, that may be born beyond the sea, or out of the limits of the United States, shall be considered as natural born citizens: Provided, That the right of citizenship shall not descend to persons whose fathers have never been resident in the United States.... This early congressional act provides some argument that the term "natural born" citizen was seen to include more than merely the "native born," that is, those born in the country (in accordance with the common law principle of jus soli ), but also to include the long-standing English statutory recognition of citizenship by descent through one's father when an individual is born abroad, that is, all of those who are citizens "at birth" or "by birth." The significance of such a statute passed by the first Congress was, of course, the fact that many of the framers of the Constitution were Members of that first Congress, as well as the fact that the first Congress's understanding of the meaning of the terms of the Constitution was most contemporaneous in time with the document's adoption. One author has noted that of the "Committee of Eleven," which first proposed to the Convention of 1787 the eligibility requirement of being a "natural born" citizen, 8 of the 11 committee members were in that first Congress, and none stated objections to or disagreement with the characterization of the term "natural born" by statute by the Congress. The Supreme Court has expressly noted the weight of authority of early actions of the first Congress in explicating portions of the Constitution because of the make-up of that Congress, and its proximity in time to the Convention. As noted by the Court, an act "passed by the first Congress assembled under the Constitution, many of whose members had taken part in framing that instrument, ... is contemporaneous and weighty evidence of its true meaning." One of the more noted political and constitutional scholars on the American presidency, Edward S. Corwin, has explained that "natural born" citizens eligible to be President clearly include all of those born "on the soil" of the United States and subject to its jurisdiction, under the common law principles of jus soli applicable in the United States, but also would appear to include those born abroad of U.S. citizens under the principle of jus sanguinis , as adopted by Congress by statute. Corwin noted that Congress has the authority as the legislative body of a sovereign nation "to determine who shall and shall not be admitted to the body politic": But who are "natural-born citizens"? By the so-called jus soli , which comes from the common law, the term is confined to persons born on the soil of a country; and this rule is recognized by the opening clause of the Fourteenth Amendment, which declares to be citizens of the United States "all persons born or naturalized within the United States and subject to the jurisdiction thereof." On the other hand, by the so-called jus sanguinis , which underlay early Germanic law and today prevails on the continent of Europe, nationality is based on parentage , a principle recognized by the first Congress under the Constitution in the following words: The children of citizens of the United States that may be born beyond the sea, or outside of the limits of the United States, shall be considered as natural-born citizens of the United States; provided that the right of citizenship shall not descend to persons whose fathers have never been resident in the United States. By succeeding legislation the general clause of this provision has been continued in force to this day. The question arises, whence did Congress obtain the power to enact such a measure? By the Constitution the Congress is authorized to pass "an uniform rule of naturalization," that is, a uniform rule whereby aliens may be admitted to citizenship; while the provision under discussion purports to recognize a certain category of persons as citizens from and because of birth . The provision must undoubtedly be referred to the proposition that, as the legislative body of a nation sovereign at international law, Congress is entitled to determine who shall and who shall not be admitted to the body politic. Should, then, the American people ever choose for President a person born abroad of American parents, it is highly improbable that any other constitutional agency would venture to challenge their decision .... It may be noted that some have argued that the relevant common meaning of natural born citizen that was prevalent in 18 th century America should not be the one that was actually applicable in the American colonies during that time from British statutory and common law, and which was adopted specifically by the states after independence in 1776 (and which, as noted by Justice Story, formed the "foundation" for American jurisprudence), but rather should be recognized as one derived from what has been described as a "philosophical treatise" on the law of nations by a Swiss legal philosopher in the mid-1700s. This particular treatise, however, in the editions available at the time of the drafting of the U.S. Constitution, did not actually use, either in the original French or in English interpretations at that time, the specific term "natural born citizens." It was not until after the adoption of the Constitution in the United States did a translator interpret the French in Emmerich de Vattel's Law of Nations to include, in English, the term "natural born citizens" for the first time, and thus that particular interpretation and creative translation of the French, to which the Vattel enthusiasts cite, could not possibly have influenced the framing of the Constitution in 1787. Furthermore, and on a more basic level, the influence of the work of Vattel on the framers in employing the term "natural born" in relation to domestic citizenship within the Constitution is highly speculative at best, is without any direct historical evidence, and is contrary to the mainstream principles of constitutional interpretation and analysis within American jurisprudence. Although it appears that there is one single reference by one delegate at the Federal Convention of 1787 to Vattel (in reference to several works of different authors to support an argument for equal voting representation of the states in the proposed Congress), there is no other reference to the work in the entire notes of any of the framers published on the proceedings of the Federal Convention of 1787, and specifically there is no reference or discussion of the work at all in relation to citizenship at the Convention, in the Federalist Papers, or in any of the state ratifying conventions. It would appear to be somewhat fanciful to contend that in employing terms in the U.S. Constitution the framers would disregard the specific and express meaning of those precise terms in British common law, the law in the American colonies, and subsequently in all of the states in the United States after independence, in favor of secretly using, without comment or explanation, a contrary, non-existent English translation of a phrase in a French-language treatise on international law. In a state case cited with approval by the U.S. Supreme Court, an extensive legal analysis of the question of natural born citizenship under the law of the United States by Assistant Vice Chancellor Sandford, in New York in 1844, found that the laws in all of the American colonies, and then in all of the states after independence, followed the English common law principles of jus soli , that is, that birth in the territory governed citizenship at birth, regardless of the nationality or citizenship of one's parents. Sandford found that it would be "inconceivable" that the framers, in drafting the Constitution, would abandon without explicit comment or explanation in the document, the existing law in all of the colonies, and then in all of the states, of who were natural born citizens in favor of an "international" or "natural" law theory of citizenship by "descent" (through one's father), an argument pressed by one of the litigants relying, in part, on Vattel. Addressing specifically the question of the use of the term "natural born citizen" in the federal Constitution as one of the qualifications for President, Vice Chancellor Sandford found the following: It is a necessary consequence, from what I have stated that the law which had prevailed on this subject, in all the states, became the governing principle or common law of the United States. Those states were the constituent parts of the United States, and when the union was formed, and further state regulation on the point terminated, it follows, in the absence of a declaration to the contrary, that the principle that prevailed and was the law on such point in all the states , became immediately the governing principle and rule of law thereon in the nation formed by such union.... The term citizen, was used in the constitution as a word, the meaning of which was already established and well understood. And the constitution itself contains a direct recognition of the subsisting common law principle, in the section that defines the qualification of the President. "No person except a natural born citizen, or a citizen of the United States at the time of the adoption of this constitution shall be eligible to the office of President," &c. The only standard which then existed, of natural born citizen , was the rule of the common law, and no different standard has been adopted since. Suppose a person should be elected President who was native born, but of alien parents, could there be any reasonable doubt that he was eligible under the Constitution? I think not. The position would be decisive in his favor that by the rule of common law, in force when the constitution was adopted, he is a citizen. Moreover, the absence of any avowal or expression in the constitution of a design to affect the existing law of the country on this subject, is conclusive against the existence of such design. It is inconceivable that the representatives of the thirteen sovereign states, assembled in convention for the purpose of framing a confederation and union for national purposes, should have intended to subvert the long-established rule of law governing their constituents on a question of such great moment to them all, without solemnly providing for the change in the constitution; still more that they should have come to that conclusion without even once declaring their object. The treatise in question by Emmerich de Vattel was a work concerning the "law of nations," which we would now classify generally as "international law." However, the concept of citizenship within a particular country is one governed not by international law or law of nations, but rather is governed by municipal law, that is, the internal law of each country. Vattel's writings on citizenship by "descent" reflected in many circumstances what the law or practice may have been in certain European nations at the time—that is, that citizenship followed the nationality or citizenship of one's father, as opposed to the place of birth. This concept, although prevalent on the European Continent was, even as expressly noted in Vattel's work itself, clearly not the law in England or thus the American colonies, and clearly was not the concept and common understanding upon which U.S. law was based. James Madison, often referred to as the "Father of the Constitution," expressly explained in the House of Representatives in the First Congress, in 1789, that with regard to citizenship the "place" of birth, and not "parentage" was the controlling concept adopted in the United States. Additionally, the Supreme Court in 1971 simply and succinctly explained, after citing historical legal precedent: "We thus have an acknowledgment that our law in this area follows English concepts with an acceptance of the jus soli , that is, the place of birth governs citizenship status except as modified by statute." Again in 1998, the Supreme Court expressly recognized jus soli , the place of birth, as controlling in the United States, noting that in this country "citizenship does not pass by descent" except as provided by Congress in statute. The "common" understanding of the term "natural born" citizen during the revolutionary period, the time of the drafting of the Constitution, and in the generation after, was that of one who was a citizen "at birth" (and the principal factor in the United States, as in England, was the place of birth within the country, rather than that of ancestry, lineage, or descent, except as provided in statute). This common understanding and usage has continued up until this day as the term "natural born" citizen has entered the popular, legal lexicon as defined as: "A citizen by birth, as distinguished from a citizen who has been naturalized," and the meaning of "natural born" in common, general usage as "having a specified status or character by birth." The evidence of historical intent, general understandings, and common law principles underlying American jurisprudence thus indicate that the most reasonable interpretation of "natural born" citizens would include those who are considered U.S. citizens "at birth" or "by birth," either by the operation of the strict "common law" of jus soli derived from English common law (physically born in the United States and subject to its jurisdiction, without reference to parentage or lineage), or under existing federal statutory law incorporating long-standing concepts of jus s an guin i s , the law of descent, including those born abroad of U.S. citizen-parents. This general historical understanding and interpretation is supported, as well, by specific federal case law in the United States, and in official legal opinions of U.S. officers. Although the Supreme Court has not needed to rule specifically on the presidential eligibility clause, as discussed in more detail below, numerous federal cases, as well as state cases, for more than a century have used the term "natural born citizen" to describe a person born in this country and under its jurisdiction, even to parents who were aliens in the U.S. Additionally, several Supreme Court cases, as well as numerous constitutional scholars, have used the term "native born" citizen to indicate all of those children physically born in the country (and subject to its jurisdiction), without reference to parentage or lineage, and employed such term in reference to those citizens eligible to be President under the "natural born" citizenship clause, as opposed to "naturalized" citizens, who are not. In no currently controlling legal opinion in American jurisprudence has the citizenship or nationality of one's parents or forebears been considered a determining factor in the eligibility of a citizen born within the United States to be President, and no holding in any case in federal court has ever established a "two citizen-parent" requirement, or other requirement of lineage or bloodline, for such a "native born" U.S. citizen to be eligible for the Presidency. Some of the legal arguments based on American jurisprudence forwarded by those who support an alternate and highly exclusionary reading of the term "natural born" citizen (including reading into the Constitution a requirement for one to have two U.S. citizen-parents) often begin with a citation to language in the 1857 Dred Scott decision, Scott v. Sandford . The Dred Scott decision, in addition to denying that even freed slaves or their progeny could be "citizens" of the United States (and thus finding that the specific petitioner in that case did not have the capacity to bring the original suit under consideration), attempted to provide legal justification under the Constitution for human slavery in the United States and the resultant treatment of "negroes of the African race" as property and chattel without rights under the Constitution. In so doing, the Court fashioned a very exclusive understanding, eventually rejected and overturned by later Supreme Court decisions, of who were "citizens" of the United States, even if one were born to emancipated slaves in this country. The opinion of the Court, written by Chief Justice Taney, noted that the status of those "whose ancestors were negroes of the African race … imported into this country, and sold and held as slaves" was that of non-citizens. That is, that even "descendants of such slaves, when they shall be emancipated, or who had been born of parents who had become free before their birth" were "not intended to be included, under the word 'citizens' in the Constitution, and can therefore claim none of the rights and privileges which that instrument provides…." The Court based such findings regarding citizenship and ancestry on the opinion that such persons did not make up, and were not thought to be part of the community or the "political body" of the "sovereign people" of the United States who ratified the Constitution, and were thus not "a constituent member of this sovereignty" since "they were at that time considered as a subordinate and inferior class of beings, who had been subjugated by the dominant race, and, whether emancipated or not, yet remained subject to their authority for, and had no rights or privileges but such as those who held the power and the Government might choose to grant them." In a concurring opinion in Scott v. Sandford , one Justice cited to Vattel's discussion of citizenship and "natural born" citizen (as later interpretations into English had expressed the French usage in his treatise, Law of Nations ), not specifically with regard or intent to define "natural born" citizenship in reference to presidential eligibility, but rather to support his opinion that Negroes brought to America as slaves, as well as their progeny, could not be citizens of the United States. It should be noted that this particular opinion was not only a concurring opinion, not joined by any other Justice in the Dred Scott decision, but that such concurrence by Justice Daniel has never formed the basis or authority for any majority ruling of a federal court in the history of American jurisprudence. Similar to the opinion of the Court, Justice Daniels' opinion has been superseded and controverted by later Supreme Court rulings and constitutional amendments. It is general knowledge that the Dred Scott decision has widely and commonly been described as the "worst" and most vilified Supreme Court decision in the history of the United States. The decision in that case authored by [Chief] Justice Taney, not only because of the enactment of the Thirteenth, Fourteenth, and Fifteenth Amendments, but also because of its specious constitutional and legal reasoning, has been reduced to an "historical curiosity." As explained by historian and professor James Kettner in his work, The Development of American Citizenship, 1608-1870 : In seeking to derive consistent exclusionist principles from an ambivalent legal tradition, Taney could only succeed by distorting history and making "bad law." ... In making national citizenship exclusively the effect of naturalization or pedigree, he disregarded volumes of judicial precedents emphasizing place of birth without regard to ancestry. Taney's opinion rested instead on the social fact of prejudice and discrimination. Within a few years of the Dred Scott decision, in 1862, the Attorney General of the United States, Edward Bates, issued a formal legal opinion to a federal department on the question of "citizenship" of those born within the geographic boundaries of the United States which clearly demonstrated the weakness in the legal reasoning of the Court in Dred Scott . This opinion is significant because it preceded the adoption of the Fourteenth Amendment, and was thus based on the then-existing state of the law, constitutional precepts, and common law principles derived from English law, and clearly expressed the legal and constitutional reasoning concerning "citizenship" in the United States underlying previous federal court precedent (other than and ignored by the majority in Dred Scott ) as well as the foundational principles in subsequent Supreme Court determinations over the next 150 years. The formal opinion of the Attorney General concluded that those who were "natural born" citizens were those who were U.S. citizens "by birth": We have natural-born citizens, (Constitution, article 2, sec. [1],) not made by law or otherwise, but born . And this class is the large majority; in fact, the mass of our citizens, for all others are exceptions specially provided for by law. As they became citizens in the natural way, by birth , so they remain citizens during their natural lives, unless, by their own voluntary act, they expatriate themselves, and become citizens of another nation. For we have no law, (as the French have,) to decitizenize a citizen who has become such either by the natural process of birth, or by the legal process of adoption.... The Constitution itself does not make the citizens; it is, in fact, made by them. It only intends and recognizes such of them as are natural—home-born; and provides for the naturalization of such of them as were alien—foreign born .... As far as I know, Mr. Secretary, you and I have no better title to the citizenship which we enjoy than the "accident at birth"—the fact that we happened to be born in the United States. And our Constitution, in speaking of natural-born citizens , uses no affirmative language to make them such, but only recognizes and reaffirms the universal principle ... that the people born in a country do constitute the nation, and, as individuals, are natural members of the body politic....[I]t follows that every person born in the country is, at the moment of birth, prima facie a citizen; and he who would deny it must take upon himself the burden of proving some great disfranchisement strong enough to override the " natural-born " right as recognized by the Constitution ... That nativity furnishes the rule, both of duty and of right as between the individual and the government, is a historical and political truth ... Nevertheless, for the satisfaction of those who may have doubts upon the subject, I note a few books, which, I think, cannot fail to remove all such doubts: Kent's Com., vol. 2, part 4, section 25; Bl. Com., book 1, chapter 10, p. 365; 7 Co. Rep., Calvin's case; 4 Term Rep., p. 300, Doe vs . Jones; 3 Pet.Rep., p. 246; Shanks vs . Dupont; and see a very learned treatise, attributed to Mr. Binney, in Am. Law reporter, 193. The Attorney General thus opined that those who are "born" citizens of the United States, as opposed to those who are "aliens" and must go through the legal process of naturalization, are "natural born" citizens of this country, without any reference to the "citizenship" or nationality of their parents. The Attorney General's opinion emphasized that these "natural born" citizens, those who are citizens of the United States at birth or "by birth," including "every person" who is "home born," are not within a very narrow or special category, but rather are "the mass of our citizens." In an earlier formal opinion from Attorney General Bates to Secretary of State Seward, the Attorney General similarly concluded: "I am quite clear in the opinion that children born in the United States of alien parents, who have never been naturalized, are native-born citizens of the United States, and, of course, do not require the formality of naturalization to entitle them to the rights and privileges of such citizenship." The Supreme Court itself soon began to question, re-evaluate, and move away from the legal reasoning underlying the Dred Scott decision. In one early Supreme Court case after Dred Scott , the Court narrowly applied the earlier theory of citizenship in Dred Scott (as being only the original community of people who ratified the Constitution and their progeny), and relied instead on the common law to discuss the concept of citizenship in the United States after the original generation of citizens. The Court noted that those children born on the soil of the United States to citizen-parents would clearly be among those who are "natural born" citizens under the common law, but did not rule or hold that such category of citizenship was exclusive to such children. The Supreme Court in Minor v. Happersett , in ruling in 1875 that women did not have the constitutional right to vote in federal or state elections (as a privilege or immunity of citizenship), raised and discussed the question in dicta as to whether one would be a "natural born" citizen if born to only one citizen-parent or to no citizen-parents, noting specifically that "some authorities" hold so. The Court, however, expressly declined to rule on that subject in this particular case. In dicta , that is, in a discussion not directly relevant to or part of the holding in the case, the Court explained: The Constitution does not, in words, say who shall be natural-born citizens. Resort must be had elsewhere to ascertain that. At common-law, with the nomenclature of which the framers of the Constitution were familiar, it was never doubted that all children born in a country of parents who were its citizens became themselves, upon their birth, citizens also. These were natives, or natural-born citizens, as distinguished from aliens or foreigners. Some authorities go further and include as citizens children born within the jurisdiction without reference to the citizenship of their parents. As to this class there have been doubts, but never as to the first. For the purposes of this case it is not necessary to solve these doubts. It is sufficient for everything we have now to consider that all children born of citizen parents within the jurisdiction are themselves citizens. Those issues or "doubts" raised in dicta by the Supreme Court in Happersett in 1875 were, however, answered by the Supreme Court in a later decision in 1898, in United States v. Wong Kim Ark , which clearly repudiated the narrow and exclusive "original-community-of-citizens" reasoning of the Court in Dred Scott based on lineage and parentage, in favor of interpreting the Constitution in light of the language and principles of the British common law from which the concept was derived. The majority opinion of the Court clearly found, by any fair reading of its reasoning, discussion, and holding, that every person born in the United States and subject to its jurisdiction (that is, not the child of foreign diplomats or of troops in hostile occupation), regardless of the citizenship of one's parents, is a "natural born" citizen, and that the Fourteenth Amendment merely affirmed the common law and fundamental rule in this country that one born on the soil of the United States and subject to its jurisdiction is a "natural born" citizen: The Fourteenth Amendment affirms the ancient and fundamental rule of citizenship by birth within the territory, in the allegiance and under the protection of the country, including all children born here of resident aliens, with the exceptions or qualifications (as old as the rule itself) of children of foreign sovereigns or their ministers, or born on foreign public ships, or of enemies within and during a hostile occupation of part of our territory, and with the single additional exception of children of members of the Indian tribes owing direct allegiance to their several tribes. The Amendment, in clear words and manifest intent, includes the children born, within the territory of the United States, of all other persons, of whatever race or color, domiciled within the United States. Every citizen or subject of another country, while domiciled here, is within the allegiance and the protection, and consequently subject to the jurisdiction, of the United States. His allegiance to the United States is direct and immediate, and although but local and temporary, continuing only so long as he remains within our territory, is yet, in the words of Lord Coke, in Calvin's Case, 7 Rep. 6a, "strong enough to make a natural subject, for if he hath issue here, that issue is a natural born subject"; and his child, as said by Mr. Binney in his essay before quoted, "if born in the country, is as much a citizen as the natural-born child of a citizen, and by operation of the same principle." The Supreme Court in Wong Kim Ark cited with approval to an earlier decision of a federal circuit court, written by Supreme Court Justice Swayne sitting on circuit, explaining that All persons born in the allegiance of the King are natural-born subjects, and all persons born in the allegiance of the United States are natural born citizens. Birth and allegiance go together. Such is the rule of the common law, and it is the common law of this country, as well as in England.... We find no warrant for the opinion that this great principle of the common law has ever been changed in the United States. It has always obtained here with the same vigor, and subject to the same exceptions, since before the Revolution. The underlying opinions and reasoning of the Attorney General in 1862 (citing the historical intent, understanding, and common law principles relating to citizenship), the federal appellate court opinion written by Supreme Court Justice Swayne in 1866, and the detailed discussion of citizenship and the holding by the Supreme Court in Wong Kim Ark in 1898, citing to judicial precedents such as The Charming Bets e y (1804); Inglis v. Sailor's Snug Harbor (1830), McCreery v. Somerville (1824), and Lynch v. Clarke (1844), have been regularly confirmed and supported by later Supreme Court and other federal court decisions finding that the two general categories of "citizens" are: (1) those who are "natural born" citizens, that is, those who are citizens "by birth" or "at birth," including all native born citizens, and (2) those who were born "aliens" and must be "naturalized" to be citizens. As explained by the Supreme Court in 1998: There are "two sources of citizenship, and two only: birth and naturalization." United States v. Wong Kim Ark , 169 U.S. 649, 702 (1898). Within the former category, the Fourteenth Amendment of the Constitution guarantees that every person "born in the United States, subject to the jurisdiction thereof, becomes at once a citizen of the United States, and needs no naturalization." 169 U.S. at 702. Persons not born in the United States acquire citizenship by birth only as provided by Acts of Congress. Id . at 703. The interpretation that one who obtains "citizenship by birth" is a "natural born" citizen eligible to be President, as distinguished from one who derives "citizenship by naturalization" and who is not so eligible, was discussed by the Supreme Court as early as 1884: The distinction between citizenship by birth and citizenship by naturalization is clearly marked in the provisions of the Constitution, by which "no person, except a natural-born citizen, or a citizen of the United States at the time of the adoption of this Constitution, shall be eligible to the office of President;" and "the Congress shall have the power to establish an uniform rule of naturalization." Constitution, art. 2, sect. 1; art. 1, sect. 8. The federal courts have on numerous occasions examined those two categories of citizens of the United States—"natural born" citizens (those who are citizens "by birth"), and "naturalized" citizens (those who are born "aliens" and who must go through the process of "naturalization")—in the context of the various rights and duties of such citizens within these two categories. The Court has thus explained that "eligibility to the Presidency" is one of the very few "rights and prerogatives of citizenship obtained by birth in this country" which is not available to a "naturalized" citizen. Similarly, the Court has noted: "The naturalized citizen has as much right as the natural-born citizen to exercise the cherished freedoms of speech, press and religion...."; and the Court has examined the right of New York to require its "class of civil servants to be citizens, either natural born or naturalized." The United States Court of Appeals for the 9 th Circuit more recently explained that "once naturalized [appellant] is afforded precisely the same protection of his right to associate as is a natural born citizen." Referring specifically to eligibility to the office of President, a United States Court of Appeals found: No more is demanded of an alien who becomes a citizen than a natural-born citizen, and, when an alien becomes a citizen, he is accorded all the rights and privileges afforded to a natural-born citizen except eligibility to the presidency. It should be noted that numerous constitutional scholars and commentators have used the term "native born" or "native citizen" in a manner which might in some contexts be considered synonymous with "natural born," to indicate a U.S. citizenship from birth in relation to Presidential eligibility, and to distinguish such eligibility from one who is a "naturalized" citizen. James Kent, for example, in his Commentaries on American L aw , explained: "As the President is required to be a native citizen of the United States, ambitious foreigners can not intrigue for the office, and the qualification of birth cuts off all those inducements from abroad to corruption, negotiation, and war...." Similarly, Justice Joseph Story used the term "native citizen" in a treatise on the Constitution: "It is not too much to say that no one but a native citizen, ought ordinarily to be entrusted to an office so vital to the safety and liberties of the people." As noted in the legal treatise from1803 by the noted legal scholar St. George Tucker, editing Blackstone's works and placing them in an American context: "That provision of the Constitution that requires that the President be a native-born citizen (unless he were a citizen of the United States when the Constitution was adopted) is a happy means of securing against foreign influence...." Although the term "native born" citizen or "native citizen" was seemingly used synonymously with "natural born" in reference to presidential eligibility by such noted constitutional scholars, it is most often not necessarily considered a specific term of art in a legal sense and does not appear in the Constitution. In common usage with respect to U.S. citizenship, it may also more narrowly mean anyone born physically within the geographic boundaries of the United States (without reference to the citizenship of one's parents). In one of the most extensive and widely respected multi-volume treatises on immigration and naturalization laws, Immigration Law and Procedure , the authors discuss the meaning of the term "native-born": [a] Native-Born Citizens This is by far the largest group of U.S. citizens, and their status is acquired simply through birth in the United States , as described in Chapter 92 below. The Constitution does not refer to native-born citizens, although it does mention natural-born citizens. Nor does this term appear in the statute, which includes the native born among various categories who acquire citizenship at birth. However, the designation of the native born is an accurate and convenient one, generally used in colloquial and legal discussions. Under common, modern understanding and later Supreme Court explanations, "natural born" citizens would include "native born" U.S. citizens, that is, those born physically within the borders of the country, but might also include others whose citizenships were "obtained by birth" in other ways. The Supreme Court of the United States has on several occasions also used the terminology "native born" citizens or "native" citizens to distinguish such citizenship "at birth" from those who have obtained U.S. citizenship through "naturalization." Even considering that the Court was using the terms in a narrow sense, and putting aside for the moment the issue of children born abroad of U.S. citizens, it is clear that the Supreme Court in these instances indicated that, at the least, all of those persons obtaining citizenship by birth within the geographic area of the United States (i.e., "native born" citizens) were eligible for the presidency (as being within the category of "natural born" citizens), as opposed to "naturalized" citizens. In Schneider v. Rusk , the Supreme Court appeared to use the term "native born" as synonymous and interchangeable with the term "natural born" in referencing those citizens eligible for the presidency, as opposed to "naturalized" citizens who are not eligible: We start with the premise that the rights of citizenship of the native born and of the naturalized person are of the same dignity and are coextensive. The only difference drawn by the Constitution is that only the "natural born" citizen is eligible to be President. Art. II, § 1. A similar distinction between "naturalized" citizens who are not eligible to the Presidency, and those who are "native" citizens (that is, those who are citizens by birth in the country) who are eligible was made in the earlier Supreme Court case of Luria v. United States : Citizenship is membership in a political society, and implies a duty of allegiance on the part of the member and a duty of protection on the part of society. These are reciprocal obligations, one being a compensation for the other. Under our Constitution, a naturalized citizen stands on an equal footing with the native citizen in all respects save that of eligibility to the Presidency. The Supreme Court in 1929, in United States v. Schwimmer , had stated in a similar manner that "Except for eligibility to the Presidency, naturalized citizens stand on the same footing as do native born citizens," and noted again in 1931 that, "The alien, when he becomes a naturalized citizen, acquires, with one exception, every right possessed under the Constitution by those citizens who are native born." Although a small faction of advocates now apparently attempt to cast doubt as to whether every so-called "native" born U.S. citizen (having been born within the borders of this country) is a "natural born" citizen under the Constitution, all doubt in the judicial arena has been resolved for more than a century in favor of "natural born" status of such individuals who are citizens "by birth" or "at birth." As discussed in more detail in the following section of this report, there have been some legitimate legal arguments and varying opinions about the status of foreign born children of U.S. citizens as being either "natural born" citizens under common law principles, or citizens who are, arguably, "naturalized" or made U.S. citizens by statute. There appears, however, to be no legitimate legal issue outstanding concerning the eligibility of all citizens of the United States who are born in the country to be President. The case law in the United States, as well as the clear historical record, does not support the argument or contention that there is some further or additional "subcategory" of "citizen" of the United States who, although born in the country and subject to the jurisdiction of the United States, is neither a "natural born" citizen nor a "naturalized" citizen. Rather, as the cases discussed above demonstrate, the categories uniformly recognized and referred to in case law in the United States as "citizens" of the United States are "natural born" citizens, that is, those who are citizens "at birth," as opposed to "naturalized" citizens, that is, those who are aliens at birth and must go through naturalization to become citizens. During the 2008 presidential campaign between Senators McCain and Obama, several lawsuits were initiated challenging the "natural born" citizenship eligibility of Senator McCain who was not born "in" the United States, but rather in the Panama Canal Zone in 1936. Because the place of birth is the concept that principally and traditionally governs strict common law natural born citizenship in the United States, questions have arisen as to whether those born outside of the geographic boundaries of the United States to United States citizen-parents ̶ and who thus are citizens at birth by descent (by way of statute)—should also be considered "natural born" citizens eligible to be President. The legal and historical questions concerning those U.S. citizens who are born abroad and eligibility were summarized in the treatise Immigration Law and Procedure : [c] Natural-Born Citizens Under the Constitution, only "natural born" citizens are eligible to become President or Vice President of the United States. The Constitution nowhere defines this term, and its precise meaning is still uncertain. It is clear enough that native-born citizens are eligible and that naturalized citizens are not. The doubts relate to those who acquire U.S. citizenship by descent, at birth abroad to U.S. citizens. "Natural born citizen" is an archaic term, derived from ancient British antecedents. Other than its use in the Presidential Qualifications Clause, its only other use was in the provision for citizens by descent in the naturalization statute enacted by the first Congress in 1790. The uncertainty concerning the meaning of the natural-born qualification in the Constitution has provoked discussion from time to time, particularly when the possible presidential candidacy of citizens born abroad was under consideration. There has never been any authoritative adjudication. It is possible that none may ever develop. However, there is substantial basis for concluding that the constitutional reference to a natural-born citizen includes every person who was born a citizen, including native-born citizens and citizens by descent. It has been noted by certain proponents of a narrow interpretation of natural born citizen (to include only those born in the United States) that the Fourteenth Amendment now clearly provides that a U.S. citizen is one who is either "born or naturalized in the United States." Under such reasoning, it is argued that a "citizen" of the United States would be a citizen only or exclusively by virtue of either being "born ... in" the United States (under the common law principles of jus soli as reflected in the Fourteenth Amendment), or by virtue of being "naturalized" in the United States, which some argue means that one is made a citizen by the operation of statutory law. Earlier federal court cases gave credibility to this version of who would be a native or natural born citizen, as opposed to a "naturalized" citizen. As explained by the Supreme Court in Wong Kim Ark : Every person born in the United States, and subject to the jurisdiction thereof, becomes at once a citizen of the United States, and needs no naturalization. A person born out of the jurisdiction of the United States can only become a citizen by being naturalized , either by treaty, as in the case of annexation of foreign territory, or by authority of C ongress, exercised either by declaring certain classes of persons to be citizens, as in the enactments conferring citizenship upon foreign-born children of citizens , or by enabling foreigners individually to become citizens by proceedings in the judicial tribunals, as in the ordinary provisions of the naturalization acts. Under such argument, a person who is born of American parents abroad, although clearly a "citizen" of the United States by law, is one who is not a citizen by virtue of being "born ... in " the United States, and must , therefore, be one of those citizens who has been "naturalized" by the operation of law, even though such naturalization was "automatic" at birth. It is therefore argued that such citizen should not be considered a "natural born" citizen, but rather a "naturalized" citizen who is not eligible for the Presidency. Some earlier federal cases had, in fact, specifically held that a person who was born abroad of a father who was a naturalized American citizen, and who therefore was a citizen of the United States by virtue of a statutory provision, was himself a "naturalized" American citizen. In Zimmer v. Acheson , the United States Court of Appeals for the 10 th Circuit found that the appellant, who had been born in Germany to a father who had been a naturalized U.S. citizen, was himself a "naturalized" citizen who could be expatriated under the provisions and requirements of the then-existing federal law: There are only two classes of citizens of the United States, native-born citizens and naturalized citizens; and a citizen who did not acquire that status by birth in the United States is a naturalized citizen. Revised Statutes § 1993, in force at the time of the birth of Harry Ward Zimmer [appellant], provided: "All children heretofore born or hereafter born out of the limits and jurisdiction of the United States, whose fathers were or may be at the time of their birth citizens thereof, are declared to be citizens of the United States; but the rights of citizenship shall not descend to children whose fathers never resided in the United States." If Werner Herman Zimmer [the appellant's father], by virtue of his naturalization on October 30, 1896, was a citizen of the United States on August 9, 1905, the date of the birth of Harry Ward Zimmer, then the latter, at the time of his birth, became a citizen of the United States by virtue of the foregoing statute, but his status as a citizen was that of a naturalized citizen and not a native-born citizen. In Rogers v. Bellei , a case dealing with the expatriation of a U.S. citizen-by-descent (having been born abroad to a U.S. citizen mother), the Court found that the subsequent conditions Congress placed on such citizens-by-descent—requiring them to reside in the United States at some point to retain their U.S. citizenship—were not unconstitutional. In reversing what some analysts saw as a trend limiting Congress's authority to expatriate those who were United States citizens, the Court appeared to assume or imply that such persons born abroad to U.S. citizens became citizens at birth by way of naturalization: Our national legislature indulged the foreign-born child with presumptive citizenship, subject to subsequent satisfaction of a reasonable residence requirement, rather than to deny him citizenship outright, as concededly it had the power to do, and relegate the child, if he desired American citizenship, to the more arduous requirement of the usual naturalization process. The existence of these earlier cases, including the Supreme Court's characterization in Wong Kim Ark of statutory citizenship of those born abroad, raise interesting contentions and considerations that have not necessarily been definitively resolved with regard to the "natural born" citizenship status ̶ for purposes of presidential eligibility—of those who have obtained U.S. citizenship by virtue of being born abroad to a U.S. citizen parent or parents. Those who support a broader, more inclusive reading of the Constitution to include as "natural born" citizens those born abroad to U.S. citizen-parents, note that these earlier decisions were based in large part on the more narrow language of the Fourteenth Amendment, but argue that the Fourteenth Amendment was adopted to rectify the wrongly reasoned and decided Supreme Court decision in the Dred Scott case, and was not intended to amend or necessarily even to address the issue of "natural born" citizenship under Article II, Section 1, cl. 5, relating to the eligibility for President. The term "natural born citizen" in Article II, it is argued, should be interpreted not only in light of the later Fourteenth Amendment, and the reasons for adopting the Fourteenth Amendment, but also in light of the common law and common understanding and usage of the term at the time of the adoption of the Constitution. It has been pointed out that more recent cases have held that the seemingly exclusive language of the Fourteenth Amendment of citizenship being limited only to those who are "born or naturalized in the United States," is applicable only with regard to Fourteenth Amendment first-sentence-citizenship, and is not necessarily the exclusive means of acquiring citizenship "at birth," since the category of "at birth" citizenship can clearly be expanded by law adopted by Congress. Such cases indicate that the Fourteenth Amendment establishes a "floor" for citizenship at birth, or for naturalization, which can be expanded by federal law. The Supreme Court in Rogers v. Bellei explained that under the Fourteenth Amendment's citizenship clause the requirement that one would have to be either born in the United States or naturalized in the United States were designations for "Fourteenth-Amendment-first-sentence" citizenship only. The category or designation of citizen "at birth" or "by birth" could, however, as expressly noted by the Court, be expanded and "modified by statute" (as it had been in England with respect to natural born subjects for more than 600 years): "We thus have an acknowledgment that our law in this area follows English concepts with an acceptance of the jus soli , that is, the place of birth governs citizenship status except as modified by statute." If it is assumed, as postulated by numerous scholars and discussed earlier in this report, that the framers and ratifiers of the Constitution were influenced by or adopted the entire corpus of British law on the subject of "natural born" citizenship—that is, the law with which they were familiar and which applied at the time to the colonies in America—then it would not be inconsistent nor necessarily unintended that such status might be affected by legislation by Congress (i.e., "except as modified by statute"), as it had been in England by Parliament. It does not appear to be conclusive that merely because Congress could by law "expatriate" or take away citizenship of an individual (as in Bellei ), that such individual was necessarily only a "naturalized" citizen, since the Supreme Court had upheld Congress's authority, under an earlier immigration law, to expatriate by statute an entire class of possible "native"/natural born citizens (women) who had married foreign men.   It is significant to note that in a more recent case, in 2001, the Supreme Court indicated that under current law and jurisprudence a child born to U.S. citizens while living or traveling abroad, and a child born in the geographic United States, had the same legal status. In Tuan An h Nguyen v. INS , the Court explained that a woman who is a U.S. citizen living abroad and expecting a child could re-enter the United States and have the child born "in" the United States, or could stay abroad and not travel back to this country and have the child born abroad, and that the child in either case would have the same status as far as U.S. citizenship: [T]he statute simply ensures equivalence between two expectant mothers who are citizens abroad if one chooses to reenter for the child's birth and the other chooses not to return, or does not have the means to do so. Concerning the contention made in earlier cases that everyone who is made a citizen only by federal statute is a "naturalized" citizen (even those who are made citizens at birth by statute), it may be noted that the common understanding and usage of the terms "naturalized" and "naturalization," as well as the precise legal meaning under current federal law, now indicate that someone who is a citizen "at birth" is not considered to have been "naturalized." Justice Breyer, for example, dissenting on other grounds in Miller v. Albright , explained that "this kind of citizenship," that is, under "statutes that confer citizenship 'at birth,'" was not intended to "involve[ ] 'naturalization,'" citing current federal law at 8 U.S.C. Section 1101(a)(23). The Supreme Court recently recognized in Tuan Anh Nguyen v. INS, that federal law now specifically defines "naturalization" as the "conferring of nationality of a state upon a person after birth." Justice Thomas, in a recent opinion concurring in part and dissenting in part, similarly noted: "It [Congress] has determined that children born abroad to U.S. parents, subject to some exceptions, are natural-born citizens who do not need to go through the naturalization process. 8 U.S.C. § 1401(c)(d),(g)." It could, therefore, be argued that by current definition and understanding in federal law and jurisprudence, one who is entitled to U.S. citizenship automatically "at birth" or "by birth"—even by statute—should not be considered to be "naturalized." The United States Court of Appeals for the Ninth Circuit has specifically recognized in a recent case that one may be a "natural born" citizen of the United States in two ways: either by being born in the United States, or by being born abroad of at least one citizen-parent who has met the residency requirement. In United States v. Carlos Jesus Marguet-Pillado , a case dealing with the propriety of an appeal based on requested jury instructions not given, the court stated: No one disputes that Marguet-Pillado's requested instruction was "an accurate statement of the law," in that it correctly stated the two circumstances in which an individual born in 1968 is a natural born United States citizen: (1) that the person was born in the United States or (2) born outside the United States to a biologically-related United States citizen parent who met certain residency requirements. Although the legal cases specifically concerning Senator McCain's eligibility were generally dismissed for want of subject matter jurisdiction (that is, the lack of legal standing of the plaintiff), a federal district court for the Northern District of California did note that Senator McCain would qualify as a citizen "at birth," and thus was a "natural born" citizen, since he was born "out of the limits and jurisdiction of the United States" to U.S. citizen parents, as provided for in federal nationality statutes in force at the time of his birth. The court found that the meaning of the phrase in the nationality statutes in force in 1936 (R.S. §1993 (1855) and 48 Stat. 797 (1934)), that is, the phrase "born out of the limits and jurisdiction of the United States" to citizen parents, was merely the reverse or "converse of the phrase 'in the United States, and subject to the jurisdiction thereof'" appearing in the citizenship provision of the Fourteenth Amendment, and that such phrase thus would include all those born abroad of U.S. citizen parents, such as Senator McCain: Article II states that "No Person except a natural born Citizen, or a Citizen at the time of the Adoption of this Constitution, shall be eligible to the Office of the President." Article II left to Congress the role of defining citizenship, including citizenship by reason of birth. Rogers v. Bellei, 401 U.S. 815, 828, 91 S.Ct. 1060, 28 L.Ed.2d 499 (1971). Many decades later, the Fourteenth Amendment set a floor on citizenship, overruled the Dred Scott decision, and provided that all born or naturalized in the United States, and subject to the jurisdiction thereof, were citizens by reason of birth (or naturalization proceedings, for that matter). Id. at 829-30, 91 S.Ct. 1060. At the time of Senator's McCain's birth, the pertinent citizenship provision prescribed that "[a]ny child hereafter born out of the limits and jurisdiction of the United States, whose father or mother or both at the time of the birth of such child is a citizen of the United States, is declared to be a citizen of the United States." Act of May 24, 1934, Pub. L. No. 73-250, 48 Stat. 797. The Supreme Court has interpreted the phrase "out of the limits and jurisdiction of the United States" in this statute to be the converse of the phrase "in the United States, and subject to the jurisdiction thereof," in the Fourteenth Amendment, and therefore to encompass all those not granted citizenship directly by the Fourteenth Amendment. [ United States v. Wong Kim Ark, 169 U.S. 649, 687 (1898) ....] Under this view, Senator McCain was a citizen at birth. In 1937, to remove any doubt as to persons in Senator McCain's circumstances in the Canal Zone, Congress enacted 8 U.S.C. 1403(a), which declared that persons in Senator McCain's circumstances are citizens by virtue of their birth, thereby retroactively rendering Senator McCain a natural born citizen, if he was not one already. This order finds it highly probable, for the purposes of this motion for provisional relief, that Senator McCain is a natural born citizen. Plaintiff has not demonstrated the likelihood of success on the merits necessary to warrant the drastic remedy he seeks. The federal court in Robinson v. Bowen thus implicitly adopted a meaning of the term "natural born" citizen in the presidential eligibility clause which would include not only the narrowest "common law" meaning ( jus soli , being born geographically in the United States without reference to parental citizenship, as codified in the Fourteenth Amendment), but also the statutory designation by Congress of one entitled to U.S. citizenship "at birth" or "by birth" even if born abroad when such citizenship is transmitted from one's parent or parents ( jus sanguinis ). In addition to the lawsuits concerning Senator McCain's eligibility, there have been several allegations and numerous lawsuits brought challenging the status of President Obama as a "natural born" citizen, based on various theories, assertions, and speculations. These cases have generally been summarily dismissed, either because of a lack of jurisdiction of the court—in that the plaintiff or plaintiffs did not have legal standing, or for a failure to state a claim upon which relief could be granted—or because the plaintiff seeking a stay or an injunction against some future event was deemed "not likely to succeed on the merits." Some of the cases concerning President Obama, or the candidate then-Senator Obama, had alleged or speculated that the President was not born in the United States, but rather was born in some foreign country or another. Other cases put forth a unique legal theory that even if President Obama had been born in Hawaii, as officially certified and documented by the State of Hawaii, he would not qualify as a natural born citizen because his father was not a U.S. citizen at the time of his birth, or because President Obama had or was entitled to "dual citizenship," or had in some way "forfeited" his United States citizenship. It may be noted that in addition to court dismissals based on lack of jurisdiction because of the failure of the plaintiff to show "standing" or to state a claim upon which relief may be granted, several of the cases regarding President Obama's "eligibility" were dismissed on the basis of the lack of subject matter jurisdiction because, as noted by the United States Court of Appeals for the 10 th Circuit, for example, the plaintiff's alleged claim was "wholly insubstantial and frivolous" such that "federal jurisdiction is not extant." Similarly, in Stamper v. United States, the United States District Court noted in dismissing an "eligibility" challenge of President Obama, that a federal court may dismiss a complaint "for lack of subject matter jurisdiction" when the "allegations of a complaint are totally implausible, attenuated, unsubstantial, frivolous, devoid of merit or no longer open to discussion," and in dismissing the case found that the court "is not required to accept unwarranted factual inferences." The United States Court of Appeals for the Third Circuit in Berg v. Obama , in upholding the lower court's dismissal of plaintiff/counsel Berg's case, also noted "the obvious lack of any merit in Berg's contentions ...," and in Kerchner v. Obama , ruled that "[b]ecause we have decided that this appeal is frivolous, we will order counsel for Appellants to show cause why just damages and costs should not be imposed." In dismissing eligibility cases some federal courts have gone so far as to find "Rule 11" violations by plaintiff's counsel. A federal district court in Georgia fined plaintiff's counsel $20,000 for a "Rule 11" violation, that is, for filing "frivolous" motions and for "using the federal judiciary as a platform to espouse controversial political beliefs rather than as a legitimate forum for hearing legal claims." In the United States District Court for the District of Columbia, in dismissing another challenge to the President's "eligibility" by an attempt to press an "interpleader" claim, the judge ordered plaintiff's counsel to "show cause" why he should not be fined under Rule 11 for frivolous filings, and eventually "reprimanded" the counsel for filing a frivolous lawsuit. In some of the cases filed, plaintiffs have argued that even if President Obama had been born in Hawaii, the move to Indonesia by his mother with him at the time he was a minor in some way "nullified" the citizenship "at birth" status of President Obama, even though as a minor he moved back to and resided within the United States. It should be noted, however, that the Supreme Court has clearly ruled that a citizen at birth, such as one born "in" the United States, does not forfeit his or her citizenship-at-birth status because of removal as a minor to a foreign country, even a country in which one or both parents are or become citizens and nationals. Rather, citizenship may only be forfeited by a citizen of the United States by an affirmative action of renunciation by one having the capacity to do so (that is, as an adult): It has long been a recognized principle in this country that if a child born here is taken during minority to the country of his parents' origin, where his parents resume their former allegiance, he does not thereby lose his citizenship in the United States provided that on attaining majority he elects to retain that citizenship and to return to the United States to assume its duties.... Expatriation is the voluntary renunciation or abandonment of nationality and allegiance. [footnotes omitted] It has no application to the removal from this country of a native citizen during minority. In such a case the voluntary action which is of the essence of the right of expatriation is lacking. The Supreme Court in a subsequent decision, in Mandoli v. Acheson in 1952, confirmed the meaning of its earlier decision in Perkins v. Elg , explaining: What it [ Perkins v. Elg ] held was that citizenship conferred by our Constitution upon a child born under its protection cannot be forfeited because the citizen during nonage is a passive beneficiary of foreign naturalization proceedings.... The Supreme Court concluded in that case: "[W]e think the dignity of citizenship which the Constitution confers as a birthright upon every person born within its protection is not to be withdrawn or extinguished by the courts except pursuant to a clear statutory mandate." Simply stated, the Supreme Court noted that to expatriate and forfeit one's U.S. citizenship "there must be a voluntary action and such action cannot be attributed to an infant whose removal to another country is beyond his control and who during minority is incapable of a binding choice." Other lawsuits, which were also summarily dismissed, alleged that even if President Obama had been born in Hawaii, he was not a "natural born" citizen because his father was not a U.S. citizen, but rather was a citizen of Kenya and therefore a British subject. It was argued that President Obama at birth would thus have been entitled to British citizenship by operation of British laws. As one who had or was entitled to "dual citizenship," it was argued that President Obama could not be a "natural born citizen" of the United States. Other arguments entailed the unique notion that under American jurisprudence parental citizenship or lineage is the determining factor for eligibility to the Presidency for native born U.S. citizens. Merely because a child born within the United States could have, under the operation of foreign law, been a citizen also of that foreign nation because of a parent's nationality, citizenship, or place of birth (i.e., "dual citizenship"), would not affect the status of that child as a U.S. citizen "at birth" under the Fourteenth Amendment, the federal nationality laws, nor under Article II of the Constitution. The citizenship laws, rights, or recognitions of other nations could not influence and impact the United States' own determination of who its citizens "at birth" would be, that is, who would be a "natural born" citizen, as the question of citizenship and categories of citizenship are a function of "municipal law"—the internal law of every country, as opposed to matters of international law or foreign law. If allowing the recognition of citizenship under the law of foreign nations were determinative of natural born citizenship in the United States—as now argued by some advocates—then the operation of foreign law would, in effect, impact and be determinative of who is eligible to be President of the United States, a result wholly at odds with U.S. national sovereignty, that is, the "inherent right of every independent nation" to determine what classes of persons are to be its citizens. As explained by the Supreme Court in 1939: On her birth in New York, the plaintiff became a citizen of the United States. ... In a comprehensive review of the principles and authorities governing the decision in that case—that a child born here of alien parentage becomes a citizen of the United States—the Court adverted to the "inherent right of every independent nation to determine for itself, and according to its own constitution and laws, what classes of persons shall be entitled to its citizenship." United States v. Wong Kim Ark, supra , p. 668. As municipal law determines how citizenship may be acquired, it follows that persons may have a dual nationality. [footnotes omitted] And the mere fact that the plaintiff may have acquired Swedish citizenship by virtue of the operation of Swedish law, on the resumption of that citizenship by her parents, does not compel the conclusion that she lost her own citizenship acquired under our law. The fact that a foreign country might recognize or allow a claim of dual citizenship or nationality of a child born in the United States because of the nationality or heritage of the child's mother or father, has never been determinative of "natural born" or other citizenship status in any case in American jurisprudence. The Court in Perkins v. Elg explained that dual nationality of a child does not affect the native-born status of a child born in the United States, and cited with approval an opinion of the Attorney General finding that a "native-born American citizen," even one with "dual citizenship," who returns to the United States would qualify to be President: One Steinkauler, a Prussian subject by birth, emigrated to the United States in 1848, was naturalized in 1854, and in the following year had a son who was born in St. Louis. Four years later Steinkauler returned to Germany taking this child and became domiciled in Weisbaden where they continuously resided.... On reviewing the pertinent points in the case, including the naturalization treaty of 1868 with North Germany, the Attorney General reached the following conclusion: "Young Steinkauler is a native-born American citizen. There is no law of the United States under which his father or any other person can deprive him of his birthright. He can return to America at the age of twenty-one, and in due time, if the people elect, he can become President of the United States ... [even though] the father, in accordance with the treaty and the laws, has renounced his American citizenship and his American allegiance and has acquired for himself and his son German citizenship and the rights which it carries...." Concerning specifically the reading into the Constitution of a two-citizen-parent requirement for "natural born" citizenship status, it should be noted that there is, significantly, no historical nor controlling legal holding in American jurisprudence to support the argument that parental citizenship governs and controls the eligibility of a native born United States citizen to be President. As indicated in the discussion of the history of the constitutional provision, there is also no justification for this unique theory, which would exclude an entire class of native born U.S. citizens from eligibility for the Presidency, in any of the statements or writings of the framers of the Constitution, or in the entire record of the ratification debates of the United States Constitution. In 1825, in a significant and widely recognized work on the Constitution, William Rawle specifically noted that the term "natural born citizen" as used in the Constitution would include "every person born within the United States ... whether the parents are citizens or aliens...." Similarly, in his treatise on Citizenship of the United States , Frederick Van Dyne, Assistant Solicitor of the Department of State, explained in 1904 that the rule governing citizenship is not one derived from "international law" or the so-called "law of nations," but is rather municipal law which "[e]very nation determines for itself' and, in the United States, derives from the common law principle of jus soli , dependent "on the place of birth," as modified by statute incorporating the principles of jus sanguinis to include the children of citizens "born out of the jurisdiction of the United States." In reviewing Supreme Court decisional material, the author in this treatise noted that the Fourteenth Amendment and the 1866 civil rights act "reaffirm the fundamental principle of citizenship by birth" which "was generally held to be regulated by the common law, by which all persons born within the limits and allegiance of the United States were deemed to be natural born citizens thereof." Although the Supreme Court has never had to address the issue of "natural born" citizenship directly in the context of a challenge to the eligibility of one to be President, the federal courts have discussed the concept on numerous occasions for more than 200 years and have, other than in the Dred Scott decision, consistently relied upon the place of birth, without regard or reference to the status of one's parents, as the determining factor of natural born citizenship. A celebrated and frequently relied-upon state court ruling in 1844 provided a detailed explanation of the legal history of the citizenship laws and statutes in the United States, and provided the following conclusion with respect to natural born citizenship: Upon principle, therefore, I can entertain no doubt, but that by the law of the United States, every person born within the dominions and allegiance of the United States, whatever were the situation of his parents, is a natural born citizen. That the place of birth was principally the rule governing "natural born" citizenship under American jurisprudence, regardless of the status of one's parents (except for children of official diplomats or hostile armies), even before the adoption of the Fourteenth Amendment, was explained by the Supreme Court in United States v. Wong Kim Ark , in 1898, which noted that the Fourteenth Amendment "affirms the ancient and fundamental rule of citizenship by birth within the territory, in the allegiance and under the protection of the country, including all children born here of resident aliens, with the exceptions or qualifications (as old as the rule itself) of children of foreign sovereigns or their ministers, or born on foreign public ships, or of enemies within and during a hostile occupation of part of our territory ...." The Supreme Court in Wong Kim Ark cited with approval those previous judicial rulings which held that every child born on the soil of the United States, and subject to its jurisdiction, are "natural born" citizens of this country, without regard to the nationality or citizenship status of their parents. The Supreme Court, this time using the term "native born citizen" again explained in that case: Passing by questions once earnestly controverted, but finally put at rest by the Fourteenth Amendment of the Constitution, it is beyond doubt that, before the enactment of the Civil Rights Act of 1866 or the adoption of the Constitutional Amendment, all white persons, at least, born within the sovereignty of the United States, whether children of citizens or of foreigners , excepting only children of ambassadors or public ministers of a foreign government, were native-born citizens of the United States . As discussed previously, the Supreme Court has used the term "native born" citizens (as expressly used in Wong Kim Ark to mean those born in the United States "whether children of citizens or foreigners") as synonymous with, or at least included within the term "natural born," in subsequent references to eligibility to the Presidency. In United States v. Schwimmer, for example, the Court stated: "Except for eligibility to the Presidency , naturalized citizens stand on the same footing as do native born citizens " Similarly, in Luria v. United States the Supreme Court stated: "Under our Constitution, a naturalized citizen stands on an equal footing with the native citizen in all respects, save that of eligibility to the Presidency," and noted in 1931 that other than the one instance in the Constitution which provides a difference, that is, the eligibility to the Presidency, "[t]he alien, when he becomes a naturalized citizen, acquires, with one exception, every right possessed under the Constitution by those citizens who are native born." With regard to the citizenship of children born in the United States to recent immigrants, it is significant to note that in this country in the late 1800's, the public's economic fears and hostility to foreigners led Congress to—in the words of one historian—"legitimize[ ] racism as national policy" by adopting legislation to prevent immigration of Chinese laborers to the United States, and to prohibit anyone of Chinese nationality to obtain U.S. citizenship through naturalization. Despite this law and its extensions, commonly known as the Chinese Exclusion Act, the federal courts consistently held that children born "in" the United States of Chinese parents were "natural born" citizens of the United States, even if the parents may not have been United States citizens themselves and could not have "naturalized" under the Chinese Exclusion Act. In 1919, for example, the United States Court of Appeals for the 5 th Circuit ruled that the appellee, Low Hong, based solely on the fact that he was born in San Francisco, without any reference to the nationality of his parents, "is a natural-born citizen of the United States." Similarly, in a case in 1920 concerning the identity of a petitioner, the Supreme Court of the United States explained that "[i]t is not disputed that if petitioner [Kwock Jan Fat] is the son" of two Chinese persons who were physically in the United States when petitioner was born, then the Court would accept the characterization of him as "a natural born American citizen ...." The Supreme Court recognized that it had been alleged in earlier immigration proceedings that the father of Kwock Jan Fat had been born in the United States and, as averred by one witness, had voted in some election. The Supreme Court, however, made no finding , did not rely upon, nor did the Court even make a passing reference to the citizenship of the father of Kwock Jan Fat. Furthermore, it is significant that there was no evidence, no argument, nor even any discussion in the decision of the Supreme Court, or in the reported lower court decision, concerning the citizenship of the mother of Kwock Jan Fat. Neither the briefs for the petitioner, nor the brief for the respondent made any assertions or allegations concerning the citizenship of, or provided any argument or evidence concerning any naturalization of the mother of Kwock Jan Fat, but rather merely noted that she had been born in China and came to the United States as a child. It is, of course, well known to those familiar with U.S. immigration laws that during the time of the Chinese Exclusion Act a woman who was a Chinese national, and not a citizen of the United States at birth, could not have been naturalized as a United States citizen even if she married someone who was a United States citizen. However, the Supreme Court never discussed, referenced, or made any finding or conclusion concerning the citizenship of either the father, or the citizenship or naturalization of the mother of Kwock Jan Fat because the citizenship of one's parents is not and was not relevant to the determination of "natural born" citizenship of one born in the United States. The relevant factor cited and determined by the Supreme Court of the United States was not the citizenship of both the father and mother, but rather—citing to the Wong Kim Ark precedent—was the physical presence of the parents in the United States (that is, that the parents were "domiciled" here) at the time of Kwock's birth in this country. Concerning the issue of balancing the considerations of fairness and justice in such identity cases of one born to Chinese parents in the United States, the Supreme Court, in an oft-quoted statement, expressly said: It is better that many Chinese immigrants should be improperly admitted than that one natural born citizen of the United States should be permanently excluded from his country. In a case that preceded the Supreme Court's Wong Kim Ark decision, the United States Court of Appeals agreed with the petitioner's claim to be "a natural-born citizen of the United States" because of his place of birth, that is, within the United States, even though his parents were both "aliens" of Chinese nationality who were in the United States privately and "not here in any diplomatic or other official capacity under the emperor of China." That federal court in 1884, relying on precedents including Assistant Vice-Chancellor Lewis Sandford's opinion in Lynch v. Clarke , explained the concept in American jurisprudence that one is a "natural born" citizen when born in the United States, and subject to the jurisdiction of the United States, and that such was the state of American law even before the adoption of the Fourteenth Amendment (for other than those brought into the United States under slavery): Independently of the constitutional provision, it has always been the doctrine of this country, except as applied to Africans brought here and sold as slaves, and their descendants, that birth within the dominions and jurisdiction of the United States of itself creates citizenship. This subject was elaborately considered by Assistant Vice-chancellor Sandford in Lynch v. Clarke , found in the first volume of his reports. [1 Sandf. 583.] In that case one Julia Lynch, born in New York in 1819, of alien parents, during their temporary sojourn in that city, returned with them the same year to their native country and always resided their afterwards. It was held that she was a citizen of the United States. After an exhaustive examination of the law the vice-chancellor said that he entertained no doubt that every person born within the dominions and allegiance of the United States, whatever the situation of his parents, was a natural-born citizen, and added that this was the general understanding of the legal profession, and the universal impression of the public mind. More recent federal cases expressly recognize the principle explained in the nineteenth century and early twentieth century cases that one born in the United States and under its jurisdiction, even when one or both parents were "aliens," is considered a citizen of the United States by birth, and thus a "natural born" citizen of the United States. The court in Dos Reis ex rel. Camara v. Nicolls , for example, accepted the findings of fact that "The relator was born in the City of Fall River, Massachusetts, on December 31, 1921. His father was a native and citizen of Portugal, and his mother was a native of Brazil," and that, as found by the Commissioner of Immigration and Naturalization, affirming the decision of the Board of Special Inquiry, "that the relator was a natural-born citizen...." In Loo Goon Hop v. Dulles , the court found that a person "having been born in this country," without any reference to, finding, or identification of the citizenship of that person's parents, is a "natural born citizen of the United States." In Yamauchi v. Rogers , the federal court in reciting "findings of fact and conclusions of law," found that the plaintiff, born in California of a "Japanese national" who had married another "Japanese national," "is a natural born citizen of the United States...." A federal court in 1974 similarly explained and held: "The plaintiff was a native of Biafra, now a part of the Republic of Nigeria. His wife and two older children are also natives of that country, but his third child, a daughter, is a natural-born citizen of the United States." In Diaz-Salazar v. INS , the court there noted that children born in the United States, even to an "illegal" (or undocumented) alien father, "are natural-born citizens of the United States." Similarly, in Mustata v. U.S. Department of Justice , the United States Court of Appeals, in reciting the facts of the case, noted: "Petitioners Marian and Lenuta Mustata are citizens of Romania. At the time of their petition, they resided in Michigan with their two minor children, who are natural born citizens of the United States ." Despite the existing questions of jurisdiction, as well as the issue of the applicability of a particular state protest or challenge statute to a presidential election (where only "electors" are actually voted for), numerous courts or administrative bodies in several states have rendered decisions relating to or at least addressing the merits of the arguments concerning the eligibility of a presidential candidate in challenges to ballot access in the state. In 2008, a U.S. district court discussed the concept of "natural born" citizenship specifically with respect to the eligibility to be President as applying—since the founding of the Nation—to all who were born in and subject to the jurisdiction of the United States: Those born "in the United States, and subject to the jurisdiction thereof," U.S. Const., amend. XIV, have been considered American citizens under American law in effect since the time of the founding, United States v. Wong Kim Ark , 169 U.S. 649, 674-75, 18 S.Ct. 456, 42 L.Ed. 890 (1898), and thus eligible for the presidency, see, e.g., Schneider v. Rusk, 377 U.S. 163, 165, 84 S.Ct. 1187, 12 L.Ed.2d 218 (1964)(dicta). Similarly, in dismissing an eligibility case concerning President Obama's birth in Hawaii, a state appellate court in Indiana, after a thorough review of federal case law, concluded that anyone born in the United States and subject to its jurisdiction, regardless of the citizenship of that person's parents, was a "natural born" citizen eligible to be President: Based on the language of Article II, Section 1, Clause 4 and the guidance provided by Wong Kim Ark, we conclude that persons born within the borders of the United States are "natural born Citizens" for Article II, Section 1 purposes, regardless of the citizenship of their parents. Just as a person "born within the British dominions [was] a natural born-born subject" at the time of the framing of the U.S. Constitution, so too were those "born in the allegiance of the United States [ ] natural-born citizens." Almost all of the cases in the 2012 election cycle had challenged the eligibility to office of the incumbent President, Barack Obama. To date, every court or administrative body dealing with ballot access issues has ruled against the challenges to the eligibility of President Obama. Numerous court decisions or administrative rulings have expressly addressed the merits of the issues before them and found that since Hawaii has certified and verified that President Obama was born there, he is a "natural born" citizen of the United States eligible to be President. The Arizona Superior Court found, for example, that: "[P]recedent fully supports that President Obama is a natural born citizen under the Constitution and thus qualified to hold the office of President." An administrative law judge in Georgia, in an opinion adopted by the Secretary of State and in which the appeals were dismissed (on jurisdictional grounds), ruled that President Obama, born in the United States, "... became a citizen at birth and is a natural born citizen." In Illinois, after a formal hearing, the elections board ruled that President Obama's birth certificate "clearly establishes" his eligibility for office as a "Natural Born Citizen." Citing to the 1898 Supreme Court case of Wong Kim Ark , in which the Supreme Court found over 100 years ago that those born in the United States and subject to its jurisdiction are "natural born" citizens, a circuit court in Maryland noted that "the issue of the definition of 'natural born citizen' is thus firmly resolved by the United States Supreme Court in a prior opinion," and held that President Obama is eligible to run for President in Maryland. A federal court in Virginia, similarly citing to Wong Kim Ark , found: "It is well settled that those born in the United States are considered natural born citizens. ... Moreover, 'those born 'in the United States, and subject to the jurisdiction thereof,' ... have been considered American citizens under American law in effect since the time of the founding ... and thus eligible for the presidency.'" Courts have also specifically considered and found to be "without merit" and devoid of "any legal authority" the argument that "natural born" citizenship in the United States requires that one must at the time of birth have parents who are both United States citizens themselves. In New Jersey, for example, in a decision upheld on appeal, the court explained: "... [T]he status of 'natural born Citizen' for Mr. Obama has not been denied by any court or administrative agency that has addressed the merits of the issue. ... The petitioners' legal position on this issue, however well intentioned, has no merit in law. Thus, accepting for the point of this issue that Mr. Obama was born in Hawaii, he is a 'natural born Citizen' regardless of the status of his father." A court in Florida also held that: "... [P]ersons born within the borders of the United States are 'natural born citizens' for Article II, Section 1 purposes, regardless of the citizenship of their parents." In New York, a court explained that "anyone born in the United States is a natural-born citizen, irrespective of parentage." Similarly, the Vermont Superior Court, citing to Supreme Court and state court precedents, held: "The common law of England, the American colonies, and later the United States, all support one interpretation only: 'that persons born within the borders of the United States are 'natural born Citizens' for Article II, Section 1 purposes, regardless of the citizenship of their parents.'" The constitutional history, the nearly unanimous consensus of legal and constitutional scholars, and the consistent, relevant case law thus indicate that every child born in and subject to the jurisdiction of the United States (that is, those who are not children of diplomatic personnel representing a foreign nation or military troops in hostile occupation), is a "natural born Citizen" eligible to be President under the qualifications clause of the Constitution, regardless of the nationality or citizenship of one's parents. The legal issues regarding "natural born" citizenship and birth within the United States without regard to lineage or ancestral bloodline have been well settled in judicial decisions in this country for more than a century, and such concepts date back to, and even pre-date, the founding of the nation. The weight of more recent federal cases, as well as the majority of scholarship on the subject, also indicate that the term "natural born citizen" would most likely include, as well as those native born citizens born in the U.S., those born abroad to U.S. citizen-parents, at least one of whom had previously resided in the United States, or those born abroad to one U.S. citizen parent who, prior to the birth, had met the requirements of federal law for physical presence in the country. The technical constitutional meaning (influenced by the corpus of British law, both common law and long-standing statutory law), as well as the meaning of the term in both the general legal lexicon and its common usage, appear to have converged on a seeming consensus that "natural born" means having a particular attribute or nature "at birth," as opposed to subsequently obtaining such attribute.

The Constitution sets out three eligibility requirements to be President: one must be 35 years of age, a resident "within the United States" for 14 years, and a "natural born Citizen." There is no Supreme Court case which has ruled specifically on a challenge to one's eligibility to be President (although several cases have addressed the term "natural born" citizen), and this clause has been the subject of several legal and historical treatises over the years, as well as more recent litigation. The term "natural born" citizen is not defined in the Constitution, and there is no discussion of the term evident in the notes of the Federal Convention of 1787. At the time of independence, and at the time of the framing of the Constitution, however, the term "natural born" with respect to citizenship was in use for many years in the American colonies, and then in the states, from British common law and legal usage. Under the common law principle of jus soli (law of the soil), persons born on English soil, even of two alien parents, were "natural born" subjects and, as noted by the Supreme Court, this "same rule" was applicable in the American colonies and "in the United States afterwards, and continued to prevail under the Constitution ..." with respect to citizens. In textual constitutional analysis, it is understood that terms used but not defined in the document must, as explained by the Supreme Court, "be read in light of British common law" since the Constitution is "framed in the language of the English common law." In addition to historical and textual analysis, numerous holdings and references in federal (and state) cases for more than a century have clearly indicated that those born in the United States and subject to its jurisdiction (i.e., not born to foreign diplomats or occupying military forces), even to alien parents, are citizens "at birth" or "by birth," and are therefore "natural born"—as opposed to "naturalized"—U.S. citizens. There is no provision in the Constitution and no controlling American case law to support a contention that the citizenship of one's parents governs the eligibility of U.S. citizens born within the United States to be President. Although the eligibility of U.S. born citizens has been settled law for more than a century, there have been legitimate legal issues raised concerning those born outside of the country to U.S. citizens. From historical material and case law, it appears that the common understanding of the term "natural born" in England and in the American colonies in the 1700s included both the strict common law meaning as born in the territory (jus soli), as well as the statutory laws adopted in England since at least 1350, which included children born abroad to British fathers (jus sanguinis, the law of descent). Legal scholars in the field of citizenship have asserted that this common understanding and legal meaning in England and in the American colonies was incorporated into the usage and intent of the term in the U.S. Constitution to include those who are citizens at birth. Challenges in 2008 to the eligibility of both Senators John McCain and Barack Obama to be President, and "ballot access" challenges to President Obama in 2012, have prompted numerous court decisions which appear to have validated the traditional, historical, and legal meaning of the term "natural born" citizen as one who is entitled to U.S. citizenship "by birth" or "at birth." This would include those born "in" the United States and under its jurisdiction (i.e. "native" born), even those born to alien parents; those born abroad to U.S. citizen-parents; or those born in other situations meeting legal requirements for U.S. citizenship "at birth." Such term, however, would not include a person who was not a U.S. citizen by birth or at birth, and who was thus born an "alien" required to go through the legal process of "naturalization" to become a U.S. citizen. This report has been updated from a previous version to include recent relevant judicial and administrative decisions, and will be updated as new decisional material may warrant.

Whether to reinstate the alternate engine program for the F-35 Lightning II fighter was a significant issue for Congress in FY2012, with implications for the defense budget, military capability in the future, and the division of power between Congress and the executive branch. The program was developing the General Electric/Rolls-Royce F136 engine as an alternative to the Pratt & Whitney F135 engine that currently powers the F-35. Successive Administrations proposed terminating the alternate engine program in the FY2007 through FY2010 budgets. Congress rejected these proposals and provided funding, bill language, and report language continuing the program. In FY2011, the Administration's budget submission again proposed to terminate the alternate engine program, and Congress eliminated funding for the program in the final FY2011 DOD and Full-Year Continuing Appropriations Act. On December 2, 2011, General Electric and Rolls-Royce announced that they were ending development of the F136 engine, terminating the F-35 engine competition. On October 26, 2001, the Department of Defense (DOD) selected the single-engine Lockheed Martin F-35, powered by the Pratt & Whitney F135 engine, as the winner of its Joint Strike Fighter (JSF) competition. DOD expects to buy 2,456 JSFs for the Air Force, Navy, and Marine Corps. In FY1996, Congress required development of an alternate engine for the F-35. This became the F136, based on an engine created by the team of General Electric and Rolls-Royce for the unsuccessful McDonnell Douglas JSF candidate. The F135 and F136 engines were designed to be used interchangeably, without modification to the F-35 airframe. In FY2007, the Administration proposed terminating the alternate engine program "because development of the main engine was progressing well and analysis indicated that savings from competition would not be offset by high upfront costs." Congress subsequently restored funding for the program, along with directive bill and report language requiring DOD to continue the program in future years. Administration-proposed terminations in FY2008, FY2009, and FY2010 were also rejected by Congress. Subsequently, in FY2011, the 112 th Congress deleted funding for the program. DOD formally terminated the alternate engine program on April 25, 2011. Supporters of the Administration's proposal to terminate the alternate engine program argue the following: Developing and procuring a second engine for the F-35 would add billions of dollars to the cost of the F-35 program by roughly doubling engine development costs and halving engine production economies of scale. Such a cost increase would reduce the number of F-35s that could be procured within a given total amount of F-35 acquisition funding, forcing cuts in future capabilities and force structure. An official from the F-35 program office stated that the reduction in F-35 procurement over the next five years might total 50 to 80 aircraft. Procuring a second engine would increase F-35 life-cycle operation and support (O&S) costs by requiring DOD to maintain two engine maintenance and repair pipelines. Supporting two engines on aircraft carriers would be particularly challenging due to limited space and facilities. Having a second engine is not needed to sustain international interest in the F-35, because the most significant potential foreign buyers are already committed to the F-35 program, and because committed and potential buyers already have several significant reasons to be interested in the F-35, starting with the aircraft's capabilities, procurement cost, and operating and support cost. Congress already accepts the risk of using single designs across fleets, both in powerplants and airframes. Many other aircraft types in the U.S. inventory use one engine design across the fleet. Procurement of a single airframe design also carries the risk of fleet grounding if there is a flaw in the design (as has occurred in the past), yet those risks are acceptable to Congress and DOD. The same risk logic should apply to F-35 engines. Development, testing, and production of the F135 have reached the point where it is no longer necessary to hedge against the possibility of technical problems in the F135 engine by pursuing an alternate engine program as a backup. The causes of F135 test failures in 2007 and 2008 have been identified and fixes are being implemented. Opponents of the Administration's proposal to terminate the alternate engine program argue the following: The Administration's proposal to terminate the alternate engine program does not comply with Section 213 of the FY2008 defense authorization act ( H.R. 4986 / P.L. 110-181 of January 28, 2008), which states: "Of the funds appropriated pursuant to an authorization of appropriations or otherwise made available for fiscal year 2008 or any year thereafter, for research, development, test, and evaluation and procurement for the Joint Strike Fighter Program, the Secretary of Defense shall ensure the obligation and expenditure in each such fiscal year of sufficient annual amounts for the continued development and procurement of 2 options for the propulsion system for the Joint Strike Fighter in order to ensure the development and competitive production for the propulsion system for the Joint Strike Fighter." Given that F-35s are to constitute the vast majority of the country's strike fighters, it would be imprudent to have all those strike fighters powered by a single type of engine, since a problem with that engine could force the grounding of the entire F-35 fleet. Having a second engine in production (or ready for production) would permit DOD to use competition (or the threat of competition) in procuring and supporting F-35 engines, which could reduce F-35 engine procurement and O&S costs compared to what would be achievable in a sole-source procurement, offsetting the additional costs associated with developing, procuring, and supporting a second engine. Competition (or the threat of competition) would also promote better engine performance, increased engine reliability, and improved contractor responsiveness. Having two F-35 engine production lines in operation would also permit F-35 engine production to be more quickly surged to higher levels if needed to respond to a change in the strategic environment, and preserve a potential for maintaining effective competition in the development and procurement of future tactical aircraft engines, particularly if F-22 and F/A-18E/F production ends. Having a second engine in production would help sustain international interest in the F-35 program, maximizing F-35 exports. Potential foreign buyers would be more inclined to purchase the F-35 if they had a choice regarding the aircraft's engine, and if they believed that competition (or the threat of competition) in engine production was holding down the engine portion of the F-35's total cost. These are the most common questions received by CRS concerning the F-35 alternate engine program: The alternate engine program was terminated by DOD on April 25, 2011. Subsequently, DOD ordered all of the tooling and engines produced under the contract to be delivered back to DOD. A spokesman for the alternate engine's builder "noted that more than $200 million in F136 hardware is located in 17 facilities, including 'nine engines under various stages of assembly.'" On December 2, 2011, General Electric and Rolls-Royce announced that they were ending their self-funded development of the F136 engine. A copy of their statement on termination appears as Appendix C . Pratt & Whitney, the incumbent engine maker, received a total of $7.3 billion in funding during the period FY1994-FY2009 for work relating to the F-35 program. This figure included funding for work performed for the Boeing concept for the JSF (a concept that was not selected to go forward.) The $7.3 billion also includes $6.1 billion received during the period FY2002-FY2009 for F135 System Development and Demonstration (SDD) work. The estimated cost of the F135 SDD contract increased from $4.8 billion at contract award in 2001 to $6.7 billion as of September 2009. Approximately $0.8 billion of the increase is cost growth; the remaining $1.1 billion or so reflects an increase in the scope of work to be performed. The General Electric/Rolls-Royce alternate engine team received a total of $2.4 billion during the period FY1995-FY2009. This total includes $1.7 billion for SDD work for the F136 engine during the period FY2005-FY2009. The F136 team's effort did not include design, development, test, or delivery of STOVL Lift System components and exhaust systems, which were developed and provided under the F135 Pratt & Whitney SDD contract. The F136 SDD contract consequently included fewer test hours and fewer ground test engines. A discussion of technical issues follows in the " Engine Development Issues " section of the report, below. Between the beginning of FY2011 and enactment of the final FY2011 DOD and Full-Year Continuing Appropriations Act on April 15, 2011, the government operated under a series of continuing resolutions (CRs). In light of the Administration's stated opposition to further funding of the alternate engine program, some members of Congress questioned the status of the program during the period of a CR. CRs prohibit spending on new starts or on procurement rates above FY2010 levels. P.L. 111-242 , the CR effective through March 4, 2011, set DOD spending at a "rate of operations" consistent with the FY2010 DOD Appropriations Act ( P.L. 111-118 ) for the base budget, the FY2010 Omnibus for military construction levels set in P.L. 111-117 with reductions for BRAC funding not requested in FY2011, plus war funding provided in Title IX of the FY2010 DOD Appropriations Act and in the FY2010 Supplemental ( P.L. 111-212 ). In a letter, Office of Management and Budget Director Jacob Lew stated that "DoD would be expected to continue funding activities on a pro-rata basis during the period covered by the CR, so as not to impinge on Congress' full-year funding prerogatives for FY 2011." This assurance covered only the CR ending March 4, 2011. As a consequence, the alternate engine program was funded at the FY2010 level from October 1, 2010, through March 24, 2011, when DOD issued a stop-work order. At a February 3, 2010, hearing, Secretary of Defense Robert Gates testified: I would just say, you know, from our standpoint, the Congress has added $1.8 billion for this program. We see it costing us another $2.9 billion over the next five years…. The reality is, the most optimistic analyses and models that we have run show that there is little advantage to the taxpayer of having a second engine. The truth is, almost none of the customers will buy two engines. If there's a European engine or a Rolls-Royce GE engine, the Europeans are probably going to buy—our European partners are probably going to buy that one. The Marine Corps and the Navy have both said they're only going to take one airplane, because of the limited logistics, space available on ships. So, the only piece of this that could be competed would be the Air Force part of it. And so, you end up having two engines for the Air Force. Look, the key is getting the F135 engine program. It's doing well. It's completed 13,000 hours of testing out of 14,700. The F136 has completed 50 hours of testing. There's no reason to believe that the second engine won't encounter the same development problems the first one has. At a February 23, 2010, hearing, Secretary of the Air Force Michael Donley stated: It is a close enough call that we cannot see right now the benefits of a considerable—what we think is still a considerable remaining investment that would have to be made in a second engine, the logistics tail that goes with it, all the pre-production work, the remaining development, which may be understated in some quarters; the firm costs that are associated with those activities against the soft savings that might be out there in the future. We're just—it just looks too cloudy to us. At the same hearing, in response to a question as to why the F-35 should not have an alternate engine when the F-15 and F-16 did, Air Force Chief of Staff General Norton Schwartz testified: Because we're 20 years, 30 years later in technological progress on engine design and production. And fundamentally … if having more engines results in less F-35s, that is not a good scenario for the Air Force or the Department of Defense. Secondly, the reality is that the F-22 and the F-18E/F are single-engine airplanes. And, you know, there's no dispute about that, and it's because we collectively in the defense community, I think, have become comfortable with the reliability and so on of those respective engines, one of which is a predecessor to the 135. General Schwartz commented on funding for the alternate engine on October 12, 2010: "If Rolls and GE are so confident that their product will succeed and bring value to the taxpayer, it would be nice if they put a little more against that $1.9 billion bill that they'd like the taxpayer to undertake," Schwartz said. Chief of Naval Operations Adm. Gary Roughead was quoted in a press report as saying, "I'm in the one engine camp.… On a carrier, space matters." "For the [price of] the alternate engine on the Joint Strike Fighter, I could have 100 more Predators, easily," (Marine Corps Gen. James) Cartwright says, referencing the General Atomics unmanned aerial system in high demand in Afghanistan. "Which would you buy?" Let me try to explain our reasoning on the question of an alternate engine. It—it's simply an analytical judgment... If you had a second engine manufacturer then you could compete the two engines against one another lot by lot as you built the aircraft. To get yourself to that point, you have to spend the money to develop the second engine, to develop—to get the tooling to build the second engine, the sustainment for a second engine. In other words, you have to do—have a whole second engine infrastructure. So you have to pay that bill to develop the competitive alternative. The question is whether that bill, which you pay upfront, will ever be repaid in terms of lower prices induced by competition between the two variants. An Office of Management and Budget (OMB) document on proposed FY2010 program terminations, reductions, and savings stated that the Administration believed the alternative engine program was "no longer needed as a hedge against the failure of the main Joint Strike Fighter engine program," and that "financial benefits, such as savings from competition, have been assessed to be small, if they exist at all, because of the high cost of developing, producing and maintaining a second engine." OMB stated that cancellation "will result in estimated near-term savings of over a billion dollars." At a May 20, 2009, hearing before the Air and Land Forces subcommittee of the House Armed Services Committee, GAO testified that "competitive pressures could yield enough savings to offset the costs of competition over the JSF program's life." The GAO testimony reaffirmed previous GAO work, including an estimate that "to continue the JSF alternate engine program, an additional investment of about $3.5 billion to $4.5 billion in development and production-related costs, may be required," and that "a savings of 9 to 11 percent would recoup that investment." GAO went on to assert that "a competitive strategy has the potential for savings equal to or exceeding that amount across the life cycle of the engine," noting that the "Great Engine War" of the 1980s resulted in "(1) nearly 30 percent cumulative savings for acquisition costs, (2) roughly 16 percent cumulative savings for operations and support costs; and (3) total savings of about 21 percent in overall life cycle costs." (For more on the "Great Engine War," see Appendix B .) GAO also noted that a number of nonfinancial benefits may result from competition, "including better performance, increased reliability, and improved contractor responsiveness." Cost has been a significant issue in the alternate engine debate. Proponents of the alternate engine point to cost growth in the F135 as evidence that a competitor is needed to control costs. The Administration maintains that the benefits of a second engine do not outweigh its costs. In July, 2009, Pratt & Whitney reported that the cost of an F135 had increased 24%, from $6.7 million apiece to $8.3 million. In response, Secretary Gates said: There is always cost growth associated with a developmental aircraft. It's one of the reasons we have over $4 billion in the FY '10 budget to reduce the program risk [by allowing] for more engineers, more testing time, more airframes for testing. We think that fixing the problems we've encountered ... with the engine is something that's quite manageable. And we don't think it's the best use of our money to fund a second engine. Also in July, 2009, DOD created a Joint Assessment Team (JAT) "to investigate and understand Pratt & Whitney's cost structure and help the JSF office in its assessment of the company's latest … bid. The JAT also will look at scrap rates and other production issues." According to reporting on a memo from Under Secretary Ashton Carter, the JAT's charter included "understanding the production cost, cost drivers, cost projections and long-term affordability of the F135" and developing "a plan to address F135 cost and affordability." DOD has declined to give CRS access to the JAT results. A February 26, 2010, press report indicated: Adding a second engine to the F-35 Lightning II program would cost the same as hewing to the single-source plan, according to a new Pentagon study. Defense Department officials say that supports their decision to reject proposals to buy General Electric and Rolls-Royce's F136 engine.… 'The estimated costs of a competitive engine acquisition strategy are projected to be approximately equivalent to a sole-source scenario, or at the break-even point,' reads a copy of a Pentagon memo explaining the JSF 'Alternate Engine Cost/Benefit Analysis' that was sent to lawmakers on Feb. 25. The memo acknowledges that continued development work on the F136 has reduced the amount of money it would take to bring the second engine online. Yet the "fundamental conclusion remains the same: The potential lifecycle cost savings from" two competing F-35 engine programs 'do not provide a compelling business case,' wrote Christine Fox, who directs Defense Department cost assessment and program evaluation. In February 2011, Pratt & Whitney announced that the F135 would receive approximately $1 billion "for additional engines and support for flight testing of the F-35, and for production improvements to the F135 engine." The bulk of this money was reportedly to acquire assets needed because of DOD's revised F-35 testing plan, but approximately $400 million would be for engine improvements, primarily in parts of the system specific to the vertical-lift F-35B. "Of the planned improvements, about a third are required to meet the original propulsion-system specification and two-thirds to 'go beyond specification' and increase the design's robustness." Section 211 of the 2007 defense authorization act ( H.R. 5122 / P.L. 109-364 of October 17, 2006) (see Appendix A for text) directed three independent cost analyses of the F-35 engine program. The studies were conducted by the Cost Analysis Improvement Group (CAIG) within the Office of the Secretary of Defense (OSD), the Institute for Defense Analyses (IDA), and GAO. The studies used the same data (which were provided by the JSF program office and contractors), and were completed in 2007. The studies came to differing conclusions regarding the estimated financial break-even points for an alternate engine program. The studies all cited non-financial benefits that would be derived from an engine competition, including improvements in fleet readiness, contractor responsiveness, sustainment of industrial base, and stronger international relations. The CAIG study examined the results of the engine competition for the Air Force F-16 fighter program (also known as the Great Engine War—see " The "Great Engine War" of 1984-1994 " in Appendix B ), the engine competition for the Navy and Marine Corps F/A-18 strike fighter program, and the sole-source procurement of the Pratt & Whitney F-119 engine for the F-22. The CAIG study noted that, in light of their analysis of past cost performance in acquisition efforts using competition, the CAIG's baseline "assumptions [were] generally favorable to dual source case." The study assumed that the second F-35 engine provider (General Electric/Rolls-Royce) would meet the initial provider (Pratt & Whitney) in pricing in 2014, the first year of competition. The study also assumed that competition would result in both an immediate 5% price decrease in engine procurement costs and steeper rate of reduction in cost for producing subsequent engines (i.e., a steeper slope on the production learning curve). The CAIG study estimated that an F-35 engine competition would need to achieve a 21.1% reduction in engine procurement costs in constant FY2002 dollars over the lifetime of the program to break even (i.e., to fully offset the costs associated with establishing and maintaining a second source). On a net-present-value (NPV) basis, the study found the procurement-cost reduction required for break-even would be 25.6%. On that basis, the study estimated that DOD would be unable to recoup its initial investment in the alternate engine development program through procurement savings alone. The CAIG study stated that DOD would need to effectively compete engine operations and support (O&S) contracts to have a chance at attaining a 25.6% savings to reach a break-even point by 2040. The report seemed skeptical that, even with competition on O&S contracts, a 25.6% savings could be achieved. In addition to the non-financial benefits of engine competition cited by all three studies, the CAIG study discussed the issue of growth potential in the F-35 engine. The study estimated that a fourth- or fifth-generation fighter would experience an average of 7.2% weight growth between Critical Design Review (CDR) and Initial Operational Capability (IOC) and an additional 0.3% of weight growth thereafter. Such growth in aircraft weight would eventually require a commensurate growth in engine thrust. The CAIG study stated that Pratt & Whitney's F135 engine was already close to exceeding its designed engine temperature specifications, and would require modifications beyond those that would be needed in the F136 engine to allow for thrust growth. The IDA study examined the engine competition for the Air Force F-16 fighter program (the Great Engine War) and the engine competition for the Navy and Marine Corps F/A-18 strike fighter program. The study estimated that an F-35 engine competition would result in a gross savings of 11% to 18%. IDA concluded that past studies of various procurement competitions showed an average (un-weighted) savings of 14.6%. The IDA study estimated that an alternate engine program for the F-35 would incur direct and indirect investment costs of $8.8 billion in constant FY2006 dollars. The study concluded that it would not be feasible to recoup these investment costs through procurement-cost savings alone. The study determined that for the alternate engine program to break even on an NPV basis, the required amount of procurement-cost savings would be an "unrealistic" 40%, and that the required amount of savings would decline to 18% if engine O&S contracts were also competed. The study stated that DOD "has not typically linked procurement and O&S costs in a single competition" and therefore had limited historical data on which to base an estimate of potential O&S savings. The IDA study states that contractor responsiveness was "the primary motivation for the Great Engine War." It stated that F-35s are to constitute 95% of the U.S. fighter/strike-fighter force by 2035, and that having an alternate engine could mitigate the risk of the entire F-35 fleet being grounded due to an engine problem. The study posited that enhanced industry responsiveness to engine upgrades and fixes resulting from competitive forces might have a significant effect on overall fleet readiness. The GAO study stated that procurement-cost savings of 10.3% to 12.3% would be required for the alternate engine program to break even on its investment costs. The study stated that analyses of past engine competitions have shown financial savings of up to 20%. The study concluded that it is reasonable to assume that savings generated from competing the engine would recoup the investment costs. Michael Sullivan, GAO's director of Acquisition and Sourcing Management, stated in testimony that he believed the alternate engine program would reach its break-even point by the late 2020s. The study stated that DOD's program management advisory group recommended in 1998 and again in 2002 that the alternate engine program be continued due to its non-financial benefits, in spite of only finding marginal financial benefits. The expected size of the F-35 production run can affect the potential for reaching a calculated break-even point for an alternate engine program. Other things held equal, the smaller the F-35 production run, the less potential might exist for reaching a break-even point, and vice-versa. The size of the F-35 production run will be influenced by both U.S. decisions on the number of F-35s to be procured for the U.S. military, by foreign governments' decisions on the numbers of F-35s they want to purchase for their own militaries, and which engine is installed in each. Such decisions can be made (and changed) multiple times over the course of many years, during which time there could be multiple changes in the international security environment and U.S. and foreign defense budgets, making it difficult to project now what the ultimate size of the F-35 production run—or that of any particular engine—might be. On September 1, 2009, the GE/Rolls-Royce team reportedly offered to build F136 engines for a firm, fixed price after the first few lots. Two weeks later, Pratt & Whitney made an offer to reduce the price of the F135 after the first three lots. This proposal would be a cost-plus contract, although the company said an earlier offer of a fixed-price F135 contract had been declined by DOD. GE/Rolls-Royce made a second fixed-price offer covering FY2012-FY2014 on April 27, 2010. A December 1, 2010, press report indicated that Pratt & Whitney and DOD had agreed on a fixed-price contract for F135s to equip F-35s procured under Low Rate Initial Production Lot IV. Subsequent reports indicated that the cost of LRIP IV F135s was 16% below the LRIP III cost, although specific figures were not given. A Memorandum of Understanding (MOU) between the United States and eight other countries on the production, sustainment, and follow-on development of the JSF that was signed by the United States on November 14, 2006, states in Section III, regarding Scope of Work (paragraph 3.2.1.1), that: The production work [of the JSF Air System] will include, but will not be limited to, the following... Production of the JSF Air Vehicle, including propulsion systems (both F135 and F136). In response to a question from CRS on whether this MOU has been superseded or changed, the Air Force states: The Joint Strike Fighter (JSF) System Development and Demonstration (SDD) Memorandum of Understanding (MOU) scope of work includes development of JSF primary and alternate propulsion systems which—consistent with the provisions used in all Department of Defense development, acquisition, and support MOUs—is ultimately subject to the availability of U.S. and partner nation funds for such purposes. The PSFD MOU provision (para 3.2.1.1.) regarding cooperative production and procurement of F135 and F136 remains valid. The Department will continue to implement both its JSF SDD and PSFD MOU obligations subject to availability of U.S. and partner funds. We have engaged in consultations with our partners on the Administration's decision not to include F136 in its RDT&E funding requests.... We do not plan to amend either the JSF SDD MOU or PSFD MOU regardless of the outcome of the U.S. FY10 authorization and appropriation process. Other European countries, such as the Netherlands, are home to firms that participate in both the F135 and F136 programs. As European companies secure more F-35-related contracts, the position of each partner nation on the need for the second engine might evolve depending on their economic interest in each engine. On September 3, 2010, British Secretary of State for Defence Liam Fox wrote to Senator Carl Levin, Chairman of the Senate Armed Services Committee, in support of the F136. "The U.K.—and we believe other international partners on the programme—are worried that a decision now to cancel the second engine may save money in the short term but end up costing the U.S. and her partners much more in the long term." Both JSF engines have experienced development challenges typical of new engine programs, including failures during ground testing. On August 30, 2007, and February 4, 2008, the F135 engine experienced failures during ground testing. The JSF Joint Program Office stated that the engine failures in both cases were due to "high-cycle fatigue" resulting in the failure of a turbine blade. A Navy official testified in 2008 that the second engine failure was as a result of ongoing testing to determine the causes of the first failure. DOD officials stated that these engine malfunctions delayed the expected first flight of the F-35B aircraft by a month or two. The engine failures and resulting delays may have contributed to a reported cost overrun of up to $850 million in the F135 program. An F135 was damaged in a test on September 11, 2009. Pratt & Whitney attributed the damage to a worn bushing that led to damage to the tips of some fan blades. The company said the damage occurred to a second generation of the engine, not the version on current flight-test aircraft, and that a "minor modification" would be incorporated immediately in all initial service release (ISR) production engines "with little or no impact on cost and schedule." The F136 has encountered three test incidents. In September 2009, an F136 was reported to have ingested a test sensor, causing minor damage. On October 2, 2009, impact damage was found on a number of blades in the high- and low-pressure turbines. Investigation revealed that a nut had come loose and been ingested into the engine, leading to a minor redesign to better secure the nut. On September 23, 2010, an F136 sustained damage to its fan and compressor. Although the cause was later attributed to an issue peculiar to that one engine, GE initiated a design change to prevent a recurrence. In April 2011, press reports indicated that some F135 engines were being replaced with spares "after a possible misassembly issue was identified in a ground-test engine that was removed from the test stand at Arnold Engineering Development Center in Tennessee in early March." Pratt & Whitney confirms that a 'small number' of F135 test and production engines have been replaced with spares since March. The replacements were ordered after a ground test engine was found to be mis-assembled after an overhaul, Pratt & Whitney says. Further checks identified the same problem on other test and production engines. In July 2009, then-JSF program manager Marine Corps Brigadier General David Heinz criticized Pratt & Whitney for quality control deficiencies reported to have led to the 24% growth in F135 costs. "There are portions of articles that I am building today that I throw away one for every one I build because the scrap and rework rate has not come up to a lean manufacturing process.... I believe, even at this point, that [the yield] should be eighty percent—where I'm scrapping one in five [parts] as opposed to one of every two." Pratt & Whitney responded that only a few parts had a high scrap rate. "In the case of a couple of parts ... we're at 70 to 80 percent [yield] rate, which at this point in the program is exactly where we should be," William Begert, the vice president of business development said. "Overall, we're doing very well on scrap rate … we're running 97 percent for the total engine. So to say that we have a 50 percent scrap rate ... is grossly inaccurate. It's just not true." A production-representative General Electric F136 reportedly achieved 115% of its required thrust in testing in August, 2010. Pratt & Whitney "plans to start tests of a higher-thrust F135 in January 2011." Because the Administration's FY2012 budget again proposes terminating the alternate engine program, a fundamental issue for Congress is whether to continue the program or accept program termination. If the alternate engine program is continued, subsidiary questions may include (but are not limited to) the following: Congressional appropriations have drawn on various sources of funds to support the alternate engine program. Some money came from existing F-35 program funds, and some from adding funds from within the DOD topline. Although the topline was increased in each year, it is not clear what portion of the increases were dedicated to the alternate engine program. The source of funds may have a direct effect on other DOD programs. If alternate engine funds are allocated within the existing F-35 budget lines, other F-35 activities may be curtailed in favor of the alternate engine program. For example, "[f]orcing the program to fund development of the General Electric/Rolls-Royce F136 from within the existing JSF budget would 'take 50-80 tails out of the program' over the next five years, says [then] program executive officer (PEO), Marine Corps Brig. Gen. David Heinz." Similarly, increasing the F-35 program topline to account for the effects of increased alternate engine funding, without concomitantly increasing the DOD topline, could force the transfer of funds from other defense programs to F-35. Congress may face a choice of whether the alternate engine program should be continued if doing so means reducing in the number of F-35s procured (either overall or in a given year); incurring other delays in the program; or reducing other defense capabilities to pay for it. As noted earlier, press accounts stated that DOD's Joint Assessment Team found that fielding and support of two F-35 engines would cost about the same as just one engine, due in part to the effect of congressionally directed appropriations over the past four years. A February 2010 letter from DOD's Director of Cost Assessment and Program Evaluation cited the need for an additional "$2.9 billion (TY$) over the next six years" to develop the F136 to the point where competition would be possible. A September 15, 2010, Government Accountability Office report stated that the $2.9 billion figure "does not include the same level of fidelity and precision normally associated with a detailed, comprehensive estimate" and that "(d)ifferent assumptions and more detailed information could either increase or decrease the $2.9 billion funding projection accordingly." It may be useful to note that two very different costs are being discussed here: the up-front cost of developing the F136, which can have consequences in the current budget year, and the lifetime cost. Supporters of the F136 refer to GAO's May 20, 2009, study showing that the up-front cost of developing the F136 may be balanced over the life of the program by savings from competition, a point on which point the CAIG and IDA studies disagreed. Assumptions regarding the effects of competition on cost are key to these analyses. Congress may have to choose which assumptions it believes. Competition is cited by GAO and advocates of alternate engine procurement as providing an inherent check on cost growth in either competitor's product. Absent competition, DOD (and other government agencies) negotiate contracts based on experience with similar products to establish prices. Those contracts take different forms, but generally include incentives for the contractor to achieve certain cost targets and penalties for missing them. Congress may consider whether the fleet-grounding risk of a single engine type for F-35 represents a greater risk than is already accepted with other aircraft fleets, and whether the risk is sufficient to justify procurement of a second engine. Those supporting an alternate engine note that F-35s are to constitute the majority of future U.S. fighters, and that using a single type of engine creates a risk of all F-35s being grounded in the event of a problem with that engine. The Marine Corps grounded 106 AV-8B Harriers in July 2000 after a faulty engine bearing was cited as the cause of a crash. About 18% of Navy groundings from 1997 to 2006 were due to engine issues. The Air Force stood down two fleets due to engine issues between 1990 and 2006. DOD officials argue that terminating the F136 alternate engine program poses little operational risk. Past decisions to pursue alternate engines for Air Force F-15s and F-16s and Navy F-14s, they state, were made at a time when the services were dissatisfied with the performance of existing engines (the F100 and TF30). DOD argues that these same conditions do not exist today. DOD argues that advances such as computational fluid design for airflow prediction and advanced software for prognostic health monitoring reduce the operational risks of relying on a single engine type for an aircraft. They argue that the advanced software will result in engines that can diagnose their own condition and notify the pilot of impending failure (as opposed to notifying pilots of a failure once it has occurred). Advanced warning of impending failures could give a pilot time to land prior to failure, and allow more efficient and cost-effective maintenance procedures. Even if the costs of supporting two engines are the same as supporting one, operational and logistical issues may complicate the use of multiple engines. The Navy, for example, has limited facilities to support multiple engines. As noted earlier, Chief of Naval Operations Admiral Gary Roughead was quoted in a press report as saying, "I'm in the one engine camp.... On a carrier, space matters." This was implicitly recognized by Air Force Chief of Staff Norton Schwartz in testimony before the House Armed Services Committee when he said, "[A] concern that I have is the reality that the alternate engine is not for anybody else but the Air Force. The Navy isn't going to operate an alternate engine aboard ships. The European partners are not going to operate two engines. You're talking about focusing this on your Air Force, which is problematic in my view." Nonetheless, the Air Force has considerable experience supporting multiple engine types for single-airframe fleets, having done so with the F-16 and F-15 for over 20 years. Congress may be faced with the choice of whether to direct multiple engines for one service or the entire F-35 buy. Since Pratt & Whitney and General Electric are the only two U.S. manufacturers of fighter aircraft engines, a potential issue for policy makers is what effect terminating the F136 engine might have on General Electric's ability to compete for future fighter aircraft engines, assuming domestically owned and sourced competition is desirable. "The engine debate is complex, but it boils down to whether the Pentagon should pay GE up to $3 billion to compete with Pratt," stated a USA Today editorial. General Electric has a significant share of the market for commercial aircraft engines. It also builds and maintains F400 series engines for the Navy and Marine Corps F/A-18E/F strike fighters and EA-18G electric attack aircraft, and supports the F110 series of engines for domestic and international clients. The CAIG and IDA studies of 2007 noted General Electric's strong position in the commercial engine market. The CAIG study stated that General Electric produced 1,000 commercial engines in 2007, while Pratt & Whitney produced 220 commercial engines. The CAIG study noted that General Electric derives about 15% of its business from military engines, while Pratt & Whitney derives about 50% of its business from military engines. A key question is how sufficient General Electric's work on engines other than the F136 (including the F400 and F110 series military engines) would be for preserving General Electric's ability to design and produce fighter engines if the F136 program were terminated. The CAIG study of 2007 stated that about 200 General Electric military jet engineers would be unable to transfer their skills to General Electric's commercial engines if the F136 engine were terminated, potentially reducing GE's ability to compete for future military engine contracts. Ending the F136 program might lead to a reduction in the number of suppliers for F-35 engine spare parts, potentially increasing the vulnerability of the F-35 engine spare parts supply chain to disruptions caused by labor disagreements or natural disasters. Alternatively, maintaining a competition between the F135 and F136 for the production of F-35 engines could reduce the workload for individual F135 suppliers and create uncertainty for both F135 and F136 suppliers regarding annual business volumes. One defense consulting firm stated in 2006 that approximately 50% of each engine is procured in a competitive environment today, suggesting that multiple vendors could create parts for each of the engines. The IDA study of 2007 examined the top F136 component suppliers and concluded that it is "unlikely that any supplier would exit the domestic industrial base because of F136 termination." Although the IDA study of 2007 concluded that the U.S. industrial base may not be "irreparably harmed" if the F136 engine is terminated, the study expressed reservations about DOD placing all of its fighter engine production with a firm that has a weak position in the commercial marketplace, because a firm with a relatively small presence in the commercial marketplace would have fewer resources that could be leveraged for use on DOD products. As mentioned earlier, the IDA study of 2007 examined the top F136 component suppliers and concluded that it is "unlikely that any supplier would exit the domestic industrial base because of F136 termination." The IDA study concluded that, overall, the U.S. industrial base would be stronger as a result of an active F136 program. Some of those who participated in or studied the Great Engine War argue that the competition between General Electric and Pratt & Whitney made Pratt & Whitney and General Electric better and "proved invaluable to future engine development." Congress may consider whether such industrial policy implications add a non-monetary value to the choice of one or two engines, and an appropriate financial cost to achieve the benefits of competition. On May 26, 2011, the House passed H.R. 1540 , the National Defense Authorization Act for Fiscal Year 2012. H.R. 1540 includes language barring funds from being spent for performance improvements to the F-35's engine unless the engine is developed and procured competitively, and other language requiring DOD to preserve existing F136 engines and tooling and to allow the contractor to perform research and development on the engine at the contractor's expense. The competitive procurement language states: SEC. 215. LIMITATION ON OBLIGATION OF FUNDS FOR THE PROPULSION SYSTEM FOR THE F-35 LIGHTNING II AIRCRAFT PROGRAM. (a) Limitation- None of the funds authorized to be appropriated by this Act or otherwise made available for fiscal year 2012 for the propulsion system for the F-35 Lightning II aircraft program may be obligated or expended for performance improvements to such propulsion system unless the Secretary of Defense ensures the competitive development and production of such propulsion system. (b) Performance Improvement Defined- In this section, the term `performance improvement', with respect to the propulsion system for the F-35 Lightning II aircraft program, means an increase in fan or core engine airflow volume or maximum thrust in military or afterburner settings for the primary purpose of improving the takeoff performance or vertical load bring back of such aircraft. The term does not include development or procurement improvements with respect to weight, acquisition costs, operations and support costs, durability, manufacturing efficiencies, observability requirements, or repair costs. The asset-preservation language states: SEC. 252. PRESERVATION AND STORAGE OF CERTAIN PROPERTY RELATED TO F136 PROPULSION SYSTEM. (a) Plan- The Secretary of Defense shall develop and carry out a plan for the preservation and storage of property owned by the Federal Government that was acquired under the F136 propulsion system development contract. The plan shall— (1) ensure that the Secretary preserves and stores such property in a manner that— (A) allows the development of the F136 propulsion system to be restarted after a period of idleness; (B) provides for the long-term sustainment and repair of such property; and (C) allows for such preservation and storage to be conducted at either the facilities of the Federal Government or a contractor under such contract; (2) with respect to the supplier base of such property, identify the costs of restarting development; (3) ensure that the Secretary, at no cost to the Federal Government, provides support and allows for the use of such property by the contractor under such contract to conduct research, development, testing, and evaluation of the F136 engine, if such activities are self-funded by the contractor; and (4) identify any contract modifications, additional facilities, or funding that the Secretary determines necessary to carry out the plan. (b) Prohibition on Disposing Property- None of the amounts authorized to be appropriated by this Act or otherwise made available for fiscal year 2012 for research, development, test, and evaluation, Navy, or research, development, test, and evaluation, Air Force, for the F-35 Lightning II aircraft program may be obligated or expended for activities related to destroying or disposing of the property described in subsection (a). (c) Report- Not later than 45 days after the date of the enactment of this Act, the Secretary of Defense shall submit to the congressional defense committees a report on the plan under subsection (a). The report accompanying H.R. 1540 states, in pertinent part: Incentivizing Competition ...Furthermore, the committee takes steps to ensure preservation of property related to the F136 propulsion system and requires the Secretary of Defense to provide support and allow access to such property to enable the contractor to continue development and testing of the system at no cost to the government. The committee applauds the contractor for continuing development and testing of the F136 propulsion system despite the steps taken by the Department of Defense to cancel the program. The committee remains steadfast in its belief that a competitive alternative to the currently-planned F136 is critical to the success of the Joint Strike Fighter program, and such competition will result in better engine performance, improved contractor responsiveness, a more robust industrial base, increased engine reliability, and improved operational readiness. A May 24, 2011, statement of Administration policy on H.R. 1540 states: F-35 Joint Strike Fighter Propulsion System: The Administration strongly objects to the language in section 215, which limits the obligation or expenditure of funds for performance improvements to the F-35 Lightning II propulsion system unless there is competitive development and production of such a propulsion system. As the test program unfolds, some improvements are likely to be needed. And this would result in the continued development of an extra engine that adds significant extra costs to the program for something the Administration and the Department of Defense (DoD) have determined is not needed and would destabilize the F-35 program when it is beginning to stabilize. Additionally, section 215 would delay development of the main engine and affect the viability of the short take off and vertical landing variant. If the final bill presented to the President includes funding or a legislative direction to continue an extra engine program, the President's senior advisors would recommend a veto. The Administration also strongly objects to section 252, which requires the Secretary to store and preserve the property developed under the F136 program – a termination that ended an unnecessary and extravagant expense, particularly during this period of fiscal restraint. The legislation would constitute a new requirement for the preservation and storage of over 250,000 pieces of Government property located with hundreds of suppliers and add costs for preserving and storing that property. On May 26, 2011, the Senate passed S. 1867 , the National Defense Authorization Act for Fiscal Year 2012. S. 1867 includes language barring funds from being spent on the F136 engine: SEC. 211. PROHIBITIONS RELATING TO USE OF FUNDS FOR RESEARCH, DEVELOPMENT, TEST, AND EVALUATION ON THE F136 ENGINE. (a) Prohibition on Use of Funds for RDT&E- None of the amounts authorized to be appropriated by this Act may be obligated or expended for research, development, test, or evaluation on the F136 engine. (b) Prohibition on Treatment of Certain Expenditures as Allowable Charges- No research, development, test, or evaluation on the F136 engine that is conducted and funded by the contractor may be considered an allowable charge on any future government contract, whether as a direct or indirect cost. The conference report on H.R. 1540 included the following language regarding preservation of F136 assets: SEC. 223. PRESERVATION AND STORAGE OF CERTAIN PROPERTY RELATED TO F136 PROPULSION SYSTEM. (a) PLAN.—The Secretary of Defense shall develop a plan for the disposition of property owned by the Federal Government that was acquired under the F136 propulsion system development contract. The plan shall— (1) ensure that the Secretary preserves and stores, uses, or disposes of such property in a manner that— (A) provides for the long-term sustainment and repair of such property pending the determination by the Department of Defense that such property— (i) can be used within the F–35 Lightning II aircraft program, in other Government development programs, or in other contractor-funded development activities; (ii) can be stored for use in future Government development programs; or (iii) should be disposed; and (B) allows for such preservation and storage of identified property to be conducted at either the facilities of the Federal Government or a contractor under such contract; and (2) identify any contract modifications, additional facilities, or funding that the Secretary determines necessary to carry out the plan. (b) RESTRICTION ON THE USE OF FUNDS.—None of the amounts authorized to be appropriated by this Act or otherwise made available for fiscal year 2012 for research, development, test, and evaluation, Navy, or research, development, test, and evaluation, Air Force, for the F–35 Lightning II aircraft program may be obligated or expended for activities related to destroying or disposing of the property described in subsection (a) until the date that is 30 days after the date on which the report under subsection (c) is submitted to the congressional defense committees. (c) REPORT.—Not later than 120 days after the date of the enactment of this Act, the Secretary of Defense shall submit to the congressional defense committees a report on the plan under subsection (a). That report shall describe how the Secretary intends to obtain maximum benefit to the Federal Government from the investment already made in developing the F136. On July 8, 2011, the House passed H.R. 2219 , the Department of Defense Appropriations Act, 2012. The bill included no funds for the F-35 alternate engine. On September 15, 2011, the Senate Appropriations Committee reported S.Rept. 112-77 to accompany H.R. 2219 . The committee report, later passed by the Senate as part of a consolidated appropriations bill, did not include funding or language relating to the F-35 alternate engine. The 2012 Department of Defense Appropriations Act was passed as part of H.R. 2055 , the Consolidated Appropriations Act, 2012. The Act contained no funds for the F-35 alternate engine, and the Joint Explanatory Statement of the Committee of Conference included no references to the program. Appendix A. Prior-Year Legislative Activity This appendix presents details from the legislative history of the F-35 alternate engine program for the period FY1996-FY2010. The appendix focuses on presenting final bill language and committee and conference report language. It omits bill language in House- or Senate-reported versions of bills, as well as numerous instances in which committee or conference reports recommended additional funding for the F-35 alternate engine program but did not otherwise discuss the program in report language. The F-35 program was known in FY1996 and FY1997 as the Joint Advanced Strike Technology (JAST) program. FY1996 Defense Authorization Act ( S. 1124 / P.L. 104-106 of February 10, 1996) Section 213 of S. 1124 / P.L. 104-106 authorized funds for the JAST program, required DOD to submit a report on the JAST program, and limited the obligation of JAST program funds until 30 days after the report is submitted. Subsection (b)(2) of Section 213 stated that $7 million of the research and development funding authorized in the act "shall be available to provide for competitive engine concepts" for the JAST program. Subsection (d) required a report on requirements for the JAST program and other combat aircraft, and on certain planning assumptions that affect those requirements. The conference report ( H.Rept. 104-450 of January 22, 1996) on S. 1124 discussed Section 213 on pages 705-707, stating in part: The Senate report ( S.Rept. 104-112 ) questioned whether the program could fulfill the needs of the three services, and directed the Department to include two separate approaches in the JAST program to reduce program risk. The Senate amendment directed the Secretary of the Navy to:... (2) evaluate at least two propulsion concepts from competing engine companies as part of those demonstrations.... The conferees share the concerns expressed in the Senate report ( S.Rept. 104-112 ) regarding the lack of engine competition and the size of flying prototypes. The conferees direct the Under Secretary of Defense (Acquisition & Technology) (USD (A&T)) to ensure that: (1) the Department's JAST program plan provides for adequate engine competition in the program; and (2) the scale of the proposed demonstrator aircraft is consistent with both adequately demonstrating JAST concepts and lowering the risk of entering engineering and manufacturing development (EMD). The conferees direct the Secretary of Defense to include in the report required by section 213(d) the Department's plan for competitive engine programs and demonstrator aircraft. The conferees recommend authorization of funds reflecting these changes, and agree to a provision (sec. 213) that would:... (4) authorize $7.0 million for competitive engine concepts. The Senate Armed Services Committee report ( S.Rept. 104-112 of July 12, 1995) on S. 1026 , an earlier version of the FY1996 defense authorization bill, discussed the JAST program on pages 95-97, stating in part: Further, the committee believes supporting competitive propulsion programs would help reduce risk and lead to higher confidence of achieving more affordable life cycle costs. The committee fears that the current JAST approach may lead to selecting one power plant manufacturer prematurely. Therefore, the committee directs the Secretary to evaluate at least two propulsion concepts from competing engine companies as part of the full scale, full thrust aircraft demonstrators. (Page 96) DOD Appropriations Act ( H.R. 2126 / P.L. 104-61 of December 1, 1995) The House Appropriations Committee report ( H.Rept. 104-208 of July 27, 1995) on H.R. 2126 discussed the JAST program on page 150, stating in part: The history of recent fighter engine propulsion plants demonstrates that development of new engines is difficult. The Navy has generally been dissatisfied with the engine performance of early model F–14s, and it eventually upgraded later model F–14s with an Air Force engine. The Air Force in the late 1970s and early 1980s was dissatisfied with both the performance and cost of engines on early models of the F–15 and the F–16, and it spent over a billion dollars to bring a second engine manufacturer into a position where competition could be conducted between two companies for future Air Force fighter aircraft. The new engine for the F–22 has suffered technical problems and is undergoing a redesign. The Joint Advanced Strike Technology (JAST) program envisions building a common aircraft to satisfy the needs of the Air Force, Navy and Marine Corps for fighter aircraft in the next century. Yet, it has selected a single power plant design, a derivative of the F–22 engine which has yet to be proven. Given the engine performance difficulties experienced over the last two decades, this is unwise. To cede the manufacture of all jet engines for three services' future aircraft without any additional competition is not likely to be cost effective. For these reasons, the Committee believes it is imperative for the JAST program to actively pursue an engine design from a second manufacturer and has provided an additional $20,000,000 only for this purpose. FY1997 Defense Authorization Act ( H.R. 3230 / P.L. 104-201 of September 23, 1996) The Senate Armed Services Committee report ( S.Rept. 104-267 of May 13, 1996) on S. 1745 , the companion bill to H.R. 3230 , discussed the JAST program on page 181, stating in part: The committee is persuaded that the benefits of engine competition will outweigh any near-term investment. Accordingly, the committee directs that remaining competition funds be rebaselined to guarantee integration into the preferred weapons system concept at the earliest practical point. DOD Appropriation Act ( H.R. 3610 / P.L. 104-208 of September 30, 1996) H.R. 3610 / P.L. 104-208 was an omnibus appropriations act that included the DOD appropriations act. The House Appropriations Committee report ( H.Rept. 104-617 of June 11, 1996) on H.R. 3610 discussed the JAST program on page 151, stating in part: The Committee recommends $602,100,000, an increase of $13,000,000 in the Navy account only to accelerate development of an alternate engine in order to have it available at the beginning of the engineering and manufacturing development phase of the program. This increase should be part of a program to develop a demonstrator engine and integrate it into the selected weapon systems contractor concepts. FY1998 Defense Authorization Act ( H.R. 1119 / P.L. 105-85 of November 18, 1997) Section 213 of H.R. 1119 / P.L. 105-85 states in part: SEC. 213. JOINT STRIKE FIGHTER PROGRAM. (a) REPORT.—Not later than February 15, 1998, the Secretary of Defense shall submit to the congressional defense committees a report on the options for the sequence in which the variants of the joint strike fighter are to be produced and fielded. (b) CONTENT OF REPORT.—The report shall contain the following:... (4) A certification that the Joint Strike Fighter Program contains sufficient funding to carry out an alternate engine development program that includes flight qualification of an alternate engine in a joint strike fighter airframe.... The House Armed Services Committee report ( H.Rept. 105-132 of June 16, 1997) on H.R. 1119 discussed the JSF program on pages 189-190, 212, and 243. The discussion on pages 189-190 states in part: The committee is also concerned that the 1997 FYDP does not reflect adequate funding within the JSF program to continue development of the alternative fighter engine (AFE) beyond the current demonstration/validation phase. The committee continues to believe that a fully developed and flight tested AFE is essential to reduce risk to the JSF program and to provide credible competition necessary for controlling program cost. Therefore, the committee directs the Secretary of Defense to provide a report to the Congressional defense committees no later than February 15, 1998, detailing the level of funding within the JSF program that is identified to fund full development and flight test of the AFE. The Senate Armed Services Committee report ( S.Rept. 105-29 of June 17, 1997) on S. 924 , the companion bill to H.R. 1119 , discussed the JSF program on pages 119-120, stating in part: The budget request included funds for the continuation of a program to establish an alternative engine for the joint strike fighter, but omitted funds for fiscal year 1998. The committee is persuaded that there is a need for an alternative engine for the JSF, but expects the Department to program sufficient funds in the future years for a robust, accelerated profile. Accordingly, the committee recommends an increase in the budget request of $28.0 million to accelerate the alternative engine program, with the understanding that the Department will provide for the accelerated program in fiscal year 1999 and beyond. FY1999 Defense Authorization Act ( H.R. 3616 / P.L. 105-261 of October 17, 1998) The Senate Armed Services Committee report ( S.Rept. 105-189 of May 11, 1998) on S. 2060 , the companion bill to H.R. 3616 , discussed the JSF program on pages 168-169, stating in part: Section 213 of the National Defense Authorization Act for Fiscal Year 1998 (Public Law 105–85) required a report on the order of fielding the variants of the JSF, and that specifically addressed the acceleration of the naval variant. The report included a certification that the JSF program contains sufficient funding to carry out an alternate engine program that includes flight qualification of an alternate engine in a JSF airframe. While not in total agreement with the report, the committee notes the timely submission and clear presentation of the Department of Defense priorities and plans. The certification of a funded program for an alternate engine is a positive commitment to cost-effective program management. However, the actual demonstration of the alternate engine in a JSF airframe has been continuously shifted to the ''out years,'' an action that threatens to invalidate the whole initiative. If the alternate engine is not completed for use for the most stressing of the JSF requirements (the short takeoff/vertical landing variant), then it may be too late to provide a major benefit to the program. Accordingly, the committee recommends an increase of $15.0 million to the budget request to accelerate the development of an alternative engine for the JSF. FY2000 Defense Authorization Act ( S. 1059 / P.L. 106-65 of October 5, 1999) The House Armed Services Committee report ( H.Rept. 106-162 of May 24, 1999) on H.R. 1401 , the companion bill to S. 1059 , discussed the JSF program on pages 236-237, stating in part: The committee continues its strong support for the development of an alternate engine to ensure sustainment of critical industrial base capabilities, control of engine cost growth, and reduction of risk to the reliability and maintainability of the planned fleet of 3,000 JSF aircraft. The committee is concerned that while the Department now states a commitment to development of an alternative engine for JSF, the planned funding levels outlined to sup port that commitment do not enable cost-efficient and timely completion of the effort. Meanwhile, the Department is also conducting other jet engine development efforts in PE 27268F as part of the aircraft engine CIP. The committee notes that requested funding for this level of effort program has increased by $66.6 million, over 40 percent, from the level projected for fiscal year 2000 just last year. The justification for the requested increase is to reduce backlog of proposed engineering tasks for currently fielded engines. While supportive of the CIP, the committee does not consider the proposed increase to this program to be of higher priority than development of a new state-of-the-art alternative engine for JSF. The committee notes that full development of a flight qualified jet engine also provides opportunities to migrate proven new technologies to existing engines. Therefore, the committee recommends $130.2 million in PE 27268F, a decrease of $30.0 million, and $265.4 million in PE 63800F, an increase of $30.0 million, and directs that this increase in JSF funding be used only for acceleration of alternate engine development. The Senate Armed Services Committee report ( S.Rept. 106-50 of May 17 [legislative day May 14], 1999) on S. 1059 discussed the JSF program on page 204, stating in part: The budget request included $476.6 million ($241.2 million in Navy research and development and $235.4 million in Air Force research and development) for continued development of the joint strike fighter (JSF). Within that total, $33.0 million is included for the alternate engine program. The committee remains concerned that development of an alternate engine for the JSF will not proceed to a point where it represents a viable alternative and reduces risk for the vertical and short take off and landing (V/STOL) JSF variant. The committee recommends an additional $15.0 million in PE 63800F to reduce risk and accelerate development of the alternate engine, a total Air Force authorization of $250.4 million. FY2001 Defense Authorization Act ( H.R. 4205 / P.L. 106-398 of October 30, 2000) The conference report ( H.Rept. 106-945 of October 6, 2000) on H.R. 4205 discussed the JSF program on pages 677-678, stating in part: The conferees are also concerned about the apparent pattern of additional contractor funding required to sustain the current DEMVAL activities of the program. Since the JSF program is potentially one of the largest acquisition programs in the Department of Defense, both competing contractors in this winner-take-all competition realize the significance of winner selection. However, the conferees are opposed to the requirement for industry to make additional, unreimbursed investments in the JSF program beyond existing contractual agreements. The conferees view the additional DEMVAL funding as necessary to provide for the execution of those projects presented in the budget request on the extended schedule. The conferees expect that risk mitigation projects, including the alternate engine, will be funded to the levels presented in the budget request. The House Armed Services Committee report ( H.Rept. 106-616 of May 12, 2000) on H.R. 4205 discussed the JSF program on pages 252-253, stating in part: Additionally, while the Department is currently reviewing the planned JSF "winner take all" strategy to ensure that aircraft industrial base concerns are addressed, the committee notes that no specific concern has been stated with respect to the future stability of the fighter aircraft engine industrial base. The committee supports continuation of the JSF alternate engine program (AEP) as directed in section 211 [sic: 213] of the National Defense Authorization Act for Fiscal Year 1998 (P.L. 105–85) and recommends that the Department specifically address measures to ensure the health of the fighter aircraft engine industrial base in any proposed restructure of the acquisition program for JSF. The committee also notes that the JSF AEP, as currently funded, will not be capable of completing development and flight qualification of the alternate engine until after award of lot five of the JSF production program. In order to reduce risk to JSF production and aircraft fielding, the Committee supports acceleration of AEP development to ensure that the alternative engine completes configuration compatibility for the JSF airframe. The committee recommends $299.5 million in PE 64800F, $131.6 million in PE 63800N, and $296.0 million in PE 64800N, the requested amounts. The committee also recommends $144.5 million in PE 63800F, an increase of $15.0 million, to accelerate the JSF AEP. DOD Appropriations Act ( H.R. 4576 / P.L. 106-259 of August 9, 2000) The Senate Appropriations Committee report ( S.Rept. 106-298 of May 18, 2000) on S. 2593 , the companion bill to H.R. 4576 , discussed the JSF program on pages 116-177, stating in part: The Committee also continues to support the Alternate Engine Program (AEP) for JSF and expects that the recommended changes in overall JSF funding will not impact the current AEP schedule and that no funds will be diverted from the existing AEP plan. FY2002 Defense Authorization Act ( S. 1438 / P.L. 107-107 of December 28, 2001) The conference report ( H.Rept. 107-333 of December 12, 2001) on S. 1438 discusses the JSF program on page 574, stating in part: The conferees remain concerned about the technical risks associated with the JSF aircraft engine and expect the Department to develop and integrate the JSF alternate engine within the EMD program. The conferees believe that the Department should execute the alternate engine program with a goal of having that engine integrated into the JSF prior to full rate production. The House Armed Services Committee report ( H.Rept. 107-194 of September 4, 2001) on H.R. 2586 , the companion bill to S. 1438 , discussed the JSF alternate engine program on page 220, stating: The budget request contained $769.5 million in PE 64800F to begin the engineering and manufacturing development phase of the JSF program, but included no funds to reduce development schedule risk of the alternate engine common hardware components. The JSF program will develop and field a family of aircraft that meets the needs of the Navy, Air Force, Marine Corps, and allies with commonality among the variants to minimize life cycle costs. The committee notes that the JSF joint program office (JPO) has encouraged two engine manufacturers to work together on the co-development of propulsion components which are common to both the JSF's current F-119 engine and the F-120 alternate engine and understands that this effort will develop two interchangeable propulsion systems while preserving the proprietary interests of each manufacturer. The committee also understands that the JPO supports production of the F-120 alternate engine as part of the low-rate initial JSF production scheduled for fiscal year 2009 but believes that increased funding in fiscal year 2002 is required to reduce development schedule risk of the common hardware components. Accordingly, the committee recommends $779.5 million in PE 64800F, an increase of $10.0 million, to reduce development schedule risk of the JSF alternate engine common hardware components. FY2003 DOD Appropriations Act ( H.R. 5010 / P.L. 107-248 of October 23, 2002) The conference report ( H.Rept. 107-732 of October 9, 2002) on H.R. 5010 states on page 279: The conferees have included an additional $29,750,000 for the Joint Strike Fighter Interchangeable Engine Program only to continue the current effort to develop and maintain two, competing, interchangeable engine programs for the Joint Strike Fighter. FY2004 Defense Authorization Act ( H.R. 1588 / P.L. 108-136 of November 24, 2003) The SENATE ARMED SERVICES COMMITTEE report ( S.Rept. 108-46 of May 13, 2003) on S. 1050 , the companion bill to H.R. 1588 , notes on page 4 the recommendation for $56 million in additional funding for the JSF program. The report discussed the JSF program on page 185, stating in part: The committee believes that the interchangeable engine should be made available for competitive procurement as early as possible. The result of a reduction to this program would be to delay the interchangeable engine by at least two years. Therefore, the committee recommends an increase of $56.0 million in PE 64800N to continue the F136 interchangeable engine development on its original schedule. The committee believes that the Department of Defense should make the financial adjustments to the Future Years Defense Program that are necessary to restore the original interchangeable engine schedule. DOD Appropriations Act ( H.R. 2658 / P.L. 108-87 of September 30, 2003) The Senate Appropriations Committee report ( S.Rept. 108-87 of July 10, 2003) on S. 1382 , the companion bill to H.R. 2658 discussed the JSF program on page 157, stating: The Committee is dismayed that the Joint Strike Fighter program office was permitted to take a reduction for inflation savings disproportionately against the F136 Interchangeable Engine. This cut resulted in a $56,000,000 reduction to this engine's research and development effort in fiscal year 2004. The Committee has been supportive of this engine development program for several years and has, in fact, increased funding to accelerate this engine's development. This cut to the program flies in the face of longstanding Committee support. The Committee, therefore, recommends a total cut of $56,000,000 to the Joint Strike Fighter program which is to be taken equally from the Navy and the Air Force Joint Strike Fighter programs with the exception of the F136 engine program. The Committee also recommends that the fiscal year 2004 cut to the F136 Interchangeable Engine be restored to the original program with an appropriate adjustment for the inflation cut. Finally, the Committee has added $20,000,000 to this program only for risk reduction to the F136 Interchangeable Engine program. FY2005 Defense Authorization Act ( H.R. 4200 / P.L. 108-375 of October 28, 2004) The House Armed Services Committee report ( H.Rept. 108-491 of May 14, 2004) on H.R. 4200 discussed the JSF program on page 183, stating in part: In order to maintain competition for the engine for the JSF, Congress has mandated the funding of an alternate engine program and the JSF Joint Program Office (JPO) is working with the contractor propulsion teams to provide for completely interchangeable engines. The committee believes that the earliest possible engine production lot competition is beneficial to the JSF program. The committee directs the JSF JPO plan to compete, at the earliest possible date, engine common hardware as well as the turbomachinery, while maintaining PW F135 and GE F136 engine interchangeability. FY2006 Defense Authorization Act ( H.R. 1815 / P.L. 109-163 of January 6, 2006) The House Armed Services Committee report ( H.Rept. 109-89 of May 20, 2005) on H.R. 1815 discussed the JSF program on pages 92-93, stating in part: Additionally, the committee understands that during the preparation of the fiscal year 2006 budget request that there were efforts by some within the military services to eliminate planned budgets for the JSF competitive engine development program. Despite those views, the committee also understands that the Secretary of Defense ensured that the engine program was nominally funded. The committee believes that a two-engine source for the single-engine JSF would be the most cost effective and operationally effective engine solution during the JSF's service life, and therefore expects that the Secretary, along with Department of the Navy and the Department of the Air Force, will remain committed to the development of competitive engines for the JSF. FY2007 Defense Authorization Act ( H.R. 5122 / P.L. 109-364 of October 17, 2006) Section 211 of H.R. 5122 / P.L. 109-364 states: SEC. 211. ACQUISITION OF, AND INDEPENDENT COST ANALYSES FOR, THE JOINT STRIKE FIGHTER PROPULSION SYSTEM. (a) ACQUISITION.— (1) IN GENERAL.—The Secretary of Defense shall provide for the development and procurement of the propulsion system for the Joint Strike Fighter aircraft through the continued development and sustainment of two interchangeable propulsion systems for that aircraft by two separate contractors throughout the life cycle of the aircraft. (2) MODIFICATIONS PROHIBITED.—Except as provided by paragraph (3), the Secretary may not carry out any modification to the acquisition program for the Joint Strike Fighter aircraft that would result in the development or procurement of the propulsion system for that aircraft in a manner other than that required by paragraph (1). (3) MODIFICATIONS ALLOWED.—Notwithstanding paragraph (1), a modification described in paragraph (2) may be carried out to the extent that each of the following requirements is met: (A) The Secretary of Defense has notified the congressional defense committees of the modification. (B) Each of the reports required by subsection (b) has been submitted. (C) Funds are appropriated for that purpose pursuant to an authorization of appropriations. (b) INDEPENDENT COST ANALYSES.— (1) IN GENERAL.—A comprehensive and detailed cost analysis of the Joint Strike Fighter engine program shall be independently performed by each of the following: (A) The Comptroller General. (B) A federally funded research and development center selected by the Secretary of Defense. (C) The Secretary of Defense, acting through the Cost Analysis Improvement Group of the Office of the Secretary of Defense. (2) MATTERS COVERED.—Each such cost analysis shall cover— (A) an alternative under which the Joint Strike Fighter aircraft is capable of using the F135 engine only; (B) an alternative under which the program executes a one-time firm-fixed price contract for a selected propulsion system for the Joint Strike Fighter aircraft for the life cycle of the aircraft following the Initial Service Release of the propulsion system in fiscal year 2008; (C) an alternative under which the Joint Strike Fighter aircraft is capable of using either the F135 engine or the F136 engine, and the engine selection is carried out on a competitive basis; and (D) any other alternative, whether competitive or sole source, that would reduce total life-cycle cost, improve program schedule, or both. (3) REPORTS.—Not later than March 15, 2007, the Secretary of Defense, the Comptroller General, and the chief executive officer of the federally funded research and development center selected under paragraph (1)(B) shall independently submit to the congressional defense committees a report on the cost analysis carried out under paragraph (1). Each such report shall include each of the following matters: (A) The key assumptions used in carrying out the cost analysis. (B) The methodology and techniques used in carrying out the cost analysis. (C) For each alternative required by paragraph (2)— (i) a comparison of the life-cycle costs, including costs in current and constant dollars and a net-present-value analysis; (ii) estimates of— (I) supply, maintenance, and other operations manpower required to support the alternative; (II) the number of flight hours required to achieve engine maturity and the year in which that is expected to be achieved; and (III) the total number of engines expected to be procured over the lifetime of the Joint Strike Fighter program; and (iii) an evaluation of benefits, other than cost, provided by competition, to include an assessment of improved performance, operational readiness and warfighting capability, risk reduction, technology innovation, and contractor responsiveness. (D) A description of the acquisition strategies (including development and production) that were used for, and experience with respect to cost, schedule, and performance under, past acquisition programs for engines for tactical fighter aircraft, including the F–15, F–16, F–18, and F–22 aircraft. (E) A comparison of the experiences under past acquisition programs carried out on a sole-source basis with respect to performance, savings, maintainability, reliability, and technical innovation. (F) The impact that canceling the F136 competitive engine would have on the high-performance military engine industrial base, and on the Department of Defense's ability to make competitive engine choices for future combat aircraft systems beyond the Joint Strike Fighter. (G) Conclusions and recommendations. (4) CERTIFICATIONS.—In submitting the report required by paragraph (3), the Comptroller General and the chief executive officer of the federally funded research and development center shall also submit a certification as to whether the Secretary of Defense provided access to sufficient information to enable the Comptroller General or the chief executive officer, as the case may be, to make informed judgments on the matters required to be included in the report. (c) LIFE-CYCLE COSTS DEFINED.—In this section, the term ''lifecycle costs'' includes— (1) those elements of cost that would be considered for a life-cycle cost analysis for a major defense acquisition program, including procurement of engines, procurement of spare engines, and procurement of engine components and parts; and (2) good-faith estimates of routine engine costs (such as performance upgrades and component improvement) that historically have occurred in tactical fighter engine programs. The House Armed Services Committee report ( H.Rept. 109-452 of May 5, 2006) on H.R. 5122 discussed the JSF program on pages 105-106 and 220-221. The discussion on pages 220-221 states in part: The budget request contained $2.0 billion in PE 64800F for the Department of the Air Force's development of the joint strike fighter (JSF), also known as the F–35, but included no funds for research and development of a second aircraft tire source for the JSF and other existing combat aircraft, or for development of an alternate JSF engine. The committee notes that the budget request also includes $2.0 billion in PE 64800N for the Department of the Navy's development of JSF.... The JSF alternate engine program is developing the F136 engine which would provide an alternative to the currently-planned F135 engine. In the committee report ( H.Rept. 109-89 ) accompanying the National Defense Authorization Report for Fiscal Year 2006, the committee expressed its belief that a two-engine source for the single-engine JSF would be the most cost effective and operationally effective engine solution during the JSF's service life, and is disappointed that the budget request did not include funds for development of an alternate JSF engine beyond fiscal year 2006. During a hearing held by the Subcommittee on Tactical Air and Land Forces on March 16, 2006, the Under Secretary of Defense for Acquisition, Technology, and Logistics testified, ''While the benefits of a second supplier are undeniable, our judgment is that those benefits are not worth the substantial financial cost of a second supplier.'' To confirm those judgments, the committee requested that the Government Accountability Office (GAO) witness at the hearing review and report on the Department of Defense's analysis that resulted in the judgment to terminate the JSF alternate engine program. On April 12, 2006, the GAO witness reported to the committee that the ''Department of Defense's quantitative analysis focuses only on potential savings for engine acquisition and does not appear to fully examine potential savings that may be possible when competition exists for providing support for maintenance and operations over the lifecycle of the engine.'' The committee concurs with GAO's observation, and believes that the JSF alternate engine program should continue until the Department of Defense fully analyzes potential costs and savings resulting from competition over the JSF engine's lifecycle. Accordingly, the committee recommends an increase of $408.0 million to continue the JSF alternate engine program for fiscal year 2007. Additionally, the committee recommends a provision (section 211) that would require that the Department of the Navy and the Department of the Air Force obligate not less than $408.0 million, of the funds authorized to be appropriated for the system development and demonstration program for the Joint Strike Fighter, for continued development of an alternate engine for the Joint Strike Fighter. The committee also recommends a provision (section 215) that would require both the Secretary of Defense, acting through the Department of Defense Cost Analysis Improvement Group, and the Comptroller General to conduct independent analyses of the JSF alternate engine program and provide a report to the congressional defense committees by March 15, 2007. The Senate Armed Services Committee report ( S.Rept. 109-254 of May 9, 2006) on S. 2766 , the companion bill to 5122, states on page 6: In order to confront irregular warfare threats, the Department must modernize and transform the armed forces. Since 2001, the Department has undergone significant modernization and transformation even during a time of war. The committee supported the Department's transformational activities, including authorizing funds for the construction of eight ships, for a total of $12.1 billion; including a provision to promote coordinated joint development, procurement, and operation of unmanned systems; adding funds for the continued development of the Joint Strike Fighter interchangeable engine during fiscal year 2007; authorizing the budget request of $3.7 billion for the Army's Future Combat Systems program; and authorizing an increase of nearly $365.0 million over the President's budget request of $11.1 billion for science and technology programs. The report states on page 7: Increasingly, the committee has emphasized the importance of developing capabilities to plan and conduct coalition operations. Ten years ago, the committee expressed concerns regarding the lack of engine competition in the Joint Strike Fighter program. As a result, the committee included a provision in the National Defense Authorization Act for Fiscal Year 1996 (Public Law 104–106) that directed the Secretary of Defense to evaluate at least two propulsion concepts from competing engine companies. Recently, the committee held hearings to review the Department's unilateral proposal, despite legislative direction to maintain a two-engine program, to eliminate the development of the F136 alternate interchangeable engine from the Joint Strike Fighter program. The committee remains concerned that relying on one engine provider to perform multiple missions, for multiple services and multiple nations presents an unnecessary operational and financial risk to the United States. Accordingly, the committee authorized provisions adding $400.8 million for the continued development of the interchangeable engine during fiscal year 2007; and directing the Secretary of Defense to continue the development and sustainment of the Joint Strike Fighter program with two competitive propulsion systems throughout the life of the aircraft or enter into a one-time, firm-fixed-price contract for a single propulsion system throughout the life of the aircraft. The report discussed two proposed legislative provisions on pages 129-131, stating: Development of the propulsion system for the Joint Strike Fighter (sec. 254) The committee recommends a provision that would direct the Secretary of Defense to continue the development and sustainment of the Joint Strike Fighter (JSF) program with two competitive propulsion systems throughout the life cycle of the aircraft, or enter into a one-time firm-fixed-price contract for a selected propulsion system for the life cycle of the aircraft following the initial service release of the JSF F135 propulsion system in fiscal year 2008. During the 1970's and early 1980's, Pratt & Whitney was the sole source provider of engines for the F–14, F–15, and F–16 aircraft. Because of persistent engine problems that resulted in the loss of aircraft and degraded readiness, Congress directed the Department of Defense to develop and produce an engine to compete with Pratt & Whitney engines on these aircraft. The benefits that resulted from this competition included improved performance, reduced risk, increased readiness, lower cost of ownership, improved contractor responsiveness to customer needs, and over $4.0 billion of cost savings. Congress once again directed the Department to provide for an engine competition for the JSF in 1996 out of concerns for a lack of competition expressed in the National Defense Authorization Act for Fiscal Year 1996 (P.L. 104–106). Congress has consistently supported a competitive engine program for the Joint Strike Fighter for the past 10 years. The JSF program is the largest acquisition program, in terms of funding, in Department of Defense history. Total JSF deliveries may well exceed 4,000 aircraft worldwide, with a resultant level of propulsion business in the tens of billions of dollars. The committee is concerned that relying on a sole engine supplier for a single-engine aircraft to do multiple missions for multiple services and multiple nations presents an unnecessary operational and financial risk to our nation. The committee is also concerned that the Department's analysis provided to the committee, as justification for the termination of the F136 interchangeable engine, accounted for only 30 percent of the engine costs over the life cycle of the aircraft and failed to comply with the Department's policy on economic analysis that would have required the inclusion of the total life cycle cost. If the Department had conducted a full life cycle analysis, the committee believes that the results of the analysis would show significant cost savings that could be achieved through a competitive engine strategy. The committee believes that through the enduring value of competition, sufficient savings will be generated from a series of competitive engine procurements over the life cycle of the aircraft that will more than offset the cost of completing the F136 engine development. In order to ensure that the Congress has the complete picture of the full life cycle costs, the committee has recommended another provision described elsewhere in this report that would require the Secretary of Defense and the Comptroller General to conduct independent life cycle cost analyses addressing this issue. Independent cost analyses for Joint Strike Fighter engine program (sec. 255) The committee recommends a provision that would direct the Secretary of Defense, a federally-funded research and development center (FFRDC) chosen by the Secretary, and the Comptroller General to conduct independent life cycle cost analyses of the development and sustainment of the Joint Strike Fighter (JSF) program with two competitive propulsion systems throughout the life cycle of the aircraft, versus terminating the alternate engine development and proceeding with only one engine. The provision would also require that the Comptroller and the FFRDC certify that they had access to sufficient information upon which to make informed judgments on the life cycle costs of the two alternatives. As noted elsewhere in this report, the committee is concerned that the Department of Defense analysis provided as justification for the termination of the F136 interchangeable engine did not account for all of the costs over the life cycle of the aircraft. The report discussed the JSF program on pages 95-96 and 179. The discussion on page 179 states: F136 Interchangeable Engine The budget request included $1,999.0 million in PE 64800F and $2,031.0 million in PE 64800N for the continued development of the Joint Strike Fighter, but included no funding for the development of the F136 interchangeable engine. The committee believes supporting competitive propulsion systems would help reduce operational risk and lead to higher confidence of achieving more affordable life cycle costs. The committee expects that the Secretary of Defense, along with the Department of the Navy and the Department of the Air Force, will remain committed to the development and sustainment of competitive propulsion systems for the Joint Strike Fighter. The committee recommends an increase of $200.4 million in PE 64800F and an increase of $200.4 million in PE 64800N for the continued development of the F136 interchangeable engine. DOD Appropriations Act ( H.R. 5631 / P.L. 109-289 of September 29, 2006) The conference report ( H.Rept. 109-676 of September 25, 2006) on H.R. 5631 discussed the JSF program on pages 205 and 228. The discussion on pages 228 states: The conferees recommend an additional $170,000,000 in Research, Development, Test and Evaluation, Air Force and $170,000,000 in Research, Development, Test and Evaluation, Navy for continuing development of the F–136 engine for the Joint Strike Fighter program. The conferees direct the Under Secretary of Defense for Acquisition, Technology and Logistics to sponsor a comprehensive independent cost analysis of the Joint Strike Fighter engine program. The conferees strongly encourage the analysis be conducted by the Institute for Defense Analyses (IDA). This analysis shall include but not be limited to: (1) a comparison of costs associated with the development of the F–135 and F–136 engines; (2) an evaluation of potential savings achieved by eliminating or continuing the development and production of an alternate engine over the program's life cycle; and (3) the potential effects on the industrial base of eliminating or continuing the development and production of an alternate engine over the program's life cycle. This analysis shall be transmitted to the congressional defense committees not later than March 15, 2007. The conferees in no way intend for this analysis to be an excuse for the Department of Defense not to fully fund the development of both the F–135 and the F–136 engines in fiscal year 2008. All evidence suggests that the development of two alternate engines will lead to cost savings through competition, increased capabilities for the warfighter, and a strengthened industrial base. Accordingly, the conferees direct the Department of Defense to fund the continued development of both the engines in the fiscal year 2008 budget submission while this cost analysis is ongoing. The House Appropriations Committee report ( H.Rept. 109-504 of June 16, 2006) on H.R. 5631 discusses the JSF program on page 163 and 266. The discussion on page 266 states: The budget request provided no funding for development of the F–136 engine for the Joint Strike Fighter program. The Committee recommends an additional $200,000,000 for continued development of this alternate engine source. The Committee directs the Under Secretary of Defense for Acquisition, Technology and Logistics to sponsor a comprehensive independent cost analysis of the Joint Strike Fighter engine program to be conducted by a federally funded research and development center (FFRDC) with demonstrated competence in this area. This analysis shall include but not be limited to: (1) a comparison of costs associated with the development of the F–135 and F–136 engines; (2) an evaluation of potential savings achieved by eliminating or continuing the development and production of an alternate engine over the program's life cycle; and (3) the potential effects on the industrial base of eliminating or continuing the development and production of an alternate engine over the program's life cycle. This analysis shall be transmitted to the congressional defense committees not later than March 15, 2007. The Committee is supportive of required studies included in the House-passed version of the National Defense Authorization Act, 2007, and intends that this cost analysis be complementary to those studies. The Senate Appropriations Committee report ( S.Rept. 109-292 of July 25, 2006) on H.R. 5631 discusses the JSF program on pages 76-77 and 157. The discussion on page 157 states: The Committee is disappointed that the Department of Defense did not include funding for the F–35 Joint Strike Fighter 2 nd Engine Source in the fiscal year 2007 budget request. Although the Committee recognizes that the Department of Defense faces difficult budget challenges, the Committee also believes it is premature to cancel the second engine source. Experience with the F–16 Fighter program engine competition led to a more reliable, better performing and lower cost engine. The Committee believes that competition for the F–35 engine is critical to procuring the best value engine at the lowest price and that competition will likely lead to an overall savings across the life cycle of the fighter program. Therefore, the Committee recommends an additional $170,000,000 to each of the Navy and Air Force Research, Development, Test and Evaluation accounts. The Committee also directs the Department of Defense to fund the continued development of both engines in future budget submissions. FY2008 Section 213 of H.R. 4986 / P.L. 110-181 states: SEC. 213. REQUIREMENT TO OBLIGATE AND EXPEND FUNDS FOR DEVELOPMENT AND PROCUREMENT OF A COMPETITIVE PROPULSION SYSTEM FOR THE JOINT STRIKE FIGHTER. Of the funds appropriated pursuant to an authorization of appropriations or otherwise made available for fiscal year 2008 or any year thereafter, for research, development, test, and evaluation and procurement for the Joint Strike Fighter Program, the Secretary of Defense shall ensure the obligation and expenditure in each such fiscal year of sufficient annual amounts for the continued development and procurement of 2 options for the propulsion system for the Joint Strike Fighter in order to ensure the development and competitive production for the propulsion system for the Joint Strike Fighter. H.R. 4986 is a revised version of H.R. 1585 , which was vetoed on December 12, 2007. The House Armed Services Committee report ( H.Rept. 110-146 of May 11, 2007) on H.R. 1585 discussed the JSF program on pages 213-214, stating: The budget request contained $1.8 billion in PE 64800F, and $1.7 billion in PE 64800N, for development of the Joint Strike Fighter (JSF), but contained no funds for development of a competitive JSF propulsion system. The competitive JSF propulsion system program is developing the F136 engine, which would provide a competitive alternative to the currently-planned F135 engine. In the committee report (H. Rept. 109–452) accompanying the National Defense Authorization Act for Fiscal Year 2007, the committee recommended an increase for the JSF competitive propulsion system, and notes that the other three congressional defense committees also recommended increases for this purpose. Section 211 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109–364) required that the Secretary of Defense, acting through the Department of Defense Cost Analysis Improvement Group, the Comptroller General, and a federally funded research and development center each provide an independent lifecycle cost analysis of the JSF propulsion system, which would include a competitive engine program by March 15, 2007. On March 22, 2007, the Subcommittees on Air and Land Forces and Seapower and Expeditionary Forces held a hearing, which included witnesses from the Department of Defense, the Institute for Defense Analyses, and the Government Accountability Office (GAO), to receive testimony regarding their findings on the JSF propulsion system. The committee believes the results of these studies were, in the aggregate, inconclusive on whether there would be a financial benefit to the Department in continuing to develop a competitive propulsion system for the JSF program. However, the committee notes that all studies identified significant non-financial factors of a two-engine competitive program, which include: better engine performance; improved contractor responsiveness; a more robust industrial base; increased engine reliability; and improved operational readiness. The committee believes that the benefits, which could be derived from the non-financial factors, favor continuing the JSF competitive propulsion system program, and recommends an increase of $480.0 million for this purpose. The committee recommends $1.8 billion in PE 64800N, an increase of $115.0 million, and directs that $240.0 million of the recommended funds be used for the competitive JSF propulsion system program; and $1.9 billion in PE 64800F, an increase of $115.0 million, and directs that $240.0 of the recommended funds be used for the competitive JSF propulsion system program. Additionally, the committee recommends a provision (section 213) that would require the Secretary of Defense to obligate sufficient annual amounts to develop and procure a competitive propulsion system for the JSF program, in order to conduct a competitive propulsion source selection, from funds appropriated pursuant to an authorization of appropriations or otherwise made available for research, development, test, and evaluation, and procurement for the JSF program. The committee notes that current plans for the competitive JSF propulsion system would complete the development of the competitive propulsion system so that a competition for the JSF propulsion would occur in fiscal year 2012 with the sixth lot of low-rate initial production aircraft. The Senate Armed Services Committee report ( S.Rept. 110-77 of June 5, 2007) on S. 1547 , the companion bill to H.R. 1585 , discussed a proposed legislative provision on pages 139-140, stating: The committee recommends a provision that would require the Secretary of Defense to obligate sufficient annual amounts to develop and procure a competitive propulsion system for the Joint Strike Fighter (JSF) program, in order to conduct a competitive propulsion source selection, from funds appropriated pursuant to an authorization of appropriations or otherwise made available for research, development, test, and evaluation, and procurement for the JSF program. The committee notes that current plans for the competitive JSF propulsion system would complete the development of the competitive propulsion system so that a competition for the JSF propulsion system would occur in fiscal year 2012 with the sixth lot of low-rate initial production. The budget request contained $1.7 billion in PE 64800N, and $1.8 billion in PE 64800F for development of the JSF, but contained no funds for development of a competitive JSF propulsion system. The competitive JSF propulsion system program is developing the F136 engine, which would provide a competitive alternative to the current baseline F135 engine. Section 211 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109–364) required that, by March 15, 2007, the Secretary of Defense, acting through the Department of Defense Cost Analysis Improvement Group, the Comptroller General, and a federally funded research and development center, each provide an independent life cycle cost analysis of the JSF propulsion system, which would include a competitive engine program. The committee has been briefed on the results of these reviews and believes those results were, in the aggregate, inconclusive on whether there would be a financial benefit to the Department of Defense in continuing to develop a competitive propulsion system for the JSF program. However, the committee notes that all studies identified significant non-financial factors of a two-engine competitive program that should be considered in deciding between the alternatives. These factors include: better engine performance; improved contractor responsiveness; a more robust industrial base; increased engine reliability; and improved operational readiness. The committee believes that the potential benefits from the non-financial factors favor continuing the JSF competitive propulsion system program. Therefore, the committee recommends an increase of $480.0 million for this purpose, including $240.0 million in PE 64800N, and $240.0 million in PE 64800F. DOD Appropriations Act ( H.R. 3222 / P.L. 110-116 of November 13, 2007) The House Appropriations Committee report ( H.Rept. 110-279 of July 30, 2007) on H.R. 3222 discussed the JSF program on page 6, stating: The success of the Department's Joint Strike Fighter (F–35) program is critical to our Nation's ability to field a modern, capable fighter aircraft fleet for decades to come. To maintain stability in this program—and limit the potential for cost increases over time—the Committee recommends an increase of $200,000,000 for F–35 production enhancements. These funds are to be used to outfit facilities with the latest in production line equipment and work-flow technology. In addition, the Committee recommends including $480,000,000 to continue development of an alternative engine for this aircraft, thereby ensuring a competitive base for engine production. The report discussed JSF the program again on pages 161-162, 211, and 360. The discussion on page 360 states in part: The fiscal year 2008 budget request includes no funding for development of the F–136 as an alternate engine within the Joint Strike Fighter program. The Committee recommends $480,000,000 for this effort. These funds have been added to the Air Force and Navy's respective Joint Strike Fighter development lines. The statement of the managers accompanying the conference report on the Defense Appropriations Act for fiscal year 2007 directed the Department of Defense to fund the continued development of both the F–135 and F–136 engines in the fiscal year 2008 budget request. The Committee notes that this direction was disregarded by the Office of the Secretary of Defense. In exercising its power of the purse, the Committee made the necessary program adjustments to the fiscal year 2008 budget request to fully fund the requirement for this engine development program. The fiscal year 2009 requirement for the F–136 is estimated to be $350,000,000. The Committee again directs the Department of Defense to fully fund this development program in the fiscal year 2009 budget submission. The Senate Appropriations Committee report ( S.Rept. 110-155 of September 14, 2007) on H.R. 3222 discusses the JSF program on page 191, stating: The Committee is disappointed that the Department of Defense did not continue funding to support the development of an alternative engine for the F–35 Joint Strike Fighter in the fiscal year 2008 budget request. Although the Committee recognizes that the Department of Defense faces difficult budget challenges, the Committee also believes it is premature to cancel the second engine source. Experience with the F–16 Fighter program demonstrated that engine competition led to a more reliable, better performing and lower cost engine. The Committee believes that competition for the F–35 engine is critical to procuring the best value engine at the lowest price and that competition will likely lead to an overall savings across the life cycle of the fighter program. Therefore, the Committee recommends an additional $240,000,000 in both the Navy and Air Force Research, Development, Test and Evaluation accounts. The Committee also directs the Department of Defense to fund the continued development of both engines in future budget submissions. FY2009 Defense Authorization Act ( S. 3001 / P.L. 110-417 of October 14, 2008) The House Armed Services report ( H.Rept. 110-652 of May 16, 2008) on H.R. 5658 , the companion bill to S. 3001 , discussed the JSF program on pages 227-228, stating: The budget request contained $1.5 billion in PE 64800F, and $1.5 billion in PE 64800N, for development of the Joint Strike Fighter (JSF), but contained no funds for development of a competitive JSF propulsion system. The budget request also contained $136.9 million for F–35 advance procurement in Aircraft Procurement, Air Force for the long-lead components necessary to procure 12 F–35A aircraft in fiscal year 2010, but contained no funds for advance procurement of competitive JSF propulsion system long-lead components. The competitive JSF propulsion system program is developing the F136 engine, which would provide a competitive alternative to the currently-planned F135 engine. In the committee report (H.Rept. 109–452) accompanying the John Warner National Defense Authorization Act for Fiscal Year 2007, and once again in the committee report (H. Rept. 110–146) accompanying the National Defense Authorization Act for Fiscal Year 2008, the committee recommended increases for the JSF competitive propulsion system, and notes that in both cases, the other three congressional defense committees concurred. Despite section 213 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181), which requires the Secretary of Defense to obligate and expend sufficient annual amounts for the continued development and procurement of a competitive propulsion system for the JSF, the committee is disappointed that the Department of Defense (DOD) chose not to comply with both the spirit and intent of this provision by opting not to include funds for this purpose in the budget request. On March 11, 2008, the Subcommittees on Air and Land Forces and Seapower and Expeditionary Forces held a hearing at which the Undersecretary of Defense for Acquisition, Technology and Logistics (USD (AT&L)) and the Government Accountability Office's (GAO) Director of Acquisition Sourcing and Management testified. Witnesses were asked to provide an update to the independent lifecycle cost analysis of the JSF propulsion system required by section 211 of the John Warner National Defense Authorization Act for Fiscal Year 2007 (Public Law 109–364) based on the obligation of an additional $480.0 million authorized and appropriated for fiscal year 2008, performance of the competitive engine program to date, and the additional year of development. The GAO Director of Acquisition and Sourcing Management complied with the subcommittees' request and testified that the Department of Defense would recoup its initial investment costs with program savings of between 9 and 11 percent, or about 1.3 percent less than the GAO reported in 2007. He also testified that at least that amount of savings could be achieved in the long run based on analysis of actual data from the F–16 engine competition. Opting not to comply with the committee request, the USD (AT&L) testified that the Department did not direct the Office of the Secretary of Defense's Cost Analysis and Improvement Group to update its analysis from the previous year, and that there had been no significant changes to the program that would have resulted in any changes to their findings. Based on this testimony, the committee believes that a competitive propulsion system for the JSF offers the promise of long-term savings. The committee also notes that in August 2007, the currently planned F135 engine experienced a hardware failure during test stand operations with the short take-off and vertical land (STOVL) lift fan engaged, and that a similar failure occurred again in February 2008, and that these engine failure will result in a currently projected delay to the first flight of the F–35 STOVL variant by 30 to 60 days. While the committee understands that the F135 engine is still in development and test failures may occur, the committee believes that, over the long-term, a competitive JSF propulsion program will result in improved engine performance for all JSF variants. These test failure events and the subcommittees' hearing testimony cause the committee to remain steadfast in its belief that the non-financial factors of a two-engine competitive program such as better engine performance, improved contractor responsiveness, a more robust industrial base, increased engine reliability and improved operational readiness strongly favor continuing the competitive propulsion system program. For continued development of the competitive JSF propulsion system program, the committee recommends $1.8 billion, an increase of $247.5 million in PE 64800F, and $1.8 billion, an increase of $247.5 million in PE 64800N. The committee also recommends $167.9 million, an increase of $31.0 million for advance procurement of competitive JSF propulsion system long-lead components, for F–35 advance procurement in Aircraft Procurement, Air Force. Additionally, the committee strongly urges the Department of Defense to comply with the spirit and intent of section 213 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181) by including the funds necessary for continued development and procurement of a competitive JSF propulsion system in its fiscal year 2010 budget request. The Senate Armed Services Committee report ( S.Rept. 110-335 of May 12, 2008) on S. 3001 discussed the JSF program on pages 99-100, stating: The budget request included $136.9 million in Aircraft Procurement, Air Force (APAF) for advanced procurement for the F–35 Joint Strike Fighter (JSF) program. In section 213 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181), Congress explicitly directed the Department of Defense to (1) develop a competitive propulsion system for the JSF aircraft; and (2) continue competition for the propulsion system throughout the production phase of the JSF program. In order to follow through on that direction and begin competition with the F–135 engine in 2012, the Department of Defense must begin funding for long lead items for the F–136 production line in 2009. Therefore, the committee recommends in increase of $35.0 million in APAF for long lead items for the F–136 engine. The report further discussed the JSF program on pages 123-124 and 197. The discussion on page 197 states: The budget request included $1,532.7 million in PE 64800N and $1,524.0 million in PE 64800F for the F–35 Joint Strike Fighter (JSF) program. In section 213 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181), Congress explicitly directed the Department of Defense to (1) develop a competitive propulsion system for the JSF aircraft; and (2) continue competition for the propulsion system throughout the production phase of the JSF program. The committee is disappointed that the administration chose to ignore the law by failing to fund the competitive propulsion system. Accordingly, the committee recommends an increase of $215.0 million in PE 64800N and $215.0 million in PE 64800F for development of the F–35 JSF competitive propulsion system. The report further discusses the JSF program on page 222, stating: The budget request included $1,524.0 million in PE 64800F for the F–35 Joint Strike Fighter (JSF) program. Over the past 2 years, Congress has added $820.0 million to continue funding of the F136 engine, a competitive propulsion source, to ensure there is fair and full competition for the propulsion system of the JSF. The Department of Defense froze the technology baseline of the F135 engine several years ago when the JSF and the engine began system development and demonstration (SDD). To ensure that both engines incorporate the best configuration and most recent technology available, the Department should invest in and direct a program for the F135 and F136 engine programs that would drive technology insertion and provide potential customers with the best performing, most efficient engines possible. For example, the committee believes that the potential application of new composite materials in the F135 engine program could result in life cycle cost savings. Because no funds were set aside for the F136 engine in the administration's budget request, elsewhere in this report the committee has recommended an increase of $430.0 million for the development of the F–136 engine. In order to maintain a level playing field, the committee recommends an increase of $35.0 million in PE 64800F for F135 engine technology development. Consolidated Appropriations Act ( H.R. 2638 / P.L. 110-329 of September 30, 2008) The FY2009 DOD Appropriations Act is Division C of H.R. 2638 / P.L. 110-329 . In lieu of a conference report for H.R. 2638 , there was an explanatory statement that was printed as a House Appropriations Committee print dated October 2008 (print 44-807). The committee print discussed the JSF program on page 215, stating: The FY2009 budget request included no funding for the continued development of the F–136 engine as an alternate engine within the Joint Strike Fighter program. The bill includes $430,000,000 for the continued development of this engine within the Navy and Air Force's Joint Strike Fighter development programs and $35,000,000 for advance procurement items within the Aircraft Procurement, Air Force appropriation. The Secretary of Defense is once again directed to fully fund the F–136 engine development and procurement efforts in the FY2010 budget submission. FY2010 FY2010 Defense Authorization Act ( H.R. 2647 / P.L. 111-84 ) The conference report accompanying H.R. 2647 states: F–35 and alternate propulsion system program The Senate amendment contained a provision (sec. 211) that would: (1) increase in funding for procurement of UH–1Y/AH–1Z rotary wing aircraft and for management reserves for the F–35 Joint Strike Fighter program; and (2) prohibit the obligation of funds authorized to be appropriated for development or procurement of an alternate propulsion system for the F–35 until the Secretary of Defense certifies in writing to the congressional defense committees that development and procurement of the alternate propulsion system would: (a) reduce life cycle costs of the F–35; (b) improve operational readiness of the fleet of F–35 aircraft; (c) will not disrupt the F–35 research, development, test, and evaluation (RDT&E) and procurement phases of the program; and (d) will not result in the procurement of fewer F–35 aircraft during the life cycle of the program. The House bill contained a provision (sec. 218) that would limit obligations for the F–35 RDT&E program to 75 percent until 15 days after the later of the dates on which: (1) the Under Secretary of Defense for Acquisition, Technology, and Logistics certifies in writing to the congressional defense committees that all fiscal year 2010 funds for the F–35 competitive propulsion system have been obligated; (2) the Secretary of Defense submits the report on F/A–18 multiyear procurement costs required by section 123 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (Public Law 110–417); and (3) the Department submits the 30-year aircraft procurement plan required by section 231a of title 10, United States Code. The House bill also contained a provision (sec. 242) that would require the Secretary of Defense to include in annual budget requests submitted to the President, beginning in 2011, such amounts as are necessary for the full funding of continued development and procurement of a competitive propulsion system for the F–35. Both the House and Senate recede from their respective provisions. The conferees agree to authorize the budget request for 30 F–35 aircraft in Aircraft Procurement, Navy, and Aircraft Procurement, Air Force. The conferees also agree to authorize an increase of a total of $430.0 million in RDT&E, Navy, and RDT&E, Air Force for continued F136 engine development; and $130.0 million in Aircraft Procurement, Air Force, for F136 engine procurement. The conferees expect that the Secretary of Defense will comply with the direction in section 213 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181), and ensure that sufficient annual amounts are obligated and expended, in each fiscal year, for the continued development and procurement of two options for the F–35 propulsion system in order to ensure the development and competitive production of the F–35 propulsion system. (Pages 706-707) The House Armed Services Committee's report ( H.Rept. 111-166 of June 18, 2009) on H.R. 2647 recommends the following: a net reduction of $122 million in Navy aircraft procurement funding for the procurement of F-35Bs and Cs for the Marine Corps and Navy, consisting of a reduction of $164 million for the one-aircraft reduction and an addition of $42 million for the F136 alternate engine (page 57; line 006); an increase of $5 million in Navy aircraft advance procurement funding for the F136 alternate engine (page 57, line 007); a decrease of $4 million in procurement funding for F-35 spares, and an increase of $2 million in procurement funding for F136 spares (page 60, line 057); a net reduction of $67 million in Air Force procurement funding for the procurement of F-35As for the Air Force, consisting of a reduction of $131 million for the one-aircraft reduction, a reduction of $9 million for F-35 initial spares, an increase of $57 million for the F136 alternate engine, an increase of $21 million for spares for the F136 alternate engine, and an increase of $129 million for F-35 spares and support equipment (page 93; line 001); an increase of $13 million in Air Force advance procurement funding for the F136 alternate engine (page 93; line 002); a net increase of $153.5 million in Navy research and development funding for the F-35 program, consisting of an increase of $231.5 million for the F136 alternate engine and a reduction of $78 million for "program excess" (page 169); and a net increase of $153.5 million in Air Force research and development funding for the F-35 program, consisting of an increase of $231.5 million for the F136 alternate engine and a reduction of $78 million for "program excess" (page 190). H.R. 2647 contains two sections relating directly to the F-35 alternate program: Section 218, which limits the obligation of FY2010 F-35 research and development funds until certain conditions (including one related to the alternate engine program) are met, and Section 242, which concerns the alternate engine program. The texts of these two provisions appear below. Section 218 states: SEC. 218. LIMITATION ON OBLIGATION OF FUNDS FOR F-35 LIGHTNING II PROGRAM. Of the amounts authorized to be appropriated or otherwise made available for fiscal year 2010 for research, development, test, and evaluation for the F-35 Lightning II program, not more than 75 percent may be obligated until the date that is 15 days after the later of the following dates: (1) The date on which the Under Secretary of Defense for Acquisition, Technology, and Logistics submits to the congressional defense committees certification in writing that all funds made available for fiscal year 2010 for the continued development and procurement of a competitive propulsion system for the F-35 Lightning II have been obligated. (2) The date on which the Secretary of Defense submits to the congressional defense committees the report required by section 123 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 ( P.L. 110-417 ; 122 Stat. 4376). (3) The date on which the Secretary of Defense submits to the congressional defense committees the annual plan and certification for fiscal year 2010 required by section 231a of title 10, United States Code. Section 242 states: SEC. 242. INCLUSION IN ANNUAL BUDGET REQUEST AND FUTURE-YEARS DEFENSE PROGRAM OF SUFFICIENT AMOUNTS FOR CONTINUED DEVELOPMENT AND PROCUREMENT OF COMPETITIVE PROPULSION SYSTEM FOR F-35 LIGHTNING II. (a) Annual Budget- Chapter 9 of title 10, United States Code, is amended by adding at the end the following new section: 'Sec. 235. Budget for competitive propulsion system for F-35 Lightning II '(a) Annual Budget- Effective for the budget of the President submitted to Congress under section 1105(a) of title 31, United States Code, for fiscal year 2011 and each fiscal year thereafter, the Secretary of Defense shall include, in the materials submitted by the Secretary to the President, a request for such amounts as are necessary for the full funding of the continued development and procurement of a competitive propulsion system for the F-35 Lightning II. '(b) Future-Years Defense Program- In each future-years defense program submitted to Congress under section 221 of this title, the Secretary of Defense shall ensure that the estimated expenditures and proposed appropriations for the F-35 Lighting II, for each fiscal year of the period covered by that program, include sufficient amounts for the full funding of the continued development and procurement of a competitive propulsion system for the F-35 Lightning II. '(c) Requirement to Obligate and Expend Funds- Of the amounts authorized to be appropriated for fiscal year 2010 or any year thereafter, for research, development, test, and evaluation and procurement for the F-35 Lightning II Program, the Secretary of Defense shall ensure the obligation and expenditure in each such fiscal year of sufficient annual amounts for the continued development and procurement of two options for the propulsion system for the F-35 Lightning II in order to ensure the development and competitive production for the propulsion system for the F-35 Lightning II.'. (b) Clerical Amendment- The table of sections at the beginning of such chapter is amended by at the end the following new item: '235. Budget for competitive propulsion system for F-35 Lightning II.'. (c) Conforming Repeal- The National Defense Authorization Act for Fiscal Year 2008 ( P.L. 110-181 ) is amended by striking section 213. Regarding Air Force research and development funding for the F-35 program, the House report states: The competitive F–35 propulsion system program is developing the F136 engine, which would provide a competitive alternative to the currently-planned F135 engine. For the past three years, in the committee report ( H.Rept. 109-452 ) accompanying the John Warner National Defense Authorization Act for Fiscal Year 2007, in the committee report ( H.Rept. 110-146 ) accompanying the National Defense Authorization Act for Fiscal Year 2008, and in the committee report ( H.Rept. 110-652 ) accompanying the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, the committee recommended increases for the F–35 competitive propulsion system, and notes that in all cases, the other three congressional defense committees also recommended increases for this purpose. Despite section 213 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181), which requires the Secretary of Defense to obligate and expend sufficient annual amounts for the continued development and procurement of a competitive propulsion system for the F–35, the committee is disappointed that the Department of Defense (DOD) has, for the third consecutive year, chosen not to comply with both the spirit and intent of this provision by opting not to include funds for this purpose in the budget request. The committee notes that the F135 engine development program has experienced cost growth since the engineering and manufacturing development (EMD) program began in fiscal year 2002. At the beginning of EMD in fiscal year 2002, the F135 engine development program was expected to cost $4.828 billion in then-year dollars. The F–35 program manager reports that as of the end of 2008, development costs have grown to $6.7 billion in then-year dollars, an increase of $1.872 billion, or 38 percent. Additionally, the committee notes that the F–35 program manager has reported an increase of approximately 38 to 43 percent in F135 engine procurement cost estimates between December 2005 and December 2008, in the annual selected acquisition reports for the F–35C and F–35A variants. Between December 2005 and December 2008, engine procurement cost estimates for the F–35B have grown approximately 47 percent, but the F–35B engine procurement cost growth is attributable to both the F135 engine and the F–35B's lift fan. Conversely, the F136 engine program has not experienced any cost growth since its inception. The F136 pre-EMD contract, which began in 2002 and was completed in 2004, was for $411.0 million and did not experience cost growth. The F136 EMD contract was awarded in 2005, and the cost estimate, at $2.486 billion, has been stable since contract award. Given the F135 development and procurement cost increases, the committee is perplexed by the Department's decisions over the past three years to not include an F–35 competitive propulsion system program in its budget requests. Based on the F135 cost growth, F135 test failures noted in the committee report ( H.Rept. 110-652 ) accompanying the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, and resultant schedule delays due to F135 engine test failures, the committee remains steadfast in its belief that the non-financial factors of a two-engine competitive program such as better engine performance, improved contractor responsiveness, a more robust industrial base, increased engine reliability and improved operational readiness, strongly favor continuing the F–35 competitive propulsion system program… For continued development of the competitive F–35 propulsion system program, the committee recommends a total increase of $463.0 million in PEs 64800F and 64800N as noted in the tables elsewhere in this report. The committee also recommends an aggregate increase of $140.0 million as noted in the tables elsewhere in this report in Aircraft Procurement, Navy and Aircraft Procurement, Air Force for the procurement of four F136 engines, F136 spare parts, and advance procurement of F136 long-lead components to continue F136 procurement in fiscal year 2011. (Pages 201-203) A June 24, 2009, statement of Administration policy on H.R. 2647 states the following regarding the F-35 program: F-35 Joint Strike Fighter Program : The Administration strongly objects to the addition of $603 million for development and procurement of the alternative engine program, and the requirement for the Department to fund the alternative engine program in future budget requests to the President. These changes will delay the fielding of the Joint Strike Fighter (JSF) capability and capacity, adversely impacting the Department's overall strike fighter inventory. In addition, the Administration objects to provisions of the bill that mandate an alternative engine program for the JSF. The current engine is performing well with more than 11,000 test hours. Expenditures on a second engine are unnecessary and impede the progress of the overall JSF program. Alleged risks of a fleet-wide grounding due to a single engine are exaggerated. The Air Force currently has several fleets that operate on a single-engine source. The Administration also objects to the limit on the obligation of overall JSF development funding to 75% of the amount authorized until Department of Defense (DOD) has obligated all funds provided in FY 2010 for the alternative engine program. If the final bill presented to the President would seriously disrupt the F-35 program, the President's senior advisors would recommend a veto. In the FY2010 defense authorization bill ( S. 1390 ) as reported by the Senate Armed Services Committee ( S.Rept. 111-35 of July 2, 2009), Division D presents committee's detailed the line-tem funding recommendations. Division D does the following: recommends a net increase of $141.45 million in Navy research and development funding for the F-35 program, consisting of an increase of $219.45 million for the F136 alternate engine and a reduction of $78 million for excess management reserves (page 678); and recommends a net increase of $141.45 million in Air Force research and development funding for the F-35 program, consisting of an increase of $219.45 million for the F136 alternate engine and a reduction of $78 million for excess management reserves (page 687). Section 211 of S. 1390 states: SEC. 211. CONTINUED DEVELOPMENT OF COMPETITIVE PROPULSION SYSTEM FOR THE JOINT STRIKE FIGHTER PROGRAM. Of the amounts authorized to be appropriated or otherwise made available for fiscal year 2010 for research, development, test, and evaluation for the F-35 Lightning II aircraft program, not more than 90 percent may be obligated until the Secretary of Defense submits to the congressional defense committees a written certification that sufficient funds have been obligated for fiscal year 2010 for the continued development of a competitive propulsion system for the F-35 Lightning II aircraft to ensure that system development and demonstration continues under the program during fiscal year 2010. Regarding Section 211, the committee's report states: The committee recommends a provision that would require the Department to obligate sufficient funds for fiscal year 2010 for the continued development and procurement of the F136 competitive propulsion system for the F–35 Lightning II to ensure that the Department continues the system development and demonstration (SDD) program during fiscal year 2010. The committee understands that current plans for the F136 Joint Strike Fighter (JSF) propulsion system would complete the development in sufficient time to conduct a first competitive contract award in fiscal year 2012, concurrent with the award for the sixth lot of low-rate initial production aircraft. The budget request included $1,741.3 million in PE 64800N, and $1,858.1 million in PE 64800F for continued development of the JSF program, but included no funds for continuing the SDD phase of the F136 program. The committee continues to believe that, in light of studies performed by the Department of Defense, the Institute for Defense Analyses, and the Government Accountability Office, it is in the best interests of the Nation to continue the development of the F136. Though the results of these studies were, in the aggregate, inconclusive on whether there would be a financial benefit to the Department in continuing to develop a competitive propulsion system for the JSF program, the committee notes that all studies identified significant non-financial factors of a two-engine competitive program. These included better engine performance; improved contractor responsiveness; a more robust industrial base; increased engine reliability; and improved operational readiness. The committee believes that the benefits, which could be derived from the non-financial factors, favor continuing the JSF competitive propulsion system program. Therefore, the committee recommends an increase of $438.9 million for continuing F136 SDD, with half that amount added to PE 64800N and the other half added to PE 64800F. (Page 35) The committee's report states that the recommendation to include additional Navy and Air Force research and development funding for the F-35 alternate engine was approved in full-committee markup by a vote of 12–10, with the votes as follows: "In Favor: Senators Levin, Kennedy, Byrd, Nelson of Florida, Bayh, Webb, McCaskill, Hagan, Begich, Thune, Wicker, and Vitter. Opposed: Senators Lieberman, Reed, Akaka, Nelson of Nebraska, Udall of Colorado, Inhofe, Sessions, Chambliss, Martinez, and Collins." (Page 276) Statement of Administration Policy A July 15, 2009, statement of Administration policy on S. 1390 states the following regarding the F-35 program: F-35 Joint Strike Fighter (JSF) Program: The Administration strongly objects to the addition of $438.9 million for development of the alternative engine program. The Administration also objects to provisions of the bill that mandate an alternative engine program for the JSF. The current engine is performing well with more than 11,000 test hours. In addition, the risks associated with a single engine provider are manageable as evidenced by the performance of the F-22 and F/A-18E/F, Air Force and Navy programs supplied by a single engine provider. Expenditures on a second engine are unnecessary and impede the progress of the overall JSF program. The Air Force currently has several fleets that operate on a single-engine source. The Administration also objects to the limit on the obligation of overall JSF development funding to 90 percent of the amount authorized until the Secretary of Defense submits a written certification that sufficient funds have been obligated in FY 2010 for the alternative engine program. If the final bill presented to the President would seriously disrupt the F-35 program, the President's senior advisors would recommend a veto. On July 23, 2009, as part of its consideration of S. 1390 , the Senate rejected by a vote of 38 to 59 (Record Vote 240) an amendment ( S.Amdt. 1767 ) that would have modified Section 211 as reported by the Senate Armed Services Committee so as to preserve the additional research and development funding for the alternate engine program, but make that funding available through an offset taken from a place in the defense budget other than what was recommended in the Senate Armed Services Committee markup. Following its rejection of S.Amdt. 1767 , the Senate adopted by voice vote another amendment ( S.Amdt. 1627 ) that rewrites Section 211 so as to remove the research and development funding that was added in committee markup for an alternate engine program. The amendment also prohibits the obligation or expenditure of FY2010 funding on an alternate program until the Secretary of Defense makes certain certifications regarding its cost effectiveness. As amended by S.Amdt. 1627 , S. 1390 is now generally consistent with the Administration's proposal to terminate the alternate engine program. S.Amdt. 1767 would have: preserved the language from Sec. 211 as reported by the Senate Armed Services Committee that would prohibit DOD from obligating more than 90% of FY2010 F-35 research and development funds until the Secretary of Defense submits to the congressional defense committees a written certification that sufficient funds have been obligated for FY2010 for the continued development of a competitive propulsion system for the F-35 to ensure that system development and demonstration continues under the program during FY2010; preserved the additional research and development funding for the alternate engine program that was added in the Senate Armed Services Committee markup; restored reductions to the UH-1Y/AH-1Z helicopter program and to F-35 program management reserves that were made so as to make available the funding that was added for the alternate engine program; and instead reduced funding for the HC/MC-130 aircraft program—a program that received $504 million in procurement funding in the FY2009 supplemental appropriations act ( H.R. 2346 / P.L. 111-32 of June 24, 2009). The text of S.Amdt. 1767 is as follows: SEC. 211. CONTINUED DEVELOPMENT OF COMPETITIVE PROPULSION SYSTEM FOR THE JOINT STRIKE FIGHTER PROGRAM. (a) In General.—Of the amounts authorized to be appropriated or otherwise made available for fiscal year 2010 for research, development, test, and evaluation for the F-35 Lightning II aircraft program, not more than 90 percent may be obligated until the Secretary of Defense submits to the congressional defense committees a written certification that sufficient funds have been obligated for fiscal year 2010 for the continued development of a competitive propulsion system for the F-35 Lightning II aircraft to ensure that system development and demonstration continues under the program during fiscal year 2010. (b) Additional Amount for UH-1Y/AH-1Z Rotary Wing Aircraft.—The amount authorized to be appropriated by section 102(a)(1) for aircraft procurement for the Navy is hereby increased by $282,900,000, with the amount of the increase to be allocated to amounts available for the procurement of UH-1Y/AH-1Z rotary wing aircraft. (c) Restoration of Management Reserves for F-35 Joint Strike Fighter Program.— (1) NAVY JOINT STRIKE FIGHTER.—The amount authorized to be appropriated by section 201(a)(2) for research, development, test, and evaluation for the Navy is hereby increased by $78,000,000, with the amount of the increase to be allocated to amounts available for the Joint Strike Fighter program (PE # 0604800N) for management reserves. (2) AIR FORCE JOINT STRIKE FIGHTER.—The amount authorized to be appropriated by section 201(a)(3) for research, development, test, and evaluation for the Air Force is hereby increased by $78,000,000, with the amount of the increase to be allocated to amounts available for the Joint Strike Fighter program (PE # 0604800F) for management reserves. (d) Offset.—The amount authorized to be appropriated by section 103(1) for aircraft procurement for the Air Force is hereby decreased by $438,900,000, with the amount of the decrease to be derived from amounts available for airlift aircraft for the HC/MC-130 recapitalization program. S.Amdt. 1627 would: eliminate the language from Sec. 211 as reported by the Senate Armed Services Committee that would prohibit DOD from obligating more than 90% of FY2010 F-35 research and development funds until the Secretary of Defense submits to the congressional defense committees a written certification that sufficient funds have been obligated for FY2010 for the continued development of a competitive propulsion system for the F-35 to ensure that system development and demonstration continues under the program during FY2010; replace the eliminated language with new language that prohibits the obligation or expenditure of FY2010 funding on an alternate engine program until the Secretary of Defense makes certain certifications regarding cost effectiveness of such a program; eliminate the additional research and development funding for the alternate engine program that was added in the Senate Armed Services Committee markup; restore reductions to the UH-1Y/AH-1Z helicopter program and to F-35 program management reserves that were made so as to make available the funding that was added for the alternate engine program. The text of S.Amdt. 1627 is as follows: SEC. 211. LIMITATION ON USE OF FUNDS FOR AN ALTERNATIVE PROPULSION SYSTEM FOR THE F-35 JOINT STRIKE FIGHTER PROGRAM; INCREASE IN FUNDING FOR PROCUREMENT OF UH-1Y/AH-1Z ROTARY WING AIRCRAFT AND FOR MANAGEMENT RESERVES FOR THE F-35 JOINT STRIKE FIGHTER PROGRAM. (a) Limitation on Use of Funds for an Alternative Propulsion System for the F-35 Joint Strike Fighter Program.—None of the funds authorized to be appropriated or otherwise made available by this Act may be obligated or expended for the development or procurement of an alternate propulsion system for the F-35 Joint Strike Fighter program until the Secretary of Defense submits to the congressional defense committees a certification in writing that the development and procurement of the alternate propulsion system— (1) will— (A) reduce the total life-cycle costs of the F-35 Joint Strike Fighter program; and (B) improve the operational readiness of the fleet of F-35 Joint Strike Fighter aircraft; and (2) will not— (A) disrupt the F-35 Joint Strike Fighter program during the research, development, and procurement phases of the program; or (B) result in the procurement of fewer F-35 Joint Strike Fighter aircraft during the life cycle of the program. (b) Additional Amount for UH-1Y/AH-1Z Rotary Wing Aircraft.—The amount authorized to be appropriated by section 102(a)(1) for aircraft procurement for the Navy is increased by $282,900,000, with the amount of the increase to be allocated to amounts available for the procurement of UH-1Y/AH-1Z rotary wing aircraft. (c) Restoration of Management Reserves for F-35 Joint Strike Fighter Program.— (1) NAVY JOINT STRIKE FIGHTER.—The amount authorized to be appropriated by section 201(a)(2) for research, development, test, and evaluation for the Navy is hereby increased by $78,000,000, with the amount of the increase to be allocated to amounts available for the Joint Strike Fighter program (PE # 0604800N) for management reserves. (2) AIR FORCE JOINT STRIKE FIGHTER.—The amount authorized to be appropriated by section 201(a)(3) for research, development, test, and evaluation for the Air Force is hereby increased by $78,000,000, with the amount of the increase to be allocated to amounts available for the Joint Strike Fighter program (PE # 0604800F) for management reserves. (d) Offsets.— (1) NAVY JOINT STRIKE FIGHTER F136 DEVELOPMENT.—The amount authorized to be appropriated by section 201(a)(2) for research, development, test, and evaluation for the Navy is hereby decreased by $219,450,000, with the amount of the decrease to be derived from amounts available for the Joint Strike Fighter (PE # 0604800N) for F136 development. (2) AIR FORCE JOINT STRIKE FIGHTER F136 DEVELOPMENT.—The amount authorized to be appropriated by section 201(a)(3) for research, development, test, and evaluation for the Air Force is hereby decreased by $219,450,000, with the amount of the decrease to be derived from amounts available for the Joint Strike Fighter (PE # 0604800F) for F136 development. FY2010 DOD Appropriations Bill ( H.R. 3326 ) In lieu of a conference report, the House Appropriations Committee on December 15, 2009, released an explanatory statement on a final version of H.R. 3326 . This version was passed by the House on December 16, 2009, and by the Senate on December 19, 2009, and signed into law on December 19, 2009, as P.L. 111-118 . The explanatory statement states that it "is an explanation of the effects of Division A [of H.R. 3326 ], which makes appropriations for the Department of Defense for fiscal year 2010. As provided in Section 8124 of the consolidated bill, this explanatory statement shall have the same effect with respect to the allocation of funds and the implementation of this as if it were a joint explanatory statement of a committee of the conference." The explanatory statement provided $2,083.8 million for Air Force F-35 procurement. This represented a $35 million increase over the Administration request, with the additional funds designated for the F-35 alternate engine program. In the explanatory statement, Air Force research and development funding for the Joint Strike Fighter program was $2.073.1 million, an increase of $215 million over the Administration request, with the additional funds designated for the F-35 alternate engine program. The explanatory statement set Navy research and development funding for the Joint Strike Fighter program at $1,956.3 million, an increase of $215 million over the Administration request, with the additional funds designated for the F-35 alternate engine program. The explanatory statement also included this text: Joint Strike Fighter Concerns persist regarding the progress of the F~35 Joint Strike Fighter (JSF) program. Last year, the Department of Defense established a Joint Estimating Team (JET) to evaluate this program. The JET reported that the program would cost significantly more and take longer to fully develop and test than the Department was then projecting. Although the JET has yet to officially report out for 2009, the initial indications are that cost growth and schedule issues remain. Nevertheless, the Department insists that the program is on track to achieve both the cost and schedule currently reflected in the program of record. Therefore, the JSF procurement program is provided $6,840,478,000, and the JSF program is designated as a congressional special interest item. The Secretary of Defense is directed to ensure that all 30 aircraft be procured as requested in the budget. The Under Secretary of Defense for Acquisition, Technology and Logistics is directed to provide the findings of the JET along with recent studies on the test program and causes of cost growth to the congressional defense committees no later than January 15, 2010. The House Appropriations Committee, in its report ( H.Rept. 111-230 of July 24, 2009) on H.R. 3326 , recommends the following: a net increase of $18.6 million in Air Force procurement funding for the F-35 program, consisting of a reduction of $111.4 million for "Reduction to non-recurring engineering" and an increase of $130 million for the alternate engine (page 187, line 1); an increase of $215 million in Navy research and development funding for the F-35 alternate engine (page 258, line 127); and an increase of $215 million in Air Force research and development funding for the F-35 alternate engine (page 273, line 84). Regarding Administration proposals to terminate programs, including the F-35 alternate engine program, the report states: The Committee also seeks to reverse a recent and increasing trend to curtail the development of systems before such efforts realize any benefit to the taxpayer. The Committee strongly supports realistic budgeting that matches available funding to overall programs. Indeed, many of the program terminations proposed in the fiscal year 2010 budget request are supported in this bill. Nevertheless, the Committee is concerned that the proposal to terminate some programs is premature, and believes that continuing certain efforts may yield significant payback. The Committee believes that this is clearly the case for the presidential helicopter, wherein five aircraft have been purchased that could be pressed into service. Similarly, in the Committee's view, there is potential for significant payback associated with the Joint Strike Fighter alternative engine and certain missile defense activities provided in this recommendation. (Page 4) The report also states: JOINT STRIKE FIGHTER ALTERNATE ENGINE The F–35 Lightning II Joint Strike Fighter program truly represents the Nation's future with respect to tactical aviation. The Navy, Marine Corps and Air Force plan to procure over 2,500 of these fifth generation stealthy aircraft and will fly them well into the future. The Department's original plan for the F–35 propulsion engine was to have two engine variants. Cost growth in other areas of the development program resulted in the Department abandoning the alternate engine program. Currently, all three variants of the F–35 aircraft will be powered by the same propulsion engine. Although this will make the logistics for the aircraft less complex, this practice presents problems. The Committee is extremely concerned that in the near future when the F–35 will comprise the majority of the Nation's tactical aircraft inventory any technical problems with the engine could theoretically ground the entire fleet of aircraft. If this situation were to arise in a time of crisis, the Commander-in-Chief's flexibility would be severely limited. Another area of concern for the Committee is the lack of competition for the Joint Strike Fighter engine program. With over 2,500 aircraft envisioned for this program, the potential for cost savings through an engine competition is enormous. The Committee is aware that the Department conducted a business case analysis that compared the cost of the program of record (sole source engine provider) to a program using a dual source strategy for the engine program. The business case concluded that the costs of the two programs were essentially the same. Since the Congress has put several hundred million dollars into the development of an alternate engine program since this business case was published, the Committee is puzzled by the Department's decision to not fund the alternate engine. With the majority of the upfront development cost having been sunk into the program, it seems clear that from this point forward the dual source strategy is the most cost effective method to acquire the propulsion engine for the Joint Strike Fighter. Therefore, the recommendation provides an additional $430,000,000 for the continued development of the alternate engine and $130,000,000 for alternate engine production costs for a total of $560,000,000 above the request for the alternate engine program. Further, since a dual source engine strategy is the most cost effective method for acquiring engines from this point forward, the Secretary of Defense is directed to include funding for the alternate engine program in future budget requests. (Pages 215-216) A July 28, 2009, statement of Administration policy on H.R. 3326 as reported in the House states the following regarding the F-35 program: Joint Strike Fighter (F-35) Alternate Engine . The Administration strongly objects to the addition of $130 million to produce, and $430 million to continue the development of, the Joint Strike Fighter (JSF) alternate engine, which was proposed for termination by the President. Expenditures on an alternate engine for the JSF are unnecessary and divert resources from the overall JSF program. The current engine is performing well, and the risks associated with a single engine provider are manageable. If the final bill presented to the President would seriously disrupt the F-35 program, the President's senior advisors would recommend that he veto the bill. The Senate Appropriations Committee, in its report ( S.Rept. 111-74 of September 10, 2009) on H.R. 3326 , recommends no funding for F-35 alternate engine development. FY2011 Defense Authorization Act ( H.R. 5136 / S. 3454 / H.R. 6523 ) As reported by the House Armed Services Committee on May 19, 2010, H.R. 5136 included $485 million for development of an alternate F-35 engine. The bill also included language that would prevent DOD from spending more than 75% of its F-35 budget until all alternate engine funds had been obligated. The language states: SEC. 212. LIMITATION ON OBLIGATION OF FUNDS FOR F–35 LIGHTNING II AIRCRAFT PROGRAM. Of the amounts authorized to be appropriated by this Act or otherwise made available for fiscal year 2011 for research, development, test, and evaluation for the F–35 Lightning II aircraft program, not more than 75 percent may be obligated until the date that is 15 days after the date on which the Under Secretary of Defense for Acquisition, Technology, and Logistics submits to the congressional defense committees certification in writing that all funds made available for fiscal year 2011 for the continued development and procurement of a competitive propulsion system for the F–35 Lightning II aircraft have been obligated. The bill as reported also includes obligation of alternate engine funds as one of the criteria required before DOD can acquire more than 30 F-35 aircraft. In pertinent part: SEC. 141. LIMITATION ON PROCUREMENT OF F–35 LIGHTNING II AIRCRAFT. (a) LIMITATION.—Except as provided in subsection (c), of the amounts authorized to be appropriated by this Act or otherwise made available for fiscal year 2011 for aircraft procurement, Air Force, and aircraft procurement, Navy, for F–35 Lightning II aircraft, not more than an amount necessary for the procurement of 30 such aircraft may be obligated or expended unless— (1) the certifications under subsection (b) are received by the congressional defense committees on or before January 15, 2011; and (2) a period of 15 days has elapsed after the date of such receipt. CERTIFICATIONS.—Not later than January 15, 2011— (1) the Under Secretary of Defense for Acquisition, Technology, and Logistics shall certify in writing to the congressional defense committees that— …(F) advance procurement funds appropriated for the advance procurement of F136 engines for fiscal years 2009 and 2010 have either been obligated or the Secretary of Defense has submitted a reprogramming action to the congressional defense committees that would reprogram such funds to meet other F136 development requirements; and …(E) six F136 engines have been made available for testing; and (F) not less than 1,000 test hours have been completed in the F136 system development and demonstration program. H.R. 5136 would also require the Secretary of Defense to include alternate engine funding in DOD's annual budget submission: SEC. 213. INCLUSION IN ANNUAL BUDGET REQUEST AND FUTURE-YEARS DEFENSE PROGRAM OF SUFFICIENT AMOUNTS FOR CONTINUED DEVELOPMENT AND PROCUREMENT OF COMPETITIVE PROPULSION SYSTEM FOR F–35 LIGHTNING II AIRCRAFT. (a) ANNUAL BUDGET.—Chapter 9 of title 10, United States Code, is amended by adding at the end the following new section: ''§ 236. Budgeting for competitive propulsion system for F–35 Lightning II aircraft ''(a) ANNUAL BUDGET.—Effective for the budget for fiscal year 2012 and each fiscal year thereafter, the Secretary of Defense shall include in the defense budget materials a request for such amounts as are necessary for the full funding of the continued development and procurement of a competitive propulsion system for the F–35 Lightning II aircraft. ''(b) FUTURE-YEARS DEFENSE PROGRAM.—In each future-years defense program submitted to Congress under section 221 of this title, the Secretary of Defense shall ensure that the estimated expenditures and proposed appropriations for the F–35 Lightning II aircraft, for each fiscal year of the period covered by that program, include sufficient amounts for the full funding of the continued development and procurement of a competitive propulsion system for the F–35 Lightning II aircraft. ''(c) REQUIREMENT TO OBLIGATE AND EXPEND FUNDS.—Of the amounts authorized to be appropriated for fiscal year 2011 or any fiscal year thereafter, for research, development, test, and evaluation and procurement for the F–35 Lightning II aircraft program, the Secretary of Defense shall ensure the obligation and expenditure in each such fiscal year of sufficient annual amounts for the continued development and procurement of two options for the propulsion system for the F–35 Lightning II aircraft in order to ensure the development and competitive production for the propulsion system for such aircraft. ''(d) DEFINITIONS.—In this section: ''(1) The term 'budget', with respect to a fiscal year, means the budget for that fiscal year that is submitted to Congress by the President under section 1105(a) of title 31. ''(2) The term 'defense budget materials', with respect to a fiscal year, means the materials submitted to Congress by the Secretary of Defense in support of the budget for that fiscal year.''. (b) CLERICAL AMENDMENT.—The table of sections at the beginning of such chapter is amended by at the end the following new item: ''236. Budgeting for competitive propulsion system for F–35 Lightning II aircraft.''. (c) CONFORMING REPEAL.—Section 213 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110–181) is repealed. H.R. 5136 further designated the competitive F-35 engine programs as major subprograms, imposing more stringent oversight and reporting requirements. SEC. 802. DESIGNATION OF F135 AND F136 ENGINE DEVELOPMENT AND PROCUREMENT PROGRAMS AS MAJOR SUBPROGRAMS. (a) Designation as Major Subprograms- Not later than 30 days after the date of the enactment of this Act, the Secretary of Defense shall designate each of the engine development and procurement programs described in subsection (b) as a major subprogram of the F-35 Lightning II aircraft major defense acquisition program, in accordance with section 2430a of title 10, United States Code. (b) Description- For purposes of subsection (a), the engine development and procurement programs are the following: (1) The F135 engine development and procurement program. (2) The F136 engine development and procurement program. (c) Original Baseline- For purposes of reporting requirements referred to in section 2430a(b) of title 10, United States Code, for the major subprograms designated under subsection (a), the Secretary shall use the Milestone B decision for each subprogram as the original baseline for the subprogram. (d) Actions Following Critical Cost Growth- (1) IN GENERAL- Subject to paragraph (2), to the extent that the Secretary elects to restructure the F-35 Lightning II aircraft major defense acquisition program subsequent to a reassessment and actions required by subsections (a) and (c) of section 2433a of title 10, United States Code, during fiscal year 2010, and also conducts such reassessment and actions with respect to the F135 and F136 engine development and procurement programs (including related reporting based on the original baseline as defined in subsection (c)), the requirements of section 2433a of such title with respect to a major subprogram designated under subsection (a) shall be considered to be met with respect to the major subprogram. (2) LIMITATION- Actions taken in accordance with paragraph (1) shall be considered to meet the requirements of section 2433a of title 10, United States Code, with respect to a major subprogram designated under subsection (a) only to the extent that designation as a major subprogram would require the Secretary of Defense to conduct a reassessment and take actions pursuant to such section 2433a for such a subprogram upon enactment of this Act. The requirements of such section 2433a shall not be considered to be met with respect to such a subprogram in the event that additional programmatic changes, following the date of the enactment of this Act, cause the program acquisition unit cost or procurement unit cost of such a subprogram to increase by a percentage equal to or greater than the critical cost growth threshold (as defined in section 2433(a)(5) of such title) for the subprogram. The report accompanying H.R. 5136 , H.Rept. 111-491 , includes other language regarding the F-35 alternate engine program. Under Air Force Research & Development/Items of Special Interest, the report states: F-35 aircraft The budget request contained $2.4 billion in PEs 64800F, 64800N, and 64800M for development of the F-35 aircraft, but contained no funds for development of a competitive F-35 propulsion system. The budget request also contained $7.7 billion in Aircraft Procurement, Air Force and Aircraft Procurement, Navy for procurement of 22 F-35As, 13 F-35Bs, and 7 F-35Cs. The competitive F-35 propulsion system program is developing the F136 engine, which would provide a competitive alternative to the currently-planned F135 engine. For the past four years, the committee recommended increases for the F-35 competitive propulsion system, and notes that in all cases, funds have been appropriated by Congress for this purpose. Despite section 213 of the National Defense Authorization Act for Fiscal Year 2008 ( P.L. 110-181 ), which requires the Secretary of Defense to obligate and expend sufficient annual amounts for the continued development and procurement of a competitive propulsion system for the F-35, the committee is disappointed that the Department of Defense (DOD) has, for the fifth consecutive year, chosen not to comply with both the spirit and intent of this law by opting not to include funds for this purpose in the budget request. In the committee report accompanying the National Defense Authorization Act for Fiscal Year 2010 ( H.Rept. 111-166 ), the committee noted cost increases in the F135 development program, as well as cost increases for the procurement of F135 engines between December 2005 and December 2008. A March 2010 report on the Joint Strike Fighter by the Government Accountability Office (GAO) notes that F135 engine development cost is now estimated to cost $7.3 billion, a 50 percent increase over the original contract award. In its report, GAO also notes that for the fiscal year 2009 F135 engine contract, the negotiated price for the F-35B engine and lift fan was 21 percent higher than the budget estimate, and the negotiated unit cost for the F-35A engine was 42 percent higher than budgeted. Over the past year, as a result of these cost increases in fiscal year 2009, the Under Secretary of Defense for Acquisition, Technology, and Logistics directed that a Joint Assessment Team (JAT) review the F135 cost structure, and the JAT concluded that engine contractor improvement plans were credible but challenging, and would require additional investment by the contractor for cost reduction initiatives. On February 23, 2010, the Deputy Secretary of Defense submitted to the committee an update of the 2007 DOD `Joint Strike Fighter Alternate Engine Acquisition and Independent Coast Analysis' for the competitive engine program which noted that an investment of $2.9 billion over six years in additional cost would be required to finish F136 engine development and to conduct directed buys to prepare the F136 for competitive procurement of F-35 engines in 2017. This report also noted that long-term costs for either a one-engine or two-engine competitive acquisition strategy are the same, on a net present value basis. Given the F135 development and procurement cost increases and that long-term F-35 engine costs would be the same for a competitive F-35 engine acquisition strategy, the committee is puzzled by the Department's decisions over the past five years to not include an F-35 competitive propulsion system program in its budget requests. The committee remains unwavering in its belief that the non-financial factors of a two-engine competitive program, such as better engine performance, improved contractor responsiveness, a more robust industrial base, increased engine reliability and improved operational readiness, strongly favor continuing the F-35 competitive propulsion system program. Therefore, the committee recommends a total increase of $485.0 million for the competitive engine program in PEs 64800F, 64800N, and 64800M as noted in the funding tables elsewhere in this report. Over the past year, the F-35 Joint Program Office (JPO) and F-35 contractor failed to meet promised expectations with regard to cost and schedule performance. As a result, in addition to the JAT, the Department of Defense conducted two other reviews of the F-35 program which included a 2009 update to the 2008 Joint Estimating Team (JET), known as JET 2, and chartered an independent manufacturing review team (IMRT). The JET 2 was tasked to conduct an independent cost and schedule estimate of the development and production program, while the IMRT reviewed production capacity and risk. The JET 2 concluded that the F-35 development program would take 30 months longer and cost some $3.0 billion more, and the IMRT concluded that the contractor's planned production ramp rates were high risk and not achievable within the contractor's planned timeframe. To reduce development and production risk, the Department of Defense proposes to procure one additional F-35C developmental test aircraft; stand-up an additional software simulation facility; utilize three operational F-35s for developmental test purposes; adjust the production profile in line with the IMRT recommendations and reduce planned production in the Future Years Defense Program by 122 aircraft; and increase amounts budgeted for F-35 development and production. Together, these actions are projected to delay the completion of F-35 development by 13 months compared to last year's plan, and cost $2.8 billion more. In accordance with section 2433 of title 10, United States Code, the Secretary of the Air Force informed the committee on March 25, 2010, that the F-35 program will exceed unit cost thresholds by more than 50 percent compared to the original baseline estimate. On March 11, 2010, in testimony before the Senate Committee on Armed Services, the Under Secretary of Defense for Acquisition, Technology, and Logistics described the F-35 program as having `unprecedented concurrency' of development, test, and production activities. On March 24, 2010, at a hearing held jointly by the Subcommittee on Air and Land Forces and the Subcommittee on Seapower and Expeditionary Forces, the Office of the Secretary of Defense's Director of Operational Test and Evaluation testified that `the primary issues with the Joint Strike Fighter program have been late delivery of test aircraft and the failure to adjust to the reality by building and resourcing realistic system development and test plans, as well as plans for producing and delivering aircraft.' Additionally, on March 24, 2010, GAO's Director of Acquisition and Sourcing Management testified to the Subcommittee on Air and Land Forces and the Subcommittee on Seapower and Expeditionary Forces that the `DOD intends to procure up to 307 aircraft at a cost of $58.2 billion before completing developmental flight testing by mid-fiscal year 2015.' The committee notes that, under current plans in the spring of 2015, the Department will have requested a total of 550 aircraft, over 22 percent of the planned procurement of 2,443 F-35s, before developmental testing is complete. The committee also notes that, notwithstanding the JAT, JET 2, and IMRT findings and continued unprecedented research and development and procurement concurrency, the request for 43 total F-35 aircraft for fiscal year 2011 is the same as projected in fiscal year 2009 for fiscal year 2011. In its testimony on March 24, 2010, GAO also noted that `with most of development testing still ahead, the risk and impact from required design changes are significant,' and may require `alterations to the production process, changes to the supply base and costly retrofitting of aircraft already produced and fielded.' Consequently, the committee remains concerned that despite the Department's recent reduction of 122 aircraft in the Future Years Defense Program, the F-35 production ramp rate may still too high and the Department should consider further reductions until developmental testing is complete. For fiscal year 2011, the committee recommends authorization of the budget request for 42 aircraft, subject to the Department's completion of certain milestones planned by the Department for calendar year 2010. Accordingly, the committee recommends a provision (sec. 141) which would require the Under Secretary of Defense for Acquisition, Technology, and Logistics and the Director of Operational Test and Evaluation to certify, not later than January 15, 2011, that certain milestones have been completed before an amount necessary for the procurement of more than 30 F-35 aircraft would be obligated or expended. A May 27, 2010, statement of Administration policy on H.R. 5136 states: F-35 Joint Strike Fighter (JSF) Extra Engine: The Administration strongly objects to the addition of $485 million for the extra engine program and to associated legislative provisions that limit the obligation of overall JSF development funding to 75 percent of the amount authorized until the funds for FY 2011 have been obligated for the extra engine program, require the Secretary to ensure that each budget in the Future Years Defense Plan include, and expend, sufficient funding to continue the program, and designate the F135 and F136 engine development and procurement programs as major subprograms. As Secretary Gates has noted, even after factoring in Congress' additional funding, the extra engine would still require a further investment of $2.4 billion before it could be considered as a viable extra engine for the JSF program. The Department does not believe that this cost will ever be recovered in a hypothesized competition or that the funds should be diverted from important defense needs. The current engine is performing well with more than 13,000 ground test and 200 flight test hours. If the final bill presented to the President includes funding or a legislative direction to continue an extra engine program, the President's senior advisors would recommend a veto. The report accompanying S. 3454 ( S.Rept. 111-201 of June 4, 2010) included a certification requirement prior to expenditure of further funding for the alternate engine: Limitation on use of funds for alternative propulsion system for the F-35 Joint Strike Fighter program (sec. 211) The committee recommends a provision that would require that, before spending any additional funds on the F136 engine that is being developed as an alternative propulsion system of the F-35 Joint Strike Fighter program, the Secretary of Defense would have to certify that development of the alternate propulsion system: (1) will: (a) reduce the total life cycle-cycle costs of the F-35 Joint Strike Fighter program; (b) improve the operational readiness of the fleet of F-35 Joint Strike Fighter aircraft; and (2) will not: (a) disrupt the F-35 Joint Strike Fighter program during the research, development, and procurement phases of the program; or (b) result in the procurement of fewer F-35 Joint Strike Fighter aircraft during the life cycle of the program. As passed, H.R. 6523 , the Ike Skelton National Defense Authorization Act For Fiscal Year 2011, did not include program-level detail, so there is no amount specified for the F-35 alternate engine (nor, for that matter, the F-35 itself.) In lieu of a conference report, the House and Senate Armed Services Committees issued a joint explanatory statement regarding H.R. 6523 . The joint explanatory statement included an amended version of the House language designating an F-35 engine development and production subprogram, as follows: SEC. 802. DESIGNATION OF ENGINE DEVELOPMENT AND PROCUREMENT PROGRAM AS MAJOR SUBPROGRAM. (a) Designation as Major Subprogram- Not later than 30 days after the date of the enactment of this Act, the Secretary of Defense shall designate an engine development and procurement program as a major subprogram of the F-35 Lightning II aircraft major defense acquisition program, in accordance with section 2430a of title 10, United States Code. (b) Original Baseline- For purposes of reporting requirements referred to in section 2430a(b) of title 10, United States Code, for the major subprogram designated under subsection (a), the Secretary shall use the Milestone B decision as the original baseline for the subprogram. (c) Actions Following Critical Cost Growth- (1) IN GENERAL- Subject to paragraph (2), to the extent that the Secretary elects to restructure the Lightning II aircraft major defense acquisition program subsequent to a reassessment and actions required by subsections (a) and (c) of section 2433a of title 10, United States Code, during fiscal year 2010, and also conducts such reassessment and actions with respect to an F-35 engine development and procurement program (including related reporting based on the original baseline as defined in subsection (c)), the requirements of section 2433a of such title with respect to a major subprogram designated under subsection (a) shall be considered to be met with respect to the major subprogram. (2) LIMITATION- Actions taken in accordance with paragraph (1) shall be considered to meet the requirements of section 2433a of title 10, United States Code, with respect to a major subprogram designated under subsection (a) only to the extent that designation as a major subprogram would require the Secretary of Defense to conduct a reassessment and take actions pursuant to such section 2433a for such a subprogram upon enactment of this Act. The requirements of such section 2433a shall not be considered to be met with respect to such a subprogram in the event that additional programmatic changes, following the date of the enactment of this Act, cause the program acquisition unit cost or procurement unit cost of such a subprogram to increase by a percentage equal to or greater than the critical cost growth threshold (as defined in section 2433(a)(5) of such title) for the subprogram. FY2011 Defense Appropriations Act On July 27, 2010, the House Defense Appropriations Subcommittee reported out its markup of the FY2011 Defense Appropriations Act. The subcommittee report included $450 million for the F-35 alternate engine. The alternate engine funds were reportedly added by a vote of 11-5. The House Appropriations Committee did not report a separate defense bill for FY2011. The Senate Appropriations Committee version of the FY2011 Defense Appropriations Act included no funds for the F-35 alternate engine program. However, the report accompanying the committee's mark commented favorably on the program. In lieu of a defense appropriations bill, the House and Senate passed a continuing resolution maintaining spending at FY2010 levels. The alternate engine program was funded at the FY2010 level from October 1, 2010, through March 24, 2011, when DOD issued a stop-work order. Vote on Alternate Engine Funding On February 16, 2011, as part of its consideration of H.R. 1 , a proposed continuing resolution for the remainder of FY2011, the House approved by a vote of 233 to 198 (Record Vote 46) an amendment ( H.Amdt. 16 ) to eliminate $450 million for the alternate engine program. FY2011 DOD and Full-Year Continuing Appropriations Act The FY2011 Department of Defense and Full-Year Continuing Appropriations Act ( H.R. 1473 ), signed into law on April 15, 2011, provided DOD funding for the remainder of FY2011. The Act included no funds for the F-35 alternate engine program. Appendix B. The "Great Engine War" of 1984-1994 Congress's interest in establishing and funding an F-35 alternate engine program may have been informed by "the Great Engine War"—an annual competition from 1984 to 1994 between Pratt & Whitney and General Electric to produce and maintain engines for Air Force F-16 fighters. Pratt & Whitney's engine for the F-16 was the F100, which was originally developed for the Air Force F-15 fighter. General Electric's alternate engine for the F-16 was the F110. Historians trace the Air Force's interest in pursuing an alternate engine for the F-16 to Air Force frustrations in the 1970s with Pratt & Whitney's management of the effort to develop the F100 and to Air Force concerns about using a single type of sole-sourced engine to power their entire fighter fleet of F-15s and F-16s. After a number of contentious hearings in 1979, Congress provided funding through the Engine Model Derivative Program (EMDP), a congressionally directed program, for General Electric to develop its F101 engine (which later became the F110) as an alternate engine for the F-16. DOD spent more than $376 million to develop the F110 to compete with the F100 and $600 million to improve the F100's durability and reliability to make it a stronger competitor. The use of annual competitions for procuring engines for an aircraft procurement program was unprecedented and controversial. Proponents believe it produced better engines, on better terms, for less money than would purchasing from a single company facing no competition. Other observers believed it "unjustifiably jeopardized combat effectiveness and pilot survivability." Most studies have concluded that contractor responsiveness—not dollar savings—was the primary benefit of the competition. Testimony presented at a 1984 hearing suggested that requiring General Electric and Pratt & Whitney to compete for annual production and O&S work generated benefits for DOD in areas such as better contract terms and conditions, better warranties to assure engine quality, consistency, and long term stability of support. A 1987 assessment stated that after competition was introduced, the incumbent (Pratt & Whitney) offered "engine improvements to the Air Force earlier than the Air Force had been led to expect without the competition." The benefits of the Great Engine War have been attributed in part to the particulars of how the engine competition was managed. Prior to the first contract award, for example, the Air Force demanded that General Electric and Pratt & Whitney provide six years of cost projections to include the production of engines, support equipment, spare engines, technical data and dual sourcing data and second sourcing data for operations and support (O&S). The contractors were held to these cost projections for six years: the Air Force let six years of firm-fixed price, or "not-to-exceed" contracts from the first production lot. Prior to the Great Engine War, government had succeeded in negotiating firm-fixed price contracts only after the engine had been operating in the field for several years. Never before had contractors agreed to provide cost projections into the future, and contracts were typically for production only, not O&S work. To avoid potential disruptions in production, and to protect itself against price gouging, DOD "required (each contractor) to provide his plan for providing dual sources of critical parts. These separately priced options in the proposals would allow the Government to reprocure spare parts from sources other than the prime contractors." Appendix C. GE Rolls-Royce Fighter Engine Team Statement on Termination of F136 Development The GE Rolls-Royce Fighter Engine Team (FET) has reached the decision to discontinue self-funded development of the F136 engine for the Joint Strike Fighter (JSF) beyond 2011. The decision, reached jointly by GE and Rolls-Royce leadership, recognizes the continued uncertainty in the development and production schedules for the JSF Program. "GE and Rolls-Royce are proud of our technology advancements and accomplishments on the F136," said Dan McCormick, President of the FET. "However, difficult circumstances are converging that impact the potential benefit of an F136 self-funded development effort." With the F136 engine development almost 80 percent complete, the U.S. Department of Defense (DoD) terminated the program in April of this year. Following termination, the GE Rolls-Royce FET had offered to self-fund F136 development through fiscal year 2012, but will now end its development work. The FET will continue to fulfill its termination responsibilities with the federal government. For 15 years, the FET has developed a competitive fighter engine for JSF with the world's most advanced propulsion technologies, including numerous patented technologies from both companies. Before the program was terminated, six F136 development engines had accumulated more than 1,200 hours of testing since early 2009. The FET consistently delivered on cost and on schedule, and was rewarded with high marks by the DoD in a successful joint venture between GE and Rolls-Royce. Throughout the F136 program, GE and Rolls-Royce have been leading advocates of defense acquisition reform—offering unique and aggressive fixed-price proposals for F136 production engines for the JSF program. "GE and Rolls-Royce are deeply grateful to our many Congressional supporters on both sides of the aisle over these many years as well as the military experts who have supported competing engines for JSF," said McCormick. "We do not waver in our belief that competition is central to meaningful defense acquisition reform."

On December 2, 2011, General Electric and Rolls-Royce announced that they were ending development of the F136 alternate engine for the F-35, ending what had been a contentious and long-running battle. The alternate engine program began in FY1996, when defense authorization conferees directed DOD to ensure that the JSF (then "JAST") program "provides for adequate engine competition" and required the Department of Defense to develop an alternative to the Pratt & Whitney F135 engine that currently powers the F-35 Joint Strike Fighter (JSF). Development of the alternative, the General Electric/Rolls-Royce F136 engine, was funded in Administration budgets from FY1996 to FY2006. From FY2007 to FY2010, Congress rejected Administration proposals to terminate the program. In FY2011, Congress agreed not to fund the alternate engine, and the alternate engine program was terminated in April 2011. The Administration's FY2012 budget submission again requested no funds for the program. Through FY2009, Congress provided approximately $2.5 billion for the Joint Strike Fighter alternate engine program. The program is projected to need an additional $1.9 billion-2.9 billion through 2016 to complete the development of the F136 engine. Critics of the proposal to terminate the F136 alternate engine argue that termination was driven more by immediate budget pressures on the department than the long-term pros and cons of the F136 program. They argue that engine competition for the F-15 and F-16 saved money and resulted in greater reliability. Some who applaud the proposed termination say that single-source engine production has been the norm, not the exception. Long-term engine affordability, they claim, is best achieved by procuring engines through multiyear contracts from a single source. Canceling the F136 engine poses questions on the operational risk—particularly of fleet grounding—posed by having a single engine design and supplier. Additional issues include the potential impact this termination might have on the U.S. defense industrial base and on U.S. relations with key allied countries involved in the alternate engine program. Finally, eliminating competitive market forces for DOD business worth billions of dollars may concern those seeking efficiency from DOD's acquisition system and raises the challenge of cost control in a single-supplier environment. Continuing F136 development raises issues of impact on the overall F-35 acquisition program. It also raises issues of the outyear costs and operational concerns stemming from the requirement to support two different engines in the field. FY2012 defense authorization bill: On May 26, 2011, the House passed H.R. 1540, the National Defense Authorization Act for Fiscal Year 2012. H.R. 1540 includes language barring funds from being spent for performance improvements to the F-35's engine unless the engine is developed and procured competitively, and other language requiring DOD to preserve existing F136 engines and tooling and to allow the contractor to perform research and development on the engine at the contractor's expense. FY2012 DOD appropriations bill: The House Defense Appropriations Committee report included no funds for the F-35 alternate engine.

Researching current federal legislation includes identifying action on pending or passed legislation and locating the relevant documents or text. Analysis, discussion, or media coverage of pending or passed legislation also has a role in the legislative research process. Such research may be accomplished by using governmental, congressional, or commercial services. Congress.g ov http://www.congress.gov Congress.gov provides Members of Congress, their staff, and the general public access to a wide variety of information, including bill summary and status, bill text, committee referrals and committee reports, sponsors and cosponsors, and Congressional Record text. A version of a bill or resolution will typically appear in Congress.gov a day or two after it is introduced or has had action on the floor of the House or Senate. The text of bills is published by the Government Publishing Office (GPO) and sent to the Library of Congress at various times throughout the day. For an estimate as to when GPO will publish a bill, contact the GPO Congressional Desk for House bill versions at 202-512-0224 or Senate Bill Clerk for Senate bill versions at 202-224-2118. Note that the bill number may not determine the chamber for the most recent version—for example, "H.R. 1792 RS" is a Senate version (RS=Reported in Senate) of a House bill. Guidance in the use of Congress.gov is available at http://www.congress.gov/help . The Congress.gov Alert Service is available to anyone who wants to obtain email alerts regarding action on bills and amendments for subjects that they identify. Once established, alerts run automatically and generate emails Monday through Friday when there is new information. To learn more about alerts and how to create them, a brief video is available at https://www.congress.gov/help/tips/managing-alerts . Congressional Record https://www.gpo.gov/fdsys/browse/collection.action?collectionCode=CREC and available via Congress.gov at http://www.congress.gov . Action on legislation passed or pending in the current Congress, and its status in the legislative process, is reported in the Congressional Record. The Record also contains the edited transcript of activities on the floor of the House and Senate. It is the primary source for the text of floor debates and the official source for recorded votes. The Record is published each day that one or both chambers are in session, except in instances when two or more consecutive issues are printed together. The Record 's Daily Digest section summarizes action in each chamber and identifies committee hearings, new public laws, official foreign travel reports, procedural agreements, Senate unanimous consent agreements, treaties and nominations actions, and committee meetings scheduled for the next legislative day. Indexes for the Record are issued twice a month. The Subject Index section can be used to identify bills by topic, and the History of Bills and Resolutions section tracks action on all legislation. Daily Compilation of Presidential Documents http://www.gpo.gov/fdsys/browse/collection.action?collectionCode=CPD Published by the Office of the Federal Register, the Daily Compilation of Presidential Documents (and its predecessor, the Weekly Compilation of Presidential Documents ) provides the dates on which the President signed or vetoed legislation. It also contains transcripts of presidential messages to Congress, executive orders, press releases, nominations submitted to the Senate, speeches, and other material released by the White House. govinfo.gov https://govinfo.gov The Government Publishing Office launched govinfo.gov as a beta website in February 2016. It is still a work in progress and will eventually replace GPO's Federal Digital System (FDsys). It provides free public access to the full text of official publications from the three branches of the federal government. Several govinfo tutorials and handouts are available on the site. Recorded webinars are also available through the Federal Depository Library Program Academy at https://fdlp.gov/about-the-fdlp/fdlp-academy . GPO Federal Digital System http://www.gpo.gov/fdsys GPO's FDsys is a website that enables GPO to display and deliver information from all branches of the U.S. government. Materials available on FDsys include the full text of bills, the Congressional Record and the Congressional Record Index (which includes a History of Bills and Resolutions section), congressional calendars, public laws, selected congressional reports and documents, the Daily Compilation of Presidential Documents , the Weekly Compilation of Presidential Documents , the Federal Register , and the Code of Federal Regulations . Coverage varies for each of these publications. FDsys will eventually be replaced by govinfo.gov (see entry above). Legislative Information System http://www.lis.gov The predecessor to Congress.gov, the Legislative Information System (LIS), is still available but only to congressional staff. It is as current as Congress.gov and will continue to be available while further developments and improvements are made to Congress.gov. A specific date has not been set but plans are to retire LIS near the end of 2018. Alerts that previously existed in LIS must be recreated in Congress.gov. U. S. House of Representatives Home Page http://www.house.gov This website provides information from and about the House of Representatives, including the following: Congressional calendars House calendars (104 th Congress, 1995-present) http://www.gpo.gov/fdsys/browse/collection.actioncollectionCode=CAL House committee activities http://www.house.gov/committees Directory of Representatives by state, district, and name http://www.house.gov/representatives The chamber's leadership http://www.house.gov/leadership House roll call votes starting with the 101 st Congress, second session (1990) http://clerk.house.gov/legislative/legvotes.aspx Brief descriptions of floor proceedings when the House is in session http://clerk.house.gov/floorsummary/floor.aspx U. S. Senate Home Page http://www.senate.gov This website offers legislative materials from and about the Senate, including the following: Congressional calendars Senate calendars (104 th Congress, 1995-present) http://www.senate.gov/pagelayout/legislative/d_three_sections_with_teasers/calendars.htm Background information on and links to materials on the legislative process, including a "How a Bill Becomes a Law" flowchart http://www.senate.gov/pagelayout/legislative/d_three_sections_with_teasers/process.htm Senate roll call votes starting with the 101 st Congress (1989-1990) http://www.senate.gov/pagelayout/legislative/a_three_sections_with_teasers/votes.htm The chamber's leadership http://www.senate.gov/pagelayout/senators/a_three_sections_with_teasers/leadership.htm Descriptions of the Senate committee system and of individual committees http://www.senate.gov/pagelayout/committees/d_three_sections_with_teasers/committees_home.htm Directories of Senators by name, state, class (term expiration date), and party http://www.senate.gov/general/contact_information/senators_cfm.cfm Glossary of common legislative terms http://www.senate.gov/pagelayout/reference/b_three_sections_with_teasers/glossary.htm House Documents Room http://clerk.house.gov/legislative/housedoc.aspx The House documents website provides links to sources for electronic copies of congressional bills, resolutions, and committee reports via the House Library and GPO's govinfo.gov. Cannon House Office Building 106 9:00 a.m.-6:00 p.m. Monday-Friday Phone: [phone number scrubbed]. A weekly compilation of measures that may be considered on the House floor is available from the Office of the Clerk at http://docs.house.gov . House Legislative Resource Center http://clerk.house.gov/about/offices_Lrc.aspx The Legislative Resource Center (LRC) provides centralized access to all published documents originating in and produced by the House and its committees, the historical records of the House since 1792, and legislative and legal reference resources. Congressional staff can retrieve legislative information and records of the House for congressional offices and the public by contacting the LRC. Cannon House Office Building 135 9:00 a.m.-6:00 p.m. Monday-Friday Phone: [phone number scrubbed] House Library http://library.clerk.house.gov The House Library provides legislative, legal, and general reference services to Members of Congress, congressional staff, and the public. Library staff conducts monthly classes on a variety of topics including how to access and use online resources. The reading room has reference materials and computers on which one may access subscription databases; tours may be arranged upon request. A House Library Portal is available for access by House staff only at http://library.house.gov . Cannon House Office Building 263 9:00 a.m.-6:00 p.m. Monday-Friday Phone: [phone number scrubbed] Senate Library http://webster.senate.gov/library (Not a public access site) The Senate Library serves present and former Senators, Member and committee staff, Senate leadership, and Senate officers. The Library provides legislative, historic, legal, business, and general reference materials and research services. The Senate Library has a   reading room, study carrels, computers, and a scanning and microform   center; tours are available upon request.   Senate Russell Office Building B-15 9 :00 a.m. - 6:00 p.m. Monday-Friday or as long as the Senate is in session Phone: [phone number scrubbed]. Senate Printing and Documents Service http://www.senate.gov/legislative/common/generic/Doc_Room.htm The Senate Documents Room provides copies of bills, reports, Senate documents, and laws. Contact information is as follows: Hart Senate Building Office B-04 9:00 a.m.-5:30 p.m., Monday-Friday Phone: [phone number scrubbed] (availability inquiries only) Fax: [phone number scrubbed] E-mail: [email address scrubbed] Daily Schedule Information Both Senate parties and the House Democratic Party provide daily recorded messages about floor proceedings when they are in session. The House Republican Party no longer has a recording. Call the following numbers for cloakroom recordings: Senate at [phone number scrubbed] (Democratic) or [phone number scrubbed] (Republican) House at [phone number scrubbed] (Democratic) Public Laws Update Service Information on new public law numbers assigned to recently enacted laws is available from the National Archives and Records Administration's Office of the Federal Register Public Laws listserv at https://listserv.gsa.gov/cgi-bin/wa.exe?A2=ind1511&L=PUBLAWS-L&P=65 . This service is strictly for email notification of new laws. Select "Subscribe" under "Options" in the right-hand column. The text of laws is not available through this service. Text is available, on an irregular basis, from GPO's FDsys at http://www.gpo.gov/fdsys/browse/collection.action?collectionCode=PLAW . White House Executive Clerk's Office By way of a recorded message, the Office of the Executive Clerk at the White House provides dates for the following information: presidential signings or vetoes of recent legislation, presidential messages, executive orders, and other official presidential action. If the desired information is not in the taped message, callers can stay on the line to speak with a staffer. The recorded message is available at [phone number scrubbed]. The inclusion of a web-based product under this heading does not imply CRS endorsement. Bloomberg Government https://www.bgov.com A subscription database that provides analysis as well as content from news sources worldwide. Services include alerts; transcripts; searchable legislation; congressional, state, and district profiles; and more. Coverage for most historical data begins with the 109 th Congress (2005-2006). CQ.com ( Plus.CQ.com ) http://www.cq.com Plus.CQ.com is an updated version of the CQ.com ( Congressional Quarterly) subscription database that provides bill texts, summaries, tracking, and analysis. Among its other features are forecasts of major pending bills; versions of bills; links to related bills; roll-call votes; legislative histories; floor and committee schedules; detailed committee coverage; texts of committee reports; transcripts of witnesses' testimony; and publications such as CQ Weekly , CQ Almanac , the Congressional Record , and Roll Call . Time spans covered vary by the category of information. The latest addition to the product is a collection of CQ markup reports on each Member's profile page. The markups are only for the current Congress and appear to be from each committee on which a Member serves. Plus.CQ.com is available in all Senate offices and the House Library. GovTrack http://www.govtrack.us GovTrack is a free service that can help determine the status of U.S. federal legislation, voting records for the Senate and the House of Representatives, information on Members of Congress, congressional district maps, and the status of legislation. State legislative information is also available. Federal legislation may be searched and browsed back to the 93 rd Congress (1973-1974) and the text of legislation is available as far back as the 106 th Congress (1999-2000). GovTrack also provides useful bill statistics, such as bill counts by Congress, from the 96 th Congress (1979-1980) to the present. Legislation can be searched by dockets and by subjects, and a bill search and track feature is available. GovTrack's core mission is to make legislative data freely available so that others can build new tools to promote civic education and engagement. HeinOnline http://‍heinonline.org HeinOnline is a searchable digital library of current and historical materials, including some congressional documents back to 1789. The database also includes legal journals, texts, cases, statutes, regulations, presidential materials, and treaties, as well as international and foreign legal journals, cases, and materials. Many are full text in the original page-image (PDF) format. HeinOnline is available only to subscribers. National Journal https://www.nationaljournal.com The National Journal Group covers the current political environment and emerging policy trends. Its information products include National Journal , T he Hotline , NationalJournal.com , The Almanac of American Politics , National Journal Daily , and National Journal On Air . All House and Senate offices have online access to NationalJournal.com, National Journal Daily , and National Journal Hotline , as well as to the print versions of National Journal Daily and the weekly National Journal Magazine . ProQuest Congressional http://congressional.proquest.com This database contains detailed abstracts and links to the full text of many congressional and federal documents, such as the Congressional Record , congressional hearing transcripts, committee prints, and legislative histories. Length of coverage varies depending on the category of information. This is the enhanced web-based counterpart of the CIS/Index to Publications of the United States Congress . This resource is fee-based and accessible only to subscribers. ProQuest Congressional is available to all House and Senate offices. Qu o rum http://quorum.us Quorum provides detailed analytics on everything related to Congress and its Members. Launched in January 2015, Quorum provides federal level tracking for bills, votes, amendments, floor statements, press releases, Dear Colleague Letters, and a full suite of social media posts as far back as the 101 st Congress (1989). There is a major focus on grassroots engagement tools that enable Members, advocates, legislative professionals, companies, and citizens to influence the legislative process. Quorum also allows users to track issues and to search for and monitor legislation and dialogue across all 50 states. The product uses ESRI geospatial technology and Census data in a legislative platform to provide unique characteristics of each congressional district. Many reviewers and users have dubbed Quorum "Google for Congress." This is a fee-based subscription service. VoteView https://voteview.com Hosted by UCLA's Department of Political Science and Social Computing, Voteview allows users to view every congressional roll call vote since 1789 on a map of the United States and on a liberal-conservative ideological map, including information about the ideological positions of voting Senators and Representatives. It also provides Geographic Information System (GIS) boundaries for congressional districts back to 1789. This beta product has a "geography" tab that allows the user to enter an address or ZIP Code to create a historical list of all Members who represented that district. This is an update to a DOS-based product developed by Keith T. Poole and Howard Rosenthal at Carnegie-Mellon University between 1989 and 1992 . Regulations are issued by federal departments and agencies under the authority delegated to them by federal law. Final rules are printed in the Federal Register (FR) and later codified by subject in the Code of Federal Regulations (CFR) . Code of Federal Regulations http://www.gpo.gov/fdsys/browse/collectionCfr.action?collectionCode=CFR The CFR codifies final rules having general applicability and legal effect that first appeared in the F ederal R egister . CFR titles are arranged by subject, and the entire CFR is revised annually (one-quarter of the titles at a time) in January, April, July, and October. Because the annual revision incorporates new regulations and drops superseded ones, the CFR reflects regulations in effect at the time of printing. An index volume that includes tables accompanies the set. By using the FR and CFR sources, with their many finding aids, it is possible to identify existing regulations in a subject area or those that pertain to a specific title and section of the United States Code , identify regulations issued pursuant to a specific public law, and find proposed regulations that are not yet final. The Electronic Code of Federal Regulations, https://www.ecfr.gov (e-CFR), is the current, updated version of the CFR . However, it is not an official legal edition of the CFR , but an unofficial editorial compilation of CFR material and FR amendments produced by the National Archives and Records Administration's Office of the Federal Register (OFR) and GPO. The OFR updates the e-CFR daily. Federal Register http://www.gpo.gov/fdsys/browse/collection.action?collectionCode=FR The FR contains the official announcement of regulations and legal notices issued by federal departments and agencies. It includes proposed and final federal regulations having general applicability and legal effect; executive orders and presidential proclamations; documents required to be published by an act of Congress; and other federal documents of public interest. Daily and monthly indexes and an accompanying publication, "List of CFR Sections Affected," aid in its use. The FR also publishes the "Unified Agenda of Federal Regulatory and Deregulatory Actions" twice yearly (usually in April and October). This document provides advance notice of proposed rulemaking by listing all rules and proposed rules that more than 60 federal departments, agencies, and commissions expect to issue during the next six months. Regulations that concern the military or foreign affairs, or that deal with agency personnel, organization, or management matters, are excluded. The agenda is available online from 1994 through the present. govinfo.gov https://govinfo.gov See entry under "Researching Current Federal Legislation— Governmental Sources " above. GPO Federal Digital System http://www.gpo.gov/fdsys See entry under "Researching Current Federal Legislation— Governmental Sources " above. RegInfo.gov http://www.reginfo.gov The Office of Management and Budget (OMB) and the General Services Administration (GSA) produce the RegInfo.gov website, which provides a list of all rules undergoing Office of Information and Regulatory Affairs (OIRA) E.O. 12866 regulatory review. Updated daily, it also provides a list of all rules on which review has been concluded in the past 30 days, lists and statistics on regulatory reviews dating back to 1981, and letters to agencies regarding regulatory actions. Regulations.gov http://www.regulations.gov This website was launched to enhance public participation in federal regulatory activities. Users can search Proposed Rules and Regulations from more than 176 federal departments and agencies along with notices from the Federal Register . Many proposed regulations include a link to a comment form that readers can complete and submit to the appropriate department or agency. Regulations.gov is updated each business day with proposed new regulations. Among the database's search options are keyword or subject, department or agency name, regulations published today, comments due today, open regulations or comments by publication dates, docket ID, Regulation Identifier Number, or CFR citations. W hite House Executive Clerk's Office See entry under "Schedule and Legislative Update Services" above. The inclusion of a web-based product under this heading does not imply CRS endorsement. BNA's Daily Report for Executives http://dailyreport.bna.com This online report covers a broad spectrum of issues, providing news reports and links to the full text of key documents, such as proposed and final legislation, regulations, testimony, and fact sheets summarizing major issues. Available in electronic and print formats to paid subscribers. Federal Regulatory Director y https://us.sagepub.com/en-us/nam/federal-regulatory-directory/book245062 This link leads to product description and purchase information for the Federal Regulatory Directory , which provides profiles of the mandates and operations of more than 100 federal regulatory agencies and is published every two years. Each profile gives a brief history and description of the agency and its regulatory oversight responsibilities and lists key staff, information sources, legislation, and regional offices. It also provides an overview of the federal regulatory process. Other aids are the full texts of key regulatory acts and executive orders, a guide to using the Federal Register and the Code of Federal Regulations , and subject and name indexes. HeinOnline http://heinonline.org See entry under " Nongovernmental Sources of Federal Legislation " above. Print and web-based media sources provide useful background information on the status of federal legislation and regulations through their reporting, political analysis, and editorial perspectives. The inclusion of a web-based product under this heading does not imply CRS endorsement of the product. CQ.com (Plus.CQ.com) http://www.cq.com In addition to the legislative analysis and tracking role of this fee-based subscription service, CQ.com provides a daily news feature, full-text of CQ Weekly , Budget Tracker for articles on appropriations bills and continuing resolutions, and a variety of CQ specialty news sources, including CQ Healthbeat . RSS news feeds are also provided as news occurs. CQ Roll Call http://www.rollcall.com CQ Roll Call , a daily newspaper, has been covering Capitol Hill news since 1955. It is free to congressional staff, both online and in print. C-SPAN.org http://www.c-span.org C-SPAN is a private, nonprofit company, created in 1979 by the cable television industry as a public service. Its mission is to provide public access to the political process. The Hill http://www.thehill.com The Hill is a newspaper for and about Congress. It is published Tuesday, Wednesday, and Thursday when Congress is in session and Wednesday only when Congress is out of session. Politico http://www.politico.com Politico.com covers political news with a focus on national politics, Congress, Capitol Hill, the presidential elections, lobbying, and advocacy. Politico Pro https://www.politicopro.com This premium subscription service goes beyond the standard political news coverage of its sister publication, Politico. According to its website, Politico Pro was launched in June 2010 to provide "access to intense Politico -style coverage of Washington's most important policy issues." It currently covers 14 issue areas: agriculture, budgets & appropriations brief, campaigns, cybersecurity, defense, education, eHealth, energy, Europe brief, financial services, health care, employment and immigration, technology, trade, transportation, and tax. Introduction to Legislative Research This two-and-a-half-hour seminar, offered six times a year by the Law Library of Congress and CRS, is designed for those with no legal research experience. A Law Library specialist will discuss the print and electronic sources used when conducting federal legislative research. Participants will be shown where and how to use the various print and electronic resources containing bills, enacted laws, and codified laws. In addition to covering the official and unofficial print publications, the seminar will demonstrate the relative strengths and substantive content of various Internet resources, such as Congress.gov, GPO's govinfo.gov, and others. This program is open to interns who have attended the CRS Intern Orientation. To register, go to http://www.crs.gov/Events/category/3 , and select the "Register" tab. Federal Legislative History Research: Using Print and Electronic Resources This two-and-a-half-hour seminar is offered four times a year. It examines methods of identifying and locating electronic and print versions of legislative history resources, including committee reports, hearings, debates, and other relevant materials. Research techniques are illustrated using a case study. The seminar emphasizes both Internet and traditional print research techniques. It is jointly sponsored by the Law Library of Congress and CRS. A Law Library specialist will discuss various electronic and print publications containing federal laws and how to research the legislative history of those laws. Participants will be shown where and how to locate electronic and print versions of congressional documents, including bills, resolutions, committee reports and prints, and floor debates that are generated in the legislative process. Sources of compiled legislative histories and methods of compiling legislative histories will be covered. Internet sources will be discussed, including Congress.gov and other Library of Congress sites, GPO's govinfo.gov, various congressional sites, and others. Fee-based databases such as Lexis or Westlaw will not be covered. This program is open to interns who have attended the CRS Intern Orientation. To register, go to http://www.crs.gov/Events/category/3 , and select the "Register" tab. Federal Statutory Research: Using Print and Electronic Resources This seminar examines methods of identifying and locating print and electronic versions of statutes and conducting research in the United States Code . It describes historical sources of federal statutory law and illustrates research techniques using case studies. The Law Library of Congress and the Congressional Research Service jointly sponsor this seminar, which emphasizes both Internet and traditional print research techniques. Knowledge of the U nited S tates Code and Legislative Procedure is a prerequisite for this program. A Law Library specialist will discuss electronic and print chronological and topical publications containing federal statutory law, including electronic and print sources of public laws and the United States Code . The seminar will cover the organizational principles and features facilitating research, the historical development of federal statutory publications, and the significance of enactment of titles of the United States Code into positive law. Internet sources will be discussed, including Congress.gov and other Library of Congress sites, various congressional sites, GPO's govinfo.gov, Cornell's Legal Information Institute site, and others. Fee-based databases such as Lexis or Westlaw will not be covered. This program is open to interns who have attended the CRS Intern Orientation. To register, go to http://www.crs.gov/Events/category/3 , and select the "Register" tab. Introduction to Congress Courses CRS regularly provides classroom instruction to congressional staff on legislative process and procedure. Two such courses are available to House and Senate staff: Congress: An Introduction to Resources and Procedure. This is an all-day program designed for those seeking a better understanding of the legislative process and the resources available to monitor it. The program is not open to interns. Attendance at this program is a prerequisite for the Advanced Legislative Process Institute Seri es (see below). Registration information is available at http://www.crs.gov/Events/category/4 .Legislative Concepts. CRS also offers a monthly introductory "Legislative Concepts" class to House staff and interns in the House Learning Center. Information is available on HouseNet at https://housenet.house.gov/training under "Training." Advanced Legislative Process Institute This Institute builds on the basic procedures and resources provided in "Congress: An Introduction to Resources and Procedure." In-depth sessions describe processes and procedural strategy that are specific to each chamber. Additional information on this class and others can be found at http://www.crs.gov/ under the "Events" tab. House Advanced Legislative Process Institute Series (HALPS) This overview of the "other chamber" includes a description of the Senate's rules and norms, and salient committee and floor procedures, focusing on those that differ from the House. Other discussion will cover the Senate's orientation toward individuals and minorities; its attitude toward and use of committees; its norm of collective scheduling of legislation; its use of motions to proceed, unanimous consent, and time agreements to call up, consider, and amend measures; the role of the presiding officer; holds; filibusters; and invoking cloture. This program is not open to interns. Register at http://www.crs.gov/Events/category/4 . Senate Advanced Legislative Process Institute Series (SALPS) This overview of the "other chamber" is an introduction to the organization and operation of the House with an emphasis on differences in procedure and their impact on legislation. Please note, registration is separate for each session. Register at http://www.crs.gov/Events/category/4 . This program is not open to interns. Note: A calendar year listing of CRS classes is not available. The class listings appear on the CRS Events page a few weeks before the scheduled date and when registration is open. Additional information on researching legislation and regulations is provided in the following CRS reports. CRS Report R43056, Counting Regulations: An Overview of Rulemaking, Types of Federal Regulations, and Pages in the Federal Register , by [author name scrubbed]. CRS Report RL32240, The Federal Rulemaking Process: An Overview , coordinated by [author name scrubbed]. CRS Report RL30812, Federal Statutes: What They Are and Where to Find Them , by [author name scrubbed]. CRS Report 98-309, House Legislative Procedures: Published Sources of Information , by [author name scrubbed]. CRS Report R41865, Legislative History Research: A Guide to Resources for Congressional Staff , by [author name scrubbed]. CRS Report RS21363, Legislative Procedure in Congress: Basic Sources for Congressional Staff , by [author name scrubbed] and [author name scrubbed]. CRS Report RS20120, Legislative Support Resources: Offices and Websites for Congressional Staff , by [author name scrubbed] and [author name scrubbed]. CRS Report 98-673, Publications of Congressional Committees: A Summary , by [author name scrubbed]. CRS Report 98-308, Senate Legislative Procedures: Published Sources of Information , by [author name scrubbed].

This report is designed to introduce congressional staff to selected governmental and nongovernmental sources that are useful in tracking and obtaining information on federal legislation and regulations. It includes governmental sources, such as Congress.gov, the Government Publishing Office's Federal Digital System (FDsys), and U.S. Senate and House websites. Nongovernmental or commercial sources include resources such as HeinOnline and the Congressional Quarterly (CQ) websites. The report also highlights classes offered by the Congressional Research Service (CRS) and the Law Library of Congress. This report will be updated as new information is available.

National Ambient Air Quality Standards (NAAQS) are a core component of the Clean Air Act (CAA). NAAQS do not regulate emission sources directly; rather, they define the level of pollution in ambient (outdoor) air above which health and welfare effects occur. The statute requires that, based on a review of the scientific literature, the Environmental Protection Agency (EPA) set (1) "primary" standards at a level "requisite to protect the public health" with an "adequate margin of safety" and (2) "secondary" standards at a level "requisite to protect the public welfare." NAAQS have been promulgated for six principal pollutants classified by EPA as "criteria pollutants": sulfur oxides measured in terms of sulfur dioxide (SO 2 ), nitrogen dioxide (NO 2 ), carbon monoxide (CO), ozone, lead, and particulate matter. This report provides an overview of the NAAQS implementation process in the context of the 1997 standards for fine particulate matter (PM 2.5 ), which consists of particles less than 2.5 micrometers in diameter. The EPA and states are in the process of finalizing the implementation of the NAAQS for particulates promulgated in 1997, delayed because of court challenges and other factors. The EPA's 1997 revisions to the particulate matter standards (also referred to as the particulates NAAQS) included separate requirements for PM 2.5 for the first time. The PM 2.5 NAAQS have been the source of significant concern and national debate. Congress has been particularly interested in EPA's promulgation and implementation of the CAA standards, and has held numerous hearings on particulate matter (and ozone) NAAQS established in 1997. EPA's and states' experiences following the promulgation of the PM 2.5 NAAQS 13 years ago could provide relevant insights as EPA and states encounter issues in the initial stages of implementing the PM 2.5 NAAQS as revised in October 2006 and as the agency proceeds with its current review of the particulates NAAQS. Beginning in 1971, regulation and monitoring of particulate matter under the CAA focused primarily on total suspended particles (TSP) and, eventually, on coarse particles equal to or less than 10 micrometers in diameter (PM 10 ). After extensive analysis and review, EPA revised the particulates standards in 1997 to provide separate requirements for fine particulate matter (PM 2.5 ) based on its links to several types of cardiovascular and respiratory health problems, including aggravated asthma and bronchitis, and to premature death. The primary (health) PM 2.5 NAAQS requirements, which became effective on September 16, 1997, are the same as the secondary (welfare) requirements. The 1997 PM 2.5 standards are set at an annual maximum concentration of 15 micrograms per cubic meter (µg/m 3 ), based on the three-year average of the annual arithmetic mean PM 2.5 concentrations from one or more community-oriented monitors, and a 24-hour maximum concentration of 65 µg/m 3 , based on the three-year average of the 98 th percentile of 24-hour PM 2.5 concentrations at each population-oriented monitor within an area. A key component of implementing the 1997 PM 2.5 NAAQS is EPA's designation of geographical areas for being in "attainment" (in compliance) or "nonattainment" (out of compliance) of the air quality standards for PM 2.5 . As of August 2008, EPA's final designations included all or part of 205 counties in 20 states and the District of Columbia for nonattainment of the 1997 PM 2.5 NAAQS. A combined population of almost 90 million resides in these nonattainment areas. The final designations were based on EPA's consideration of air quality monitoring data and recommendations provided by states and tribes. The designation of nonattainment areas raised questions and concerns, particularly for those areas designated as such for the first time. Nonattainment designation began a process in which states (and tribes) must develop and adopt emission control programs sufficient to bring air quality into compliance by a statutorily defined deadline. States were required to submit, by April 2008, their State Implementation Plans (SIPs) for how the designated nonattainment areas will meet the 1997 PM 2.5 NAAQS. States with nonattainment areas were to be in compliance with the 1997 PM 2.5 NAAQS by April 5, 2010, unless they are granted an extension. At the time this report was updated, EPA had not released a status of overall compliance with the 1997 PM 2.5 NAAQS. According to EPA, with the exception of four areas in three states, states have either submitted the complete SIPs or the agency made a final approval that an area attained the 1997 PM 2.5 NAAQS based on 2006-2008 air quality data. In November 2009, EPA issued findings that Georgia, Illinois, and Pennsylvania missed deadlines for submitting plans, or elements of plans for four nonattainment areas. Nonattainment areas that miss deadlines for SIP submissions or that submit inadequate SIPs can be subject to sanctions, including a suspension of federal highway funds for new projects. Highway funding sanctions would not apply to the three states if within 24 months of the effective date of the findings notice EPA determines that they have submitted the required SIPs. Based on 2006 through 2008 air quality monitoring data, EPA has indicated that 19 of the 39 nonattainment areas were meeting the 1997 PM 2.5 standard as of June 2010. Under EPA's "Clean Data Policy," certain nonattainment SIP submission requirements may be suspended if the area is monitoring attainment (see 40 CFR 50.1004(c)). See the section entitled " Demonstrating Attainment with the 1997 PM 2.5 NAAQS " later in this report for more detailed discussion of EPA's findings. Concerns were raised regarding compliance deadlines because of EPA's delay in providing implementation procedures and guidance for achieving and maintaining compliance with the 1997 PM 2.5 NAAQS. The EPA published its final "PM 2.5 implementation" rule on April 25, 2007. Six petitions for review of EPA's implementation rule were filed with the U.S. Court of Appeals for the District of Columbia (D.C.) Circuit, and two petitions for reconsideration were filed with EPA. Given that states were required to submit their SIPs by April 2008, state and local air pollution control agencies, as well as some Members of Congress, had expressed their concerns about the delays in publishing a final implementation rule and the lack of guidance. The EPA concluded that, in many cases, implementing national strategies—including the 1999 visibility protection regulations (Regional Haze Rule); voluntary diesel engine retrofit programs; and federal standards scheduled to be implemented between 2004 and 2010 on cars, light trucks, heavy-duty, and nonroad diesel engines—would provide a framework for achieving attainment with the 1997 PM 2.5 NAAQS. The EPA's May 2005 final rule, the Clean Air Interstate Rule (CAIR), was expected to serve as the primary tool to assist downwind states in meeting the PM 2.5 (and eight-hour ozone) NAAQS by mitigating interstate transport of sulfur dioxide (SO 2 ) and nitrogen oxide (NOx) emissions from electric generating units that contribute to the formation of PM 2.5 . CAIR covered 28 states in the eastern United States and the District of Columbia, including 26 jurisdictions in the PM 2.5 nonattainment region. As a preferred implementation strategy, EPA encouraged states to use a trading program to reduce emissions of target pollutants by up to 70% in a cost-effective manner. In a July 11, 2008, decision ( North Carolina v. EPA ), the U.S. Court of Appeals for the D.C. Circuit vacated CAIR, initially causing some states to reconsider implementation plans (SIPs) already submitted and pending submission for achieving or maintaining attainment with 1997 PM 2.5 NAAQS. The D.C. Circuit subsequently modified its decision on December 23, 2008, in response to an EPA motion, reversing its decision to vacate CAIR while EPA develops a replacement rule. The Circuit, however, left the substantive requirements of its July 2008 decision fully intact. That decision strongly suggests that there is no simple "fix" that would make CAIR acceptable to the court. The court's decision to vacate the rule drew the interest of some Members of Congress and was the subject of a July 29, 2008, congressional hearing. On August 2, 2010, EPA published a proposed "Transport Rule" intended to supersede the current CAIR. The proposed rule would limit sulfur dioxide (SO 2 ) and nitrogen oxide (NOx) emissions from electric generating units within 31 states in the eastern United States and the District of Columbia that affect the ability of downwind states to attain and maintain compliance with the 1997 and 2006 PM 2.5 and the 1997 ozone NAAQS. The proposal includes modifications in response to the Court's concerns, particularly with regard to certain aspects of emissions contributing to ozone. The implications of this proposal have already generated considerable debate among states, industry, and other stakeholders, and have been the topic of further deliberation by Congress. The Senate Committee on Environment and Public Works Subcommittee on Clean Air and Nuclear Safety held a hearing on EPA's proposed alternative transport rule on July 22, 2010. EPA has scheduled three public hearings, and comments on the proposal must be received on or before October 1, 2010. Further complicating issues associated with achieving attainment of 1997 PM 2.5 NAAQS, EPA promulgated revisions to the NAAQS for particulate matter on October 17, 2006, primarily a tightening of the 1997 standard for PM 2.5 . On November 13, 2009, EPA published its designations of 31 areas in 18 states, comprising 120 counties (89 counties and portions of 31 additional counties), for nonattainment of the revised 2006 24-hour PM 2.5 standard. The final designations, based on 2006 through 2008 air quality monitoring data, include counties that would be designated nonattainment for PM 2.5 for the first time, but the majority of the counties overlap with EPA's final nonattainment designations for the 1997 PM 2.5 NAAQS. Most of the 1997 PM 2.5 nonattainment areas were only exceeding the annual standard; only 12 counties were exceeding both the 24-hour and the annual standards. Thus, tightening the 24-hour standard resulted in an increased number of areas being designated nonattainment based on exceedances of both the 24-hour and the annual standard. The EPA had urged states to consider control strategies that may be useful in attaining the 2006 revised PM 2.5 NAAQS when developing control strategies for the 1997 PM 2.5 standards. The effective date of the final designations rule is December 14, 2009, 30 days from the date of publication in the Federal Register . Following formal designation, the states have three years to submit SIPs, and are required to meet the 2006 revised PM 2.5 NAAQS no later than five years from the date of designation unless granted an extension. Further delays in implementing the 1997 NAAQS could result in some stakeholders advocating moving directly to implementation of the 2006 standards. EPA's next round of the periodic review of the particulates NAAQS is under way. The agency announced its intention to accelerate the review, in part in response to a February 24, 2009, decision by the U.S. Court of Appeals for the D.C. Circuit to grant petitions challenging certain aspects of the EPA's revised NAAQS, denying other challenges. The court's decision did not vacate the PM standards but remanded certain aspects of the annual PM 2.5 standard to EPA for reconsideration. EPA has targeted proposing any changes to the standards by February 2011, and October 2011 for final standards. Potential risk reduction estimates and initial staff recommendations reported in recently released draft EPA assessment s and an April 2010 review by the members of the current CASAC suggest the evidence supports further strengthening of the NAAQS for fine particulates. In the April 2010 review of EPA's draft assessment, members of the CASAC agreed that the evidence suggests the need for stricter PM 2.5 standards to adequately protect human health. The issue of whether particulates NAAQS should be strengthened or not, findings and recommendations included in EPA's assessments, and the implications with regard to the ongoing implementation of the 1997 PM 2.5 NAAQS will likely be subject to extensive comment and debate. The designation of geographical areas failing to comply with the NAAQS, based on monitoring and analysis of relevant air quality data, is a critical step in NAAQS implementation. The CAA establishes a process for designating nonattainment areas and setting their boundaries, but it allows the EPA Administrator some discretion in determining what the final boundaries of the areas will be. Areas are identified as "nonattainment" when they violate or contribute to the violation of NAAQS. Areas are identified as "attainment/unclassified" when they meet the standard or when the data are insufficient for determining compliance with the NAAQS. The designation process is intended as a cooperative federal-state-tribal process in which states and tribes provide initial designation recommendations to EPA for consideration. In Section 107(d)(1)(A) (42 U.S.C. 7407), the statute states that the governor of each state shall submit a list to EPA of all areas in the state, "designating as ... nonattainment, any area that does not meet ( or that contributes to ambient air quality in a nearby area that does not meet ) an air quality standard" (emphasis added). Following state and tribal designation submissions, the EPA Administrator has discretion to make modifications, including to the area boundaries. As required by statute (Section 107(d)1(B)(ii)), the agency must notify the states and tribes regarding any modifications, allowing them sufficient opportunity to demonstrate why a proposed modification is inappropriate, but the final determination rests with EPA. PM 2.5 attainment or nonattainment designations were made primarily on the basis of three-year federally referenced PM 2.5 monitoring data. At the time the PM 2.5 NAAQS were being finalized in 1997, EPA began developing methods for monitoring fine particles. Using funding specifically authorized for this purpose in FY1998-FY2000 EPA appropriations, the agency worked closely with states and tribes to initiate the deployment of a portion of the network of 1,200 monitors in January 1999. The majority of the monitors were not in place until January 2000. States and tribes were expected to rely on data collected during 2000-2002 for their recommendations. The EPA considered the 2001-2003 data to make the final PM 2.5 designations published in January 2005. In its guidance document, EPA identified several factors that would be considered in determining attainment with the 1997 PM 2.5 NAAQS and specified data and conditions that would not be acceptable. The EPA's guidance also included a recommendation that states and tribes consider using the same boundaries for nonattainment for both the PM 2.5 and eight-hour ozone standards, to facilitate consistency in future implementation plans. The EPA expected that many of the PM 2.5 nonattainment areas would overlap with the eight-hour ozone designations. However, PM 2.5 designations do not include nonattainment classifications based on severity as specified by statute for PM 10 and ozone, which have two and seven classifications, respectively. PM 2.5 is governed by the general nonattainment planning requirements of Title I (Part A and Part D, subpart 1) of the act. The EPA recognized that determining the geographic extent of nearby source areas that contribute to nonattainment would be complicated. The CAA does not specifically require combining neighboring counties within the same nonattainment area, but it does require the use of metropolitan statistical area boundaries in the more severely polluted areas (Section 107(d)(4)(A)(iv)). Echoing this requirement, and similar to the eight-hour ozone approach, EPA recommended that Metropolitan Statistical Areas or Consolidated Metropolitan Statistical Areas serve as the "presumptive boundary" for nonattainment areas under the 1997 PM 2.5 standards. Metropolitan areas are generally treated as units, even when part of the area lies in a separate state or does not have readings exceeding the standards. In the latter case, even though a specific county may not exceed the standards, the pollution generated there is likely to influence PM 2.5 levels elsewhere in the metropolitan area. In addition, including the entire metropolitan area avoids the creation of additional incentives for sprawl development on the fringes of urban areas. For rural areas in violation of the 1997 PM 2.5 standards, EPA's guidance presumed that the full county would be designated a nonattainment area. The EPA has generally used its discretion to expand the size of nonattainment areas or to combine areas that a state listed as separate areas into a single larger unit. As it did in implementing other NAAQS, EPA also combined nonattainment counties across state lines into the same nonattainment area, if the counties are part of the same metropolitan area. Although, according to EPA, staff in the regions and the agency's Office of Air Quality Planning and Standards were available for assistance and consultation throughout the designation process pursuant to the statutory requirements for working with states, some states disagreed with EPA's final designations relative to the states' own recommendations. By the end of February 2004, 18 states and the District of Columbia had recommended 142 counties as potential nonattainment areas for the 1997 PM 2.5 NAAQS. After reviewing the state recommendations, EPA proposed modifications resulting in nonattainment designations for 244 counties in 21 states and the District of Columbia at the end of June 2004. As required by statute, EPA notified each of the affected states regarding their specific modifications, providing them with the opportunity to submit new information and demonstrate why a proposed modification was inappropriate. Some states responding to EPA's proposal continued to support their original recommendations. The EPA's final PM 2.5 designation rule, published on January 5, 2005 (70 Federal Register 944-1019), established the boundaries for areas designated as "nonattainment," "unclassifiable" (data not sufficient to make a determination regarding compliance), or "attainment/unclassifiable." The EPA designated 47 areas, composed of 225 counties in 20 states and the District of Columbia, as nonattainment; 5 areas consisting of 7 counties as unclassifiable; and the remaining counties in the United States as attainment/unclassifiable. The EPA's designations reflected minor modifications to its June 2004 proposal. Primarily, 19 counties were removed from the list of nonattainment areas, and other counties were redefined by designating only specified locations ("partial") within the county as nonattainment. In some cases, when considering factors defined in its guidance in conjunction with the additional information provided by the states and tribes, EPA determined that only those portions of a county that contained the significant sources of emissions should be considered as contributing to the violations. In other cases, the agency determined that if emissions from a large identifiable source in a county contribute to the violations in a nearby area, the portion of the county where the source is located would be designated nonattainment, even if it is not contiguous with the remainder of the designated area. The boundaries for these "noncontiguous" portions are based on legally recognized government boundaries, such as townships, tax districts, and census blocks. Some states and stakeholders continued to contend that several counties should not be designated nonattainment, particularly when taking into account 2004 PM 2.5 monitoring data. The EPA's final designations were based on monitoring data for the three-year period from 2001-2003. Monitoring data for 2004 were not available in time for EPA to meet its statutory deadline for PM 2.5 geographical area designations (see timeline and discussion later in this report). The final PM 2.5 designation rule, published on January 5, 2005, included provisions allowing states to submit no later than February 22, 2005, certified, quality-assured 2004 monitoring data that suggest a change in designation is appropriate for consideration (70 Federal Register 948). A nonattainment designation could be withdrawn if EPA agreed that the additional data warranted such a change. On April 14, 2005, EPA published a final supplemental rule amending the agency's initial final designations published in January 2005 (70 Federal Register 19844). After reviewing 2002-2004 air quality monitoring data provided by several states, EPA determined that eight areas comprising 17 counties previously identified as not meeting the 1997 PM 2.5 NAAQS should be designated as "in attainment" (see Table 1 below). The EPA also changed four of the five areas designated as "unclassifiable" to "attainment," based on 2002-2004 data. The EPA did not consider the modifications for these areas "re-designations" because the changes were made prior to the April 5, 2005, effective date of the initial designations. In letters dated January 20, 2006, EPA denied six petitions submitted to the agency requesting reconsideration of the previous designations of one or more full or partial counties as nonattainment for the 1997 PM 2.5 NAAQS. The petitions were for counties in Georgia, Illinois, Michigan, Missouri, Ohio, and West Virginia. In the August 25, 2008, Federal Register , EPA announced its determination that a three-county (Harrisburg, Lebanon, Carlisle ) Pennsylvania nonattainment area for the 1997 PM 2.5 NAAQS was in attainment. The determination was based on certified ambient air monitoring data showing that the area has monitored attainment of the 1997 PM 2.5 NAAQS since the 2004-2006 monitoring period. By the end of August 2008, final nonattainment designations were in effect for 39 areas, comprising 205 counties within 20 states (and the District of Columbia) nationwide, with a combined population of almost 90 million. The EPA map in Figure 1 highlights the nonattainment designation areas for the 1997 PM 2.5 NAAQS. The final designated nonattainment areas for the 1997 PM 2.5 NAAQS were primarily concentrated in the central, mid-Atlantic, and southeastern states east of the Mississippi River, as well as in California. More than 2,900 counties in 30 states have been designated attainment/unclassifiable for the 1997 PM 2.5 NAAQS. Some public interest groups maintain that at least 150 additional counties warranted nonattainment designations on the basis of emission sources in those areas. Any area initially designated attainment/unclassifiable may be subsequently re-designated to nonattainment if ambient air quality data in future years indicate that such a re-designation is appropriate. Likewise, as was the case for EPA's determination regarding the three-county area in Pennsylvania, areas initially designated nonattainment may be determined to be attainment areas if more current certified monitoring data support the designation. As noted earlier in this report, several areas previously designated nonattainment for the 1997 PM 2.5 NAAQS currently have air quality that attains the level set by the standards based on certified ambient air monitoring data for the period 2006-2008. EPA identifies these areas through clean data/attainment determinations published in the Federal Register . Pursuant to 40 CFR 51.1004, this action by EPA suspends requirements for these areas to submit attainment demonstrations, associated reasonably available control measures, reasonable further progress plans, contingency measures, and other planning SIPs related to attainment of the1997 PM 2.5 NAAQS as long as the areas continue to meet the standard. EPA has indicated that as of June 2010, 19 of the 39 areas (includes multiple states and counties) originally designated nonattainment for the 1997 PM 2.5 NAAQS were in attainment with the standard based on a preliminary assessment of air quality monitoring data for the three-year period 2006 to 2008. According to the February 2010 EPA report entitled Our Nation's Air: Status and Trends Through 2008 , nationally, annual and 24-hour PM 2.5 concentrations were 17% and 19% percent lower, respectively, in 2008 compared to 2001. Based on a comparison of results from PM 2.5 monitoring locations (565 sites) for two three-year periods, 2001-2003 and 2006-2008, EPA reported that almost all measured sites showed a decline or little change in measured PM 2.5 concentrations. Of the 565 monitoring sites, EPA reported that 16 sites in California, Illinois, Indiana, Michigan, Ohio, Utah, and West Virginia showed the greatest decreases in annual PM 2.5 concentrations, and five sites in California, Montana, Oregon, Pennsylvania, and Utah showed the greatest decrease in 24-hour PM 2.5 concentrations. Four monitoring sites located in Montana, Arizona, and Wisconsin showed annual PM 2.5 concentrations at levels greater than 1 µg/m 3 in, but none were above the annual PM 2.5 NAAQS standard for the most recent three-year period (2006-2008). Nineteen sites located throughout all regions of the United States showed an increase in 24-hour PM 2.5 concentrations greater than 3 µg/m. 3 Seven of these sites, located in or near metropolitan areas in Arizona, California, Georgia, Montana, Virginia, and Washington, were above the 2006 24-hour PM 2.5 NAAQS standard for the most recent three year period. For both the 24-hour and annual PM 2.5 standards, most of the areas that showed the greatest improvement in concentration levels when comparing the two three-year periods were the ones that generally had the highest in earlier years. Despite the reported overall progress, in 2008 nearly 37 million people lived in counties with measured concentrations exceeding both the annual and the 24-hour (based on EPA's 2006 revised standards) PM 2.5 national air quality standards, according to the February 2010 EPA report. Following the designation of an area as nonattainment, the state where the area is located must develop a State Implementation Plan (SIP) that demonstrates how attainment with the PM 2.5 standards will be achieved. Under Section 110 of the CAA, states must submit their SIPs to EPA within three years of designation; 1997 PM 2.5 NAAQS SIPs were due April 5, 2008. To be approved, a SIP must demonstrate that the area will reach attainment of the standards by a specified deadline—April 2010 for 1997 PM 2.5 NAAQS unless an extension allowed under the CAA is granted. SIPs include pollution control measures that are to be implemented by federal, state, and local governments, and rely on models of the impact on air quality of projected emission reductions to demonstrate attainment. On November 27, 2009, EPA published its findings that three states failed to meet the deadline for submitting complete SIPs (74 Federal Register 62251-62255). For the remaining designated areas, states either submitted a complete SIP or EPA made a final approval that the area attained the 1997 PM 2.5 NAAQS based on 2006-2008 air quality data. States with areas that have received final clean data determinations, including those that did not adequately satisfy the SIPs requirement, are not subject to the final action in the November 27, 2009, notice. In the November 27, 2009, notice, EPA issued findings that Georgia, Illinois, and Pennsylvania missed deadlines for submitting plans, or elements of plans for four nonattainment areas: Atlanta, Georgia; St. Louis, (Illinois portion only); Liberty-Clairton, Pennsylvania; and Philadelphia-Wilmington, (Pennsylvania portion only). If acceptable plans have not been submitted within 18 months of the effective date (publication) of the November 2009 Notice (May 2011), states will begin to face sanctions. As detailed in the November 27, 2009, Notice, Section 179(a)(1) of the CAA establishes specific consequences if EPA finds that a state has failed to submit a SIP or, with regard to a submitted SIP, if EPA determines it is incomplete or if EPA disapproves it. Specifically: Pursuant to CAA section 179(a) and (b) and 40 CFR 52.31, the offset sanction identified in CAA section 179(b)(2) will apply in the area subject to the finding. [Any new or modified emission sources will require obtaining offset emissions]. If EPA has not affirmatively determined that the State has made a complete submission within 6 months after the emission offset sanction is imposed, then the highway funding sanction will also apply in areas designated nonattainment, in accordance with CAA section 179(b)(1) and 40 CFR 52.31. Additionally, any of these findings also triggers an obligation for EPA to promulgate a FIP [Federal Implementation Plan] if the state has not submitted, and EPA has not approved, the required SIP within 2 years of the finding. The "18-month clock" will stop and subsequent sanctions will not take effect if EPA finds the state has made a complete submission within 18 months of the November 2009 Notice. States with nonattainment areas were to be in compliance with the 1997 PM 2.5 NAAQS by April 2010, unless they were granted an extension. On April 25, 2007, EPA published its final rule that described the requirements that states and tribes must meet in their implementation plans to achieve and maintain attainment of the 1997 PM 2.5 NAAQS. In addition to detailing provisions necessary to demonstrate how the PM 2.5 NAAQS will be attained, the implementation rule included guidance for submitting a SIP demonstrating that reaching attainment within the five-year requirement is impractical. A number of provisions that generated several comments during the proposal were retained in the final rule, and continue to be the topic of debate. As noted earlier, petitions for legal review of EPA's implementation rule were filed with the U.S. Court of Appeals for the D.C. Circuit, and two petitions for reconsideration were filed with EPA. If new or revised SIPs for PM 2.5 attainment establish or revise a transportation-related emissions budget, or add or delete transportation control measures (TCMs), they trigger "conformity" determinations. Transportation conformity is required by the CAA, Section 176(c) (42 U.S.C. 7506(c)), to prohibit federal funding and approval for highway and transit projects unless they are consistent with ("conform to") the air quality goals established by a SIP and will not cause new air quality violations, worsen existing violations, or delay timely attainment of the national ambient air quality standards. Conformity becomes applicable within one year of the effective date of designating an area as nonattainment. EPA has promulgated several transportation conformity rules and rule amendments since its enactment as part of the 1990 CAA. The rules generally establish the criteria and procedures for determining whether transportation plans, transportation improvement programs (TIPs), or projects conform to a state's SIP. On July 1, 2004, EPA published a final rule making transportation conformity regulations applicable explicitly to PM 2.5 nonattainment areas and included criteria and procedures for the new PM 2.5 and eight-hour ozone NAAQS. On May 6, 2005, EPA published a final rule further amending the transportation conformity regulations by adding transportation-related PM 2.5 "precursors" and specifying when these precursors must be considered in conformity determinations before and after PM 2.5 SIPs are submitted. The EPA established the criteria for determining which transportation projects must be analyzed for local particle emissions (referred to as "hot spots" ) in PM 2.5 nonattainment and maintenance areas, and revised existing requirements for projects in PM 10 areas, in a final rule published on March 10, 2006. Although petitioners challenged certain provisions of the July 2004 and March 2006 final rules with varying results, all PM 2.5 nonattainment areas have completed their initial transportation conformity determinations, and as a result their transportation plans and programs conformed to the 1997 PM 2.5 NAAQS according to EPA. On March 24, 2010, EPA published a final rule amending the transportation conformity regulation primarily to incorporate the October 17, 2006, strengthening of the 24-hour PM 2.5 air quality standard and revocation of the annual PM 10 standard. The final rule, which affects implementation of conformity in PM 2.5 and PM 10 nonattainment and maintenance areas, also addresses a court remand concerning hot-spot analyses as they apply to PM 2.5 and PM 10 , as well as to carbon monoxide and nonattainment and maintenance areas. Whether any special consideration can be given to areas whose air quality is adversely affected by pollution from upwind areas is one of the more frequently raised issues in nonattainment areas. Unlike the larger coarse particles, which generally settle more rapidly and fall near their source of emission, the smaller PM 2.5 particles frequently remain in the atmosphere longer and can travel significant distances from their original source. The transport of PM 2.5 can contribute to, and in some cases can be the primary cause of, nonattainment in areas downwind of an emission source. Subpart 1 of the CAA allows EPA to "classify the area for the purpose of applying an attainment date" and to consider such factors as "the availability and feasibility of pollution control measures." As referenced in the proposed PM 2.5 implementation rule, areas also may petition the agency under § 126 of the CAA to impose controls on upwind sources that significantly contribute to their nonattainment of the standard. The May 2005 promulgation of the Clean Air Interstate Rule (CAIR) was expected to address the interstate transport of pollutants (SO 2 and NOx) from electric generating units (EGUs) hindering downwind states from attaining the eight-hour ozone and 1997 PM 2.5 NAAQS. Although modifying its decision in December 2008, the D.C. Circuit Court's July 2008 decision to vacate CAIR put the focus back on § 126 petitions as the available means to address interstate transport of air pollutants in the immediate future (a more detailed discussion of the Court's decision is provided later in this report under " D.C. Circuit's Decision Vacating the Clean Air Interstate Rule (CAIR) "). EPA has never granted a § 126 petition in the manner outlined by the statute. EPA denied a 2004 § 126 petition from the state of North Carolina for several reasons, in part arguing that CAIR was a better mechanism for addressing the interstate transport of pollution to which North Carolina was subject than was the state's petition under § 126. North Carolina challenged this denial in court. Its challenge was stayed, pending the outcome of the CAIR lawsuit, of which North Carolina was a petitioner. With the CAIR case decided, EPA asked the D.C. Circuit to remand the North Carolina petition to the agency for reconsideration, which the court agreed to do on March 5, 2009. In December 2008, Delaware petitioned EPA under § 126 to impose emission controls on electric generating units in nine other states. New Jersey filed a § 126 petition with the agency on May 13, 2010, to address emissions from a Pennsylvania coal-fired power plant. Section 126(b) requires EPA to make the finding in the petition or deny it within 60 days. However, section 307(d) of the CAA provides extensions under certain circumstances for rulemaking. EPA has submitted such extensions for both the Delaware and New Jersey petition. EPA's proposed "Transport Rule" published August 2, 2010, is intended to supersede the current CAIR, and, in conjunction with other federal and state action, reduce the impact of transported emissions on downwind states. The proposal would include required reductions in SO 2 and NOx emissions in the following 24 jurisdictions that contribute significantly to nonattainment in, or interfere with maintenance by, a downwind area with respect to the annual PM 2.5 NAAQS promulgated in July 1997: Alabama, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia, West Virginia, and Wisconsin. Although EPA does not have a grant program specifically designed to assist nonattainment areas, the agency generally provides grants to state air pollution agencies in support of their programs. Other sources of funding are also available. For example, states may obtain funding for projects intended to contribute to the attainment or maintenance of NAAQS under the Department of Transportation's (DOT's) Congestion Mitigation and Air Quality Improvement Program (CMAQ). Congress authorized $8.6 billion for this program for FY2005-FY2009 under the Safe, Accountable, Flexible and Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) ( P.L. 109-59 ), signed into law on August 10, 2005. Authorized initially by Congress under the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA, P.L. 102-240 ) and funded by the Highway Trust Fund, CMAQ provides funding for surface transportation and other related projects that contribute to air quality improvements and congestion mitigation. In particular, the program is authorized to fund projects that contribute to the reduction of carbon monoxide (CO) and ozone concentrations. CMAQ funds are apportioned to a state based on its population and pollution reduction needs. States with no maintenance or nonattainment areas for ozone or CO are guaranteed a minimum of 0.5% of each fiscal year's authorized CMAQ funds. CMAQ was expanded to allow the use of funds for projects intended to reduce particulate concentrations under the Transportation Equity Act for the 21 st Century (TEA-21, P.L. 105-178 ). TEA-21 did not, however, change the apportionment formula that is based on CO and ozone. States with maintenance or nonattainment areas for only particulates receive the guaranteed minimum. A number of events, most notably the D.C. Circuit Court's July 2008 decision that would have vacated the EPA 2005 Clean Air Interstate Rule (CAIR) in its entirety, have directly affected the timely implementation of the 1997 PM 2.5 NAAQS. Although, on December 24, 2008, the D.C. Circuit subsequently modified its original decision by temporarily reinstating the rule until EPA develops an alternative, the court's actions have raised a number a questions regarding implementation of the PM NAAQS. Also impacting implementation of the 1997 PM 2.5 NAAQS are EPA's final 2006 revisions of the PM NAAQS and subsequent final designation of nonattainment areas in November 2009, and actions regarding implementation of the agency's eight-hour ozone NAAQS. Finally, EPA has initiated the next round of periodic review of the PM NAAQS and announced its intent to expedite that review, targeting February 2011 for proposing any changes to the standards. All of these issues have garnered attention in Congress. The EPA's Rule to Reduce Interstate Transport of Fine Particulate Matter and Ozone, or the Clean Air Interstate Rule (CAIR), published in May 2005, was identified as an important tool for helping states address the interstate transport of pollutants (SO 2 and NOx) from electric generating units (EGUs) hindering downwind states from attaining the eight-hour ozone and 1997 PM 2.5 NAAQS. Under the EPA's approach to the SIPs, implementation of CAIR would have met the interstate transport (downwind state) provision of Section 110(a)(2)(D) of the CAA. On July 11, 2008, the U.S. Court of Appeals for the D.C. Circuit issued a decision vacating CAIR. However, on December 23, 2008, the court reversed itself by allowing CAIR to remain in effect until a new rule is promulgated by EPA, noting that vacating the old rule would "temporarily defeat … the enhanced protection of the environmental values" that the rule was designed to preserve. The court did not impose a specific deadline on EPA's development of the replacement rule, but it did say that it was not granting an indefinite stay of its July 2008 decision. As already discussed, on August 2, 2010, EPA published a proposed "Transport Rule" intended to supersede the current CAIR. Although CAIR generally had broad support among environmentalists and many in the regulated community, no less than 32 petitions for review of CAIR were consolidated and decided in North Carolina v. EPA . Some, including the state of North Carolina, argued that the rule was not strong enough to address pollution from upwind sources. Others, mostly individual utilities, contended that the rule's emission budgets would disproportionally affect certain operations and facilities. The D.C. Circuit found several of the key challenges valid, but decided against voiding only the successfully challenged portions. Noting that EPA regards CAIR as one integrated action, the court's July 11, 2008, decision would have vacated the entire rule (and its associated Federal Implementation Plan) and remanded it to EPA. In developing CAIR, with respect to the 1997 PM 2.5 NAAQS, EPA modeled the emissions impacts of 37 eastern states on 62 eastern downwind counties projected by EPA to be in nonattainment in 2010. EPA found 23 states and the District of Columbia were projected to contribute significantly to 2010 PM 2.5 nonattainment. These states and the District constitute the region covered under CAIR's annual NOx and SO 2 caps. Based on air quality analyses in support of the CAIR, EPA predicted that 17 of 36 areas in the eastern United States designated as nonattainment (out of compliance) with the 1997 PM 2.5 NAAQS would reach attainment by 2010 as a result of implementing CAIR in conjunction with other existing national programs. On the other hand, the EPA analyses recognized that as many as 19 of the areas would remain in nonattainment, highlighting the importance of local and state emission reduction efforts. The extent of pollution reduction projected to result from implementing CAIR had been the subject of considerable debate among stakeholders and some Members of Congress for some time prior to the July 2008 D.C. Circuit decision to vacate the rule in its entirety, and its subsequent decision to temporarily stay its decision. Under EPA's implementation guidance for the SIPs outlining states' strategies for complying with the 1997 PM 2.5 NAAQS, carrying out the CAIR would have met the interstate transport (downwind state) provision of § 110(a)(2)(D) of the CAA. As litigation regarding certain aspects of CAIR was pending, EPA reported that its implementation was continuing. According to EPA, all the states covered under CAIR chose to participate in the trading programs for SO 2 and NOx (or acknowledged an EPA Federal Implementation Plan (FIP) as a default); some also have established direct control programs complementing the trading programs. States had been working to put implementing rules in place, and some in the regulated community had been going forward with investing in equipment for CAIR. The D.C. Circuit's original July 2008 decision vacating CAIR in its entirety presented a major setback to the implementation of the 1997 PM 2.5 (and ozone) NAAQS. EPA's Director of Atmospheric Programs testified before Congress that ... [i]n many cases, states in the CAIR region have relied heavily on the emission reductions required by CAIR as they conducted their modeling to show that they will meet the 1997 ambient air quality standards on time. These attainment demonstration components of the SIPs will likely need to be revised to show how the states will achieve the emission reductions previously required by CAIR. Current and pending SIPs from downwind states would have potentially been inadequate because they assumed the CAIR reductions in interstate transport of pollutants. SIPS from upwind states, on the other hand, could be inadequate if they do not prevent downwind nonattainment: the CAA makes clear that states are to impose controls on stationary sources of pollution that contribute significantly to downwind nonattainment or interfere with the maintenance of air quality standards in other states (§ 110(a)(2)(D)). This provision of the statute has been widely disregarded in the past, with little EPA effort (other than regional cap-and-trade programs) to address it. This reluctance to act can be challenged through CAA § 126 petitions, and the court's decision puts the focus on these petitions as the available means of addressing interstate transport of air pollutants in the immediate future. As discussed, EPA has never granted a § 126 petition in the manner outlined by the statute (see earlier discussion in this report under " Upwind Pollutant Contributions: § 126 of the CAA "). On September 24, 2008, EPA requested reconsideration of the court's July 2008 decision vacating CAIR, with suggestion for rehearing en banc (that is, a rehearing by the entire court), as did the Natural Resources Defense Council (NRDC), the National Mining Association, and the Utility Air Regulatory Group, in separate petitions. Granting reconsideration or a rehearing en banc is unusual, and success is especially unlikely given that the initial North Carolina v. EPA decision was unanimous and appeared to give the court little pause. Granting a rehearing requires the vote of a majority of the active duty judges on the D.C. Circuit. As requested by the court, a new round of legal briefings was filed in early November 2008. In a brief submitted on behalf of EPA November 17, 2008, the U.S. Department of Justice continued to support the request in the petition for a rehearing, but said that a stay of the decision long enough to allow implementation of a replacement regulatory regime would be preferable to complete vacatur. On December 23, 2008, the D.C. Circuit, on EPA's motion, reversed its decision to vacate CAIR, allowing for EPA to develop a replacement rule. The Circuit, however, left the substantive requirements and findings of its July 2008 decision fully intact. The court's decision stated that there is no simple "fix" that would make CAIR acceptable to the court. It is also unclear whether the agency can salvage the regional cap-and-trade approach, which lies at the heart of CAIR, or if cap-and-trade on a smaller scale, whether intrastate or intra-company, would face better odds. In its July 2008 decision, the court found "more than several fatal flaws" in the rule, and concluded, "No amount of tinkering will transform CAIR, as written, into an acceptable rule." The D.C. Circuit did not impose a specific deadline on EPA's development of the replacement rule in its December 2008 decision. However, the court did emphasize that it was not granting an indefinite stay of its July 2008 decision. Rewriting the regulations to address the court's objections posed significant difficulties for EPA. The deadlines for states in nonattainment to submit SIPs and reach attainment (with the exception of exemptions) of the 1997 PM 2.5 NAAQS have passed. While it is apparent that states were able to rely, to some extent, on reductions associated with the first phase of CAIR through 2010, continued reliance on CAIR for subsequent reductions is an area of some debate. According to EPA, current CAIR requirements for reductions remain in effect, and CAIR regional control programs continue their operations pending the agency's promulgation of an alternative transport rule. EPA anticipates finalizing the proposed "Transport Rule" published August 2, 2010, by late spring 2011. At the end of 2005, EPA completed its statutorily required review and assessment of relevant scientific studies to either reaffirm or modify the particulates NAAQS. Based on the review, on October 17, 2006, EPA promulgated revisions to the particulates NAAQS. Given the simultaneity of the 2006 particulates NAAQS as revised and the ongoing implementation of the 1997 PM 2.5 standards, outcomes and challenges associated with the review and EPA's changes to the existing (1987 and 1997) NAAQS for PM 10 and PM 2.5 could affect the implementation schedule for the 1997 PM 2.5 NAAQS. Based on its review and analysis of scientific studies available between 1997 and 2002, and determinations made by the Administrator, EPA's modifications to the particulates NAAQS tightened the current NAAQS primarily by strengthening the daily (24-hour) standard for PM 2.5 . The 2006 NAAQS lowered the daily PM 2.5 standard from 65 micrograms per cubic meter (µg/m 3 ) to 35 µg/m 3 and retained the annual standard at 15 µg/m 3 . The EPA left the existing (1987) daily standard for coarse particles (PM 10 ) in place at 150 µg/m 3 and relaxed the standard somewhat by revoking the existing annual maximum concentration standard of 50 µg/m 3 . As anticipated, EPA's tightening of the PM 2.5 NAAQS resulted in the classification of more areas as "nonattainment" and in need of implementing new controls on particulate matter. States and local governments will be required to develop and implement new plans (SIPs) for addressing emissions in those areas that do not meet new standards. In a February 2006 advanced notice of proposed rulemaking (ANPR) outlining an implementation plan for the transition to the 2006 particulates standards, EPA indicated that it would be beneficial for states to consider control strategies that may be useful in attaining the 2006 revised PM 2.5 NAAQS when developing their strategies for the 1997 PM 2.5 standards. On November 13, 2009, EPA published its final designations of 31 areas in 18 states, comprising 120 counties (89 counties and portions of 31 additional counties), for nonattainment of the revised 2006 24-hour PM 2.5 standard. The final designations, based on 2006 through 2008 air quality monitoring data, include a few counties that would be designated nonattainment for PM 2.5 for the first time, but the majority of the counties identified overlap with EPA's final nonattainment designations for the 1997 PM 2.5 NAAQS. However, most of the 1997 PM 2.5 nonattainment areas were only exceeding the annual standard; only 12 counties were exceeding both the 24-hour and the annual standards. Thus, tightening the 24-hour standard resulted in an increased number of areas (and counties) being designated nonattainment based on exceedances of both the 24-hour and the annual standard—150 counties nationally. In December 2008, EPA had announced designation of 211 counties and portions of counties in 25 states as nonattainment areas for the 2006 PM NAAQS based on 2005-through-2007 data. Publication of a final designation rule for the 2006 PM 2.5 NAAQS was delayed pending review by the agency under the current Administration. The review of the final designation rule, along with several other agency proposed and final actions introduced toward the end of the previous Administration, was initiated, in part, in response to a White House January 20, 2009, memorandum, and the Office of Management and Budget's subsequent January 21, 2009, memorandum, regarding regulatory review. During this review, EPA revised its designations based on more current monitoring data (calendar years 2006-2008). EPA's final designation rule became effective December 14, 2009 (30 days from the date of publication). Following formal designation, the states have three years to submit State Implementation Plans (SIPs), which identify specific regulations and emission control requirements that would bring an area into compliance. States are required to meet the 2006 revised PM 2.5 NAAQS no later than five years from the date of designation, unless granted an extension. EPA projects that states will be required to submit SIPs in November 2012, and would have to meet the new PM 2.5 standard in November 2014 (or 2019, if qualified for an extension). As discussed earlier, states must be in compliance with the 1997 PM 2.5 NAAQS by April 2010, unless granted an extension. Given the continuing delays in implementing the 1997 NAAQS and the D.C. Circuit's July and December 2008 decisions regarding the CAIR, some stakeholders advocated moving directly to implementation of the 2006 standards. However, the 2006 particulates NAAQS have faced challenges of their own. In December 2006, several states and industry, agriculture, business, and public advocacy groups separately petitioned the court to review the 2006 particulates NAAQS. A February 24, 2009, decision by the U.S. Court of Appeals for the District of Columbia Circuit granted the petitions in part, denying other challenges, and remanded the standards to EPA for further consideration. While the court did not specifically vacate the 2006 PM standards, and their implementation will proceed, the decision and EPA's eventual actions have prompted renewed interest in PM NAAQS among members of Congress. Delaying publication of the final area designations for the 2006 PM 2.5 NAAQS delayed the expected effective date, which had been scheduled for April 2009. The effective date for the final designations is December 14, 2009. EPA's next round of the periodic review of the particulates NAAQS is under way. The agency announced its intention to accelerate the review, in part in response to the February 2009 D.C. Circuit court decision regarding the 2006 particulates NAAQS. EPA has indicated that it plans to propose any changes to the standards by February 2010 and has targeted October 2011 for final standards. Potential risk reduction estimates and initial staff recommendations reported in recently released draft EPA assessments suggest further strengthening of the NAAQS for fine particulates. The assessments include findings that indicate that more stringent annual and 24-hour PM 2.5 standards could potentially reduce mortality risk from long-term exposure as well as provide protection from high peak concentrations. In an April 2010 review of EPA's draft assessments, members of the CASAC agreed that the evidence suggests the need for stricter PM 2.5 standards to adequately protect human health. The EPA's assessments and findings, and the issue of whether particulate NAAQS should be strengthened or not, will likely be subject to considerable comment and debate. Concerns regarding the potential impacts of the ozone and particulate standards have led to several attempts by Congress over the years to modify the implementation requirements. Attempts in recent years were generally attached to larger pieces of legislation, such as the energy and transportation bills, as well as proposed multi-pollutant bills to reduce emissions from coal-fired power plants. Although PM 2.5 has not been one of the primary pollutants specified in the multi-pollutant legislation previously considered, certain provisions of some of the bills could have potentially contributed to reducing PM 2.5 concentrations. The D.C. Circuit's July 2008 decision to vacate CAIR put into play again the issue of a multi-pollutant strategy with respect to the electric utility industry—a framework based on a consistent set of emissions caps implemented through emission trading. Such an approach would not resolve all the issues surrounding CAIR, and would raise issues of its own: Should multi-pollutant legislation supplement or be a substitute for the current regulatory regime? How stringent should the emission caps be? What is an appropriate schedule for their introduction? How should they relate to existing CAA provisions? Should carbon dioxide be included with SO 2 , NOx, and mercury control programs? Should requirements be limited to the electric utility industry? Should EPA be provided with the authority to implement CAIR or other cost-based, market-oriented approaches to address NAAQS? Should there be comprehensive revision to the CAA to address the full scope of ozone and PM 2.5 NAAQS nonattainment and related issues, as well as other pollutant emissions from coal-fired power plants, and emerging environmental issues such as climate change? These questions and related issues related to the CAIR were at the center of discussion during a July 29, 2008, hearing held by the Senate Committee on Environment and Public Works Subcommittee on Clean Air and Nuclear Safety, and on July 22, 2010, the committee held a hearing on EPA's proposed alternative transport rule. Congress could consider a more surgical legislative vehicle aimed specifically at providing EPA with the authority to implement some form of CAIR or other cost-based, market-oriented approaches to address NAAQS. The court's December 23, 2008, ruling and EPA's subsequent August 2010 proposed alternative transport rule seem to have lessened interest in such an approach. At the other extreme, Congress might consider a more comprehensive revision to the CAA to address not only ozone and PM 2.5 NAAQS nonattainment, but also other pollutant emissions and emerging environmental issues such as climate change. Implementation of the 1997 PM 2.5 NAAQS impacts a number of counties throughout the United States. EPA's final nonattainment designations included 39 areas, comprising 205 counties within 20 states (and the District of Columbia) nationwide, with a combined population of almost 90 million. A number of concerns have been raised regarding the potential impacts, and numerous questions have been triggered regarding the specifics of the implementation process for the 1997 standards. Similar concerns are likely to stimulate debate as EPA and states encounter issues in the initial stages of implementing the PM 2.5 NAAQS as revised in October 2006 and as the agency proceeds with its current review of the particulates NAAQS. Already delayed considerably, implementation of the 1997 PM 2.5 NAAQS faced further uncertainty as a result of the U.S. Court of Appeals for the D.C. Circuit's July 11, 2008, decision ( North Carolina v. EPA ) that would have vacated the Clean Air Interstate Rule (CAIR). EPA projected that CAIR, in conjunction with other federal measures such as recent auto and truck emission standards, would be sufficient to demonstrate attainment in a large portion of monitored nonattainment counties by 2015, prior to the development and implementation of local measures. However, the court's subsequent December 23, 2008, ruling temporarily reinstating CAIR until EPA promulgates a replacement rule, allowed implementation of the 1997 PM 2.5 NAAQS to continue in the interim. EPA anticipates finalizing the proposed alternative to CAIR published on August 2, 2010, in spring of 2011, eliciting additional concerns with respect to the ongoing implementation of the 1997 PM 2.5 NAAQS in the interim. EPA promulgated revisions to the NAAQS for particulate matter on October 17, 2006, primarily a tightening of the 1997 standard for PM 2.5 . The tightening of the PM 2.5 standards increased the number of areas in nonattainment, and areas already designated nonattainment under the 1997 standard may need to adopt more stringent control measures to reach attainment. SIPs for the new 2006 PM 2.5 NAAQS will not be due until December 2012, and attainment will not be required before December 2014. Under the CAA, states are required to meet the new standard "as expeditiously as practicable," but no later than five years from the effective date of final nonattainment designations, unless granted an extension. Citing the historical delays associated with implementing the 1997 standards, some stakeholders have advocated leapfrogging to implementation of the 2006 standards instead. However, opponents contend that an approach relying on the schedule for the 2006 revised particulates NAAQS would further delay the projected benefits of reducing exposures to PM 2.5 . Delays in finalizing the nonattainment designations for the 2006 PM 2.5 NAAQS delayed the effective date of these designations, and subsequently implementation. In addition, the 2006 revised particulates NAAQS have sparked their own controversies, and judicial challenges have been upheld in part (other challenges were denied) by the court and remanded to the EPA for reconsideration. While the court did not specifically vacate the 2006 PM standards and their implementation will proceed, EPA's actions in response to the decision could have implications in the future. In part, in response to the court's decision, EPA initiated the next round of review of the PM NAAQS, and has announced its intent to expedite that review. Although 2006-2008 air quality data indicate that 19 of the 39 nonattainment areas for 1997 PM 2.5 NAAQS have come into attainment, there are a number of states and cities that remain in nonattainment. Deadlines for states to submit their SIPs for the 1997 PM 2.5 NAAQS have elapsed, as has the April 5, 2010, deadline for reaching attainment (unless granted an extension). In light of these expired deadlines and given the many issues surrounding the particulates NAAQS in general, the final phase of implementing the 1997 PM 2.5 NAAQS will likely remain an issue of considerable debate for many stakeholders and interest groups, as well as Congress. Because of legal challenges, the lack of a national monitoring network, and other factors, implementation of the 1997 PM 2.5 NAAQS has been delayed repeatedly since it was promulgated. The timeline presented in Table A-1 below reflects the most recent key milestone dates for implementing the 1997 PM 2.5 NAAQS, including actual completions. These milestones are driven primarily by statutory requirements. It follows an EPA milestone schedule outlined in an April 21, 2003, memorandum to EPA regional administrators that also provided the nonbinding guidance for implementation of the PM 2.5 area designations. Recognizing potential efficiencies associated with states and tribes being able to harmonize control strategies, the initial PM 2.5 schedule was intended to be similar to that for the eight-hour ozone program. The PM 2.5 NAAQS requirement for three years of monitoring data to determine whether areas were meeting the established limits was one factor responsible for delaying implementation. Comprehensive monitoring data sufficient to make this determination and the attainment designations were not available in 1997. Recognizing this dilemma, in the 1998 Transportation Equity Act for the 21 st Century (TEA-21; P.L. 105-178 , Title VI), Congress revised the statutory deadline requirements for the new NAAQS, predicated on a previously released EPA Interim Implementation Policy. TEA-21 required states to submit designation recommendations within one year after receipt of three years of data meeting defined federal protocols, and required EPA to promulgate designations within one year after state recommendations were due, but not later than December 31, 2005. As discussed earlier in this report, operation of the network of monitors was phased in from 1999 through 2000, making three-year monitoring data available at different points, depending on area location. Rather than a staggered designation schedule, which would likely have hampered cross-coordination of implementation plans, EPA proposed a single date for state and tribal recommendations and final EPA designations. The deadlines of February 15, 2004, for governors to submit their PM 2.5 designation recommendations and December 31, 2004, for EPA to promulgate designations for each state, were the result of Congress amending the CAA in the FY2004 omnibus appropriations ( P.L. 108-199 ). In addition to the delay in establishing a monitoring network, the 1997 NAAQS standards were challenged in District Court by the American Trucking Associations, the U.S. Chamber of Commerce, and several other state and business groups. An initial May 1999 opinion by the District Court partially in favor of the plaintiffs was reversed by the Supreme Court in February 2001.

Particulate matter (PM), including fine particulate matter (PM2.5) and larger, but still inhalable particles (PM10), is one of the six principal pollutants for which the U.S. Environmental Protection Agency (EPA) has set National Ambient Air Quality Standards (NAAQS) under the Clean Air Act (CAA). EPA most recently revised the particulates NAAQS in October 2006, but is due to propose revised standards in February 2011 and promulgate them by October 2011.While currently much of the interest in the particulates NAAQS is focused on reviewing the NAAQS and speculation as to the degree of stringency of any new standards, implementing revised standards can take many years. EPA and states are in the early stages of implementing the 2006 revised standards, and have not finalized implementation of the standards promulgated in 1997 after years of litigation and other delays. This report outlines the implementation process for the 1997 PM2.5 NAAQS and describes issues raised as EPA and states developed and employed implementation strategies for achieving attainment. The EPA's final designation of 39 areas, consisting of 205 counties in 20 states and the District of Columbia, as "nonattainment" (out of compliance) areas for the 1997 PM2.5 NAAQS became effective in April 2005. A combined population of almost 90 million resides in these areas. States with PM2.5 nonattainment areas are required to develop comprehensive implementation plans, referred to as State Implementation Plans (SIPs), demonstrating how attainment will be reached by a designated deadline. SIPs include pollution control measures that rely on models of the impact on air quality of projected emission reductions to demonstrate attainment. States were required to submit SIPs for the 1997 PM2.5 NAAQS by April 2008, but EPA did not begin receiving most submissions until July 2008. On November 27, 2009, EPA published its findings that three states failed to meet the deadline for submitting complete SIPs. For the remaining designated areas, states either submitted a complete SIP or EPA made a final approval that the area attained the 1997 PM2.5 NAAQS based on 2006-2008 air quality data. States must be in compliance by 2010, unless they are granted an extension. A number of issues will continue to be debated as the implementation of the 1997 PM2.5 NAAQS progresses. Notably, the U.S. Court of Appeals for the D.C. Circuit's July 11, 2008, decision (North Carolina v. EPA) to vacate the Clean Air Interstate Rule (CAIR) introduced new concerns and disruptions with respect to the implementation of the 1997 PM2.5 NAAQS. Implementation of CAIR would have assisted states in addressing the interstate transport (upwind state) emission contributions in achieving attainment. The court's December 23, 2008, modified decision allows CAIR to remain in effect, but only temporarily until EPA promulgates a replacement rule, which could have future implications for implementing the PM2.5 NAAQS. On August 2, 2010, EPA published a proposed "Transport Rule" intended to supersede the current CAIR. In addition, other promulgated and proposed EPA rulemakings that influence various aspects of regulating air quality, including EPA's 2006 changes to the particulates NAAQS, continue to impact the 1997 PM2.5 NAAQS implementation process. EPA and states have encountered similar issues in implementing the 2006 revised particulates NAAQS. Whatever the outcome of the current review of the particulates NAAQS, implementation of any changes to the standards in many regards will also likely mirror the experience of EPA and states following the promulgation of the PM2.5 NAAQS 13 years ago.

The National Directory of New Hires (NDNH) is a database of personal information and wage and employment information of American workers. Employers are required by P.L. 104-193 to send new hire reports to the State Directory of New Hires, which then sends the required information to the NDNH. States also are required to send quarterly wage information of existing employees (in UC-covered employment) and unemployment compensation claims information to the NDNH. Federal employers (i.e., agencies) send their new hire reports and quarterly wage information directly to the NDNH. A new hire report contains six data elements on new employees, which include the name, address, and Social Security number of each new employee and the employer's name, address, and tax identification number. The NDNH contains three components. (1) The first component of the NDNH is the new hires file (i.e., report). It contains information that is also on each employee's W-4 form. (2) The second component of the NDNH is the quarterly wage file. The quarterly wage file contains quarterly wage information on individual employees in UC-covered employment. This information comes from the records of the State Workforce Agencies (sometimes called State Employment Security Agencies) and the federal government. When an individual has more than one job, separate quarterly wage records are established for each job. (3) The third component of the NDNH is the Unemployment Compensation file. The Unemployment Compensation file contains information pertaining to persons who have received or applied for unemployment compensation, as reported by State Workforce Agencies. With respect to this file, the state can only submit information that is already contained in the records of the state agency (i.e., generally the State Workforce Agency) that administers the Unemployment Compensation program. Thus, the NDNH obtains its data from State Directories of New Hires, State Workforce Agencies, and federal agencies. The NDNH, itself, is a component of the Federal Parent Locator Service (FPLS), which is maintained by the federal Office of Child Support Enforcement (OCSE) and is housed at the Social Security Administration's National Computer Center in Baltimore, MD. According to the Department of Health and Human Services (HHS), during FY2010 about 672 million records were posted to the NDNH. The original purpose of the NDNH was to help states locate child support obligors who were working in other states so that child support could be withheld from the noncustodial parent's paycheck. It is estimated that about 30% of child support cases involve noncustodial parents who do not live in the same state as their children. States generally use NDNH data rather than state new hire data or state quarterly wage data because they are more likely to acquire earnings information about noncustodial parents who have obtained work or claimed unemployment insurance benefits in a different state, or who are employed by the federal government. Moreover, because many noncustodial parents are in temporary employment or move from job to job, the quick reporting of information on new hires greatly increases the likelihood that the NDNH will be able to locate a noncustodial parent and pass on the information to states, so that the Child Support Enforcement (CSE) agencies can collect child support via income withholding before the noncustodial parent changes jobs. Since its enactment in 1996, access to the NDNH has been expanded, mostly to prevent fraud and abuse, to certain other programs and agencies (discussed later). Employers are required to collect from each newly hired employee and transmit to the State Directory of New Hires a report that contains the name, address, and Social Security number of the employee and the employer's name, address, and tax identification number. Most states require only these six basic data elements in each new hires report; some states require or request additional information. The State Directory of New Hires is required to submit its new hire reports to the NDNH. New hire reports must be deleted from the NDNH 24 months after the date of entry. For CSE purposes, quarterly wage and unemployment compensation reports must be deleted 12 months after entry unless a match has occurred in the information comparison procedures. The reporting and deletion requirements result in a constant cycling of wage and employment data into and out of the NDNH. (The HHS Secretary may keep samples of data entered into the NDNH for research purposes. ) The HHS Secretary has the authority to transmit information on employees and employers contained in the new hires reports to the Social Security Administration (SSA), to the extent necessary, for verification. SSA is required to verify the accuracy of, correct, or provide (to the extent possible) the employee's name, Social Security number, and date of birth and the employer's tax identification number. According to OCSE, all Social Security numbers on new hire reports and unemployment compensation files are verified by SSA before the information is added to the database of the National Directory of New Hires. Quarterly wage files, however, often do not include all of the necessary elements for a successful verification. In such situations, the information is transmitted to the NDNH, but it is flagged indicating that SSA was not able to verify the Social Security number and name combination. Employers must provide a new hires report on each newly hired employee to the State Directory of New Hires generally within 20 days after the employee is hired. The new hires report must be entered into the database maintained by the State Directory of New Hires within five business days of receipt from an employer. Within three business days after the new hire information from the employer has been entered into the State Directory of New Hires, the State Directory of New Hires is required to submit its new hire reports to the NDNH. Within two business days after the new hire information is received from the State Directory, the information must be entered into the computer system of the NDNH. For purposes of locating individuals in a paternity establishment case or a case involving the establishment, modification, or enforcement of child support, the HHS Secretary must compare information in the NDNH against information in the child support abstracts in the Federal Child Support Case Registry at least every two business days. If a match occurs, the HHS Secretary must report the information to the appropriate state CSE agency within two business days. The CSE agency is then required to instruct, within two business days, appropriate employers to withhold child support obligations from the employee's paycheck, unless the employee's income is not subject to withholding. Quarterly wage information on existing employees is required to be transmitted to the NDNH from the State Workforce Agencies within four months of the end of a calendar quarter. However, some states report quarterly wage data to the NDNH on a monthly or weekly basis. Federal agencies are required to transmit quarterly wage information on federal employees to the NDNH no later than one month after the end of a calendar quarter. Unemployment compensation information (which comes from State Workforce Agencies) is required to be transmitted to the NDNH within one month of the end of a calendar quarter. In order to safeguard the privacy of individuals in the NDNH, federal law requires that the OCSE restrict access to the NDNH database to "authorized" persons. Moreover, the NDNH cannot be used for any purpose not authorized by federal law. Thus, in order for any agency not mentioned in this section to gain access to the NDNH, Congress must authorize a change in law. The HHS Secretary is required to share information from the NDNH with state CSE agencies, state agencies administering the Title IV-B child welfare program, state agencies administering the Title IV-E foster care and adoption assistance programs, state agencies administering the Temporary Assistance for Needy Families (TANF) program, the Commissioner of Social Security, the Secretary of the Treasury (for Earned Income Tax Credit purposes and to verify income tax return information), and researchers under certain circumstances. P.L. 106-113 (enacted in November 1999) granted access to the Department of Education. The provisions were designed to improve the ability of the Department of Education to collect on defaulted student loans and grant overpayments. OCSE and the Department of Education negotiated and implemented a computer matching agreement in December 2000. P.L. 108-199 (enacted in January 2004) granted access to the Department of Housing and Urban Development. The provisions were designed to verify the employment and income of persons receiving federal housing assistance. P.L. 108-295 (enacted in August 2004) granted access to the State Workforce Agencies responsible for administering state or federal Unemployment Compensation programs. The provisions were designed to determine whether persons receiving unemployment compensation are working. P.L. 108-447 (enacted in December 2004) granted access to the Department of the Treasury. The provisions were designed to help the Treasury Department collect nontax debt (e.g., small business loans, Department of Veterans Affairs (VA) loans, agricultural loans, etc.) owed to the federal government. P.L. 109-250 (enacted in July 2006) granted access to the state agencies that administer the Food Stamp program. These provisions were designed to assist in the administration of the Food Stamp program. P.L. 110-246 (enacted in June 2008) changed the Food Stamp program references to the Supplemental Nutrition Assistance Program (SNAP). P.L. 113-79 (enacted in February 2014) required all state SNAP agencies (rather than giving them the option) to data-match with the NDNH at the time of SNAP certification for the purposes of determining eligibility to receive SNAP benefits and determining the correct amount of those benefits. P.L. 110-157 (enacted in December 2007) requires the Secretary of Veterans Affairs to provide the HHS Secretary with information for comparison with the National Directory of New Hires for income verification purposes in order to determine eligibility for certain veteran benefits and services. It requires the Secretary to (1) seek only the minimum information necessary to make such a determination; (2) receive the prior written consent of the individual before seeking, using, or disclosing any such information; (3) independently verify any information received prior to terminating, denying, or reducing a benefit or service; and (4) allow an opportunity for an individual to contest negative findings. P.L. 110-157 terminated the New Hires Directory comparison authority for the VA Secretary at the end of FY2011 (i.e., September 30, 2011). P.L. 112-37 (enacted in October 2011) extended the termination date to November 18, 2011. During the period from November 19, 2011, through September 29, 2013, the provision was not in effect. The Department of Veterans Affairs Expiring Authorities Act of 2013 ( P.L. 113-37 ) made the provision effective beginning September 30, 2013, and for 180 days thereafter. The NDNH is almost unanimously viewed as a successful and pivotal element of the CSE program. According to HHS, in FY2010 4.7 million noncustodial parents and putative fathers were located through the NDNH, up from 2.8 million in FY1999 (a 68% increase). The NDNH, however, does not provide information on the self-employed nor does it include hours worked or industry/occupation-related data. Since the establishment of the NDNH, federal law has been amended six times to expand access of more programs and agencies to the NDNH (listed above). Although Congress specifically included several provisions that would safeguard the information in the NDNH, some advocacy groups are concerned that as more agencies and programs are granted access to the NDNH, the potential for mismanagement of the database and accidental or intentional misuse of confidential information escalates. The NDNH is a database that contains personal and financial data on nearly every working American, as well as those receiving unemployment compensation. The size and scope of the NDNH has continued to cause much concern over whether the privacy of individuals will be protected. In addition to the data security safeguards, federal law includes privacy protection provisions that require the removal or deletion of certain information in the NDNH after specified time periods. It has been argued that stronger safeguards may be needed to prevent the unauthorized intrusion into the personal and confidential information of millions of Americans associated with the NDNH. The federal government and states administer numerous benefit programs that provide aid, in cash and noncash form, to persons with limited income. In theory, all of these programs could use the employment and income information contained in the NDNH to verify program eligibility, prevent or end unlawful or erroneous access to program benefits, collect overpayments, or assure that program benefits are correct. Some observers are worried that more of these federal and state programs will try to obtain access to the NDNH. They contend that expanded or wider access to, and use of, these data could potentially lead to privacy and confidentiality breaches, financial fraud, identity theft, or other crimes. They also are concerned that a broader array of legitimate users of the NDNH may conceal the unauthorized use of the personal and financial data in the NDNH. Some policymakers maintain that, although many agencies and programs could potentially benefit from access to the NDNH, those entities will not pursue access because many of these agencies currently do not have the computer capacity or capability to use an automated system such as the NDNH. Many of these agencies and programs are administered at the local level where computer availability is limited or computer capability to interface with the automated NDNH is nonexistent. Moreover, many of the privacy protections and strict security requirements tied to the NDNH may be administratively burdensome for many agencies. Finally, some child support advocates are concerned that the wider access to the NDNH may have negative repercussions for the CSE program in that as other programs and agencies use the NDNH effectively and find matches in cases that involve an overpayment, those agencies will want to collect their money and may use income withholding as the mechanism to do so. Thus, these other programs will be in direct competition with the CSE program for the income of noncustodial parents.

The National Directory of New Hires (NDNH) is a database that contains personal and financial data on nearly every working American, as well as those receiving unemployment compensation. Contrary to its name, the National Directory of New Hires includes more than just information on new employees. It is a database that includes information on (1) all newly hired employees, compiled from state reports (and reports from federal employers), (2) the quarterly wage reports of existing employees (in Unemployment Compensation (UC)-covered employment), and (3) unemployment compensation claims. The NDNH was originally established to help states locate noncustodial parents living in a different state so that child support payments could be withheld from that parent's paycheck. Since its enactment in 1996, the NDNH has been extended to several additional programs and agencies to verify program eligibility, prevent or end fraud, collect overpayments, or assure that program benefits are correct. Although the directory is considered very effective, concerns about data security and the privacy rights of employees remain a part of debates regarding expanded access to the NDNH.

From the ear liest days of commercial radio, the Federal Communications Commission (FCC) and its predecessor, the Federal Radio Commission, have encouraged diversity in broadcasting. The FCC's policies seek to encourage four distinct types of diversity in local broadcast media: diversity of viewpoints, as reflected in the availability of media content reflecting a variety of perspectives; diversity of programming, as indicated by a variety of formats and content, including programming aimed at various minority and ethnic groups; outlet diversity, to ensure the presence of multiple independently owned media outlets within a geographic market; and minority and female ownership of broadcast media outlets. In addition to promoting diversity, the FCC aims, with its broadcast media ownership rules, to promote localism and competition by restricting the number of media outlets that a single entity may own or control within a geographic market and, in the case of broadcast television stations, nationwide. Localism addresses whether broadcast stations are responsive to the needs and interests of their communities. In evaluating the extent of competition, the FCC considers whether stations have adequate commercial incentives to invest in diverse news and public affairs programming tailored to serve viewers within their communities. Section 202(h) of the Telecommunications Act of 1996 ( P.L. 104-104 ) directs the FCC to review its media ownership rules every four years to determine whether they are "necessary in the public interest as a result of competition," and to "repeal or modify any regulation it determines to be no longer in the public interest." Section 257(b) of the act directs the FCC to promote policies favoring the diversity of media voices and vigorous economic competition. In 2004, 2011, and 2016, the U.S. Court of Appeals for the Third Circuit directed the FCC to review its broadcast ownership diversity policies in conjunction with the media ownership rules. In August 2016, the FCC completed the 2014 Quadrennial Review of its media ownership rules and diversity policies (2016 Diversity Order). The decision contained rules related to (1) the determination and disclosure of media ownership (attribution rules); (2) limits on the type and number of media properties a single entity may own (media ownership rules); and (3) rules designed to enhance media ownership diversity. The new media ownership rules became effective December 1, 2016. The National Association of Broadcasters, Nexstar Broadcasting Inc. (an operator of broadcast television stations), and Connoisseur Media (an operator of radio stations) filed petitions with the FCC requesting that the agency reconsider its 2016 decision by repealing and/or relaxing the media ownership rules, and adopting rules creating a new "incubator program" to enhance ownership diversity. In November 2017, acting in response to the reconsideration petitions, the FCC repealed and/or relaxed several rules and adopted rules creating an incubator program while asking for additional comments on how to implement it (2017 Reconsideration Order). Most of the changes became effective in February 2018, while others, related to the FCC's collection of data, became effective in March 2018 following approval of the Office of Management and Budget (OMB). In August 2018, the FCC issued rules governing a new incubator program. Parties, including the Prometheus Radio Project, have appealed these orders. The U.S. Court of Appeals for the Third Circuit is scheduled to hear arguments regarding the legal challenges to all of the FCC's recent broadcast media ownership rule changes. The FCC's next quadrennial media ownership review is scheduled to begin in 2018. The Consolidated Appropriations Act, 2004 ( P.L. 108-199 ) directed the FCC to adopt rules that would cap the reach of a single company's television stations at 39% of U.S. television households. In addition, Congress exempted this national ownership cap from the FCC's required review of its media ownership rules every four years. In December 2017, the FCC initiated a rulemaking proceeding in which it proposed to eliminate or modify that national audience reach cap. In the proceeding, the FCC sought comments on whether the agency has the authority to modify or eliminate the national cap, and noted that previously the agency had rejected arguments that Congress precluded the FCC from making any adjustment. For more information about the history of the national ownership rule, see Table A-1 . The debate over media ownership rules is occurring against the background of sweeping changes in news consumption patterns. Figure 1 illustrates these general trends. Based on surveys conducted by Pew Research Center, the percentage of adults citing local broadcast television as a news source declined from 65% in 1996 to 37% in 2017. The percentage of respondents who stated that they "got news yesterday" from online sources grew from 2% in 1996 to 43% in 2017, marking the first time that online sources outranked local broadcast television. In contrast, those citing printed newspapers as a source they "read yesterday" or use regularly declined from 50% in 1996 to 18% in 2016. Broadcast radio also has declined in importance as a source of news. These trends raise questions as to whether common ownership of multiple media outlets in the same market might limit diversity of viewpoints as much today as two decades ago. As broadcast stations face competition for viewers' attention from other media outlets, and thereby financial pressures, some have sought to strengthen their bargaining relative to program suppliers (i.e., broadcast networks), advertisers, and/or programming distributors (i.e., cable and satellite operators) by consolidating. For example, in an agreement that was subsequently rescinded, Sinclair Broadcast Group proposed to acquire Tribune Media Company, thereby making it the largest owner of broadcast television stations in the United States. In November 2017, Entercom Communications completed its merger with CBS Radio Inc., making it the largest radio operator in the United States in terms of revenue. In June 2018, Gray Television announced that it would purchase Raycom Media Inc. in a $3.65 billion transaction that would enable Gray to reach one-fourth of U.S. households. The extent to which such media consolidation can occur is directly related to the FCC media ownership and attribution rules in place at the time. Two characteristics of broadcast television and broadcast radio stations determine whether or not the media ownership rules described in later sections of this report are triggered: (1) the geographic range (or contours ) of their signals, and (2) the limits of their media markets as determined by the Nielsen Company, a market research firm. The FCC uses Designated Market Areas (DMAs) to determine the geographic regions that apply to the duopoly rule, and uses broadcast television signals to determine when the rules are triggered within DMAs. Following the transition of broadcast stations from analog to digital signals in 2009, the FCC modified the media ownership rules to reflect two digital television service contours: 1. The digital "principal community contour" (digital PCC). This contour specifies the signal strength required to provide television service to a station's community of license. The FCC sought, when defining the digital PCC, to provide television stations with flexibility in siting and building their facilities while still preventing stations from straying too far from their respective communities of license. 2. The digital "noise limited service contour" (digital NLSC). The FCC designed this contour to define a geographic area in which at least 50% of residents can receive the signal a majority of the time. The FCC wanted to ensure that after the digital transition, broadcasters would be able to reach the same audiences they served previously with analog transmissions. The FCC uses DMAs created by the Nielsen Company to define local television markets. Nielsen has constructed 210 DMAs by assigning each county in the United States to a specific DMA, based on the predominance of viewing of broadcast television stations licensed to operate in a given metropolitan statistical area, defined by the OMB. The 1 millivolt-per-meter (1 mv/m) contour for FM radio represents a signal that will result in satisfactory service to at least 70% of the locations on the outer rim of the contour at least 90% of the time. In its rules for AM radio stations, the FCC delineates three types of service areas: (1) primary, (2) secondary, and (3) intermittent. Some classes of radio stations render service to two or more areas, while others usually have only primary service areas. The FCC defines the primary service area of an AM broadcast radio station as the service area in which the groundwave is not subject to objectionable interference or fading. The signal strength required for a population of 2,500 or more to receive primary service is 2 millivolts per meter (2 mv/m). For communities with populations of fewer than 2,500, the required signal strength is 0.5 mv/m. When the FCC first proposed incorporating AM contour signals in its media ownership rules, it noted that "a one mv/m AM signal is somewhat less than the signal intensity needed to provide service to urban populations, but somewhat greater than the signal at the outer limit of effective non-urban service." The FCC also relies on the Nielsen Company to define local radio markets. These markets, called "Metros," generally correspond to the metropolitan statistical areas defined by the OMB, but are subject to exceptions based on historical industry usage or other considerations at the discretion of Nielsen. In contrast to television markets, radio markets do not include every U.S. county. To determine the number of radio stations within a radio market, the FCC uses a database compiled and updated by BIA Kelsey, another market research firm. Many licensees of commercial broadcast television and radio stations have relationships that allow others to exert substantial influence over the operation and finances of those licensees' stations. FCC rules prohibit unauthorized transfers of control of licenses, including de facto transfers of control. To help it enforce its media ownership rules, the FCC has developed attribution rules "to identify those interests in or relationships to licensees that confer a degree of influence or control such that the holders have a realistic potential to affect the programming decisions of licensees or other core operating functions." In such cases, the FCC may deem an entity to influence a broadcast station's operations and finances to a degree that triggers the FCC's media ownership rules, even when the FCC does not consider the entity to be the official licensee. The following summarizes the media attribution rules, as described and modified in the 2017 Reconsideration Order, and related FCC policies. Joint sales agreements (JSAs) enable the sales staff of one broadcast station to sell advertising time on a separately owned station within the same local market. In 2016, the FCC adopted rules specifying that television JSAs allowing the sale of more than 15% of the weekly advertising time on a competing local broadcast television station are attributable as ownership or control. Congress subsequently twice extended the period by which parties must terminate a television JSA in order to comply with the FCC's rule limiting ownership of multiple television stations within a DMA (see " Local Television Ownership Rule (Television Duopoly Rule) "), ultimately extending the deadline to September 30, 2025. The FCC's rules also specified that stations must file copies of attributable television JSAs with the commission. In its 2017 Reconsideration Order, the FCC eliminated the television JSA attribution rule. The FCC determined that JSAs can promote the public interest, and that this provides an independent reason for eliminating the Television JSA Attribution Rule.... [They] have created efficiencies that benefit local broadcasters—particularly in small- and medium-sized markets—and have enabled these stations to better serve their communities." With the repeal of the JSA attribution rule, broadcast television stations are no longer required to file copies of their JSAs with the FCC. However, broadcast television stations must still make copies of JSAs available in their public inspection files. These files are available for review on the FCC website. A JSA among commercial radio stations, whereby one station sells 15% or more of another same-market station's advertising time, is attributable for the purpose of applying the local radio ownership rule. In August 2016, the FCC adopted new disclosure requirements for all joint operating agreements, broadly encompassed by the term shared services agreements (SSAs) among broadcast television stations. In its 2017 Reconsideration Order, the FCC upheld the SSA disclosure rule, which became effective in March 2018 following approval from the OMB. The FCC defines an SSA as any agreement or series of agreements, whether written or oral, in which (1) a station provides any station-related services including, but not limited to, administrative, technical, sales, and/or programming support, to a station that is not directly or indirectly under common de jure control permitted under the [FCC's] regulations; or (2) stations that are not directly or indirectly under common de jure control permitted under the [FCC's] regulations collaborate to provide or enable the provision of station-related services, including, but not limited to, administrative, technical, sales, and/or programming support, to one or more of the collaborating stations. In this definition, the term station includes the licensee, including any subsidiaries and affiliates, and any other individual or entity with an attributable interest in the station. Each station that is a party to an SSA, whether in the same or different television markets, must file a copy of the SSA in its online public inspection file. The stations may redact confidential or proprietary information. The stations must also report the substance of oral SSAs in writing to the FCC. SSA disclosure requirements do not apply to noncommercial television stations, radio stations, and newspapers. The FCC declined to make SSAs attributable, and emphasized that its action "was not a pretext for future regulation of SSAs." The FCC stated that any consideration of the regulatory status of these agreements in the future must reflect "significant study and understanding of the impact of these agreements on station operations and a complete account of the public interest benefits these agreements help facilitate." Broadcast stations that outsource management to other stations are known as sidecars . In March 2014, the FCC's Media Bureau issued a public notice stating that it would closely scrutinize any proposed transaction that includes sidecar agreements in which two (or more) broadcast stations in the same market enter into an arrangement to share facilities, employees, and/or services, or to jointly acquire programming or sell advertising and enter into an option, right of first refusal, put/call arrangement, or other similar contingent interest, or a loan guarantee. In February 2017, the FCC's Media Bureau rescinded this guidance. Nielsen ranks each DMA by the estimated number of television households. It estimated that as of January 2018, the New York DMA contained more than 7 million television households, reaching 6.309% of U.S. television households, making it the number one DMA in the country. In contrast, Nielsen estimated that the Glendive, MT, market was the smallest DMA in the country (ranked number 210), with 4,030 television households, representing 0.004% of U.S. television households. The FCC uses Nielsen's estimates of television households to determine the national audience reach of broadcast television station group owners, for the purpose of applying the national ownership cap. In 1985 the FCC adopted a rule that, for the purpose of applying its national ownership rule, discounted the number of television households reached within a DMA by stations operating in the Ultra High Frequency (UHF) band by half in measuring a station owner's reach. This adjustment reflected the physical limitations of UHF signals, which generally provided poorer picture quality than signals in the Very High Frequency (VHF) band at the time the rule was adopted. However, on June 12, 2009, broadcast television stations completed a transition from analog to digital service pursuant to a statutory mandate. As a result of this switch, UHF stations had a technological advantage, and more broadcast television licenses began to operate on these frequencies. By December 2009, 73% of the 1,392 commercial stations operated in the UHF band. In September 2013, under then-Acting FCC Chairwoman Mignon Clyburn, the FCC proposed eliminating the UHF discount, citing the completed transition to digital broadcasting. In September 2016, the FCC, under then-Chairman Thomas Wheeler, eliminated the UHF discount effective November 2016. In a dissenting statement, then-Commissioner Ajit Pai contended that the FCC lacked the authority to review the UHF discount without simultaneously reviewing the national audience cap. In April 2017, after Commissioner Pai became chairman, the FCC reinstated the UHF discount. With the discount, a single entity that owns exclusively UHF stations could effectively reach 78% of U.S. television households, or double the current national ownership cap of 39% of U.S. television households. In December 2017, the FCC launched a new rulemaking proceeding to examine whether to modify or rescind the UHF discount and national ownership cap. For more information about the history of the UHF discount and national ownership cap, see Table A-1 . When parties request that the FCC allow them to transfer broadcast television licenses, they must ensure that they comply with all FCC rules, including the FCC's media ownership rules. In the event of a transfer of operational and financial agreements involving broadcast stations, rather than an actual license, the parties need not discuss how such arrangements relate to the national ownership rule. In contrast to its attribution rules regarding local media ownership, the FCC has not issued a formal rulemaking regarding its treatment of sharing, sales, operating, and financial agreements, with respect to national media ownership. Instead, it has either articulated its policy on an ad hoc basis in reviewing merger applications, or remained silent. For example, in 2013, when Local TV LLC applied to the FCC to transfer control of its broadcast television station licenses to Tribune Media Company and Dreamcatcher Broadcasting LLC, Tribune proposed that Dreamcatcher would be the new licensee of Local TV's stations in the Norfolk-Portsmouth-Newport News, VA, and Wilkes Barre-Scranton-Hazelton, PA, television markets. Tribune, however, would operate the stations pursuant to shared services agreements (but not joint sales agreements). The FCC's media bureau (but not the full commission) [d]isagree[d] with [opponents of the proposed arrangement] that the facts here show that Tribune will be operating the Dreamcatcher Stations as though it owned them outright. Dreamcatcher will be run by a highly experienced broadcaster, with established independence from Tribune. Because Tribune already owned newspapers in those markets, it did not attempt to take control of the broadcast licenses in those markets in order to comply with the FCC's now-defunct rule prohibiting common ownership of newspapers and television stations within the same DMA (described in " Newspaper/Broadcast Cross-Ownership Rule "). FCC's Media Bureau staff did not, however, directly address how this determination applied to the national ownership rule. Four years later, when Tribune applied to the FCC to transfer control of its broadcast licenses to Sinclair Broadcast Group, the FCC commissioners raised concerns, and in July 2018 they designated the proposed transaction for a hearing before an FCC administrative law judge. Among their concerns was that Sinclair's proposed sale of Tribune's Chicago station WGN-TV could effectively be a "sham" transaction because (1) the proposed buyer had no previous experience in broadcasting, (2) the proposed buyer served as CEO of a company in which Sinclair's executive chairman had a controlling interest, (3) the proposed buyer would have purchased the station at a price that appeared to be significantly below market value, (4) Sinclair would have had an option to buy back the station in the future, (5) Sinclair would have owned most of WGN-TV's assets, and (6) pursuant to a number of agreements, Sinclair would have been responsible for many aspects of the station's operation. The FCC commissioners stated, "Such facts raise questions about whether Sinclair was the real party in interest under Commission rules and precedents and attempted to skirt the Commission's broadcast ownership rules." The FCC commissioners were silent, however, with respect to how, post-transaction, Sinclair's potential remote operation of four television stations within the Wilkes-Barre-Scranton-Hazleton, PA, television market might cause it to breach the national ownership cap. In Wilkes Barre-Scranton-Hazelton alone, Sinclair operates three stations remotely and Tribune operates one. While Sinclair's and Tribune's investor presentation about their transaction highlighted Wilkes Barre as a market common to the two companies, the FCC's designated hearing order did not. As the FCC has been addressing attribution on a case-by-case basis, it is unclear how it would treat such relationships with respect to enforcing national ownership limits in the future. For example, this matter may arise again when the FCC reviews Gray Television's proposed acquisition of stations from Raycom. In the Ottumwa, IA-Kirksville, MO television market, Raycom operates, but is not the licensee of, a station that airs programming from the FOX and NBC networks. Gray does not own any stations in the market. In Gray's investor presentation regarding its proposed merger with Raycom, it highlights Ottumwa as a "Raycom" market, thus implying that it intends to operate the station upon completion of the transaction. It is unclear whether Gray's operation of the station would cause control to be attributed to Gray if future transactions might enable Gray's stations to reach 39% of all U.S. television households, the national limit for a single owner. This issue also would have arisen had Sinclair pursued its proposed merger with Tribune. In Sinclair's final amendment to its merger application, it offered to sell certain stations in order to comply with the national ownership cap (assuming the UHF discount remained in place). Sinclair would nonetheless have reached more than 39% of U.S. television households if the four Wilkes Barre stations, which it would have operated but would not have owned, had been included in the calculation. The FCC has five distinct sets of rules governing ownership of multiple media outlets in a single market: (1) local television ownership rules (known as the television duopoly rules); (2) local radio ownership rules; (3) radio/television cross-ownership rules; (4) newspaper/broadcast cross-ownership rules; and (5) the dual network rule. The local television ownership rule (known as the television duopoly rule) limits common ownership of television stations serving the same geographic region. An entity may own or control two television stations in the same television market, so long as the overlap of the stations' signals is limited and the joint control does not include two of the four most widely watched stations within the market. The FCC may, however, make exceptions to the "top four" prohibition on a case-by-case basis, depending on the conditions of a particular DMA. The FCC initially adopted a TV duopoly rule in 1941, barring a single entity from owning two or more broadcast television stations that "would substantially serve the same area." In 1964, the FCC adopted the signal overlap component of the rules. The FCC sought to limit "future ownership to a maximum of two stations in most states and, thus ... act indirectly to curb regional concentrations of ownership as well as overlap itself." In 1999, the FCC adopted the "top four ranked/eight voice" test, under which it would approve a merger among two of the "top four" stations so long as at least eight independently owned and operating commercial or noncommercial full-power broadcast television stations would remain in the DMA after the proposed combination was consummated. It also adopted the waiver criteria. The "top four ranked" stations in a local market generally are the local affiliates of the four major English-language broadcast television networks—ABC, CBS, Fox, and NBC. The rules apply to the stations' ranking at the time they apply for common ownership. While making some technical modifications, the FCC retained the television duopoly rules in 2016. In its 2017 Reconsideration Order, the FCC eliminated the "eight voices" component of the test. Furthermore, it decided that in applying the restriction on ownership of two top-four-ranked stations in the same market, it would conduct case-by-case evaluations to account for circumstances in which the application of the prohibition may be unwarranted. The FCC found that the modification to the television duopoly rule would not be likely to harm minority and female ownership of broadcast stations. Table 1 summarizes the rules, including waiver circumstances. In 2016, the FCC retained its "failed station/failing station" waiver test. Under this policy, to obtain a waiver of the local television (duopoly) rule, an applicant must demonstrate that (1) one of the broadcast television stations involved in the proposed transaction is either failed or failing; (2) the in-market buyer is the only reasonably available candidate willing and able to acquire and operate the station; and (3) selling the station to an out-of-market buyer would result in an artificially depressed price. The FCC declined to relax its criteria for determining whether a station is failing or failed, stating that parties might be able to manipulate the data used to determine the criteria. The local radio ownership rule limits ownership of radio stations serving the same geographic area. In 2017, the FCC adopted a presumptive waiver of the local radio ownership rule in limited circumstances. In contrast to the television duopoly rule, the FCC does not have failed/failing station waiver criteria for the local radio ownership rule. FCC first adopted rules limiting ownership of FM radio stations serving "substantially the same service area" in 1940. In 1943, the FCC adopted a rule limiting ownership of AM radio stations "where such station renders or will render primary service to a substantial portion of the primary service area of another [AM] broadcast station." In 1964, the FCC amended the rule to use the service contours of FM and AM stations to define the service area. The FCC first adopted a rule limiting ownership of AM and FM stations serving the same area in 1970 and amended them in 1989. In 1992, to address the fact that many radio stations were facing difficult financial conditions, the FCC relaxed the radio ownership rule to establish numerical limits on radio station ownership based on the total number of commercial stations within a market, rather than on whether their signals overlapped. Congress directed the FCC to set new caps, according to instructions laid out in Section 202(b) of the Telecommunications Act of 1996. These limits, described in Table 2 , remain in place today. In 2016, the FCC retained the local radio ownership rule, asserting the following: This competition-based rule indirectly advances our diversity goal by helping to ensure the presence of independently owned broadcast radio stations in the local market, thereby increasing the likelihood of a variety of viewpoints and preserving ownership opportunities for new entrants. In 2016, the FCC clarified certain aspects of its local radio ownership rule. One of the clarifications related to the application of the rule in cases when Nielsen changes the boundaries of radio markets (i.e., Nielsen Audio Metros). In another clarification, the FCC stated that in Puerto Rico, the FCC will use radio station signal contour overlaps, rather than the Nielsen Audio Metro, to apply the local radio ownership rule due to topographical and market conditions. In 2017, the FCC eliminated the radio/television cross-ownership rule. This rule prohibited an entity from owning more than two television stations and one radio station within the same DMA, unless the DMA met certain criteria. The FCC found that it could no longer justify retention of the rule in light of broadcast radio's diminished contributions to viewpoint diversity and the variety of other media outlets that contribute to viewpoint diversity in local markets. The FCC reaffirmed its previous conclusion in 2016 that the radio/television cross-ownership rule is not necessary to promote competition or localism. The FCC also determined that the elimination of the rule would not likely have a negative impact on minority and female ownership. The FCC repealed the newspaper/broadcast cross-ownership (NBCO) rule in 2017. The rule prohibited common ownership of a daily print newspaper and a full-power broadcast station (AM, FM, or TV) if the station's service contour encompassed the newspaper's community of publication. The FCC found that prohibiting newspaper/broadcast combinations was no longer necessary to serve the agency's goal of promoting viewpoint diversity in light of the multiplicity of sources of news and information in the current media marketplace and the diminished role of daily print newspapers, and therefore did not serve the public interest. The FCC noted that given its conclusion in 2003 that the rule was not necessary to promote the goals of competition or localism, and could potentially hinder localism, viewpoint diversity had remained its principal rationale for maintaining the NBCO rule. The FCC determined repealing the NBCO rule could potentially promote localism by enabling local news outlets to achieve efficiencies by combining resources needed to gather, report, and disseminate local news and information. Furthermore, the FCC concluded that eliminating the NBCO rule would not have a material impact on minority and female ownership. The dual network rule (described in detail at 47 C.F.R. §73.658(g)) prohibits common ownership of two of the "top four" networks but otherwise permits common ownership of multiple broadcast networks. Generally, the four broadcast networks covered by this definition are ABC, CBS, Fox, and NBC. The FCC did not address the dual network rule in its 2017 Reconsideration Order, and the rule therefore remains in effect. The FCC first adopted this rule, which originally prohibited ownership of any two networks, with respect to radio in 1941, as part of the Chain Broadcasting Report . The FCC directed the rule at NBC, the only company at that time with two radio networks. The FCC found that the operation of two networks gave NBC excessive control over its affiliated broadcast radio stations, and an unfair competitive advantage over other broadcast radio networks. The FCC extended the dual network rule to television networks in 1946. Section 202(e) of the Telecommunications Act of 1996 directed the FCC to revise its dual network rule. Per the act, the FCC modified the rule to enable common ownership of two networks, as long as one of the networks was not among the top four networks (i.e., ABC, CBS, FOX, and NBC). In 2001, the FCC revised the rule to permit one of the four major networks to jointly own one of those emerging networks, which have since merged into the CW network. Today, the CBS Corporation has a partial ownership interest in the CW broadcast network. In 2016, the FCC retained the "dual network" rule without modification, in order to foster its goals of preserving competition and localism. Table 3 summarizes the public-interest rationales for each of the media ownership rules. The FCC has a long history of attempts to adopt rules to encourage diverse broadcast station ownership, including ownership by women and members of minority groups. Examples of the FCC's attempts are described within several of its past media ownership reviews, including the adoption of the Failed Station Solicitation Rule and the establishment of a class of "eligible entities" that could qualify for relaxed ownership rules, attribution rules, and more flexible licensing policies than their counterparts. As a result of this history, and appeals of previous FCC actions imposing rules to foster diversity of broadcast ownership, the Third Circuit Court of Appeals is overseeing the FCC's efforts to foster diversity of broadcast station ownership. In 2016, the FCC adopted a new order (2016 Diversity Order) containing rules designed to increase broadcast ownership diversity. In accordance with a Third Circuit directive, the agency submitted the rules to the court. In its 2016 Diversity Order, the FCC reinstated the revenue-based eligible entity standard, using the Small Business Administration's definition of a "small business." The FCC had also used this revenue-based eligible entity standard in its previous 2008 ownership diversity rulemaking (2008 Diversity Order). Under this definition, entities that own broadcast stations and have total annual revenue of $38.5 million or less qualify for certain construction, licensing, transaction, and auction measures, described below. The FCC adopted six measures in the 2016 Diversity Order that are designed to enable eligible entities to abide by less restrictive media ownership and attribution rules, and more flexible licensing policies, than their counterparts. Table 4 describes the six measures. Similar to the reinstated definition of eligible entities, these measures are the same as those previously adopted in the FCC's 2008 Diversity Order. To justify this decision, the FCC reasoned that "we continue to believe that enabling more small businesses to participate in the broadcast industry will encourage innovation and promote competition and viewpoint diversity." It added that whether or not such measures would specifically lead to increased broadcast ownership by women and minorities has no bearing on whether the measures will promote small business participation in the broadcast industry. Interested parties have appealed the 2016 Diversity Order to the Third Circuit. As part of its reconsideration of the Quadrennial Media Ownership order in 2017, the FCC established a new incubator that provides a broadcast radio ownership rule waiver to a broadcaster that establishes a program to help facilitate station ownership for a certain class of owners. In addition, the FCC launched a new rulemaking proceeding seeking comment on how to implement the program. The FCC issued rules governing the incubator program in August 2018. Most of the rules became effective on September 27, 2018. Information collection requirements are subject to review by the OMB, pursuant to Section 3507(d) of the Paperwork Reduction Act of 1995 ( P.L. 104-13 ). Under the incubator program, an established radio broadcaster will provide financial and operational support, including training and mentoring, to a new or small radio broadcaster. At the end of a successful incubation relationship, the new or small broadcaster will either own and operate a new station independently, or be on a firmer financial footing. Once an incubation relationship is completed successfully, the established broadcaster will be eligible to receive a waiver of the FCC's Local Radio Ownership Rule, subject to certain requirements. In the order, the FCC did not foreclose the possibility of eliminating or further relaxing its local radio ownership rule in the 2018 Quadrennial Review. The FCC noted that Congress would be able to adopt legislation either authorizing or mandating tax certificates and tax credits in the agency's incubator program, either in addition to or in lieu of the FCC local radio ownership rule waiver. Furthermore, the FCC stated that following the completion of the 2018 Quadrennial Review, it might consider expanding the incubator program to apply to television stations. In addition, it stated that "were Congress to provide an alternative benefit for incubating broadcasters, we would be strongly inclined to expand the program to include television stations." National Ownership Rule History

The Federal Communications Commission (FCC) aims, with its broadcast media ownership rules, to promote localism and competition by restricting the number of media outlets that a single entity may own or control within a geographic market and, in the case of broadcast television stations, nationwide. In addition, the FCC seeks to encourage diversity, including (1) the diversity of viewpoints, as reflected in the availability of media content reflecting a variety of perspectives; (2) diversity of programming, as indicated by a variety of formats and content; (3) outlet diversity, to ensure the presence of multiple independently owned media outlets within a geographic market; and (4) minority and female ownership of broadcast media outlets. Two FCC media ownership rules have proven particularly controversial. Its national media ownership rule prohibits any entity from owning commercial television stations that reach more than 39% of U.S. households nationwide. Its "UHF discount" rule discounts by half the reach of a station broadcasting in the Ultra-High Frequency (UHF) band for the purpose of applying the national media ownership rule. In December 2017, the commission opened a rulemaking proceeding, seeking comments about whether it should modify or repeal the two rules. If the FCC retains the UHF discount, even if it maintains the 39% cap, a single entity could potentially reach 78% of U.S. households through its ownership of broadcast television stations. An important issue with respect to the national ownership cap, which the FCC has not addressed in a rulemaking, is how the agency treats a situation in which a broadcaster manages, operates, or sells advertising for a television station owned by another. In some cases, the FCC has articulated its policy on an ad hoc basis in the context of merger reviews, while in other instances it has effectively consented to such arrangements through its silence. Thus, a single entity could comply with the national ownership cap while still influencing broadcast television stations it does not own, reaching more viewers than permitted under the cap. For example, in reviewing the now-cancelled proposed merger between Sinclair Broadcast Group and Tribune Media Company in 2018, FCC commissioners raised concerns that Sinclair's proposed sale of Tribune's Chicago station WGN-TV in order to comply with the national ownership cap could effectively be a "sham" transaction due to Sinclair's relationships with the proposed buyer. Nevertheless, neither Sinclair's application nor the FCC's order for a designated hearing addressed whether Sinclair's intention to operate four television stations owned by others within the Wilkes-Barre-Scranton-Hazleton, PA, television market might cause it to breach the national ownership cap. In November 2017, acting in response to petitions from broadcast station licensees, the FCC repealed or relaxed several local media ownership rules. The repealed rules limited common ownership of broadcast television and radio stations within the same market, and of television stations and newspapers within the same market. The FCC also relaxed rules limiting common ownership of two top-four television stations (generally, ABC, CBS, FOX, and NBC stations) within the same market. In August 2018, the FCC issued rules governing a new "incubator" program designed to enhance ownership diversity. Parties, including the Prometheus Radio Project, have appealed these orders. The U.S. Court of Appeals for the Third Circuit is scheduled to hear arguments regarding the legal challenges to all of the FCC's recent broadcast media ownership rule changes. The FCC plans to launch its next quadrennial media ownership review later this year. These regulatory changes are occurring against the background of significant changes in media consumption patterns. Based on surveys conducted by Pew Research Center, the percentage of adults citing local broadcast television as a news source declined from 65% in 1996 to 37% in 2016. As broadcast stations face competition for viewers' attention from other media outlets, and thereby financial pressures, some station owners have sought to strengthen their positions by consolidating. The extent to which such media consolidation can occur is directly related to the FCC media ownership and attribution rules in place at the time.

The December 2009 contract by a South Korean consortium to provide four commercial nuclear reactors to the United Arab Emirates (UAE) signaled a new role for South Korea in the world nuclear energy market. The $20 billion deal indicates that South Korea (the Republic of Korea, ROK) has completed the transition from passive purchaser of turn-key nuclear plants in the 1970s to major nuclear technology supplier, now capable of competing with the largest and most experienced nuclear technology companies in the world. Because the plants being exported by South Korea are based on a U.S. design, U.S. export controls will continue to apply. Westinghouse obtained the necessary authorization in March 2010 from the U.S. Department of Energy (DOE) to transfer information related to the technology to the UAE. A December 2009 peaceful nuclear cooperation agreement between the UAE and the United States, required for nuclear trade by Section 123 of the Atomic Energy Act, was intended to ease weapons proliferation concerns by stipulating that the UAE would not develop fuel cycle facilities to support its planned nuclear power program. The UAE program may establish a precedent for U.S. policy on future Korean exports to non-nuclear power nations, which is likely to be of continuing congressional interest. South Korea's growing status in the world nuclear market is an important consideration in the renewal of the existing U.S.-Korea nuclear cooperation agreement, which expires in March 2014. South Korea wants the new "123 agreement" to include advance U.S. consent for reprocessing of spent nuclear fuel and enrichment of uranium—sensitive fuel cycle technologies that are not currently permitted. The Korean Minister of the Knowledge Economy called for Korea to achieve "peaceful nuclear sovereignty" under future U.S. agreements. Korea contends that it needs to be able to offer full fuel cycle services to potential nuclear reactor customers in order to compete worldwide. The United States is concerned about the nuclear weapons proliferation implications of such an expansion of enrichment and reprocessing, along with its potential impact on other security issues on the Korean peninsula. Congress will have an opportunity to review any new agreement before it takes effect. With time running out to address the fundamental U.S. and Korean differences over reprocessing, the two countries announced on April 24, 2013, that they would extend the existing 123 agreement by two years to allow for additional negotiations. Legislation to authorize the two-year extension was introduced by Representative Royce on June 20, 2013 ( H.R. 2449 ). South Korea's nuclear technology progression has been similar to the earlier nuclear paths of France and Japan, which appear likely to be followed in the future by China. France, Japan, and now South Korea developed their nuclear power industries with technology and designs licensed from U.S. companies to supply domestic energy needs. In each case, the licensees assumed progressively greater responsibility for construction of the U.S.-designed units and eventually the engineering and design as well. The foreign firms now compete for nuclear plant contracts throughout the world, including the United States, either in consortia with their former U.S. licensors or independently. In the UAE deal, the South Korean consortium is headed by government-owned Korea Electric Power Corporation (KEPCO) and includes other major Korean industrial companies that are involved in Korea's rapidly growing domestic nuclear power plant construction program. The consortium also includes Pittsburgh-based Westinghouse Electric Company, which currently owns the U.S. design on which the Korean design is based, and the Japanese industrial conglomerate Toshiba, now the majority owner of Westinghouse. Although Korean companies now take the lead on design and construction of Korea's nuclear power plants, Westinghouse still provides support under the design license. Such support typically includes components, instrumentation and control equipment, and technical and engineering services. The Korean plant to be built in the UAE, the APR-1400 model, is a modified version of the System 80+ design developed by the U.S. firm Combustion Engineering (C-E), which was later acquired by Westinghouse. The total value of components and services to be provided for the UAE project by Westinghouse and other U.S. companies is estimated at about $2 billion, according to a financial package approved in September 2012 by the U.S. Export-Import Bank. When the construction of South Korea's first commercial nuclear power plant began in 1972, the South Korean economy was about 7.5% the size of Japan's, and the country's per-capita income was slightly lower than that of North Korea. With such a relatively small industrial base, South Korea's plans to finance and operate a fleet of nuclear power plants could have been considered overly ambitious, and its long-term plans to master the new technology might have seemed unrealistic. But the subsequent growth of the South Korean economy—with per-capita income now rivaling other developed nations and GDP nearly 20% of Japan's—turned out to be more than sufficient to sustain the country's planned nuclear power development. South Korea launched its nuclear power program through the government-owned Korea Electric Company (now Korea Electric Power Corporation, KEPCO), which purchased the country's first nuclear power units from Westinghouse. Those first plants were ordered on a turn-key basis, in which the foreign supplier delivered a completed plant with minimal Korean industry input. As shown in Figure 1 , the first of these turn-key units, Kori 1, began operating in 1978. Westinghouse supplied the reactor and other components of the nuclear steam supply system (NSSS) and constructed the plant, and other western firms provided the turbine-generator and architect/engineering services. Wolsong 1 and Kori 2, coming on line in 1983, were also turn-key units, with all major components and construction services provided primarily by non-Korean companies. After those first three units, Korean firms took over the construction work on subsequent plants, beginning with Kori 3, which began commercial operation in 1985. However, the NSSS, turbine-generators, and architect/engineering services continued to be provided primarily by non-Korean companies, including Westinghouse, Atomic Energy of Canada Limited (AECL), and the French firm Framatome, which had previously licensed its design from Westinghouse. That arrangement continued for the next six units, which came on line from 1995-1999. In 1987, KEPCO embarked on an effort to establish a standard Korean design, selecting the System 80 design from the U.S. firm Combustion Engineering (C-E) as the basis. The System 80 design had been used for three identical units nearing completion at Palo Verde, AZ. Combustion Engineering won the competition for the Korean standard design contract by agreeing to full technology transfer, according to KEPCO. A 10-year technology license agreement was signed in 1987 and extended for 10 more years in 1997. The U.S. contractors for the turbine-generators (General Electric) and architect/engineering services (Sargent & Lundy) agreed to transfer key technology as well. All of the major U.S. companies working on the new C-E plants agreed to serve as subcontractors to Korean firms: Combustion Engineering to Hanjung (now Doosan), General Electric (GE) also to Hanjung, and Sargent & Lundy (S&L) to Korea Power Engineering Company (KOPEC), which is majority owned by KEPCO. Yonggwang 3 and 4 and Ulchin 3 and 4, which began operating from 1995 to 1999, were constructed under that arrangement. A similar partnership was formed with Atomic Energy of Canada Limited (AECL) to build Wolsong 2-4, completed during 1997 through 1999. Plant construction continued to be carried out by Korean companies. Components and work shared by Korean and foreign firms are shown in Figure 1 . Korean reactor designers worked with C-E, which became part of Westinghouse in 2000, to develop a standard Korean design from the System 80 model. This effort resulted in the 1,000 megawatt Optimized Power Reactor (OPR-1000). The seven OPR-1000 units that have been completed since 1999 were built and constructed almost entirely by Korean firms. However, some key components continued to be supplied or heavily supported by non-Korean firms, constituting a small percentage of each nuclear unit's total cost. Development of a larger and more advanced model of the Korean standard design was based on the C-E System 80+ design that received U.S. standard design certification from the Nuclear Regulatory Commission (NRC) in May 1997. The Korea Atomic Energy Research Institute (KAERI) helped develop the U.S. design, complementing work on the Korean version of the design that began in 1992. The Korean design was largely completed by 1999 and was designated the APR-1400. South Korea currently has four nuclear units under construction, one OPR-1000 and three APR-1400s, to be completed between 2013 and 2017. Five more APR-1400s are planned to be completed between 2018 and 2021. That construction program would increase the country's nuclear power reactors from 23 to 32, and nuclear power generating capacity from 20,800 megawatts to 32,500 megawatts. South Korea's long-term electricity plan calls for increasing nuclear capacity to 42,700 megawatts by 2030, the equivalent of about seven additional APR-1400s after 2021. South Korea generated 35% of its electricity from nuclear plants in 2011 and plans to increase that share to 59% by 2030. Ever since South Korea completed the first nuclear unit in which Korean firms participated in all phases of development—Yonggwang 3 in 1995—the country has opened an average of about one unit every 18 months. Starting after the most recent reactor, Shin Wolsong 1, began commercial operation in July 2012, South Korea plans to complete an average of about one reactor per year through 2030. With the planned rate of domestic nuclear plant construction remaining fairly stable, it would appear that any significant expansion of South Korea's nuclear engineering and construction industry would depend on exports. The South Korean government expects KEPCO's reactor sale to the UAE to constitute the leading edge of a much larger nuclear power marketing effort throughout the world. According to news media reports, the Ministry of Knowledge Economy (MKE), which is responsible for industrial and trade policy, had established a goal for South Korea to capture 20% of the world nuclear power plant market during the next 20 years. Based on an estimated world market of about 400 large commercial reactors through 2030, a 20% penetration would result in South Korean exports of 80 reactors during the next 20 years, with an estimated value of $400 billion. There have been recent indications that South Korea is scaling back those targets, as well as its expectations for world nuclear growth, but the country is competing vigorously for export sales, particularly in the Middle East and North Africa. As South Korea's first foreign reactor sale, the UAE contract for the four-unit Barakah plant is likely to establish a template for future exports. The companies involved in the UAE project appear to be the same ones that are currently building Korean domestic nuclear plants and are likely to play similar roles in the export program. The importance placed by the ROK government on the contract was underscored by the presence of South Korean President Lee Myung-bak at the signing ceremony in the UAE December 27, 2009, along with UAE President Sheikh Khalifa bin Zayed al-Nahayan. Construction of the first Barakah reactor officially began in July 2012. The selection of the KEPCO consortium was made by the Emirates Nuclear Energy Corporation (ENEC), which will oversee the contract's implementation. According to a statement issued by ENEC, the contract includes the following major provisions: The KEPCO consortium will design, build, help operate and maintain, and provide initial fuel for four APR-1400 nuclear units at a total cost of about $20 billion. A "high percentage of the contract" will be under a fixed price. Korean investors will have an equity interest in the UAE plants. The first unit is to begin commercial operation in 2017, with the other three to be completed by 2020. Extensive training, human resources development, and education is to be provided to allow UAE to eventually provide most of the nuclear plant staffing and develop commercial infrastructure and support businesses. A potential follow-on contract for long-term operation and maintenance of the Barakah plant, worth as much as another $20 billion over 60 years, is under discussion with KEPCO and other vendors. The Korean consortium was selected over two other proposals, from Areva and General Electric-Hitachi. According to media reports, the decision was strongly affected by price. One report indicated that the KEPCO total of $20 billion was 30% lower than the Areva bid, which in turn was lower than the GE-Hitachi offer. Another report described KEPCO's price as $16 billion lower than Areva's. KEPCO's bid averages out to $5 billion per reactor, which is higher than a reported estimate of $3.15 billion for each of two APR-1400s being built at the Shin-Kori site in Korea, with the difference ascribed to the additional costs of operating in a country with no previous nuclear experience. The $20 billion cost of 5,600 megawatts of electric generating capacity works out to $3,571 per kilowatt, excluding financing costs, substantially lower than the most recent estimate of $5,339 per kilowatt for U.S. reactors by the Energy Information Administration. As noted above, the Korean and U.S. companies involved in the UAE project have worked together extensively in the past on the domestic Korean nuclear power program, with Korean firms gradually taking over most of the work. U.S. participation in future domestic Korean nuclear plants is expected to be very small, but it may be larger in Korean reactor exports such as Barakah. Below are the members of the KEPCO consortium and their roles in the UAE project: KEPCO . Prime contractor and project integration. Korea Hydro and Nuclear Power Company (KHNP). Operating company for Korean nuclear power plants. To serve as engineering, procurement, and construction contractor and operator. KEPCO subsidiary. KOPEC . Nuclear power plant architect/engineering services. Majority owned by KEPCO. Korea Nuclear Fuel Company (KNF) . Initial nuclear fuel loads. Korea Plant Service and Engineering Company (KPS) . Plant maintenance. Majority owned by KEPCO. Doosan Heavy Industries & Construction . Fabrication of nuclear steam supply system and other major components. Samsung C&T Corporation . Plant construction. Hyundai Engineering and Construction . Plant construction. Westinghouse Electric Company . Technical and engineering support services and various components. Toshiba Corporation . Majority owner of Westinghouse. Role unspecified. Possible component supply and technical consulting. Westinghouse and other U.S. companies are now expected to carry out about 10% of the work on the Barakah project, double the initial estimates. The Export-Import Bank of the United States in September 2012 approved $2 billion in financing for U.S. equipment and services for Barakah, mostly to be provided by Westinghouse and its U.S. sub-suppliers. "The Barakah project will allow us to maintain about 600 U.S. jobs," Westinghouse said after the Ex-Im Bank financing approval. The Ex-Im Bank estimated that, overall, the $2 billion in financing would "support approximately 5,000 American jobs across 17 states." Items to be supplied by Westinghouse and other U.S. companies include reactor coolant pumps, reactor components, controls, engineering services, and training. Although most of the U.S. technology involved in the Korean standard reactor designs (OPR-1000 and APR-1400) has been successfully transferred to Korean firms as called for by the initial C-E licensing agreement in 1987, Westinghouse still considers the Korean reactors to be Westinghouse-licensed products. As a result, Korean exports of the APR-1400, such as the UAE project, will be subject to U.S. export control requirements. In addition, certain marketing restrictions under the Westinghouse licensing arrangement have no expiration, and so they have continued under the "business cooperation agreement" that succeeded the original technology license in 2007. The provisions of the business cooperation agreement were applied to the UAE project. Westinghouse is also partnering with Korean industry to produce control element assemblies for C-E reactor designs, including U.S. and Korean nuclear power plants, as well as the UAE plants and other potential Korean exports. The joint venture between Westinghouse and KNF is being located at the KNF fuel fabrication plant in Daejeon, Korea, and will be 55% owned by Westinghouse. The goal set by the Korean Ministry of Knowledge Economy for a 20% South Korean share of the global nuclear power plant market would place South Korea about equal to Russia and behind only France and the United States in the nuclear market, according to a ministry report to President Lee. "Nuclear power-related business will be the most profitable market after automobiles, semiconductors, and shipbuilding," the report said. MKE also called for South Korean firms to expand their share of the estimated $78 billion world market for operation, maintenance, and repair of nuclear power plants. As noted above, those goals may now be considered too optimistic, but South Korea still clearly intends to be a major participant in the world nuclear market. The UAE contract added substantial credibility to MKE's export goals and changed the dynamics of the world nuclear power market. Kuwaiti officials were paraphrased as saying the UAE price "is likely to become a benchmark for atomic energy technology across the region." After losing the UAE contract, Areva was reported to be examining ways to modify its plant design to cut costs, such as by cutting the number of steam generators from four to two by making them larger, as in the Korean design. Other potential Korean export deals are under consideration in Indonesia and the United States, Westinghouse's home market. Other countries that have been mentioned in the news media include Vietnam, Malaysia, Thailand, and Middle East neighbors of the UAE. A Korean consortium has reportedly been selected by Jordan to build the kingdom's first research reactor. KNHP signed a preliminary agreement with Indonesian energy firm Medco Energi in July 2007 to build Korean-design reactors in Indonesia. However, Japanese firms are reportedly also under consideration. A U.S. energy development company, Alternate Energy Holdings Incorporated (AEHI), announced in January 2010 that it was negotiating with South Korean officials on an agreement to build APR-1400 nuclear units at proposed sites in Idaho and Colorado. An AEHI news release said, "We expect the agreement to be similar to the UAE agreement announced last week. Such technology should give AEHI a serious competitive advantage." Plans for financing for the proposed projects are unknown, however. KEPCO took an early step toward exporting the APR-1400 to the United States by meeting with the U.S. NRC November 18, 2009, on possible standard design certification for the reactor. At the "initial pre-application meeting," KEPCO gave a presentation on the Korean nuclear industry, the U.S. and Korean work on developing the System 80+ and the APR-1400, and differences between the two designs. Prospects for NRC certification of the APR-1400 could presumably be helped by its similarity to the previously certified System 80+. However, NRC officials stressed that "this meeting did not initiate the review of the APR-1400 design certification." NRC's most recent licensing schedule shows the KEPCO design certification review beginning in mid-2013, with no completion date scheduled. The capacity of the Korean nuclear industry would apparently need to expand to meet MKE's export goals. As noted above, Korea plans to complete an average of about one reactor per year for the domestic market. In addition, Doosan and other firms have been producing major reactor components for non-Korean reactors, such as the four Westinghouse AP-1000 units being built in China. To export 80 units by 2030, as implied by the MKE goal, the Korean industry would have to complete an additional four units per year, a substantial increase over the current rate. However, the total implied construction rate of about five units per year has been achieved by other countries in the past, such as France during the 1980s. To expand Korea's nuclear plant construction and service capacity, MKE has announced plans to train 2,800 nuclear technical staff by 2011 and invest $350 million in further design improvements, including an increase in research and development personnel. Under the MKE plan, South Korea was to be completely self-sufficient in nuclear reactor technology by 2012. Nuclear R&D cooperation between the United States and the Republic of Korea dates to the beginning of President Eisenhower's Atoms for Peace program. The first major U.S.-ROK nuclear project, a 100 kilowatt research reactor, began operating in 1962 and was later upgraded to 250 kilowatts and finally to two megawatts. These joint activities were carried out under a series of peaceful nuclear cooperation agreements signed between 1956 and 1965. Joint research on the nuclear fuel cycle has proved more problematic. Fuel cycle technologies, such as reprocessing spent nuclear fuel to separate plutonium and uranium to make new fuel, can potentially be used to make weapons materials. The current peaceful nuclear cooperation agreement, signed in 1972, requires U.S. consent before South Korea can reprocess spent fuel (Article VIII F). The United States opposed Korean proposals in the 1970s to develop a conventional chemical reprocessing plant and conduct related R&D. In the 1980s, Korea proposed to develop the TANDEM fuel cycle, in which spent fuel from Westinghouse and other light water reactors would be dissolved to make fuel for CANDU heavy water reactors, without fully separating weapons-useable plutonium. However, the United States opposed this plan as well, on the grounds that only one further step would be needed to achieve complete plutonium separation. In the 1990s, the Korea Atomic Energy Research Institute (KAERI) conducted a joint research program with DOE national laboratories and Atomic Energy of Canada Limited on the DUPIC fuel cycle (direct use of PWR spent fuel in Candu), in which light water reactor spent fuel would be made into Candu fuel without reprocessing. However, KEPCO showed little interest in using the technology. In the 2000s, KAERI began focusing on another spent fuel recycling technology, pyroprocessing, as a way to handle its growing spent fuel inventory while minimizing proliferation issues. Pyproprocessing is an electrometallurgical process in which spent fuel is dissolved in molten salt, and uranium, plutonium, and other higher elements are partially separated though electrodeposition on a cathode. Supporters of the process contend that it is proliferation-resistant because, unlike in conventional chemical reprocessing plants, pyroprocessing facilities cannot separate pure plutonium. The George W. Bush Administration initially agreed that pyroprocessing would be an appropriate technology for South Korea to pursue, signing an R&D agreement in 2002 under the U.S. Department of Energy (DOE) International Nuclear Energy Research Initiative (I-NERI). In cooperation with various DOE national laboratories, KAERI began developing a continuous pyroprocessing system that it hoped could be economical for commercial-scale operation. As a first step, the Advanced Conditioning Pyroprocess Facility (ACPF) was constructed in a shielded "hot cell" at KAERI to reduce oxide spent fuel to the metal form needed for pyroprocessing. However, before KAERI could begin operating the ACPF, the Bush Administration decided in 2008 to withhold permission under the U.S.-ROK nuclear cooperation agreement for any spent fuel separation work in Korea, including oxide fuel reduction to metal. Critics of the program had contended that pyroprocessing would violate the 1992 Joint Declaration on Denuclearization of the Korean Peninsula, which forbids nuclear reprocessing. KAERI had contended that pryoprocessing did not constitute "reprocessing," because of the lack of complete plutonium separation, but the Bush Administration decided otherwise. As an alternative, the Bush Administration suggested a joint R&D program in which all spent fuel separation work would be carried out in the United States, particularly at DOE's Idaho National Laboratory (INL), which already has pyroprocessing equipment. South Korea strongly objected to the proposal and began sponsoring seminars and other informational activities in Washington, DC, in support of its pyroprocessing program. However, U.S. policy did not change, and South Korea agreed to a 10-year Joint Fuel Cycle Study in 2011 in which KAERI scientists would conduct spent fuel separation work at INL and other U.S. facilities, while work in Korea would be restricted to simulated material. Operation of KAERI's ACPF is reportedly still under discussion. In addition to bilateral research projects, South Korea and the United States work together in several international R&D organizations. The two countries are jointly involved in projects on advanced reactors under the Generation IV International Forum (GIF) and the International Atomic Energy Agency's International Project on Innovative Nuclear Reactors and Fuel Cycles (INPRO). Both are also members of the International Framework on Nuclear Energy Cooperation (IFNEC), focusing on the development of international "reliable comprehensive fuel service arrangements" and R&D priorities. To provide a forum for U.S.-ROK views on nuclear research and other nuclear energy issues, the Joint Standing Committee on Nuclear Energy Cooperation (JSCNEC) has met once a year since 1980. Under Section 123 of the Atomic Energy Act of 1954 (42 U.S.C. 2153), the United States cannot conduct nuclear energy activities with another country without an agreement on nuclear cooperation, or "123 agreement." The current U.S.-Korea 123 agreement was signed in 1973 and will expire on March 19, 2014. Negotiators from the two countries are working to overcome substantial disagreements about the provisions of a new agreement so that it can take effect before the expiration date. A new 123 agreement does not require congressional approval, but it must lie before Congress for 90 days of continuous session before going into effect. This gives Congress time to hold hearings on the agreement and potentially pass a disapproval resolution, which, if signed by the President or enacted over his veto, would block the new agreement. Because of the 90-day requirement, a new U.S.-Korea 123 agreement would probably have to be presented to Congress sometime in spring 2013 to avoid a lapse in March 2014. If the U.S.-ROK agreement expired, NRC would be prohibited from issuing export licenses for nuclear reactors or major components to Korea, and existing licenses would be suspended. NRC also could not issue licenses to export nuclear materials, such as enriched uranium for reactor fuel. Also prohibited would be direct supply of nuclear material by the U.S. government, as well as U.S. government R&D cooperation, such as the 10-year pyroprocessing study. Under NRC regulations (10 CFR 110, Appendix A), major reactor components that need specific licenses for export, as well as an active 123 agreement, are: Reactor pressure vessels, On-line fuel changing equipment (for heavy water reactors), Complete reactor control rod systems, Reactor primary coolant pumps, and Essentially complete nuclear facilities. Minor reactor components can be exported under a general NRC license that does not require a 123 agreement, although "generic assurances" must be provided that such components are for peaceful purposes. Minor components include specific components listed in the NRC regulations, plus any other components or subcomponents especially designed for a reactor. NRC regulations at 10 CFR 110.26(b) provide a list of countries to which minor reactor components can be exported under a general license. The Republic of Korea is currently included in the list, although it is possible that its status could change if the U.S.-ROK 123 agreement lapses. If South Korea were dropped from the general license list, exporters of minor components could apply for specific licenses, still without the need for a 123 agreement. Minor reactor components or subcomponents that are not specifically designed for reactor purposes do not need NRC licenses and so would not be directly affected by a lapse in the U.S.-Korea 123 agreement. However, Commerce Department export regulations would continue to apply. "Special nuclear material," such as fissile isotopes of uranium and other reactor fuel, must have a specific license from NRC for shipments of more than 1 gram. Uranium and other nuclear materials also must have specific licenses for exports above certain levels. Specific licenses for nuclear materials exports cannot be issued without a 123 agreement. Exports below the specified levels can use a general NRC license and do not require a 123 agreement. Such exports cannot go to a country on NRC's embargo list, which does not include South Korea. Table 1 shows an illustrative list of current NRC specific licenses for U.S. exports to South Korea. Major exports include essentially complete pressurized water reactors (PWRs) from Westinghouse, which took over from the original exporter Combustion Engineering, reactor components, and nuclear materials. Most of the licenses expire on March 18, 2014, immediately before the expiration of the U.S.-ROK 123 agreement. In addition to NRC licenses for exporting nuclear materials and reactor components, U.S. companies conducting nuclear-related business abroad may require authorization from DOE under 10 CFR Part 810, which implements Section 57b of the Atomic Energy Act. Section 57b requires DOE authorization for any company or person who wants to "directly or indirectly engage in the production of any special nuclear material outside of the United States." These activities usually involve nuclear technology transfer and engineering and consulting services. For example, an 810 authorization was required for the transfer of Westinghouse reactor technology from South Korea to the UAE. The value of U.S. nuclear exports that could be dependent on the extension of the U.S.-ROK 123 agreement extension is difficult to estimate. The United Nations Commodity Trade Statistics Database (Comtrade) shows U.S. exports to Korea of nuclear components and fuel elements totaling a modest $181.8 million from 2001 through 2010. However, some of the large exports under the licenses listed in Table 1 , such as reactors and major components, are estimated to have a value of up to $200 million apiece. Therefore, it appears that the total value of those exports is higher than shown in the Comtrade data base search. In the nuclear materials area, the major U.S. uranium enrichment company, USEC, signed a contract in October 2007 totaling $400 million with South Korea through 2013. The contract included new and existing delivery commitments and averages about $67 million per year. U.S. exports of natural uranium to Korea appear to be substantially smaller, since exports of U.S.-origin uranium to all countries averaged only $19 million from 2007-2011. The UAE Barakah plant is the largest current Korean-U.S. nuclear project that could be affected by a lapse in the U.S.-ROK 123 agreement. As discussed above, about $2 billion of work on Barakah is expected to go to U.S. companies. Much of that work will consist of U.S.-made components exported directly to the UAE, which has its own 123 agreement with the United States, so those exports would probably not be directly affected by the U.S.-ROK agreement. However, some components and subcomponents will be exported to Korea for further fabrication and subsequent shipment to the UAE. Any of those components requiring NRC specific licenses could not be exported without a 123 agreement. Most of the subcomponents being sent to Korea are probably covered by the NRC general license or need no NRC license. As discussed above, the effect of a lapse on general license exports is less clear. Also uncertain would be the effect of a lapse on the DOE 810 authorizations for technology transfer associated with the project. Because of the importance of the Barakah project for South Korea's nuclear export plans, any uncertainty and potential for delay related to the status of the 123 agreement would undoubtedly be a major source of concern for all parties. Other major U.S.-Korean nuclear projects that could be affected are four reactors being built at two sites in China, Sanmen and Haiyang. The Chinese reactors are the first Westinghouse AP1000s, the company's most advanced design, incorporating "passive" safety features and modular construction techniques. Because major components for these reactors are being made in South Korea, some of the same uncertainties faced by the UAE project could apply to subcomponents from the United States. Lapses in 123 agreements have occurred in the past. One major example was the expiration of the U.S. agreement with the European Atomic Energy Community (Euratom) at the end of 1995. A new 123 agreement had been negotiated when the old one expired, but it had been submitted for congressional review on November 29, 1995, too late for the required 90 days of continuous session. NRC suspended specific and general licenses for most Euratom countries on January 4, 1996, allowing exports to continue only to four countries that had submitted bilateral nonproliferation assurances. However, additional assurances were supplied in time to prevent a significant interruption in U.S. exports to Euratom, and, despite some congressional controversy, the new agreement took effect in March 1996. The future direction of U.S.-South Korean cooperation in world nuclear energy markets poses a number of near- and long-term policy considerations for the United States. U.S. policymakers will face decisions related to U.S. nuclear energy cooperation with Korea that will affect broader U.S. policy goals. In turn, U.S. decisions based on broad policy goals will have an effect on Korean involvement with the U.S. nuclear industry. The most immediate challenge facing U.S.-ROK nuclear cooperation is the renewal of the 123 agreement, as discussed above. As with most U.S. nuclear cooperation agreements, the existing Korean agreement requires U.S. consent for any reprocessing or enrichment activities related to U.S.-supplied materials and technology. Korea is requesting that the new 123 agreement include U.S. advance consent for future Korean civilian reprocessing and enrichment activities. The United States has reacted skeptically to the idea, on grounds of general nonproliferation policy and the complications that such activities might pose for other security issues on the Korean peninsula. The outlook for a new 123 agreement is further complicated by the February 25 change in presidential administrations in South Korea. Although the ruling conservative party remains in power, the negotiating positions of new ROK President Park Geun-hye on this issue are unclear. The degree to which the United States retains control over the South Korean nuclear program has led to proposals for South Korean "nuclear sovereignty." As reported in the Korean news media, the term has been applied to restrictions ranging from the current U.S. restrictions on South Korean spent fuel reprocessing to approvals of technology exports, such as the UAE sale. South Korean Minister of Knowledge Economy Choi Kyung-hwan in late 2009 clarified that the term does not refer to nuclear weapons development by using the phrase "peaceful nuclear sovereignty." Choi called the current U.S. restrictions on Korean spent fuel reprocessing "excessive," and pointed to the UAE sale as evidence of, as paraphrased in a Korean news report, "global confidence in South Korea's ability to handle the task." Koreans regularly note that the United States for decades has granted advance consent for reprocessing to the Euratom countries and Japan, and argue that Korea, with its well-developed nuclear power program, should be treated equivalently. U.S. recognition of South Korea's rights to engage in all peaceful nuclear fuel cycle activities, whether or not it chooses to actually do so, appears to be an element of the nuclear sovereignty concept. Korean officials contend that their nuclear industry must reprocess its spent fuel to forestall a looming waste storage crisis. The Korean nuclear industry had previously estimated that spent fuel pools at some sites would run out of space beginning in 2016. A recent analysis calculates that, if spent fuel from older storage pools can be shifted to newer pools at each plant site, that date could be pushed back to the early 2020s, starting at the Yonggwang site. Expansion of non-pool "dry" storage facilities is considered politically and legally problematic in South Korea. KAERI's program to develop pyroprocessing technology, as discussed above, could allow uranium and plutonium from spent fuel to be recycled in fast reactors (reactors whose neutrons have not been slowed by water or other moderators), which also must be developed. Although such a "closed" fuel cycle could not be implemented before existing spent fuel pools run out of space, supporters contend that it would increase public acceptance of the necessary additional waste storage facilities. Supporters of a closed fuel cycle also say it could provide a secure, domestic energy source by extracting plutonium and uranium for multiple recycling in fast reactors. Korea's request for advance consent on uranium enrichment is based on its desire to provide full fuel supply contracts to potential reactor customers, to better compete in the world market with such rivals as the French firm Areva. Critics of that argument have pointed out that Korea won the UAE reactor contract in direct competition with Areva. However, the Korean industry may be calculating that it would not have to offer deep discounts, as reportedly was the case with the UAE, if it could provide complete fuel supply services as part of its reactor sales. Korea would also like to reduce its reliance on foreign uranium enrichment providers, to which it pays about $300 million per year. An enrichment plant in Korea might be based on the "black box" model, in which a foreign country constructs a plant without revealing key information about the technology to the host country. U.S. policy has long opposed the expansion of enrichment and reprocessing to additional countries, because of concern that the technology, even if initially for civilian purposes, can be used to make weapons materials. Granting advance consent to South Korea could undermine that policy by encouraging other countries to make similar requests in the future and making it harder for the United States to turn them down. There are also U.S. concerns that granting consent for enrichment and reprocessing in South Korea could complicate efforts to persuade North Korea to adhere to the Korean Peninsula denuclearization agreement and give up its nuclear weapons program. Because of the strongly differing views between the United States and South Korea on reprocessing and enrichment, negotiations on renewing the 123 agreement have proved challenging. Lack of progress on those issues led the two countries to announce a two-year extension of the existing agreement on April 24, 2013. Legislation to authorize the two-year extension was introduced by Representative Royce on June 20, 2013 ( H.R. 2449 ). The additional time could allow negotiators to explore a wide range of potential compromise approaches for a new agreement: Short-term agreement. Existing restrictions on reprocessing and enrichment could be continued in a relatively short agreement, perhaps coinciding with the completion of the 10-year joint pyroprocessing feasibility study. Decisions on advance consent, taking into account the results of the study, would then need to be made in a subsequent agreement. Advance consent with conditions. A new agreement could provide advance consent for reprocessing and enrichment, but South Korea would agree not to exercise that right until certain conditions were met. For example, milestones might need to be met regarding the Korean Peninsula denuclearization agreement. Advance consent for limited activities. The United States could grant advance consent for a limited set of fuel cycle activities. An example might be the operation of KAERI's Advanced Conditioning Pyroprocess Facility, which reduces oxide spent fuel to metal form for pyroprocessing. This reduction process results in relatively little separation of plutonium and uranium. In addition to the 123 agreement, Korea's ambitious plans for future reactor exports would require further DOE 810 authorizations for the transfer of U.S.-based technology. Under Section 57b, the Secretary of Energy must determine that each proposed technology export "will not be inimical to the interest of the United States" with the concurrence of the Department of State and after consultation with NRC and the Departments of Commerce and Defense. Such reviews would examine U.S. interests in the relevant region and throughout the world, such as controls on the re-transfer of U.S.-origin nuclear technology after it is exported by Korea. Future growth of South Korea's nuclear energy technology export program would offer opportunities for the U.S. nuclear industry as well as significant challenges. As the KEPCO-UAE sale makes clear, U.S. companies can directly benefit from participation in Korean export projects, in this case an estimated $2 billion for Westinghouse and its subcontractors. But the UAE project also illustrates the potential competition that U.S. nuclear suppliers may face from Korea, which overcame a GE-Hitachi bid in the final round and an earlier Westinghouse proposal. As the South Korean nuclear industry develops more reactor components of indigenous design, the opportunities for U.S. participation in South Korean export projects may diminish. Government ownership of KEPCO may also be a competitive concern for U.S. industry. A World Nuclear Association report notes that South Korea may develop a large, exportable reactor design based on the APR-1400 with indigenous components by 2015, "though Westinghouse is not likely to let it compete in main markets such as USA and China without KEPCO buying the rights to the design." Such issues related to South Korean "peaceful nuclear sovereignty" are likely to be a topic of continuing U.S.-ROK discussion.

A South Korean consortium signed a contract in December 2009 to provide four commercial nuclear reactors to the United Arab Emirates (UAE), signaling a new role for South Korea in the world nuclear energy market. The $20 billion deal indicates that South Korea has completed the transition from passive purchaser of turn-key nuclear plants in the 1970s to major nuclear technology supplier, capable of competing with the largest and most experienced nuclear technology companies in the world. In the 1970s, South Korea launched its nuclear power program through the government-owned Korea Electric Company (now Korea Electric Power Corporation, KEPCO), which purchased the country's first nuclear power units from Westinghouse. In the early years of the Korean nuclear program, Westinghouse and other foreign suppliers delivered completed plants with minimal Korean industry input. After the first three units, Korean firms took over the construction work on subsequent plants, although the reactor systems, turbine-generators, and architect/engineering services continued to be provided primarily by non-Korean companies. In 1987, KEPCO embarked on an effort to establish a standard Korean design, selecting the System 80 design from the U.S. firm Combustion Engineering as the basis. Combustion Engineering won the competition for the Korean standard design contract by agreeing to full technology transfer, according to KEPCO. The technology transfer program resulted in the development of the APR-1400 power plant, which is the design purchased by the UAE. In the UAE deal, the South Korean consortium is headed by KEPCO and includes other major Korean industrial companies that are involved in Korea's rapidly growing domestic nuclear power plant construction program. The consortium also includes Pittsburgh-based Westinghouse Electric Company, which currently owns the U.S. design on which the Korean design is based, and the Japanese industrial conglomerate Toshiba, which now owns most of Westinghouse. Because the AP-1400 is based on a U.S. design, U.S. export controls will continue to apply. U.S.-Korean nuclear energy cooperation is conducted under a "123 agreement" required by Section 123 of the Atomic Energy Act of 1954. The current agreement was signed in 1973 and will expire on March 19, 2014. A new 123 agreement does not require congressional approval, but it must lie before Congress for 90 days of continuous session before going into effect. As with most U.S. 123 agreements, the existing U.S.-Korean agreement requires U.S. consent for any reprocessing or enrichment activities related to U.S.-supplied materials and technology. Korea is requesting that the new 123 agreement include U.S. advance consent for future Korean civilian reprocessing and enrichment activities. The United States has opposed the idea, on grounds of general nonproliferation policy and the complications that such activities might pose for other security issues on the Korean peninsula. To comply with the 90-day congressional review requirement, a new agreement probably would need to have been submitted to Congress by spring 2013. Any lapse in the agreement could affect exports of U.S. nuclear materials and reactor components to Korea, potentially affecting ongoing construction of the UAE project. With time running out to address the fundamental U.S. and Korean differences over reprocessing, the two countries announced on April 24, 2013, that they would extend the existing agreement by two years to allow for additional negotiations. Legislation to authorize the two-year extension was introduced by Representative Royce on June 20, 2013 (H.R. 2449).

Over the past decade, Congress has substantially increased Department of State and Department of Defense (DOD) efforts to train, equip, and otherwise engage with foreign military and other security forces. As these efforts have increased, congressional questions and concerns have multiplied. Such concerns range from broad to specific—for example, the perceived lack of an overarching strategy for such assistance or, more specifically, the utility of the current legal framework, appropriate State Department and DOD roles and modes of coordination, and program effectiveness. The legal and institutional framework through which the State and Defense departments share responsibility for providing such assistance has evolved over time, creating what some have labeled a complex and confusing "patchwork" of authorities and arrangements. For most of the past half-century, Congress has authorized such assistance programs under Title 22 of the U.S. Code (Foreign Relations), specifically the Foreign Assistance Act of 1961, as amended (1961 FAA, P.L. 87-195), and the Arms Export Control Act, as amended (AECA, P.L. 90-629), and appropriated the bulk of funds to State Department accounts. A DOD agency has administered those funds under the Secretary of State's direction and oversight. After the attacks on the United States of September 11, 2001 (9/11), policymakers have increasingly come to view the United States as facing new military threats and challenges to which the State Department authorities could not appropriately respond. As a result, Congress has increasingly provided DOD with the means to provide such assistance under its own Title 10 U.S. Code (Armed Services) and the annual National Defense Authorization Act (NDAA) authority and funding under the DOD budget. As U.S. assistance to foreign forces has risen, and increasingly been provided under DOD budgets, some policymakers have questioned the utility of such aid, as well as the efficacy of the legal and institutional framework under which it is provided. Current State and DOD security assistance and engagement efforts involve a range of activities, including "traditional" programs transferring conventional arms for defense posture purposes, training and equipping regular and irregular forces for combat, conducting counterterrorism programs, and expanding education and training programs. Obama Administration officials have argued that such efforts are cost-effective in the long run, potentially generating considerable savings in U.S. defense costs. Some policymakers, however, look at the mixed record of success and question whether the expenditure of billions of dollars on such programs is justified. Some wonder whether reforming such programs may improve results. This report provides an overview of U.S. assistance to and engagement with foreign military and other security forces. It focuses on various aspects of the respective State Department and DOD roles, particularly their broad "shared responsibility" for security assistance. It includes information on the historical evolution and current status of State Department and DOD responsibilities, an overview of current State Department, DOD, and joint State-DOD authorities, and a discussion of key oversight questions. In the issues section, the report identifies certain questions Congress may wish to raise: How should security assistance/cooperation effectiveness be assessed? Should the current statutory and institutional framework be modified or changed? Are agencies provided sufficient resources to carry out their institutional roles? How might congressional oversight and public transparency be improved? Two concepts merit emphasizing as they are key to understanding the legal and institutional framework governing U.S. assistance (i.e., weapons, supplies, training, and other support) to and engagement with foreign military and other security forces: U.S. assistance to and engagement with foreign forces is often a shared responsibility among two or more U.S. government agencies, principally between the State Department and DOD, but also with others. U.S. assistance to and engagement with foreign forces serves multiple purposes. Several terms are often related to such assistance and engagement, but no standard government-wide terminology exists. This section briefly discusses those concepts and terms. For a fuller listing of terms and definitions, see Appendix A . Foreign military and other security assistance is a shared responsibility across the U.S. government. Although the State Department and DOD are the major players, other U.S. agencies also contribute to U.S. security assistance efforts, including the U.S. Agency for International Development (USAID), the Departments of Energy (DOE), Homeland Security (DHS), Justice, and Treasury, along with members of the intelligence community. Conducting foreign relations is the State Department's responsibility, and the Secretary of State, as the President's primary foreign policy advisor, contributes to the development of the President's foreign policy and ensures its coherent implementation. Defending the country against foreign threats is the DOD's core mission. The State Department-DOD shared responsibility is a result of the overlap in these functions when assisting foreign militaries and other security forces for the mutual benefit of a foreign government and the United States. The United States has long recognized that it may at times be required to act alone to deter or combat threats. Nevertheless, since the end of World War II, policymakers have asserted that U.S. long-term security also requires cultivating foreign governments as allies to counter potential mutual enemies (or the enemies that threaten U.S. allies). The State Department-DOD shared responsibility arises from the many decisions that must be made in providing allies' and partners' militaries and other security forces with the equipment and training necessary to combat those enemies. Determining what equipment and training a foreign government needs and can effectively utilize requires military expertise. Determining how the provision of that equipment will affect relations with a foreign government and its people (as well as the governments of neighboring countries) and regional/international balances of power requires diplomatic skills and international affairs expertise. Determining whether a country's economy can absorb the cost of maintaining adequate military forces, and acquiring and maintaining military equipment, is a judgment for economists and development specialists. In recent years, some policymakers and analysts have expressed concern over what they identify as a growing imbalance between the departments with the growing DOD role, leading to the "militarization" of U.S. foreign policy. Some contend that this trend stems from the substantial advantages of DOD personnel resources and Congress's provision of a growing number of new authorities to conduct security assistance missions. On the other hand, others perceive that weaknesses in the State Department's planning and implementation culture, limited personnel, and insufficient resources have compelled DOD to seek its own authorities and greater resources. Foreign military and other security assistance serves multiple purposes, both for the U.S. government and for recipient governments. As expressed in many documents since the immediate post-World War II period, foreign military assistance has been viewed as a means to foster international stability. U.S. security can be enhanced by spreading the burden for mutual defense, and by helping other governments deter or combat external aggression or internal subversion by countries or forces that may pose long-term risks to the United States. For the U.S. government, foreign military aid may also be a diplomatic asset. Such assistance may be used to cultivate goodwill and, in some cases, to persuade foreign governments to take positions or measures that the United States believes beneficial to its own and allied interests, or to express support for such actions. In addition, DOD uses foreign military and other security assistance as a tool to develop institutional ties with foreign militaries, cultivating relations that may be useful in dealing with future crises and fighting together in future conflicts. "Building partner capacity" through security assistance has been highlighted in recent defense strategy and guidance as a key component of defense planning and a significant means of decreasing DOD budgets in the long run. On the receiving end, the governments, military and security forces, and populations of recipient countries may incur both benefits and costs from such assistance. Foreign governments and militaries may use such aid to help them deter or actively counter aggression from other states. At times, foreign governments may use such aid to help battle or suppress domestic foes. In some cases, however, this aid may, from a U.S. perspective, upset the political balance within a country, enabling powerful militaries to unduly influence, pressure, or oust fledgling democratic governments or to suppress democratic opposition or movements in ways that may include, on some occasions, the violation of human rights. Moreover, maintaining or sustaining military and security forces may harm a country's economic prospects by diverting scarce funds from economic development to military purposes. Although U.S. military assistance is potentially beneficial, unless it is carefully calibrated and monitored, such assistance may have unintended consequences affecting U.S. interests in and relations with a recipient country, as well as the surrounding region. The discussion of U.S. assistance to foreign military and other security forces is complicated by the lack of a standard and adequate terminology. "Military assistance," "security assistance," "security cooperation," "security sector assistance," "security force assistance," and "defense articles and services" are all terms used in connection with the supply of weapons, equipment, supplies, and training to such forces and, in some cases, engagement with them. Some of these terms are defined by policy documents or in law (see Appendix A ). Some authorities are labeled with two more informal terms—"build partner capacity" or "train and equip"—which are used in the discussion of specific authorities below. The two terms most commonly used today for assistance to foreign military and security forces are "security assistance" and "security cooperation." Security assistance is the term most frequently used, regardless of the agency providing that assistance. There is no State Department definition for security assistance. The annual State Department congressional budget justification (CBJ), however, lists six budget accounts under the heading "International Security Assistance." These accounts, with their underlying Title 22 authorities (the 1961 FAA and the AECA), are commonly regarded as the State Department's security assistance portfolio. DOD formally defines security assistance as the group of State Department 1961 FAA and AECA programs that a DOD organization, the Defense Security Cooperation Agency (DSCA), administers. These include programs conducted under two of the State Department international security assistance accounts and attendant authorities, as well as programs conducted under four related 1961 FAA and AECA authorities. DOD uses the overarching term "security cooperation" to denote the State Department security assistance administered by DSCA through which the U.S. government furnishes defense articles, military training, and other defense-related services, as well as all other DOD interactions with foreign defense establishments. The purposes of the interactions with foreign defense establishments defined as security cooperation are to "build defense relationships that promote specific U.S. security interests, develop allied and friendly military capabilities for self-defense and multilateral operations, and provide US forces with peacetime and contingency access to a host nation." The current legal and institutional framework for assistance to foreign militaries and other security forces has its origins in congressional documents, legislation, and executive orders that, beginning in the late 1940s, established the respective roles and responsibilities of the Department of State and DOD. A lead oversight role for the Secretary of State has been a central and enduring feature for most of the time since then, as has been DOD's major role in administering many security assistance programs. Nevertheless, the legal and institutional basis for State Department influence and oversight has evolved over time. The principle of civilian leadership, influence, and oversight of security assistance was a central feature of the first large-scale U.S. foreign assistance (including military assistance) programs during the post-World War II and early Cold War years. These early military and security force assistance programs were first instituted to help foreign governments build the capacity to defend against state-based foreign threats, principally the Soviet Union. This assistance started with the Greek-Turkish Aid Act, 1947, and the Mutual Defense Assistance Act of 1949, and continued through the Mutual Security Acts of the 1950s. For most of that period, program direction and oversight of funds authorized under these acts were vested in the Secretary of State by executive orders, although for four years White House officials were in charge, and for some of this early period, U.S. ambassadors played a major role. The Foreign Assistance Act of 1961 (1961 FAA), Section 622(c), fixed the Secretary of State's leadership role in statute for funds authorized by the act, charging the Secretary with responsibility, under the direction of the President, for the "continuous supervision and general direction" of foreign assistance, including military assistance, education, and training under the act. In 1968, Congress broadened the scope of this responsibility to include all military assistance, regardless of the source of authority. Under Section 623, Congress charged the Secretary of Defense with responsibility for administering the FAA-authorized military assistance programs (a function originally assigned to the Secretary of Defense under Mutual Security Acts of the 1950s). Through executive orders, the President delegated to the Secretary of State most of the foreign assistance authority assigned to him by the 1961 FAA, but retained the legislative mandate for State Department oversight and DOD administration regarding military assistance. Beginning in the 1980s, Congress began providing DOD with authority in Title 10 of the U.S. Code and annual National Defense Authorization Acts (NDAAs) (often referred to collectively as "Title 10 authorities") to conduct a wide range of programs and activities funded by DOD appropriations. Congress began providing such authorities in the 1980s for counternarcotics and humanitarian assistance; authority for nonproliferation and counterterrorism programs was subsequently added in the 1980s and 1990s. With the collapse of the Soviet Union in 1991, U.S. government assistance to and engagement with foreign militaries and security forces has been employed to counter new threats, including those from non-state actors. Many of the new authorities were provided to DOD, especially after the terrorist attacks on the United States of September 11, 2001 (9/11). As the United States undertook military action in Afghanistan in 2001 and then in Iraq in 2005, Congress provided a number of DOD crisis and wartime authorities, some providing new global authority and some specific to those conflicts. Most recently, DOD statutes have been added regarding U.S. assistance to conflicts in Africa. The Defense Institute for Security Assistance Management (DISAM) catalogues approximately 80 Title 10 security cooperation programs and authorities; RAND, using different criteria, identifies 106 "core" Title 10 security cooperation statutes. Although not subject to 1961 FAA and AECA conditions, Title 10 security cooperation authorities may be subject to NDAA and DOD appropriations conditions, including conditions on human rights observance. After U.S. military action began in Afghanistan and Iraq, Congress provided several authorities for DOD to support partners in those efforts. One was a broad authority for coalition assistance not limited to those two conflicts. Others enabled assistance to (1) those countries providing military forces to participate in those conflicts and (2) bordering countries that providing assistance and other support for those operations. Congress also provided new authorities to support bilateral security assistance in Iraq and Afghanistan. The growth of the Title 10 authorities has raised questions about the historical division of responsibility between the Secretary of State and the Secretary of Defense. About 50 of the 80 security cooperation statutes identified by DISAM specifically require the concurrence of the Secretary of State before the Secretary of Defense may exercise his authority. Some analysts state that this proliferation of Title 10 authorities has muddled the coherence of U.S. programs and policy and undermined the earlier clarity of 1961 FAA Section 622(c) Secretary of State oversight responsibility. Other analysts question the extent to which the provision extends State Department oversight to noncombat aid and activities authorized by Title 10 and NDAAs. Since the 1950s, an elaborate structure for continuous interdepartmental collaboration has been in place, but it has changed significantly over time. As of March 1972, the interdepartmental coordination process, intended to integrate economic and military aid, consisted of five levels, which led from country-level program recommendation development to final recommendations to be submitted to the Secretary of State and then to the President. Today, the mechanisms for State Department-DOD collaboration may be considered in some respects simpler, when dealing with State Department security assistance, and in other respects more complex, when dealing with DOD authorities. DOD, through U.S. military personnel as well as DOD civilian employees and contractors, engages in a wide range of noncombat activities and contacts abroad. DOD sometimes implements or otherwise supports State Department programs or the programs of other civilian agencies. The State Department oversees DOD implementation of the military aid, education, and training programs funded through the State Department budget. At other times, DOD conducts programs under DOD authorities, sometimes in cooperation with civilian agencies. The White House, the State Department, and other agencies with a security sector assistance responsibility, such as the Departments of Justice and Homeland Security, and the United States Agency for International Development (USAID), work together at many levels to plan and implement military aid programs and activities. Under State Department oversight and guidance, DOD plays a key role in the "traditional" Title 22 military assistance programs authorized by the 1961 FAA and the Arms Export Control Act (AECA). These are the Foreign Military Sales (FMS), Foreign Military Financing (FMF), and International Military Education and Training (IMET) programs, which provide military equipment and related assistance, along with military education and training. Oversight for these programs is provided by the State Department Bureau of Political-Military Affairs (PM). FMS, FMF, and IMET are administered by the DSCA, an agency under the Office of the Secretary of Defense, Policy. In the field, primary responsibility for these programs rests with the Security Cooperation Organization (SCO) in each U.S. embassy, staffed with military personnel and directed by military officers reporting to both the U.S. ambassador and the geographic Combatant Commander (GCC), but nonetheless part of the embassy diplomatic mission. DOD also cooperates with civilian agencies, playing what DOD terms a "supporting" role by providing assistance in conjunction with programs under the aegis of or implemented by the State Department or other agencies. For instance, DOD conducts counterproliferation programs under its own authority, but at the same time supports and cooperates on nonproliferation initiatives with the Departments of State and Energy under the Nonproliferation, Demining, and Related Programs (NADR) and Nonproliferation and Disarmament Fund (NDF). DOD also supports some State Department programs funded under the State Department peacekeeping operations (PKO) account. In addition, DOD has long supported USAID by providing disaster and humanitarian relief to foreign populations for natural and manmade disasters. In crises, DOD responds under the direction of the USAID Administrator to provide food, shelter, supplies, logistical support, medical evacuations, refugee assistance, and search and rescue services. In other situations, DOD conducts activities often characterized as humanitarian or development assistance, but that may be undertaken primarily for other purposes, such as strengthening relations with other military forces, establishing relations with foreign local leaders and peoples in areas where U.S. military personnel are operating to legitimize their presence (e.g., by providing benefits such as clinics, wells, and schoolhouses), or providing training for U.S. forces. USAID representatives are detailed to the geographic combatant commands (COCOMs) to review and provide advice on humanitarian and civil action projects to ensure they conform to sound development practices. In 2005, USAID established an office at headquarters in Washington to coordinate with DOD, now named the Office of Civil-Military Cooperation. Under its own Title 10 and NDAA authorities, DOD provides assistance to equip, train, and educate foreign military and other security forces, as well as to provide humanitarian relief and health assistance. Some of these authorities contain a specific provision requiring the "concurrence" (i.e., approval) of the Secretary of State. (Activities requiring concurrence are generally reviewed at the highest levels of the State Department.) On occasion, geographic COCOM security cooperation personnel draw on multiple authorities and funding pots to develop bilateral or multilateral programs for foreign forces. In some cases, they draw on both Title 10 and Title 22 resources to assemble a coherent program. The types and modes of DOD-State collaboration will depend on the combination of authorities. Title 10 activities are planned and implemented by the COCOMs and are in support of their Theater Security Cooperation Strategic Plans. Such activities (as well as activities and programs conducted under Title 22) must be justified as contributing to the U.S. Integrated Country Strategy for each country in which they are conducted. COCOMs also are expected to coordinate Title 10 activities with U.S. Embassy SCOs and secure Chief of Mission (COM) approval. Special cooperative DOD-State Department arrangements were mandated beginning in 2005, first in the "Section 1206" Global Train and Equip" authority (subsequently codified under Section 2282 of Title 10) and then in two other "hybrid" programs where DOD and State are partners. (The hybrid authorities are the Global Security Contingency Fund and the Afghanistan Infrastructure Fund.) The modes of DOD and State Department collaboration differ for these authorities. In April 2013, the Obama Administration issued Presidential Decision Directive 23 (PPD-23) mandating an overhaul of U.S. security sector assistance policy, including the framework for establishing a new interagency framework for planning, implementing, assessing, and overseeing security sector assistance (SSA) to foreign governments and international organizations. A PDD-23 fact sheet cites nine goals for the SSA framework, including consistency with broader national security goals, policy coherence, interagency collaboration, comprehensive strategies, better use of resources, and the need to respond to urgent crises, emergent opportunities, and changes in partner security environments, among others. PPD-23 implementation is in progress. The State Department and DOD "shared responsibility" for security assistance is exercised in diverse ways. The precise arrangements depend on the statutory authority and any relevant executive directives, as well as the arrangements that have been worked out between the two departments. This section provides information on how the two departments share responsibility for State Department security assistance programs and a representative sample of programs conducted under Title 10 authority. The "traditional" State Department programs—and more recent counternarcotics, law enforcement, and peacekeeping programs—provide assistance, in the recent lexicon, to "build partnership capacity" by training and equipping foreign military and other security forces, and to otherwise aid foreign military and other security forces. As mentioned earlier, such programs are authorized under the 1961 FAA and the AECA. The DSCA administers about half (by number) of the State Department programs. (These are FMS/FMF and related SDAF and leases, IMET, excess defense articles [EDA], and a portion of PKO programs.) The State Department administers programs conducted under its other security assistance authorities. These programs include those funded from three accounts—the International Narcotics Control and Law Enforcement (INCLE) account, Nonproliferation, Anti-Terrorism, Demining and Related Programs account (NADR), and the remaining PKO—or conducted under two drawdown authorities or the 1961 FAA Section 614 "special" authority expediting assistance. DSCA, the COCOMs, and the military services may provide varying levels of support to such programs. Program descriptions and funding amounts for State Department bilateral and regional programs are provided annually in the State Department's congressional budget justification. The programs are funded through foreign operations appropriations. Many 1961 FAA and AECA programs are subject to a wide variety of conditions and exclusions. (With certain exceptions, DOD authorities are subject only to restrictions in the statute itself. ) Table 1 lists State Department authorities in alphabetical order. It identifies whether a program is administered by DOD's DSCA or otherwise supported by DOD. Support may include direct support through DOD contributions to State Department programs, or indirect support through coordination of DOD programs with State Department programs. Appendix C provides more detail on the State Department authorities.) State Department input into DOD activities conducted under Title 10 security cooperation authorities varies widely. About 50 of the many Title 10 authorities require the Secretary of State's concurrence. The concurrence process generally entails review of a program by a high-level (i.e., congressionally confirmed) State Department officer, as may be delegated by the Secretary of State. Programs and activities conducted under authorities that do not require Secretary of State concurrence may be subject to State Department input through a number of other coordination mechanisms. In addition, DOD activities abroad may be subject by law or policy to "Chief of Mission" (COM) authority, which involves the approval of the ambassador at the relevant U.S. embassy abroad. (Moreover, some military personnel implementing or participating in DOD activities may be subject to COM authority. Military personnel under the command of a GCC, for instance, those in country temporarily for a combined training exercise, are not subject by law to COM authority; however, those operating under the aegis of an embassy—SCOs or military personnel sent by one of the armed services—are subject to COM authority. ) Table 3 provides a quick reference to selected Title 10 authorities. They are described in more detail in Appendixes E through J. ( Appendix E , Contingency Operations and Coalition Operational Support; Appendix F Counterproliferation, Counter-drug, and Counterterrorism; Appendix G Defense Institution Building; Appendix H Exercises, Training, and Military-to-Military Contacts; Appendix I Humanitarian Assistance and Defense Health Programs; and Appendix J Multipurpose Authority: The Combatant Commander's Initiative Fund.) The three State Department-DOD joint or "hybrid" authorities are Title 10 statutes, as Congress authorized them in annual NDAAs. These are listed in Table 2 and detailed in Appendix D . Policymakers continue to grapple with four dilemmas that have been present almost since the beginning of the massive U.S. military assistance programs in the mid-20 th century. As the scope and pace of security assistance and cooperation has grown since 9/11, these issues have become ever more pressing. They include the following: how to assess effectiveness; whether and how to modify or change the statutory framework to better reconcile foreign policy concerns with at times competing perceived security needs; how to reconcile institutional roles and available resources; and how to provide appropriate transparency for oversight. These issues have arisen repeatedly over the past sixty-plus years. For most of this time, the context for U.S. security assistance was the Cold War when U.S. military assistance was intended to bolster foreign allies defense capabilities against a single adversary—the Soviet Union or its proxies—or to aid in suppressing domestic revolutionary movements perceived as Soviet-inspired. The issues have risen in a new context in the post-Cold War era, as transnational terrorist groups have presented the United States with new challenges in a dramatically different threat environment. Threats from numerous and shifting non-state actors place a special premium on rapid organizational response and on flexibility in funding that did not exist previously. Some analysts believe that responding to such threats may benefit from new approaches. Nevertheless, the many obstacles to resolving these issues—notably organizational prerogatives and funding limitations—continue as before. A long-standing question has been: How effective are military and other security assistance (now including security cooperation) efforts, and how might they be improved? Given the multiple purposes and various types of security assistance and security cooperation activities, there is no simple answer. Recent disappointments with the results of training and equipping military forces around the world, particularly Iraqi and Afghan military forces over the past decade, have led many to look skeptically at such investments, judging that "efforts are too often wasted." However, investments elsewhere, particularly for building counterterrorism/counterinsurgency capacity in the Philippines, have led some to assert that such efforts can be successful if carefully designed and properly implemented. Recent studies, discussed below, point to a mix of strategic, political, economic, and military factors at play in determining and enhancing the potential success of large-scale "train and equip" efforts to build partner capacity. In addition, some analysts note that security assistance/cooperation activities may be used for a variety of purposes and may have collateral benefits other than building partner capacity. For example, engaging with foreign militaries and police forces may build goodwill, help cultivate relations, and improve access, even if measurable results in foreign force capacity are not achieved. Examining the effectiveness of 20 security cooperation programs intended to build partner capacity in weak or failing states, a recent CRS report found results varied depending on the program's primary strategic purpose. The programs examined were undertaken from 1947 to the present. Programs with the most success were those intended to build alliances, as well as interpersonal and institutional linkages. Programs to build international participation in military coalitions were effective in achieving that aim, but also placed significant operational burdens on U.S. military forces. Least effective were programs for which the primary purpose was to enable U.S. forces to withdraw by transferring the primary responsibility for ending a war to domestic security forces. Programs addressing three strategic purposes met with mixed success, i.e., programs undertaken to manage regional security challenges, indirectly strengthen a party to a regional conflict, and mitigate conflict. Similarly, a 2013 RAND report found that effectiveness may vary depending on certain political, economic, and military factors. Attempting to identify ways to improve security assistance/cooperation efforts in general, whether under Title 22 or Title 10 authority, this report stated that effectiveness correlates with characteristics of the recipient country and with the level of U.S. and recipient commitment. It concluded that building partner capacity efforts have worked best in well-governed and economically sound countries that can efficiently use U.S. provided funds, invest their own funds to support or sustain capacity, and share U.S. interests. However, according to the report, this is not an ironclad rule: "BPC done well, done consistently, and matched to partner absorptive capacities and interests can be effective even when the partner is not particularly robust in any dimension at the outset." In cases of both "ideal" and "suboptimal" partners, prospects for success improved (1) when specific BPC objectives align with specific partner interests (regardless of the alignment of broader interests), and (2) when efforts are well matched to partner baseline capabilities and absorptive capacity. The report also stated that ministerial capacity (within the recipient ministries of defense and other relevant government institutions) is the foundation for other forms of capacity, and that "ministerial capacity building can, itself, improve a partner's absorptive capacity even when baseline absorptive capacity is low." Thus, it found that that increases in defense institution building "could enable future capacity building in other areas," and viewed these DIB as "central to the future BPC toolkit." RAND found it neither "surprising nor problematic" that the primary objective of some BPC programs is to build a relationship or secure access, and pointed to a possible synergy between relationship building and BPC assistance, "with better relations making capacity building more effective and demonstrations of effectiveness in capacity building improving relations." An academic study published in 2012 of U.S. security assistance to Greece, Vietnam, and Lebanon during crucial historical periods found that training and equipping foreign forces is not enough. Programs "were more likely to succeed," it stated, "when the United States became deeply involved in the partner state military's sensitive affairs—influencing personnel and organization, but refraining from becoming a co-combatant—and when unhelpful external actors played a diminishing role." An Open Society Foundations' overview of selected academic studies examining counterterrorism efforts stated that "no large-scale quantitative studies find a positive correlation between U.S. security assistance and a reduction in terrorism; however there are successes" (one of which it identified as the Philippines) as well as instances in which such assistance can be counterproductive. This overview pointed to a number of nonmilitary factors influencing terrorism levels, including the extent to which governments discriminate against their minority groups, the existence of an independent judiciary, and spending on social welfare, including targeted aid for education, health, and civil society. DOD and the State Department have evaluation and assessment mechanisms for some individual programs, but as yet there is no government-wide, standardized assessment processes or systems. Two prominent examples of individual program assessment mechanisms are the DOD Section 1206 assessment methodology and the State Department's metrics and evaluation system for the Global Peace Operations Initiative. Under the April 5, 2013, Presidential Decision Directive 23 (PPD-23) on U.S. Security Sector Assistance Policy, the State Department Office of U.S. Foreign Assistance Resources ("F") is leading an effort to develop evaluation and assessment tools. Some analysts suggest that the Administration also take steps to develop a standard, strategic-level mechanism to measure results. Congress may wish to take one or more approaches to examining the issue of security assistance effectiveness. One approach would be to examine the status and adequacy of existing U.S. government evaluation tools and mechanisms and efforts to further develop them. Given the difficulties of assessing individual activities, some Members may wish to examine the feasibility of conducting broader assessments of overlapping interagency efforts. Others may wish to ascertain the extent to which tools and plans meet industry "best practices," and, if not, whether Congress might provide additional assistance to enable the Administration to meet private sector standards. Another approach would be to consider the appropriate criteria for determining the "success" or "failure" of a security assistance program. Some analysts state that while programs tend to be judged on whether they achieve the desired end-state of strategic goals. Others argue that an assessment should also take into account the effect on intermediate goals, such as enhancing the U.S. security position, or the contribution that security assistance and cooperation programs can make as one of several tools jointly used to achieve objectives. A third approach would be to study whether the United States is appropriately prioritizing its security assistance budget. The RAND study cited above indicates that the more successful programs are conducted in developed countries, but since 2006 the United States has increasingly prioritized security cooperation programs in less-developed countries and fragile states, especially where governments are combating terrorism. Given some analysts' perspective that certain types of nonmilitary aid may be more productive than security assistance in countering terrorism, related lines of inquiry would be whether and to what extent U.S. economic or development aid should supplement or in some cases supplant security assistance, and how to best integrate economic/development and security assistance programs. Concerns about the current State Department-DOD relationship governing security assistance center on two perspectives of that relationship and the guiding statutory framework. Both perspectives stem from the growing number and specific nature of Title 10 authorities to assist foreign militaries and security forces, a trend that has made the statutory regime more complex. A core issue is how to reconcile foreign policy concerns with perceived urgent and at times competing security needs. On one hand are concerns that the expansion of DOD authority has rendered the State Department unable to carry out its 1961 FAA Section 622(c) oversight responsibility of security assistance and cooperation activities to ensure a coherent foreign policy. Since 9/11, some analysts have perceived DOD as acting with growing autonomy, increasingly independent of State Department direction and supervision. The proliferation of DOD security cooperation authorities is viewed by some analysts as an element of the militarization of foreign policy, with GCCs disproportionately influencing the tenor of relations with countries in their theaters of operations. This viewpoint reflects a broader perception that DOD's overwhelming advantage in personnel and funds allows it to evade State Department direction and oversight and to conduct activities better carried out by civilians, which may be to the detriment of long-term U.S. interests. As a result, some analysts and practitioners argue that Congress should "rebalance" the State Department-DOD division of labor by strengthening State Department input into and oversight of DOD security cooperation. One way to do so might be to streamline the modes of State Department-DOD cooperation, an effort that Administration officials state is underway. Another would be to expand State Department oversight resources, including new posts in State's Bureau of Political-Military Affairs, which oversees security assistance, and at U.S. embassies. Still another might be to reform the statutory framework, placing some or most DOD security assistance activities under existing or expanded Title 22 authority or conducting such activities under an existing or new State Department-DOD "joint formulation" authority. On the other hand, some policymakers state that DOD's ability to enhance U.S. national security by assisting and interacting with foreign militaries is constrained by the current structure of authorities and division of responsibilities. Three related perceptions seem central to this group of concerns: The complexity of the current Title 10 security cooperation framework, providing differing levels of State Department input and oversight for security cooperation activities through variety of mechanisms, impedes DOD's ability to conduct activities in a timely and efficient manner. The State Department does not possess the institutional inclination and capacity to lead or oversee the broad range of security cooperation activities that some analysts and practitioners view as necessary to meet national security demands. The existing Title 10 security cooperation authorities fall short of addressing national security needs. From this perspective, some analysts and practitioners argue that Congress should reform the current Title 10 security cooperation framework. Some argue for broad reform to rationalize the statutory framework, part of which would include measures to address perceived problems with State Department input and oversight. Policymakers' perspectives on the means to create a more efficient and effective division of labor between State and DOD diverge widely. The three approaches to statutory reform mentioned above are examined below. Some policymakers and analysts judge that the State Department Title 22 statutes should once again be the mainstay authority for providing defense articles and services and other U.S. government assistance to foreign militaries and other security forces. For those holding this position, the provision of defense articles and services and certain other support to foreign forces is foreign assistance and should fall under State Department, not DOD, authority. Policymakers who prefer the use of State Department authority view FMF, IMET, and PKO as providing ample authority to conduct many programs currently carried out under Title 10, and use of these authorities as the most expeditious means to ensure that security cooperation programs conform to U.S. foreign policy. On the other hand, some policymakers assert that Title 10 assistance cannot be equated with Title 22 foreign assistance because it serves different purposes than the "traditional" 1961 FAA and AECA assistance. They view the primary purpose of State Department assistance, particularly FMF and IMET, as promoting U.S. relations and interests in foreign countries by helping foreign governments and militaries to meet their security needs as they perceive them. DOD assistance, on the other hand, is viewed as responding to needs identified by the U.S. government and primarily benefitting U.S. national security. Proponents of using Title 22 authority for most DOD security cooperation authorities recognize that an expanded use of these authorities might require modifications to provide the utility, flexibility and speed that DOD seeks through Title 10 authority, as well as changes in traditional practices. FMF is a particular source of concern because of perceived limitations on its use. As noted above, FMF funds have been generally used as a diplomatic or "political" tool for weapons and equipment desired by the recipient country (but not necessarily for weapons and equipment that DOD might think most appropriate). In some cases, this means that FMF funds continue even when this assistance is not being used to best advantage. In addition, FMF traditionally has been used for bilateral rather than multilateral programs, and some view it as not suited to the regional programs DOD contemplates for areas such as maritime security. State Department officials state that bilateral use has been a matter of practice, not of law, and that FMF programs may be dedicated to regional programs as necessary. Objections to using DOD funds to conduct programs under State Department authority have spanned a range of practical concerns. Some analysts question whether Title 22 authorities, even if modified, could provide the needed flexibility for quick responses as key Title 10 authorities are intended to do. (Others point out that the DSCA manages both State Department and some major DOD security cooperation authorities, and that acquisition and delivery speed depends on the priority given to the programs, and that processing times can be slower than desired even for DOD authorities intended to address emerging threats.) In addition, some question the extent to which DOD can maintain control over the use of transferred funds, ensuring that they are used in accordance with DOD authorities. Budgetary constraints pose an additional limitation. Some analysts question whether Congress would appropriate sufficient funds to the State Department to cover current DOD funded security cooperation activities. Some policymakers would prefer to transfer DOD funds to State Department security assistance accounts for such DOD security cooperation activities conducted under State Department authority. Some analysts note that there are precedents for funding transfers from DOD to the State Department to conduct activities important to the missions of both agencies. Some analysts also point out that the State Department transfers funds to DOD for DOD activities conducted under Title 22 authorities. In an era of stress on DOD budgets for personnel, readiness, and modernization needs, however, some policymakers judge that DOD appropriations should fund only activities that are clearly vital to its mission. For those who wish to enhance the possibilities for State Department control and oversight of Title 10 security cooperation activities, a DOD-State Department "joint formulation" mechanism provides a possible model. Two Title 10 security cooperation statutes provide that the State Department and DOD "shall jointly formulate" specified assistance programs, although the program development processes differ. One statute is DOD's premier building partner capacity authority, Section 1206/10 U.S.C. 2282, with DOD in the lead. This is implemented through a "bottom-up" process that starts at the field level with the COCOMs and the U.S. embassies. The other statute is the GSCF, with the State Department in the lead. GSCF program development has largely been a "top down" process, with proposals originating at the State Department and DOD offices in Washington, DC. Both of these authorities are limited to contingency operations addressing emerging or urgent threats. Some analysts argue that State Department oversight and its ability to integrate security assistance programs with foreign policy would be enhanced by extending the joint formulation concept—from emergent or urgent threat response to a broader spectrum of security cooperation missions. Such an extension could provide greater State Department oversight where coordination mechanisms are weak or nonexistent. In 2008, DOD described the Section 1206 joint formulation process as the "gold standard" for interagency planning and cooperation. Similarly, when first enacted in 2011, GSCF authority was widely considered the vanguard of a new mode of State-DOD collaboration because of its unique blend of a State lead with close DOD collaboration. More recent opinions on the utility of these joint formulation models vary. A 2013 RAND report depicted the Section 1206 mechanism as overly complex. In addition, the difficulties encountered by the GSCF in planning and implementing programs has convinced some analysts that the GSCF is not a viable mechanism for conducting joint State-DOD security assistance and cooperation activities. Some analysts argue, however, that the most recent GSCF programs have been developed expeditiously. In testifying before Congress, one analyst stated that he found "a fair amount of consensus" that the joint formulation model reduced interagency tensions involved in coordinating programs. Some policymakers and analysts argue that Title 10 security cooperation legislation should be reformed to simplify the existing myriad authorities and fill some gaps. DOD is engaged in an effort to reform the Title 10 authorities by consolidating similar authorities and identifying gaps. Part of this effort may well be to reexamine the degree and modes of State Department input. Other policymakers and analysts recommend changes that may be related to this effort, such as statutory reforms to enable planners to better mesh Title 22 and Title 10 authority and resources into coherent programs. A primary rationale for Title 10 security cooperation reform is to simplify the complex legal and bureaucratic regime—the plethora of very specific authorities with differing interagency collaboration requirement—which makes effective and timely planning difficult. (As explained earlier, the security cooperation authorities listed above were identified as foreign assistance or security assistance from the sources selected for this report, but many others exist, some of which are similar to the authorities catalogued here. ) For security cooperation planners, piecing together a program, often from multiple Title 22 and Title 10 authorities, entails navigating the various institutional arrangements through which the State Department reviews and provides input to DOD plans, and applying for funds from central, global pots of money. A second rational for reform is what defense analysts describe as "filling gaps" in the Title 10 security cooperation framework. This could include expanding existing authorities or adding new authorities to provide DOD with the flexibility and funding to more readily assist partners in responding to a wider range of threats. Some analysts argue, however, that expanding existing DOD authorities or adding new ones would only increase the overlap with existing State Department authority and further undermine Secretary of State oversight. In considering possible reforms, policymakers may weigh perceived time and resource constraints on DOD when it conducts activities under Title 22 authority against a possible reduction of State Department oversight and control. Proposals for DOD statutory reform range in scope. A 2016 RAND report recommends various ways to consolidate existing DOD statutes. It also recommends expanding existing DOD authorities or legislating new ones. RAND proposes creating consolidated "umbrella" authorities or other changes in several areas: counternarcotics, counterterrorism, humanitarian assistance, defense institution building, and maritime security, among others. Other analysts propose more sweeping reform, consolidating and expanding existing DOD security cooperation authorities into one broad, comprehensive Title 10 authority. Some analysts assert Congress deliberately created the framework of narrow DOD authorities in order to exercise effective oversight and caution that consolidation may have inadvertent consequences, among them rendering DOD programs so broad that they will outstrip available State Department and Congressional resources to monitor them. Skeptics argue that such a consolidation may result in the duplication of authorities that already exist under Title 22. Proposals for statutory reform range span a wide gamut, and there are many possible implications from such reform. At one end of the spectrum, some analysts argue that Congress should revoke or let expire most DOD security assistance authorities and bring existing programs under Title 22 authority; at the other end of the spectrum some analysts propose creating a new, comprehensive Title 10 authority that encompass existing Title 10 authorities and more, and perhaps dispense with all or all but minimal State Department oversight requirements. In between are a number of less ambitious, but nonetheless significant reform proposals: revamping current practices for State Department authorities to make them more suitable for DOD programs; expanding the purposes of the hybrid, dual-key State Department-DOD authorities to encompass a wider variety of programs in non-urgent environments; or consolidating, revising, and possibly expanding existing Title 10 authorities. Desired benefits include greater efficiency in planning and implementing programs, greater program effectiveness, and lower costs to the U.S. government. Nevertheless, whatever the option, both proponents and opponents warn of possible risks and inadvertent consequences. These may include unintended budgetary consequences for either the State Department, DOD, or both, and complications for interagency and Congressional input and oversight. The growth of Title 10 security cooperation authorities responds, in addition to perceived constraints on State Department assistance as discussed above, to evolving perceptions of DOD roles and missions. The adoption of security cooperation as a key military mission has not been accompanied by an increase in personnel and funding to enable the State Department and DOD to fulfill their respective roles. Prior to 2005, DOD regarded assistance to foreign militaries as a secondary role, but DOD Directive 3000.05, issued late in that year, signaled a shift in the DOD concept of such noncombat missions. This directive elevated stability operations, defined as "military and civilian activities ... to establish or maintain order," to "a core U.S. military mission" to be "given priority comparable to combat operations." It noted that although many stability operations tasks abroad were "best performed by indigenous, foreign, or U.S. civilian professionals ... U.S. military forces shall be prepared to perform all tasks necessary to establish or maintain order when civilians cannot do so." Soon thereafter, DOD made a number of institutional and policy changes to embrace noncombat missions, one of which was extending the mission of building partner capacity in foreign military forces, previously generally conducted in nonconventional warfighting situations by Special Operations Forces (SOF), to U.S. general purpose forces (GPF). In 2010, former Defense Secretary Robert M. Gates wrote: "Within the military, advising and mentoring indigenous security forces is moving from the periphery of institutional priorities, where it was considered the province of the Special Forces, to being a key mission for the armed forces as a whole." Given the perceived necessity of these training and support missions, and the political improbability of funding them under the State Department rather than the DOD budget, the State Department supported, or at least did not stand in the way of, growing DOD security assistance authority as long as it required the concurrence of the Secretary of State. A decade later, several concerns regarding appropriate State Department and DOD roles and resources again emerge. On the State Department side, the massive increase in DOD security assistance funding and activities under the Counterterrorism Partnership Fund (CTPF) in FY2015 and FY2016, along with DOD's desire for a peacetime global maritime security authority, have intensified some analysts' concerns that without additional resources, the State Department will not have the personnel to properly exercise its 1961 FAA Section 622(c) oversight function. Concerns also exist as to whether DOD has sufficient personnel, both at the Pentagon and in embassy SCOs, to adequately conduct its own implementation and oversight (such as end-use monitoring of defense articles) responsibilities. Resources are also a matter of concern to some defense analysts. As U.S. military troops are drawn down and DOD budgets are tightened, some analysts favor prioritizing DOD resources for building U.S. combat capability. Others object that such a prioritization will significantly reduce available personnel and funding for security cooperation activities. Members of Congress may wish to examine whether and what additional State Department and DOD personnel resources may be needed in response to DOD's substantially increased security cooperation portfolio, and whether additional funding is needed to hire, train, and retain qualified personnel, or to hire contractors to perform needed functions. Regarding personnel, on the State Department side, Congress may consider whether the State Department requires more personnel to oversee Title 10 security cooperation activities, or whether State Department oversight could be better managed with existing personnel through improved coordination mechanisms. (A related issue is whether Congress should legislate a greater role for the State Department in the on-the-ground development and execution of security assistance and cooperation programs, particularly as a means of ensuring appropriate resources are dedicated to those functions.) On the DOD side, Congress may wish to ascertain the extent to which GPF are used to train, advise, and mentor foreign military and other security forces, compared with SOF, the advantages and disadvantages of using GPF versus SOF for these missions, and the effect of the use of GPF on military readiness. A related inquiry may be whether DOD should create a security cooperation career path and assign general purpose forces to a dedicated security cooperation unit. Although Congress receives many State Department and DOD reports on these agencies' security assistance and cooperation programs and expenditures, the expansion of DOD activities has prompted concerns that reporting requirements are not sufficient to provide a full and authoritative accounting of U.S. funding for security assistance activities around the world. DOD reporting on its security cooperation programs is a source of particular concern to some observers; for instance, DOD has not provided a bottom-line figure for its security cooperation activities, on either a global or a country-by-country basis. Nevertheless, some analysts also perceive gaps in State Department reporting. The State Department and DOD separately report their security assistance and cooperation activities and expenditures to Congress, usually through reports specifically required by individual statues. Congressional requirements are not consistent by agency or by statute; in the case of DOD, no reporting is required for several statutes (most of which concern military-to-military contacts). The State Department provides overview program descriptions and data for each bilateral aid recipient through its annual Congressional Budget Justification (CBJ), which is available online. While the CBJs provide data and descriptions on regional programs, information on regional programs is not broken down by country, making impossible a full account of State Department assistance to each country. Congressional notifications (CNs) and reports required by the AECA or other legislation provide detailed information to Congress, but they are not made available online. The State Department and DOD jointly issue a two-volume annual report entitled Foreign Military Training and DOD Engagement Activities of Interest , which covers both Title 22 and Title 10 security assistance training ( http://www.state.gov/t/pm/rls/rpt/fmtrpt ). It contains extensive information on State Department and DOD training and other DOD nonsecurity assistance programs. State Department training includes that funded under FMS/FMF, IMET, INCLE, the PKO GPOI program, and 1961 FAA drawdowns. DOD training includes that funded under Section 1004 counter-drug authority, the CTFP, Section 1206/10 U.S.C. 2282, and funding for attendance at the DOD regional centers, as well as training funded under other non-security assistance programs. Most programs are documented down to the level of individual attendance. (The report does not track equipment or other non-training support.) DOD has no public document comparable to the State Department's CBJ to provide information on security cooperation programs by country. Given the scattershot nature of sources of information available to Congress on Title 10 security cooperation, there is no way to account for DOD spending by country. Congress obtains information on DOD programs through reports and CNs required by Title 10 legislation. Through the NDAA, Congress has periodically required reports on programs and spending on multiple authorities. In addition, Congress has affixed annual reporting requirements to many individual authorities. 10 U.S.C. 122a requires that the Office of the Assistant Secretary of Defense for Public Affairs post required reports "on a publically accessible Internet website." This office has posted a number of congressionally required reports on its website ( http://www.defense.gov/News/Publications/almanac/asdpa ), but they are scattered among many other types of publications. Another DOD website, open.defense.com, provides additional but limited information. Congress receives detailed information on spending for some DOD authorities through NDAA-required CNs. As with the State Department CNs, these are not available online. Congress may wish to consider the extent to which reporting practices and requirements for security assistance and cooperation authorities facilitate or impede congressional oversight, in particular whether a public accounting of both State Department and DOD funding flows on a country-by-country basis may enhance congressional oversight of bilateral relations. While some policymakers and analysts argue for more information to provide transparency and improve accountability, others express concern that greater transparency regarding DOD assistance, in particular, may negatively affect U.S. relations with foreign governments, militaries, and security forces. Congress has long grappled with the problem of maximizing the benefits of security assistance, or at least minimizing its risks, by ensuring appropriate institutional structures, functions, and oversight. There are ample precedents for some of today's key challenges – addressing inefficiencies in State Department-DOD coordination is not new, nor are State-DOD disagreements about the use of available security assistance funds, or concerns about achieving the most effective use of those funds. The current threat environment, however, creates a special urgency about meeting those challenges. Statutory reform is widely seen as one key element of improving security assistance efficiency and effectiveness, but advocates have proposed a wide range of options in that area. Given the herculean dimensions of broad statutory reform and possible inadvertent consequences of any such reform, Congress may also wish to examine a range of possible non-statutory fixes to the system, including Administration measures to improve interagency cooperation under the PPD-23 reform process. Several questions may provide guidance for congressional inquiry: To what extent, if any does the current threat environment require changes to the current statutory framework? To what extent may non-statutory changes alleviate perceived bottlenecks and obstacles to conducting efficient and effective security assistance programs? To what extent might a holistic approach to security assistance, integrating it with other types of assistance, increase effectiveness? In what ways might Administration and congressional oversight of security assistance programs be improved? Appendix A. Terminology This appendix discusses definitions for the following terms: military assistance, security assistance, security cooperation, security sector assistance, security force assistance, and foreign assistance. Military Assistance "Military Assistance" is the term used in the Foreign Assistance Act of 1961, as amended (1961 FAA, P.L. 87-195), for assistance to foreign security forces, but it is not specifically defined. At the time the 1961 FAA was written, it seems likely that military assistance meant the U.S. provision of defense articles and services to foreign militaries, as well as military education and training, which the 1961 FAA specifically identifies, along with civil (also known as civic) action, as military assistance. (See the text box below for the definitions of these terms.) Whether the term "military assistance" was originally meant to encompass assistance to other foreign security forces, including police, is not clear. It appears that, for clarity's sake, the term "security assistance" replaced "military assistance" in State Department documents. Security Assistance and Security Cooperation Today, "security assistance" is a term frequently used for assistance provided to foreign military and security forces, regardless of the agency providing that assistance. DOD, however, defines the term differently from its common usage. There is no State Department-issued definition of security assistance. The annual State Department congressional budget justification (CBJ), however, lists six budget accounts under the heading "International Security Assistance," and these accounts, with their underlying Title 22 authorities, are commonly regarded as the State Department's security assistance portfolio. These accounts are Foreign Military Financing (FMF), International Counternarcotics and Law Enforcement (INCLE), International Military Education and Training (IMET), Nonproliferation, Anti-Terrorism, and Related Programs (NADR), Peacekeeping Operations (PKO), and the Special Defense Acquisition Fund. DOD defines security assistance as the group of State Department programs authorized by the 1961 FAA and the Arms Export Control Act of 1976 (AECA) that are administered by the Defense Security Cooperation Agency (DSCA). These programs are FMF and IMET, as well as three others that do not require appropriations: (1) Foreign Military Sales (FMS), through which foreign governments purchase defense articles and services with their own funds, (2) the leases of equipment, and (3) the provision of excess U.S. defense articles. DOD uses an overarching term, "Security Cooperation," to denote the State Department security assistance administered by DSCA as well as all other DOD "interactions with foreign defense establishments to build defense relationships." This term addresses the lack of common terminology for DOD's many noncombat activities and contacts, including not only the provision of defense articles and services, but also humanitarian assistance, exercises, and military-to-military contacts that benefit both U.S. and foreign forces. These "interactions" include programs to provide defense articles and services to foreign governments for which Congress provides DOD with specific authority, as well as programs and military exercises conducted under DOD's organic Title 10 authority. Despite the formal DOD definition, personnel and entities within DOD use the term "security assistance" to include Title 10 assistance and activities. For instance, the name of the unit responsible for implementing Navy assistance and activities across the security cooperation spectrum is Naval Education and Training Security Assistance Field Activity (NETSAFA). Some congressional documents do the same. For instance, Section 1211 of the FY2015 National Defense Authorization Act (NDAA, P.L. 113-291 ) requiring a biennial report on 19 Title 10 authorities or programs to train, equip, otherwise assist or reimburse foreign security forces refers to those authorities as security assistance. Security Sector Assistance and Security Force Assistance In Presidential Decision Directive 23, issued on April 5, 2013, the Obama Administration uses the term "Security Sector Assistance" to encompass assistance provided by all U.S. government agencies to both foreign defense and law enforcement forces. This inclusive term covers all the State Department security assistance programs, and most if not all DOD security cooperation programs, exercises, and engagements, as well as related activities of the U.S. Agency for International Development, the Justice Department, and other agencies. There may be different opinions, however, on whether the term includes all DOD humanitarian assistance authorities. This term is closely linked to "Security Sector Reform" (SSR), an internationally used term that refers to the broad span of programs and activities to improve the way a country provides safety, security, and justice through its police and other law enforcement and rule of law personnel, as well as its defense forces. DOD uses the term "Security Force Assistance" in a similar manner, although it is a narrower term. DOD Instruction 5000.68 identifies SFA as a subset of Security Cooperation through which DOD contributes U.S. government efforts to strengthen and reform foreign security forces and their supporting institutions. The instruction states that such activities should be conducted "primarily to assist host countries to defend against internal and transnational threats to stability." In addition, SFA may be used to help host counties defend against external threats, contribute to coalition operations, or organize, train, equip, and advise another country's security forces or supporting institutions. SFA does not include DOD activities with other sectors of a foreign government or population. Is Title 10 Security Cooperation a Subset of Foreign Assistance? The question of whether DOD Title 10 security cooperation programs and activities constitute foreign assistance is fraught with legal, policy, and practical implications. In the 1961 FAA, military assistance, including military education and training, is referred to as a subset of foreign assistance. The U.S. Army Operational Law Handbook, in its discussion of fiscal law limitations on the use of DOD funds for assisting foreign forces, describes military and related supplies and training to foreign forces as foreign assistance, with the exception of training for familiarization, interoperability, or safety purposes. (It notes that whether the exception applies to training is also determined by the size, length, and purpose of training events.) In general, however, DOD has avoided referring to programs and activities to train, equip, or otherwise support or engage with foreign security forces under Title 10 authorities as foreign assistance, using instead the term "foreign assistance or security assistance related." Appendix B. Historical Evolution of Roles and Responsibilities The current legislative framework for security assistance and cooperation has its origins in the post-World War II military assistance statutes and programs, but it has evolved overtime. This appendix traces the laws and purposes of such assistance from the late 1940s to the present day. Greek-Turkish Aid Act, 1947 The strategic rationale for security assistance, and the origins of the Secretary of State's current primary role in providing it, date to 1947, when Congress bestowed on the President all authority to implement the Greek-Turkish Aid Act (P.L. 80-75, May 22, 1947). This act provided economic and military assistance to those two countries. In a statement to a joint session of Congress requesting the aid, President Truman tied U.S. national security to that of other free peoples living in a world of peace. The President delegated his power and authority under the act to the Secretary of State through Executive Order (E.O.) 9857. That E.O. also charged the U.S. ambassadors to those countries with the responsibility to direct assistance activities within Greece and Turkey "under the guidance and instructions of the Secretary of State...." It instructed the Secretary of State to make "appropriate arrangements" with other departments, including the Department of the Navy and the Department of War, to enable ambassadors to fulfill their responsibilities under the act. Mutual Defense Assistance Act, 1949 In its consideration of the Mutual Defense Assistance Act of 1949 (MDAA, P.L. 81-329, October 6, 1949) to assist the newly formed North Atlantic Treaty Organization (NATO), Congress set the parameters of the current security assistance legal framework. Through this legislation, Congress established that foreign military assistance would be separate from the DOD budget and provided the first guidelines for the current division of responsibility between the State Department and DOD for military assistance. In a joint Senate Foreign Relations Committee and Senate Armed Services Committee hearing on the legislation, then Secretary of Defense Louis A. Johnson clarified that the Administration wanted to "keep foreign military assistance costs separate and distinct as an item so that you [Congress] can evaluate and the people of America can understand what we are doing, and not as a buried item in the budget bill of the Defense Department." Later, in a joint report, the Senate Foreign Relations Committee and the Senate Armed Services Committee stated their judgment that primary authority and responsibility for directing the foreign assistance program authorized by the act be "lodged in the President, and under him the Secretary of State," and that DOD's close participation in making program policies was necessary "because this is a military program aimed at increasing the national security." In January 1950, through E.O. 10099, President Truman charged the Secretary of State with "responsibility and authority for the direction" of the MDAA program and authority to approve programs after consultation with the Secretary of Defense and the Administrator for Economic Cooperation. Mutual Security Act, 1951 With the Mutual Security Act of 1951 (1951 MSA, P.L. 82-165, October 10, 1951), Congress shifted primary responsibility for the direction and oversight of foreign assistance, including military assistance, to the White House. The 1951 MSA provided military, economic, and technical assistance to friendly countries, primarily in Western Europe, but also in the Near East, Africa, Asia, and the Pacific, "to maintain the security and to promote the foreign policy of the United States." Section 501 authorized the President "to appoint in the Executive Office of the President a Director for Mutual Security" who under the direction of the President "shall have primary responsibility for ... continuous supervision and general direction of the assistance program under this Act to the end that such programs shall be (A) effectively integrated both at home and abroad, and (B) administered so as to assure that the defensive strength of free nations of the world shall be built as quickly as possible on the basis of continuous and effective self-help and mutual aid." Section 503 spelled out the Director's primary role with regard to military assistance. Section 506(a) enumerated a list of the Secretary of Defense's responsibilities for administering military assistance and related technical assistance and advice that has endured, with minor changes, to this day (now as 1961 FAA Section 623, see below), to be exercised subject to the Director of Mutual Security's "coordination, direction, and supervision." In E.O. 10300 implementing the 1951 MSA, President Truman specified what on the surface appeared to be an accessory role for the Secretary of State: "The Secretary of State and the Director for Mutual Security shall establish and maintain arrangements which will insure that the programs included in the Mutual Security Act of 1951 shall be carried out in conformity with the established foreign policy of the United States." Nevertheless, that same year, an executive branch memorandum noted the fundamental premise that the State Department should exercise leadership, guidance, and in the final instance, control—subject only to Presidential determination if other interested Cabinet officers object—over all elements of the foreign policy of the United States and over the policies and principles to govern the operations of other agencies involved in overseas activities insofar as they affect Foreign Policy considerations. Mutual Security Act, 1954 By enacting the Mutual Security Act of 1954 (1954 MSA, P.L. 83-665, August 26, 1954), Congress set the scene for the return of the Secretary of State as a principal figure in military assistance, although with a somewhat reduced military assistance oversight role. The 1954 MSA bestowed authority for all foreign assistance on the President. At first, through E.O. 10575 (November 6, 1954), President Eisenhower delegated that authority to the Foreign Operations Administration (FOA) Director, except for military assistance. President Eisenhower delegated that responsibility, including responsibility for determining recipients, to the Secretary of Defense, subject to "coordination" by the FOA Director. Then, in mid-1955, the period of White House direct oversight of foreign assistance, which lasted almost four years, came to an end. In an April 1955 letter to Secretary of State John Foster Dulles, President Eisenhower signaled his intent to shift responsibility for foreign assistance from the White House to the Secretary of State. "The Secretary of State, under the President," he wrote, "must be the official responsible for the development and control of foreign policy and all relations with foreign governments, to include policies affecting mutual security." Through E.O. 10610 of May 1955, President Eisenhower reestablished the Secretary of State's authority over foreign assistance, with the exception of most authority for military assistance. The President vested authority provided by the 1954 MSA for military assistance in the Secretary of Defense, subject to coordination by the Secretary of State. However, seemingly in line with the President's letter, E.O. 10610 (Section 202) charged the Secretary of State with determining the value of the military assistance program in each recipient country. Draper Committee Recommendations, 1959 Throughout the 1950s, military assistance became increasingly controversial. In November 1958, President Eisenhower appointed a committee to study and recommend changes to U.S. foreign assistance programs, including the Military Assistance Program (MAP). Known as the "Draper Committee" after its president, William H. Draper, Jr., the committee recommended in August 1959 both that military assistance be appropriated in the DOD budget and that the ability of the Department of State "to provide foreign policy direction for, and to coordinate, the military and economic assistance programs should be strengthened." The committee's stated reason for funding military assistance programs in the DOD budget was to ensure they would "come into competition for financial support with other activities and programs of the Department of Defense." The recommendation to place MAP under the defense budget did not imply a recommendation to reduce the State Department role, however. To the contrary, in its conclusions, the Draper Committee highlighted an interim report's description of the "key to success" of the MAP as ensuring "an effective working relationship" between the Departments of State and Defense. The interim report discussed two elements to improve the working relationship: (1) "strengthening of the position of the State Department on the policy level of military assistance planning and an increased assurance of the conformity of the Military Assistance Program to foreign policy and to related assistance programs" and (2) "the focusing of responsibility on the Department of Defense for the planning, programming and execution of military assistance within the framework of policy guidance laid down in the National Security Council and by the Department of State." The Foreign Assistance Act of 1961 (1961 FAA) With the passage of the 1961 FAA, Congress provided the Secretary of State with authority over military assistance that drew on the authority provided the White House in the 1951 MSA. The 1961 FAA echoed provisions of the 1951 MSA in three ways: (1) in the wording of the oversight responsibility originally vested in the Director of Mutual Security, (2) in the stated purpose of Secretary of State oversight, and (3) in the listed responsibilities of the Secretary of Defense in administering the program. As with previous foreign assistance, the 1961 FAA bestowed on the President the authority to carry out its provisions, which the President then delegated to department secretaries and key officials. Over time, the division of responsibility between the Secretary of State and the Secretary of Defense has been modified. For instance, through the first executive order governing the 1961 FAA, E.O. 10973, President Kennedy delegated most presidential authority for furnishing military assistance to the Secretary of Defense, including Section 503(a) authority to identify countries or international organizations that "the President finds will strengthen the security of the United States and promote world peace." When President Carter issued a revised executive order to govern the 1961 FAA (E.O. 12163 revoking E.O. 10973), he reserved Section 503(a) authority to the President, with a note that the Secretary of State was authorized to make that finding in certain situations. This arrangement continues to this day. From the beginning, Congress explicitly provided the Secretary of State through the 1961 FAA with a strong oversight responsibility regarding military assistance. Under Section 622(c), Congress vested in the Secretary of State, under the direction of the President, responsibility for the "continuous supervision and general direction" of foreign assistance, with specific reference to "military assistance, including military education and training," provided under the 1961 FAA. Also under Section 622(c), Congress made the Secretary of State responsible "for determining whether there shall be a military assistance (including civic action) or a military education and training program for a country and the value thereof." Congress's intention for Secretary of State oversight, under that section, was "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." Under Section 623, Congress charged the Secretary of Defense with responsibility for administering the military assistance program, enumerating tasks similar to those first assigned under the 1951 MSA. During the 1960s and 1970s, the 1961 FAA and related State Department accounts became the primary vehicle for U.S. military assistance, although significant assistance was provided under other accounts and authorities, especially for the Vietnam War effort. A notable exception was military services support funding for the conflict in Southeast Asia, which was authorized and funded under DOD legislation. In the mid-1970s, after the Vietnam War had concluded, Congress amended the 1961 FAA to expand Secretary of State oversight responsibility. By deleting the words "in this Act" from the mandate to exercise "continuous supervision and general direction," Congress gave the Secretary of State (again under the direction of the President) oversight responsibility for all military assistance, regardless of the authority or budget under which it is provided. (This responsibility underpins Congress's current practice of making many Title 10 assistance authorities subject to the concurrence of the Secretary of State.) Although the 1961 FAA gave the Secretary of State primary responsibility for security assistance, other responsibilities and the organization for implementing security assistance programs changed over time. At first, the Secretary of State delegated his responsibility for oversight to the U.S. Agency for International Development Administrator, and then divided that responsibility between two State Department officials. The oversight responsibility—exercising continuous supervision and general direction of military assistance programs—was subsequently re-delegated to State's Director for Political-Military Affairs. In 1963, the Secretary of Defense divided his implementation responsibilities and delegated those responsibilities among several DOD positions. In 1971, he made a number of subsequent organizational changes, including the creation of the Defense Security Assistance Agency (DSAA, now the Defense Security Cooperation Agency, DSCA), with responsibilities for program administration. (Before the DSAA was established, the distribution of defense articles and services appeared to be the responsibility of the geographic combatant commands (COCOMs.) Continuing Evolution of the Legislative Framework In keeping with changing needs and conditions since 1961, Congress has amended the 1961 FAA several times to incorporate additional security assistance authority. Congress has also enacted laws to provide new sources of Title 22 and Title 10 (as well as Title 50) security assistance authority. Expansion of Title 22 Authority The original 1961 FAA military assistance provisions were supplemented by numerous amendments, including five key security assistance authorities: International Narcotics Control authority (Part I, Chapter 8, Section 481), added in 1972 and subsequently amended; International Military Education and Training authority (Part II, Chapter 5, Sections 541-549), added in 1976 and subsequently amended; Peacekeeping Operations authority (Part II, Chapter 6, Section 551), added in 1978 and subsequently amended; Antiterrorism Assistance authority (Part II, Chapter 8, Section 572), added in 1983 and subsequently amended; and Nonproliferation and Export Control Assistance authority (Part II, Chapter 9, Sections 581-585), added in 2000 and subsequently amended. Congress provided additional security assistance authority through other laws as well. The AECA, a major new Title 22 authority, was added in 1968. The AECA provided new authority for cash arms sales (with associated training and equipment) through a Foreign Military Sales (FMS) program and for assistance in purchasing arms and associated training and equipment through a Foreign Military Financing (FMF) credit and grant authority. AECA authority overlaps with 1961 FAA security assistance provisions, which the AECA amended to provide congruent authority. Like the 1961 FAA, the AECA vests responsibility in the Secretary of State, under the direction of the President, for providing "continuous supervision and general direction" oversight, in this case for provisions of the act. Nonproliferation and similar assistance is another area where Congress legislated separate but related authorities under Titles 22, 10, and 50. Over the years, as Congress added new security assistance authority through amendments to the 1961 FAA and other legislation, the division of responsibility between the Secretaries of State and Defense for security assistance became more complex. As with the 1961 FAA, Title 22 legislation in general bestowed security assistance authority on the President. As a result, through executive orders, the President delegates most authority to the Secretaries of State, Defense, or, as appropriate, other agencies. He may reserve certain authorities for himself. As noted above, the current primary executive order governing the delegation of foreign assistance authority is E.O. 12163, issued by President Carter in 1979. Amended many times, E.O. 12163 delegates presidential authority contained in the 1961 FAA as well as numerous appropriations and other acts. For security assistance, the division of responsibility between the Secretaries of State and Defense under E.O. 12163 is supplemented by other orders. For instance, AECA authority bestowed on the President is delegated by E.O. 13637, and presidential authority for nonproliferation assistance provided by the Freedom Support Act is delegated by E.O. 12884. Under the regime established by these and related executive orders, the President's 1961 FAA and AECA responsibilities for foreign military sales and financing is divided between the Secretaries of State and Defense, with some responsibilities reserved to the President. As indicated above, AECA security assistance responsibilities are divided between the Secretaries of State and Defense. Four key 1961 FAA security assistance authorities added post-1961—counternarcotics (1972), peacekeeping operations (1978), antiterrorism (1983), and nonproliferation (2000)—are delegated to the Secretary of State. Nevertheless, sometimes multiple provisions affect the division of responsibility. For example, in the area of counternarcotics, E.O. 12163 delegates to the Secretary of Defense the President's authority to provide military assistance and law enforcement assistance to Andean countries in the International Narcotics Control Act of 1990 ( P.L. 101-623 , Section 3 through the foreign military financing program). E.O. 12163, however, also provides that the Secretary of Defense shall exercise this function "in consultation with the Secretary of State." Moreover, the 1961 FAA counternarcotics provisions directly bestow oversight responsibility for all counternarcotics efforts on the Secretary of State. Section 481(b) of the 1961 FAA charges the Secretary of State with responsibility "for coordinating all assistance provided by the United States government to support international efforts to combat illicit narcotics production or trafficking." Addition of Title 10 Security Cooperation Authority Beginning in the 1980s, Congress expanded the scope and character of the statutory framework by authorizing DOD to directly train, equip, and otherwise assist foreign military and other security forces through new provisions in annual National Defense Authorization Acts (NDAA), some codified to Title 10 of the U.S. Code (Armed Services). Unlike Title 22 provisions, which generally bestow assistance authority on the President, most NDAA and Title 10 security cooperation authorities are specifically assigned to the Secretary of Defense. Counternarotics authorities were among the earliest DOD statutes, enabling the use of substantial military assets to curb narcotics production abroad and block exports to the United States. Post 9/11, Congress has approved additional Title 10 statutes in response to perceptions that DOD would need new, flexible tools to meet the demands of a changing international security environment. In the new environment, challenges would be posed not only by peer competitors, but also, and perhaps more immediately, by the lawlessness and ungoverned spaces found in weak and failing states. Many new statutes provide authority for DOD authorities build the capacity of foreign forces to work unilaterally or as partners with the United States to deter and counter threats. These included authorities responding to the increased demand for military resources as a result of U.S. interventions in Afghanistan and Iraq, and to military requests for greater flexibility to meet the challenges—actual and potential—posed by terrorists and other violent groups. Appendix C. Title 22 Department of State Authorities This appendix provides information on Title 22, Department of State statutes. These include the State Department's three "traditional" security assistance programs: Foreign Military Sales (FMS), Foreign Military Financing (FMF), and the International Military Education and Training (IMET), including the "expanded-IMET defense civilian-oriented program component) programs. They also include the State Department's excess defense articles program and two Arms Export Control Act programs related to FMS/FMF: the equipment leasing program and the Special Defense Acquisition Fund (SDAF). These are all administered by the Department of Defense's Defense Security Cooperation Agency (DSCA). Other Department of State authorities and programs discussed here are the drawdown authorities, International Narcotics Control and Law Enforcement, Non-Proliferation, Anti-Terrorism, Demining, and Related Programs, Peacekeeping Operations, and Special Authorities. DOD participates in or otherwise may support the later programs. For these programs, administered and implemented by the State Department, DOD support may include personnel, equipment, and services such as transportation. DSCA-Administered Title 22 State Department Programs Excess Defense Articles 22 U.S.C. 2321j (1961 FAA Section 516) gives the President authority to transfer excess defense equipment (EDA) as part of military assistance programs, narcotics control programs, or activities that have been separately justified to Congress. Supplies must be drawn from DOD existing stocks. DOD cannot spend funds available for procuring defense equipment for the transfer, and the transfer cannot have an adverse impact on U.S. military readiness or on the national technology and industrial base and potential such sales. Transfers on a grant basis are to be preferred to those on a sales basis "after taking into account the potential proceeds from, and likelihood of, such sales, and the comparative foreign policy benefits that may accrue to the United States as the result of a transfer on either a grant or sales basis." A 30-day advance notification is provided to Congress before any transfers of excess defense articles valued at more than $7 million (in terms of original acquisition costs). The aggregate value of excess defense articles transferred under this provision may not exceed $425 million in a fiscal year. Foreign Military Sales (FMS), Foreign Military Financing (FMF) and Related AECA Provisions FMS (AECA, Sections 21-22, 22 U.S.C. 2761-2762) is the U.S. government's main vehicle for selling weapons, equipment, and associated training to friendly foreign countries. Military weapons and equipment ranges from major weapons systems, such as sophisticated aircraft, to smaller items, such as patrol boats, night vision goggles, and military boots. Foreign governments may purchase such items directly from the private companies offering them, but many prefer to purchase through FMS because the U.S. government negotiates with those suppliers for packages of materiel and services on behalf of that government and monitors the procurement process through delivery. FMF grants and loans (AECA, Section 23, 22 U.S.C. 2763) are provided to selected foreign governments to purchase items through FMS. The State Department is primarily responsible for determining which nations are to receive military assistance from each program. The actual FMF expenditure for FY2015 was $5.9 billion in the enduring and OCO budgets, of which $4.4 billion was provided in the enduring budget to Israel ($3.1 billion) and Egypt ($1.3 billion). (For FY2016, total estimated FMF in the enduring and OCO budgets was $6.0 billion, but the State Department has not provided a by-country breakdown by country.) For FY2017, the State Department requested some $5.7 billion in the enduring and OCO budgets, with same dollar amounts as in FY2015 in the enduring budget for Israel and Egypt. Under one related AECA provision, DOD defense articles may be leased rather than sold to eligible countries or international organizations (Leases of Equipment 22 U.S.C. 2796, AECA Sections 61-65). The President must first determine that there are compelling U.S. foreign policy and national security reasons to do so. Leases may not exceed five years, but they may be renewed. In another related AECA provision, the Special Defense Acquisition Fund (SDAF, 22 U.S.C. 2795, AECA Section 51) supports an inventory of defense articles that may be used to meet the urgent needs of partner nations. First established in 1982 as a revolving fund and then discontinued in 1995 due to post-Cold War spending cuts, the SDAF was resurrected in FY2012. During its first 13 years of operation, it funded the stockpiling of "various defense articles ranging from arms and ammunition, to radars and radios and Night Vision Goggles, to major end items such as helicopters, small boats, tanks, vehicles, and missiles" for future sales to partner nations. The SDAF was recapitalized in FY2012 (as recommended the previous year by a Security Cooperation Reform Task Force working on FMS/FMF reform) from FMF funds authorized for transfer to the account ( P.L. 112-74 , Section 7080), as well as from receipts from selected FMS sales. Most stockpiled defense articles are sold to partner nations or provided to them through U.S. building partner capacity programs. The SDAF may also be used to purchase defense services. International Military Education and Training (IMET) Program IMET (1961 FAA Section 541-543, 22 U.S.C. 2347) provides grants to foreign military and foreign civilian defense personnel from all levels to attend U.S. professional military education institutions and operational training courses. Incorporated in 1976 in the 1961 FAA, IMET sends foreign personnel to the military service senior-level war colleges and the National Defense University, as well to military service Command and Staff Colleges, where they take basic and advanced officer training. In 1990, the program was expanded (E-IMET) to provide opportunities for foreign civilian defense and related personnel to attend educational programs fostering responsible defense resource management, among other purposes. IMET emphasizes longer training experiences in the United States to maximize student exposure to the American way of life. In FY2016, estimated IMET funding totaled $108.1 million. The FY2017 request was $110.3 million. All IMET funding for those years is in the enduring budget. State Department Administered Programs That DOD May Support Drawdown Authorities Defense articles in existing DOD stocks and military services may be provided under three 1961 FAA "drawdown" (meaning without a corresponding appropriation) provisions and, for FY2015, a special appropriations provision in the Further and Continuing Appropriations Act, 2015 ( P.L. 113-235 ). 1961 FAA Section 506(a)(1) authorizes $100 million a year in military assistance from DOD stocks, services, and military training and education. 1961 FAA Section 506(a)(2) authorizes up to $200 million a year from any U.S. government inventory and military education and training, of which up to $75 million may be provided by DOD for five purposes, including counternarcotics and law enforcement, international disaster assistance, anti-terrorism assistance, nonproliferation, migration and refugee assistance, and support for cooperative efforts to locate and repatriate Vietnam War military or civilian personnel who have not been accounted for. 1961 FAA Section 552(c)(2) provides that up to $25 million per fiscal year may be provided for an unforeseen peacekeeping emergency from any U.S. government agency. For FY2015, Section 7047 of P.L. 113-235 authorizes up to $30 million of commodities and services to be provided to the U.N. War Crimes Tribunal for the former Yugoslavia. Assistance under drawdown authorities is generally directed by a presidential determination and provided, with notification to Congress, when all other sources of assistance are exhausted. International Narcotics Control and Law Enforcement (INCLE) The International Narcotics Control and Law Enforcement (INCLE) account funds State Department law enforcement support programs and counternarcotics programs that focus on assisting foreign security forces. (Several other sources of funding for U.S. government counternarcotics programs focus on other aspects of the problem, including State Department Economic Support Funds [ESF], USAID development assistance, and the DOD authorities discussed below.) The FY2016 estimated INCLE expenditure was $1.2 billion, while the FY2017 request was $1.1 billion (both figures include enduring and OCO budget amounts). State Department and USAID authority for counternarcotics programs is contained in several 1961 FAA provisions, including Chapter 8 of Part I, entitled "International Narcotics Control." In addition, 1961 FAA Section 481 vests the Secretary of State with responsibility "for coordinating all assistance provided by the United States Government to support international efforts to combat illicit narcotics production or trafficking." Although most DOD counternarcotics assistance to foreign forces is conducted under its own authority, DOD may play an additional role in INCLE-funded programs if defense articles or services are provided through the DSCA. Nonproliferation, Anti-Terrorism, Demining and Related Programs (NADR) The Nonproliferation, Anti-terrorism, Demining and Related Programs (NADR) account provides economic assistance for counterterrorism, nonproliferation, and export control equipment and training. It also provides programs to increase respect for human rights by sharing antiterrorism techniques and promotes multilateral nonproliferation activities. The FY2016 expenditures for this account were an estimated $885.5 million; the FY2017 request was $668.5 million (both figures include enduring and OCO budget amounts). When deemed necessary, DSCA provides support for some NADR programs by providing defense articles and services through its delivery process. In addition, DOD may provide other support, including running DOD-funded programs in conjunction with NADR-funded programs. One example is the long-standing interagency Trans-Sahara Counterterrorism Partnership (TSCTP) through which the State Department, DOD, and USAID work to thwart potential terrorist activity in 11 countries on the African continent. (The TSCTP is primarily funded through the PKO account; see below.) In addition, DOD contributes to the State Department's eight regional interagency strategy groups to assess and counter the threats posed by terrorists. DOD contributions to the work of these groups are made though 10 U.S.C. 2282 (formerly known as "Section 1206") counterterrorism programs and the Regional Defense Combating Terrorism Fellowship Program (CTFP), described below. Peacekeeping Operations (PKO) The Peacekeeping Operations (PKO) account funds programs to provide articles, services, and training for countries participating in international peacekeeping operations, including United Nations and regional operations. PKO programs include efforts to diminish and resolve conflicts, address counterterrorism threats, and reform military establishments. In addition, PKO funds U.S. military participation in the Multilateral Force and Observers (MFO) in Sinai. PKO-funded programs are authorized under 1961 FAA Sections 551-553 (22 U.S.C. 2348). The FY2016 PKO estimated expenditure was $600.6 million, and the FY2017 request was $475.4 million (both figures include enduring and OCO budgets). DOD sometimes provides its own funds to complement or otherwise assist with PKO-funded programs. As mentioned in the description of the NADR account, above, PKO funds are the primary vehicle for TSCTP's military assistance programs, most of which are implemented by DOD. DOD plays a similar role in TSCTP's East African counterpart, the Partnership for East Africa Counterterrorism (PREACT), which also provides counterterrorism training and equipment. In addition, DOD provides trainers, advisors, mentors, and transportation for the long-standing PKO-funded Global Peace Operations Initiative (GPOI) to train and equip and support deployment of foreign military troops and police for United Nations and regional peacekeeping missions, a major component of which is the Africa Contingency Operations Training Assistance (ACOTA) program. (A representative from the Office of the Under Secretary of Defense, Policy, co-chairs the GPOI Coordinating Committee.) DOD also contributes to other PKO-funded missions, including maritime security and counterpoaching efforts, with DSCA and the combatant commands involved when defense articles and services are provided. Special Authorities The President may authorize (per 22 U.S.C. 2364, 1961 FAA Section 614) the expedited provision of foreign assistance provided under the 1961 FAA and AECA "when important to the security interests off the United States." The President may exercise this authority after consultation with and notification to specified congressional committees and leaders. Among the permitted uses are up to $750 million in AECA sales and up to $250 million for the furnishing of assistance through the AECA. Appendix D. Hybrid Department of State-Department of Defense (DOD) Authorities For three authorities, Congress has given the Department of Defense (DOD) and the State Department joint responsibility. All have been made law through the National Defense Authorization Act (NDAA). The global Build Partner Capacity authority (formerly known as "Section 1206) is now codified at 10 U.S.C. 2282. The Global Security Contingency Fund authority is a pilot project scheduled to expire in FY2017. The Afghanistan Infrastructure Fund authority has expired, although funds are still available to complete projects through FY2016. "Section 1206"/10 U.S.C. 2282 Build Partner Capacity Authority Established by the FY2006 NDAA ( P.L. 109-163 , Section 1206) as a three-year pilot program, "Section 1206" (then titled the Global Train and Equip) has become a pillar of DOD security cooperation. The FY2015 NDAA codified Section 1206 as the Build Partner Capacity authority at 10 U.S.C. 2282. Section (a)(1)(A) of this authority enables DOD to train and equip foreign military and security forces to conduct counterterrorism operations; Section (a)(1)(B) enables DOD to train and equip foreign military forces to participate in or support ongoing allied or coalition military and stability operations that benefit the U.S. national security interest. The original stated purpose of the program was to enable quick turnaround train and equip assistance, with delivery within six months, although recently the time frame for delivery generally has ranged from 5 to 15 months. Since FY2006, the counterterrorism component has been used primarily in the broader Middle East and Africa. Since FY2010, the military and stability operations component has been used to provide training, equipment, transportation, and other services to countries of eastern and central Europe to participate in NATO International Security Assistance Force (ISAF) coalition operations in Afghanistan. There is a current cap of $350 million on funding specifically appropriated for all 10 U.S.C. 2282 programs. In addition, funds may be transferred from other accounts to be used for 10 U.S.C. 2282 purposes. For FY2015, $407.7 million in Counterterrorism Partnership Fund (CTPF) monies were allocated to programs conducted under 10 U.S.C. 2282 authority in eight sub-Saharan African countries and to Jordan, Lebanon, and Tunisia. Additional CTPF funds are being transferred in FY2016. The Global Security Contingency Fund The Global Security Contingency Fund (GSCF), a Department of State-DOD authority, was established as a four-year pilot project by Section 1207 of the FY2012 NDAA ( P.L. 112-81 ). Jointly funded by the State Department and DOD, the GSCF is used to pool money and expertise to provide near-to-mid-term assistance to address emergent challenges for purposes of border and maritime security, internal defense, counterterrorism, and in some cases justice sector programs. Decisions are jointly made by the Secretaries of State and Defense, with the Secretary of State in the lead. Special Operations Forces (SOF) conduct programs in Bangladesh, Hungary, Romania, and Slovakia, Other programs are conducted in the Philippines, Ukraine, and West Africa (a regional counter-Boko Haram program). Two programs in Libya, one of them SOF, are suspended. Thus far, appropriations to the GSCF have been provided through transfers from other accounts. In the FY2016 Consolidated Appropriations Act, Congress provided up to $15 million for GSCF programs in Europe and Eurasia through transfers from the FMF account; there was no parallel DOD transfer authority. The Afghanistan Infrastructure Fund In Section 1217 of the FY2011 NDAA ( P.L. 111-383 ), Congress gave the Secretaries of State and Defense authority to jointly develop and carry out water, power, and transportation infrastructure projects in Afghanistan, as well as other projects supporting the counterinsurgency strategy in Afghanistan funded by an Afghanistan Infrastructure Fund (AIF) in the DOD budget. The Secretary of State is responsible for implementing projects in coordination with the Secretary of Defense, except when the secretaries jointly determine that the Secretary of Defense should implement them. This authority expired at the end of FY2015, but through DOD FY2016 appropriations ( P.L. 114-113 , Division C), Congress made up to $50 million available for FY2016 for costs associated with existing AIF projects. Appendix E. Title 10 Authorities: Contingency Operations and Coalition Operational Support During the past decade, Congress provided the Department of Defense (DOD) with country-specific assistance authorities to support U.S. contingency operations in Iraq and Afghanistan; only those pertaining to Afghanistan are still in effect. Since 2003, Congress has also provided a number of authorities to reimburse or otherwise assist foreign governments for their support to U.S. military operations in Iraq and Afghanistan and other theaters of the U.S. "Global War on Terrorism" where U.S. troops were deployed in contingency operations. In addition, a Title 10-codified global logistics support authority provides logistics support to coalition partners worldwide. Afghanistan Operational Support The Afghanistan Security Forces Fund (ASFF) was established in 2005 to enable DOD to train and equip the security forces of Afghanistan. Current authority for this program is contained in the FY2008 National Defense Authorization Act (NDAA), P.L. 110-181 , Section 1513, as amended. (The last amendment was Section 1531 of the FY2016 NDAA, P.L. 114-92 .) FY2016 appropriations are $3.7 billion. The Commanders' Emergency Response Program (CERP) was developed in Iraq in 2003 to give "walking-around" money to commanders in the field to fund small-scale humanitarian relief and urgent reconstruction projects to assist military efforts. CERP was then extended to Afghanistan, which is the only country where it is now used under FY2012 NDAA ( P.L. 112-81 , Section 1201, as amended) authority. The FY2016 DOD Appropriations Act ( P.L. 114-113 , Division C) provides that up to $5 million from the DOD Operations and Maintenance account may be used to fund CERP activities. Coalition Support Fund (FY2008 NDAA, P.L. 110-181 , Section 1233, as Amended) This fund provides authority for DOD, with the concurrence of the Secretary of State, to reimburse key countries in Southwest Asia for support to U.S. military efforts in Afghanistan, such as for fuel or for the costs of stationing U.S. troops in their countries. It also provides authority to procure supplies and provide specialized training and equipment on a non-reimbursable basis to coalition forces supporting U.S. military operations in Afghanistan. (This part of the authority is referred to as the "Coalition Readiness Support Program," or CRSP). Available FY2016 funding is $1.16 billion, of which up to $1 billion may be provided to Pakistan under certain conditions. (FY2016 NDAA, P.L. 114-92 , Section 1212). Coalition Support for Logistics As amended, the Coalition Support for Logistics statute (FY2008 NDAA, P.L. 110-181 , Section 1234, as amended) authorizes up to $450 million in FY2016 for DOD, in accordance with AECA and other export control laws, to provide logistical support such as supplies, services, and transportation (including airlift and sealift) to coalition partners supporting certain U.S. military operations. Global Lift and Sustain In 2006, Congress provided a new "Global Lift and Sustain" (10 U.S.C. 127(d)) authority, formally titled "Logistic Support for Allied Forces in Combined Operations." This authority enables DOD to fund logistics, supplies, and services to allied forces during coalition operations up to $105 million annually. These funds may be used to provide logistics support in both active hostilities or noncombat situations, including the provision of humanitarian or foreign disaster assistance. Funds may also be used in a country stabilization or peace operation. DOD used this authority to provide logistics support to NATO forces during the 2011 operations in Libya. Appendix F. Title 10 Authorities: Counterproliferation, Counter-drug, and Counterterrorism The Department of Defense (DOD) has a variety of counterproliferation, counter-drug (or more narrowly, counternarcotics) and counterterrorism authorities, many of which are conducted in concert with related programs of the Department of State and other agencies. The following represent a sample of key authorities in these areas. Counterproliferation The Cooperative Threat Reduction program has been the core of DOD counterproliferation efforts since 1991. Other nonproliferation programs are conducted by DOD, the State Department, the Department of Energy, and the Department of Homeland Security. Cooperative Threat Reduction Through Cooperative Threat Reduction (CTR) authority (as most recently set forth in the FY2015 National Defense Authorization Act [NDAA], P.L. 113-291 , Sections 1301-1352), DOD conducts programs to help eliminate and control the possible misuse or spread of nuclear, chemical, biological, and other weapons and related materials, components, delivery vehicles, technology, and expertise. (The original Cooperative Threat Reduction authority was the Soviet Nuclear Threat Reduction Act of 1991, which was Title II of the Conventional Forces in Europe Treaty Implementation Act of 1991, P.L. 102-228 , known as the "Nunn-Lugar Amendment" to the Arms Export Control Act. As such, it was a Title 22 [22 U.S.C. 2551 note] program funded and administered by DOD.) The CTR program is administered by the Defense Threat Reduction Agency. P.L. 113-291 authorized $365.1 million in FY2015 funds to be available in FY2015, FY2016, and FY2017. The FY2016 NDAA, P.L. 114-92 , authorized $358.5 million in FY2016 funds to be available in FY2016, FY2017, and FY2018. International Counterproliferation Program The International Counterproliferation Program (ICPP) is designed to deter the proliferation and acquisition of weapons of mass destruction (WMD) by organized crime in Eastern Europe, the Baltics, and the states of the former Soviet Union. Its two components, one conducted jointly with the Federal Bureau of Investigations (FBI) and the other in consultation and cooperation with the Commissioner of Customs, were authorized during the 1990s by two NDAAs. Authority to establish the joint DOD-FBI program to train law enforcement personnel of countries from the specified regions was provided by the 1995 NDAA, P.L. 103-337 , Section 1504(e)(3)(A). Authority to establish the program to work with customs and border guard officials was provided by the FY1997 NDAA, P.L. 104-201 , Section 1424. (Although this program was established by an NDAA, it is not, strictly speaking, "Title 10," as it is codified at 50 U.S.C. 2333.) This program is now covered by Sections 1321 and 1322 of the P.L. 113-291 authority, although that legislation did not specifically repeal the earlier statutes. Funding for the ICPP is not available through public information. International Counter-drug Program DOD has multiple roles and responsibilities in the area of counternarcotics (CN) and more broadly, counter-drugs (CD). In addition to providing assistance to combat the production and trafficking of illicit narcotics abroad, DOD is the single lead federal agency for detecting and monitoring the aerial and maritime movement of illegal drugs toward the United States. In addition, DOD plays a key role in collecting, analyzing, and sharing intelligence on illegal drugs with U.S. law enforcement and international security counterparts. DOD's international CN program includes activities conducted under two principal multi-country authorities: "Section 1004" (FY1991 NDAA, P.L. 101-510 , Section 1004, as amended) and "Section 1033" (FY1998 NDAA, P.L. 105-85 , as amended)—and a Colombia-specific program. DOD also provides CN assistance through joint task forces using a Title 10 support to law enforcement authority (10 U.S.C. 374). DOD efforts are subject to State Department oversight through 1961 FAA Section 481 (22 U.S.C. 2291), which vests responsibility for coordinating all U.S. counter-drug assistance with the Secretary of State. These programs are funded from DOD drug interdiction and counter-drug appropriations (over $1 billion for FY2016), which is also used for other programs. Section 1004 Under Section 1004, the Secretary of Defense is authorized to provide specified types of support for counter-drug activities of any foreign law enforcement agency, when requested by appropriate officials. These include the maintenance, repair, and upgrading of equipment made available by DOD; the transportation of personnel, supplies, and equipment; the establishment and operation of bases of operations or training facilities; counter-drug-related training of law enforcement personnel; aerial and ground reconnaissance, vehicles, and aircraft; and linguistic and intelligence analysis services. (In the FY2015 NDAA, P.L. 113-291 , Section 1012, Congress extended this authority to include assistance to counter transnational organized crime.) Section 1033 Through Section 1033, DOD provides a wide range of equipment to an increasing number of specified countries. Permitted equipment includes nonlethal protective and utility personnel equipment (including navigation equipment), secure and non-secure communications equipment, radar equipment, night vision systems, vehicles, aircraft, and boats. Congress has capped funding for Section 1033 assistance at $125 million annually (FY2015 NDAA, P.L. 113-291 , Section 1013.) Colombia Counternarcotics DOD provides Colombia with counternarcotics assistance through authority provided in the FY2005 NDAA ( P.L. 108-375 , Section 1021, as amended). Counterterrorism assistance is also provided under this "Unified Counter-Drug and Counterterrorism Campaign" authority, which currently expires in FY2016. DOD, the State Department, and the NAS work closely in-country, with oversight from the U.S. Southern Command (SOUTHCOM), which endorses the program plans developed by the country team and the Assistant Secretary of Defense for Special Operations and Low-Intensity Conflict (ASD/SO-LIC), which approves them. Counterterrorism Two DOD security cooperation authorities are explicitly intended for counterterrorism activities. One, discussed in the "Hybrid" section above, is 10 U.S.C. 2282 Section (a)(1)(A), which enables DOD to train and equip foreign military and security forces to conduct counterterrorism operations. The other is the Regional Defense Combating Terrorism Fellowship Program (CTFP, 10 U.S.C. 2249(c)), described below. Regional Defense Combating Terrorism Fellowship Program Known as the Combating Terrorism Fellowship Program (CTFP), 10 U.S.C. 2249c is an educational program established in 2002. CTFP funds enable mid- to senior-level foreign military officers and ministry of defense and government civilian security officials to attend nonlethal counterterrorism conferences and seminars, as well as U.S. professional military educational institutions and DOD regional security centers. In addition, CTFP funds activities conducted through mobile education units or other education programs. Funding is currently capped at $35 million. In FY2015, some 2,900 military and security personnel from 122 countries were funded. Appendix G. Title 10 Authorities: Defense Institution Building The Department of Defense (DOD) conducts three specific programs to build the institutional capacity of foreign Ministries of Defense. One, the Ministry of Defense Advisors Program, is carried out under a specific statute. The other two are conducted using multiple authorities. Through the FY2015 National Defense Authorization Act (NDAA), P.L. 113-291 , Section 1206, Congress provided DOD with authority, in concurrence with the Secretary of State, to conduct human rights training of foreign security forces and associated security ministries through FY2020. Although defense institution building (DIB) programs may be conducted under State Department IMET funding, the DOD DIB programs are intended to enable the department to conduct programs more quickly. In addition, the Wales Initiative Fund, which has carried out a number of activities to increase interoperability between NATO and developing partner forces, now focuses on defense institution building. Wales (Formerly Warsaw) Initiative Fund The Wales Initiative Fund (WIF, formerly the Warsaw Initiative Fund), which was renamed after the Wales NATO summit in September 2014, currently supports the participation of 16 developing countries in NATO's Partnership for Peace (PfP) program. (The State Department leads U.S. PfP support.) Activities funded by WIF are conducted using the authority of three statutes (10 U.S.C. 168, 10 U.S.C. 1051, and 10 U.S.C. 2010). As the Warsaw Initiative Fund, WIF was originally established as a DOD fund to train and equip countries engaged in the PfP program for the countries of Eastern Europe, but has subsequently been expanded to include all developing NATO partners. WIF's purpose is to enhance partner capacity and advance democratic reform of defense establishments and military forces, in order to increase interoperability. Its current focus is on building defense institutions, according to the DSCA, which manages the program. The Ministry of Defense Advisors Program Initially designed for Afghanistan, the Ministry of Defense Advisors Program (MODA) was established as a global authority by the FY2012 NDAA ( P.L. 112-81 , Section 1081, as amended). MODA enables senior DOD civilian experts to advise their counterparts abroad on matters such as personnel and readiness, acquisition and logistics, strategy and policy, and financial management. The FY2015 NDAA expanded the statute's scope to include regional organizations with security missions. MODA is funded through the DSCA budget. Defense Institution Reform Initiative The Defense Institution Reform Initiative (DIRI) is conducted through the Office of the Secretary of Defense (OSD) Rule of Law program under 10 U.S.C. 168, military-to-military contacts authority, and 10 U.S.C. 1051, developing country participation in multilateral, bilateral, or regional events. DIRI supports foreign defense ministries and related agencies by determining institutional needs and developing projects to meet them. Project areas are extensive: establish and improve functional capabilities to organize, train, equip, and sustain security forces under civilian control; develop defense policy, strategy, and planning capabilities; improve resource management, and logistics and acquisitions capabilities; and establish or enhance civilian defense capabilities, as well as civil-military relations and inter-ministerial coordination. DIRI both scopes out projects for execution under the MODA and conducts its own military-to-military informational engagements. Defense Institute of International Legal Studies Legal Capacity Building DOD's "Increasing Partner Capacity Building in Rule of Law Context" program is conducted by the Defense Institute of International Legal Studies (DIILS) under 10 U.S.C. 168. DIILS is DOD's lead agency in providing professional legal education, training, and rule of law programs (including human rights and international humanitarian law) for international military and related civilians globally. In addition, DOD draws on DIILS to impart human rights instruction in connection with other authorities; for instance, Section 1206/10 U.S.C. 2282 Build Partner Capacity programs have a DIILS-conducted human rights component. Appendix H. Title 10 Authorities: Exercises, Training, and Military-to-Military Contacts The Department of Defense (DOD) has several authorities to train and otherwise engage with foreign military forces. Three global statutes are mentioned below. Other statutes are region-specific. Bilateral and Multilateral Combined Exercises 10 U.S.C. 2010, entitled "Participation of developing countries in combined exercises: payment of incremental costs," and referred to in the biennial report as "Bilateral and Multilateral Combined Exercises," authorizes the Secretary of Defense, after consultation with the Secretary of State, to pay developing countries for incremental expenses incurred as a direct result of participating in a bilateral or multilateral military exercise. The exercise must be undertaken to enhance U.S. security interests, and the country's participation must be necessary to achieve exercise objectives. 10 U.S.C. 2010 defines incremental expenses as "the reasonable and proper cost of the goods and services that are consumed by a developing country as a direct result of that country's participation in a bilateral or multilateral military exercise with the United States, including rations, fuel, training ammunition, and transportation." Incremental expenses do not include pay, allowances, and other normal costs of such country's personnel. The statute does not set a funding limit. Joint Combined Exchange Training Program (JCET) Entitled "Special operations forces: training with friendly forces," 10 U.S.C. 2011 provides authority for the Joint Combined Exchange Training Program. It authorizes the commander of U.S. Special Operation Command (USSOCOM), as well as the commander of any other unified or specified combatant command, to pay or authorize payment, with prior approval of the Secretary of Defense, for three categories of expenses: (1) expenses of training special operations forces assigned to that command in conjunction with training, and training with, armed forces and other security forces of a friendly foreign country; (2) expenses of deploying such special operations forces for that training; and (3) for a friendly developing country, the incremental expenses incurred by that country as the direct result of such training. The primary purpose of such training, as specified by 10 U.S.C. 2011, is to train the U.S. special operations forces. The statute does not set a funding limit. National Guard State Partnership Program The National Guard State Partnership Program, established by the FY2014 National Defense Authorization Act (NDAA), Section 1205 (32 U.S.C. 107 note), provides for exchanges between U.S. National Guard personnel and foreign military, security, and other foreign government forces whose primary functions include disaster or emergency response. Secretary of State concurrence is required for proposed new partnerships as well as for existing partnership engagements that are not traditional military-to-military engagements. This authority stipulates that up to $10 million is available to cover the costs of foreign participation. It expires September 30, 2016. Appendix I. Title 10 Authorities: Humanitarian Assistance and Defense Health Programs The following represent a sample of Department of Defense (DOD) humanitarian assistance programs. The Humanitarian Assistance and the Humanitarian and Civil Assistance programs are funded through the DOD Overseas Humanitarian and Disaster Assistance (OHDACA) account, which also funds programs under four other Title 10 statutes. Humanitarian Assistance Program Humanitarian Assistance 10 U.S.C. 2561, added (as 2551) in 1992 (known as the Humanitarian Assistance Program, or HAP), authorizes funding for humanitarian relief and unspecified humanitarian purposes worldwide. HAP is used for both crisis missions and for routine humanitarian and civil action projects. In crisis missions, HAP provides humanitarian daily rations (sometimes referred to as "meals ready to eat," or MRES). In noncrisis environments, HAP funds are used for activities intended to promote good-will, such as building schools and digging wells. HAP authority also permits the transport of supplies to respond to or mitigate serious harm to the environment. Humanitarian and Civil Assistance Humanitarian and Civil Assistance (HCA, 10 U.S.C. 401) authority, added in 1986, permits DOD to carry out humanitarian and civic action activities abroad in conjunction with military operations. The primary purpose of these activities must be to train U.S. armed forces. The activities must not duplicate any other assistance and must meet the security interests of both the United States and the host country. HCA is partially funded from the OHDACA account and partially from military service funds. Defense Health Programs DOD has two health programs, neither of which has a specific statutory authority. The DOD HIV/AIDS Prevention Program (DHAPP) imparts HIV prevention education as part of U.S. training, exercises, and humanitarian activities, primarily in Africa. Programs are supported by DOD appropriations and transfers from the U.S. President's Emergency Plan for AIDS Relief (PEPFAR). Congress annually appropriates funds to DOD for this activity; FY2016 appropriations were $8 million. The Defense Health Program (DHP) supports emerging infectious disease prevention through partnerships among five DOD overseas laboratories, the military health system, and other U.S. and foreign agencies through the DOD Global Emerging Infections Surveillance and Response System (DOD-GEIS) of the Armed Forces Health Surveillance Center. Funding for this program serves U.S. and foreign interests; there is no breakout in DOD budget justification documents for the foreign component. Appendix J. Title 10 Multipurpose Authority: The Combatant Commander's Initiative Fund Several Title 10 authorities authorize or appropriate funds for Department of Defense (DOD) programs conducted under other authorities. For instance, the Wales Initiative Fund statute, listed above under Appendix G , provides funds to conduct programs for NATO-related purposes under programmatic authorities that are not region-specific. Similarly, the Counterterrorism Partnerships Fund, discussed above in a text box, provides funds for counterterrorism programs in Africa and the Middle East, to be conducted under other authority. The Combatant Commander's Initiative Fund is similar in that it provides funds to be used for other authorities. Unlike similar authorities to assist or engage with foreign security forces, however, the CCIF statute provides funds for a wide variety of purposes (some of which are for the benefit of U.S. forces), and the relatively modest funding is not limited by region. Combatant Commander's Initiative Fund The multipurpose Combatant Commander Initiative Fund (CCIF, 10 U.S.C. 166a) provides discretionary funding for combatant commanders to conduct various activities, especially in response to unforeseen contingencies. Some permitted uses are related to foreign assistance, including humanitarian and civic assistance, and include urgent and unanticipated humanitarian relief and reconstruction, as well as military education and training to military and related civilian personnel of foreign countries, including transportation, translation, and administrative expenses (up to $5 million per year). Up to $5 million per year may be spent to sponsor the participation of foreign countries in joint exercises. The statute itself authorizes the fund, but activities are carried out under other authorities. DOD FY2016 appropriations provided up to $15 million for the fund for all CCIF activities.

The Department of State and the Department of Defense (DOD) have long shared responsibility for U.S. assistance to train, equip, and otherwise engage with foreign military and other security forces. The legal framework for such assistance emerged soon after World War II, when Congress charged the Secretary of State with responsibility for overseeing and providing general direction for military and other security assistance programs and the Secretary of Defense with responsibility for administering such programs. Over the years, congressional directives and executive actions have modified, shaped, and refined State Department and DOD roles and responsibilities. Changes in the legal framework through which security assistance to foreign forces—weapons, training, lethal and nonlethal military assistance, and military education and training—is provided have responded to a wide array of factors. Legal Authorization and Funding For most of the past half-century, Congress has authorized U.S. security assistance programs through Title 22 of the U.S. Code (Foreign Relations) and appropriated the bulk of security assistance funds through State Department accounts. DOD administers programs funded through several of these accounts under the Secretary of State's direction and oversight. Beginning in the 1980s, however, and increasingly after the terrorist attacks on the United States on September 11, 2001 (9/11), some policymakers have come to view the State Department authorities, or the funding allocated to them, as insufficient and too inflexible to respond to evolving and emerging security threats. As a result, Congress has increasingly provided DOD with the means to offer security assistance under authorities in either Title 10 of the U.S. Code (Armed Services) or the annual National Defense Authorization Act (NDAA), both funded as part of the DOD budget. (These are collectively known as "Title 10" authorities and referred to by DOD as "security cooperation.") DOD security assistance and other security cooperation programs conducted under Title 10 authority and established prior to 9/11 include counternarcotics, counter-proliferation, humanitarian assistance, and assistance for training and equipping NATO forces. Title 10 statutes also provide authority for DOD to pay the expenses of foreign forces to enable them to participate in exercises, exchanges, and other military-to-military contacts. Post-9/11 DOD security cooperation authorities focus on counterterrorism assistance, and assistance to foreign forces in areas of conflict. Much of this assistance is for "building partner capacity" (BPC) to enable foreign forces to take greater responsibility for their own defense and for achieving mutual security goals in order to reduce U.S. costs. As part of the BPC effort, recent legislation provides DOD with authority to help strengthen foreign Ministries of Defense and related defense institutions. (Some of these DOD authorities require the concurrence [i.e., approval] of the Secretary of State.) Post-9/11 innovations include Congress's establishment through NDAA authority of two joint State Department-DOD authorities with a lead role for the Secretary of State: (1) an Afghanistan Infrastructure Fund established in FY2011 and (2) the Global Security Contingency Fund (GSCF), a pilot project established in FY2012 to address emerging threats. In FY2006, Congress created a DOD "joint formulation" BPC authority to address emerging counterterrorism threats, with DOD in the lead. To some analysts, the increase of Title 10 authorities and funding to DOD for BPC support to foreign military and other security forces contributes to the perceived "militarization" of U.S. foreign policy. For others, the increase of Title 10 authorities emerged from perceived gaps in existing authorities but has resulted in a confusing, inefficient "patchwork" of authorities and coordination arrangements that are not sufficient to meet all needs. Issues Covered in This Report Since the late 1940s, Congress has played an active role in shaping the legal and institutional construct for security assistance activities. As Congress continues to consider legislation governing security assistance and cooperation, and to conduct oversight of such programs, some Members may seek new ways to improve program effectiveness and address inefficiencies in planning and implementation. This report provides an overview of U.S. assistance to and engagement with foreign military and other security forces, focusing on Department of State and DOD roles. It lays out the historical evolution and current framework of the Department of State-DOD shared responsibility. It concludes with a brief overview of salient issues: how to assess effectiveness; whether and how to modify or change the statutory and institutional framework; how to reconcile institutional roles and available resources; how to provide appropriate transparency for oversight. This discussion is relevant to current FY2017 NDAA proposals. S. 2943, the Senate Armed Services Committee (SASC) version of the FY2017 NDAA, contains broad proposals to consolidate many DOD security cooperation authorities under a new Title 10 chapter dedicated to security cooperation authorities, expanding some, and codifying some NDAA statutes. The House-passed version of that Act, H.R. 4909, would also consolidate a number of existing Title 10 and NDAA statutes under a new Title 10 chapter, but it does not expand existing nor propose new authority. The appendixes provide information on the history of the State-DOD shared responsibility, as well as details of selected State Department and DOD security assistance and cooperation statutes. Additional information on the DOD "Building Partner Capacity" programs and activities may be found in CRS Report R44313, What Is "Building Partner Capacity?" Issues for Congress, coordinated by [author name scrubbed].

The Transportation, Housing and Urban Development, and Related Agencies (THUD) appropriations subcommittees are charged with drafting bills to provide annual appropriations for the Department of Transportation (DOT), the Department of Housing and Urban Development (HUD), and six small related agencies. Title I of the annual THUD appropriations bill funds DOT. The department is primarily a grant-making and regulatory organization. Its programs are organized roughly by mode of transportation, providing grants to state and local government agencies to support the construction of highways, transit, and intercity passenger rail infrastructure, while overseeing safety in the rail, public transportation, commercial trucking and intercity bus, and maritime industries. The Federal Aviation Administration (FAA) is exceptional among DOT's large sub-agencies in that the largest portion of its budget is not for grants but for operating the U.S. air traffic control system. In support of that task, it employs over 80% of DOT's total workforce, roughly 46,000 of DOT's approximately 56,000 employees. Title II of the annual THUD appropriations bill funds HUD. The department's programs are primarily designed to address housing problems faced by households with very low incomes or other special housing needs. These include several programs of rental assistance for persons who are poor, elderly, and/or have disabilities. Three rental assistance programs—Public Housing, Section 8 Housing Choice Vouchers, and Section 8 project-based rental assistance—account for the majority of the department's funding. Two flexible block grant programs—the HOME Investment Partnership Program and Community Development Block Grants (CDBG)—help communities finance a variety of housing and community development activities designed to serve low-income families. Other, more specialized grant programs help communities meet the needs of homeless persons, including those with AIDS. HUD's Federal Housing Administration (FHA) insures mortgages made by lenders to home buyers with low down payments and to developers of multifamily rental buildings containing relatively affordable units. Title III of the THUD appropriations bill funds a collection of agencies involved in transportation or housing and community development. They include the Access Board, the Federal Maritime Commission, the National Transportation Safety Board, the Amtrak Office of Inspector General (IG), the Neighborhood Reinvestment Corporation (often referred to as NeighborWorks), the U.S. Interagency Council on Homelessness, and the costs associated with the government conservatorship and regulation of the housing-related government-sponsored enterprises, Fannie Mae and Freddie Mac. Most of the programs and activities in the THUD bill are funded through regular annual appropriations , also referred to as discretionary appropriations. This is the amount of new funding allocated each year by the appropriations committees. Appropriations are drawn from the general fund of the Treasury. For some accounts, the appropriations committees provide advance appropriations , or regular appropriations that are not available until the next fiscal year. In some years, Congress will also provide emergency appropriations , usually in response to disasters. These funds are sometimes provided outside of the regular appropriations acts—often in emergency supplemental spending bills—generally in addition to regular annual appropriations. Although emergency appropriations typically come from the general fund, they may not be included in the discretionary appropriation total reported for an agency. Most of the Department of Transportation's budget is in the form of contract authority . Contract authority is a form of mandatory budget authority based on federal trust fund resources, in contrast to discretionary budget authority, which is based on resources in the general fund. Contract authority controls spending from the Highway Trust Fund and the Airport and Airway Trust Fund. When the Appropriations Committee subcommittees are given their 302(b) allocations, those figures include only net discretionary budget authority (nonemergency appropriations, less any offsets and rescissions); contract authority from trust funds is not subject to that limitation. This can lead to confusion when comparing totals, as the total annual discretionary budget authority for THUD is typically around half of the total funding provided in the bill, with the remainder made up of mandatory contract authority. Congressional appropriators are generally subject to limits on the amount of new nonemergency discretionary funding they can provide in a year. One way to stay within these limits is to appropriate no more than the allocated amount of discretionary funding in the regular annual appropriations act. Another way is to find ways to offset a higher level of discretionary funding. A portion of the cost of regular annual appropriations for the THUD bill is generally offset in two ways. The first is through rescissions , or cancellations of unobligated or recaptured balances from previous years' funding. The second is through offsetting receipts and collections , generally derived from fees collected by federal agencies. Table 1 shows funding trends for DOT and HUD over the period FY2009-FY2015, omitting emergency funding and other supplemental funding. The purpose of Table 1 is to indicate trends in the funding for these agencies; thus emergency supplemental appropriations are not included in the figures. Table 2 provides a time line of legislative action on the FY2016 THUD appropriations bill. The annual budget resolution provides a budgetary framework within which Congress considers legislation affecting spending and revenue. It sets forth spending and revenue levels, enforced by the rules of each chamber, including spending allocations to House and Senate Appropriations Committees. After the House and Senate Appropriations Committees receive their discretionary spending allocations from the budget resolution (referred to as 302(a) allocations), they divide their allocations among their 12 subcommittees, each of which is responsible for one of the 12 regular appropriations bills. The allocations to each of the subcommittees are referred to as 302(b) allocations. The FY2016 budget resolution was agreed to by the House on April 30, 2015, and the Senate on May 6, 2015 ( H.Con.Res. 27 and S.Con.Res. 11 ). It set an overall base discretionary spending limit of $1.017 trillion for FY2016, an increase from the FY2015 level of $1.014 trillion and consistent with the current statutory spending limits under the Budget Control Act, as amended. The current Section 302(b) allocation for the Senate THUD subcommittee is $376 million more than that provided for the House subcommittee. This difference creates an additional difficulty in reaching agreement on a final FY2016 THUD appropriation level. Table 3 shows the discretionary funding provided for THUD in FY2015, the Administration request for FY2016, and the amount allocated by the House and Senate Appropriations Committees to the THUD subcommittees. Table 4 lists the total funding provided for each of the titles in the bill for FY2015 and the amount requested for that title for FY2016. As discussed earlier, much of the funding for this bill is in the form of contract authority, a type of mandatory budget authority. Thus, the discretionary funding provided in the bill is only about half of the total funding provided in this bill. As shown in Table 4 , the President's FY2016 budget requested $134.7 billion for the programs in the THUD bill, $27.4 billion more than appropriated for THUD in FY2015. Most of this increase was for highway, transit, and rail funding under the Administration's surface transportation reauthorization proposal; the request for DOT is $22 billion over FY2015. The request for HUD is $5 billion more than provided in FY2015, but $1.1 billion of that increase reflects a decline in savings available from offsetting receipts. The House-passed H.R. 2577 provides a total of $108.7 billion for THUD in FY2016. While this appears to be $1.5 billion over the net budgetary resources amount provided in FY2015, after accounting for a projected $1.1 billion reduction in offsetting receipts to HUD in FY2016 and the effects of $400 million in rescissions of funding in the FY2015 bill, the actual amount of new funding recommended in the House bill is virtually identical to the FY2015 level. The Senate-reported H.R. 2577 recommends $109.1 billion for THUD; after accounting for the differences in rescissions and offsetting receipts in FY2015, this represents an increase of less than 1% over FY2015 funding. This situation is explored further in the next section of this report and Table 5 . In the case of the THUD bill, net discretionary budget authority (which is the level of funding measured against the 302(b) allocation) is not the same as the amount of new discretionary budget authority made available to THUD agencies, due to budgetary savings available from rescissions and offsets. Each dollar available to the subcommittees in rescissions and offsets enables the subcommittee to provide funding that does not count against the 302(b) level. As shown in Table 5 , in FY2015, due to rescissions and offsets, the THUD subcommittees were able to provide $10.1 billion in discretionary appropriations to THUD agencies above the net discretionary budget authority level. The amount of these "budget savings" can vary from year to year, meaning that the "cost" in terms of 302(b) allocation of providing the same level of appropriations may vary as well. Due to a $1.1 billion reduction in offsetting collections in FY2016 compared to FY2015, it "cost" the House THUD subcommittee an additional $1.1 billion in discretionary funding in FY2016 to provide the same level of total funding as provided in FY2015, all else being equal. Combined with a decrease in rescissions in their FY2016 proposal, the House THUD subcommittee's $1.5 billion increase in 302(b) allocation over THUD's net FY2015 level ends up as a $25 million increase. And since the subcommittee also proposed reducing the mandatory funding level by $25 million, the net change for FY2016 becomes zero. Table 6 presents FY2016 appropriations totals and selected accounts for DOT, compared to FY2015 enacted levels. A brief summary of key highlights follows the table. For an expanded discussion, see CRS Report R44063, Department of Transportation (DOT): FY2016 Appropriations , by [author name scrubbed]. For DOT, the House-passed H.R. 2577 would provide the following: $70.6 billion in budgetary resources, $1.0 billion (1%) below the comparable FY2015 level (before rescissions). $100 million (an 80% cut from FY2015) to the National Infrastructure Investment (TIGER grants) program. $1.148 billion (a 17% cut from FY2015) to Amtrak. A 9% ($199 million) cut from FY2015 to the transit Capital Investment Grants (New Starts & Small Starts) program. That no funds may be used to facilitate new scheduled air transportation to Cuba, or to issue a license or certificate for a commercial vessel that docked or anchored within 7 miles of a Cuban port within the previous 180 days. For DOT, the Senate Committee on Appropriations recommended: $71.3 billion in budgetary resources, $368 million (0.5%) below the comparable FY2015 level. The same amount as in FY2015 for National Infrastructure Investment (TIGER grants) and Amtrak grants. A 25% ($535 million) cut from FY2015 for the transit Capital Investment Grants (New Starts & Small Starts) program. The Administration's budget proposal for DOT included the following: A request for $93.7 billion in budgetary resources, an increase of 31% over FY2015. A 150% increase in funding over FY2015 for National Infrastructure Investment (TIGER grants). A 25% increase in funding over FY2015 for the federal-aid highway program. A 69% increase in funding over FY2015 for transit. A 76% increase in funding over FY2015 for Amtrak, plus $2.3 billion for development of other passenger rail service. Table 7 presents an account-by-account summary of FY2016 appropriations proposals for HUD, compared to FY2015 enacted levels. It is followed by a brief summary of key highlights. For an expanded discussion, see CRS Report R44059, Department of Housing and Urban Development: FY2016 Appropriations , coordinated by [author name scrubbed]. For HUD, H.R. 2577 , as reported by the Senate Appropriations Committee ( S.Rept. 114-75 ), would provide: $46.2 billion in gross appropriations, which is approximately $850 million more in appropriations than was provided in FY2015 but about $3 billion less than was requested by the President and $183 million less than was approved by the House. $37.6 billion in net budget authority reflecting savings from offsets and other sources, which is $1.9 billion more than FY2015 ($850 million more in appropriations and $1 billion less in savings from offsets). A 93% cut in funding for HOME relative to FY2015. It proposes no provisions related to the Housing Trust Fund, as proposed in the House. A $100 million decrease in Community Development Block Grant (CDBG) funding relative to FY2015 (-3%), but a $100 million increase over the President's requested funding level. Funding increases to cover the cost of renewing subsidies in the Section 8 tenant-based (Housing Choice Voucher) and project-based rental assistance accounts (+$630 million and +$1 billion relative to FY2015). Proposes funding for new incremental vouchers for homeless youth and homeless veterans. For HUD, the House-passed H.R. 2577 would provide the following: $46.4 billion in gross appropriations, which is approximately $1 billion more in appropriations than was provided in FY2015 but $3 billion less than requested by the President. $37.7 billion in net budget authority, reflecting savings from offsets and other sources, which is $2 billion more than FY2015 ($1 billion more in appropriations and $1 billion less in savings available from offsets). A 15% cut in funding for HOME relative to FY2015, with a provision to supplement that amount by diverting any funding for the Housing Trust Fund to the HOME program. Roughly level funding for the Community Development Block Grant (CDBG) program relative to FY2015, rejecting a cut proposed in the President's budget. Funding cuts (relative to FY2015) for Choice Neighborhoods (-75%) and the Public Housing Capital Fund (-10%). Funding increases to cover the cost of renewing subsidies in the Section 8 tenant-based (Housing Choice Voucher) and project-based rental assistance accounts (+$614 million and +$924 million relative to FY2015). No funding for the new incremental vouchers that were requested in the President's budget. Rejection of the legislative reforms requested by the President, with reference to the authorizing committees being most appropriate to consider such reforms. The President's FY2016 budget request for HUD included the following: $49.3 billion in gross appropriations, which is approximately $4 billion more in gross appropriations than was provided in FY2015. $40.6 billion in net budget authority, reflecting savings from offsets and other sources, which is $5 billion more than FY2015 ($4 billion more in appropriations and $1 billion less in savings available from offsets). Increases in funding for most HUD programs, including funding for 67,000 new incremental Section 8 Housing Choice vouchers. A 7% funding cut for CDBG, with a proposal to revisit the way funding is distributed to communities. Several legislative reform proposals affecting the rental assistance programs, including changes to the way that income is calculated and recertified. Table 8 presents appropriations levels for the various related agencies funded within the Transportation, HUD, and Related Agencies appropriations bill.

The House and Senate Transportation, Housing and Urban Development, and Related Agencies (THUD) appropriations subcommittees are charged with providing annual appropriations for the Department of Transportation (DOT), Department of Housing and Urban Development (HUD), and related agencies. THUD programs receive both discretionary and mandatory budget authority; HUD's budget generally accounts for the largest share of discretionary appropriations in the THUD bill, but when mandatory funding is taken into account, DOT's budget is larger than HUD's budget. Mandatory funding typically accounts for around half of the THUD appropriation. The FY2015 THUD bill's appropriation totaled $107.3 billion: $53.8 billion in net discretionary funding and $53.5 billion in mandatory funding. The Administration requested net budget authority of $134.7 billion (after scorekeeping adjustments) for the agencies funded by the THUD bill for FY2016, an increase of $27.4 billion (26%). Most of this increase was for highway, transit, and passenger rail programs in DOT, reflecting the increased funding proposed in the Administration's surface transportation reauthorization proposal. The House-passed bill (H.R. 2577) includes net budget authority of $108.7 billion for THUD in FY2016, $55.3 billion in discretionary funding and $53.5 billion in mandatory funding. In total, this is a 1% increase over FY2015 levels (+3% discretionary reduced by smaller offsets, about level mandatory funding). The Administration has issued a Statement of Administration Policy for H.R. 2577 criticizing the funding levels and certain provisions in the bill, saying that the President's advisors would recommend that the bill be vetoed. The Senate Committee on Appropriations recommended $109.1 billion in net budget authority and omitted certain provisions that the Administration had objected to, such as limitations on travel to Cuba. DOT: The Administration requested a total of $93.7 billion in discretionary and mandatory funding for DOT for FY2016, an increase of roughly $22 billion (31%) over FY2015. The House-passed H.R. 2577 would provide $70.6 billion for DOT, $646 million less than in FY2015. The reductions were primarily to the TIGER grant program (-$400 million), the New Starts transit grant program (-$199 million), and Amtrak capital grants (-$252 million). The Senate-reported bill recommends $71.3 billion, $35 million below the FY2015 level; the major change from FY2015 levels is a proposed cut of 25% ($535 million) to the New Starts transit grant program. HUD: The President requested $40.6 billion in net new budget authority for HUD for FY2016, $5 billion more than provided in FY2015 ($35.6 billion). The House-passed H.R. 2577 includes $37.7 billion for HUD, $2.1 billion above FY2015. Of that increase, $1.1 billion is attributable to a reduction in savings from offsetting receipts from the Federal Housing Administration (FHA). The bulk of the remainder of the increase is directed to funding the renewal costs of the Section 8 Housing Choice Voucher and project-based rental assistance programs. The Senate-reported H.R. 2577 recommends $37.6 billion in net new budget authority, representing $850 million more in appropriations and $1.1 billion to make up for reduced offsets compared to the FY2015 level. Like the House-passed version, it prioritizes funding for Section 8 rental assistance. Related Agencies: The Administration requested a total of $351 million for the agencies in Title III (the Related Agencies). This is about $1 million more than they received in FY2015. The House-passed H.R. 2577 would provide $342 million for the related agencies, cutting $8 million from the Neighborhood Reinvestment Corporation. The Senate-reported H.R. 2577 recommends $306 million, the $45 million reduction would come from the Neighborhood Investment Corporation. The Senate Committee on Appropriations released a substitute amendment to H.R. 2577 on November 18, 2015; see the "Recent Developments" box on page 3 for detail.

Over several congresses, policymakers have been interested in drug compounding and pharmaceutical supply chain security and have worked to craft legislation to enhance the Food and Drug Administration (FDA) ability to protect the public. On September 25, 2013, the leadership of the Senate Committee on Health, Education, Labor, and Pensions and the House Committee on Energy and Commerce announced an agreement on a bill to cover both topics. The House passed H.R. 3204 , the Drug Quality and Security Act, which now awaits Senate action. Title I is the proposed Compounding Quality Act. Title II is the proposed Drug Supply Chain Security Act. This report provides an overview of the provisions in H.R. 3204 , as passed by the House. This report does not discuss policy implications of the potential passage and implementation of provisions in the bill. Under current law, the Federal Food, Drug, and Cosmetic Act (FFDCA, 21 USC 301 et seq.), the federal government regulates drug manufacturing and sales within the United States. However, the FFDCA provides specific conditions in which a drug may be compounded—primarily that the compounding is done by a pharmacist or physician based on a prescription for an individual patient—for which several FFDCA requirements of manufacturers do not apply. Such compounding is regulated by the states within their authority over the practice of pharmacy. There are, however, entities that perform activities that do not fit within this limited sphere of compounding. Federal regulators, the pharmacy and manufacturing industries, state authorities, and various courts have had differing opinions on who has jurisdiction—FDA or the states—over those activities. Title I of H.R. 3204 , the proposed Compounding Quality Act, attempts to address some of these issues. The act would, among other things: maintain FDA authority to regulate drug compounding that goes beyond the scope of state-regulated practice of pharmacy; establish a new category of compounding entity, termed "outsourcing facility," which would apply to entities that compound sterile drugs, volunteer to register with FDA, and follow practice and reporting requirements; require that the label of a drug from an outsourcing facility state "This is a compounded drug"; dictate user fees to fund outsourcing facility registration and reporting; advisory committee activities; annual reports; the issuing of regulations; and a study by the Government Accountability Office (GAO); and direct enhanced communication among state boards of pharmacy and between those boards and the FDA. To do so, Title I would amend FFDCA Section 503A [21 USC 353a] on pharmacy compounding and add a proposed Section 503B on outsourcing facilities as well as proposed Sections 744J and 744K to give FDA the authority to assess and use outsourcing facility fees. Several provisions in Title I reflect challenges FDA has encountered in implementing FFDCA Section 503A [21 USC 353a], Pharmacy Compounding, in current law. H.R. 3204 would amend that section by removing the provision in current law that restricts a compounder from advertising or promoting a compounded drug. Relatedly, it would also remove the modifier "unsolicited" from the phrase "valid prescription" in referring to what the pharmacy must receive before compounding a drug. H.R. 3204 includes a severability provision indicating that, in the event a provision of the act is declared unconstitutional, the remaining provisions would be unaffected. The remaining provisions in FFDCA Section 503A lay out the circumstances in which a state-regulated pharmacy may compound a drug. Although current law does not use the term, Members of Congress, FDA officials, and others often refer to this as traditional compounding . It involves compounding by a licensed pharmacist or physician in response to a prescription for an individual patient. The section describes what ingredients may be used, what kinds of drugs may not be compounded, required consultation between the HHS Secretary and the National Association of Boards of Pharmacy, and required implementing regulations. For facilities that compound drugs in ways that go beyond the circumstances described by FFDCA Section 503A [21 USC 353a], a proposed Section 503B would allow an entity to voluntarily register as an outsourcing facility . For an outsourcing facility that follows the requirements described in the proposed Section 503B, certain existing requirements that apply to drug manufacturers would be waived. These are: a drug's labeling must provide adequate directions for use or be deemed misbranded (Sec. 502(f)(1)) [21 USC 352]; a manufacturer may sell a drug in the United States only after FDA has approved its new drug application based on evidence of safety and effectiveness and other requirements regarding manufacturing processes, labeling, and reporting (Sec. 505 [21 USC 355]); and supply chain entities (manufacturers, wholesale distributors, dispensers, and repackagers) must comply with activities that would be required by Title II of this Act (proposed Sec. 582). The proposed Section 503B would include requirements that focus on the drug, the outsourcing facility, and the Secretary. A drug that is compounded in a registered outsourcing facility would have to meet the following conditions: may not be made from bulk drug substances unless they comply with limitations specified in this bill on use of bulk drug substances and other ingredients; may not be a drug that has been withdrawn or removed from the market because it was found to be unsafe or not effective; may not be "essentially a copy of one or more approved drugs"; may not be on the Secretary's list of "drugs that present demonstrable difficulties for compounding that are reasonably likely to lead to an adverse effect on the safety or effectiveness of the drug or category of drugs, taking into account the risks and benefits to patients" unless compounding is done "in accordance with all applicable conditions identified on the list ... as conditions that are necessary to prevent" such difficulties; if it is subject to a risk evaluation and mitigation strategy (REMS), the outsourcing facility must demonstrate a plan to use "controls comparable to the controls applicable under the relevant" REMS; may be sold or transferred only by the outsourcing facility that compounded it; must be compounded in an outsourcing facility that has paid fees (as would be established in this Act); must have a label that includes the statement "This is a compounded drug." (or comparable statement); must also contain specified identifying information of the outsourcing facility and the drug to include lot or batch number, established drug name, dosage form and strength, quantity or value, date compounded, expiration date, storage and handling instructions, National Drug Code (if available), "Not for resale" statement, "Office Use Only" statement (if applicable), and a list of active and inactive ingredients; and must have a container "from which individual units of the drug are removed for dispensing or administration" that includes a list of active and inactive ingredients, FDA adverse event reporting information, and directions for use. A registered outsourcing facility must register with the Secretary of Health and Human Services (the Secretary) annually (electronically, unless waived by the Secretary) and indicate whether it intends to compound a drug on the Secretary's list of drug shortages; submit a report to the Secretary twice a year identifying the drugs compounded, including the active ingredient and its source, National Drug Code numbers, and other specified information; be subject to inspection (pursuant to Section 704 [21 USC 374], which applies to manufacturing facilities) according to a risk-based schedule based on factors such as the compliance history of the outsourcing facility, inherent risk of the drugs being compounded, among others; and submit adverse event reports. The Secretary must make outsourcing facility registration information publicly available; and issue regulations regarding the list of drugs presenting demonstrable difficulties for compounding after convening and consulting with an advisory committee (to include specified membership) on compounding; regularly review the lists and update as necessary. The proposed Section 503B would include definitions of compounding, essentially a copy of an approved drug, approved drug, outsourcing facility, and sterile drug. Title I would amend the FFDCA sections involving prohibited acts (Sec. 301 [21 USC 331]) and misbranded drugs (Sec. 502 [21 USC 352]) to include specified actions regarding compounded drugs. It also would direct the Secretary to promulgate implementing regulations. H.R. 3204 would amend the FFDCA to add sections (744J and 744K) addressing user fees. The bill would require the Secretary to collect an annual establishment fee from each outsourcing facility that chooses to register as well as reinspection fees when applicable. The bill specifies the process the Secretary would follow to establish fee amounts, an inflation adjustment factor, an adjustment factor and exceptions for certain small businesses, the crediting and availability of fees, fee collection and the effect of failure to pay fees (which would include deeming a product misbranded and therefore prohibiting its sale). The bill would also require the Secretary to report annually to Congress describing fees collected, entities paying fees, hiring of new staff, use of fees to support outsourcing facility inspections, and the number of inspections and reinspections performed. The Secretary could use those fees "solely to pay for the costs of oversight of outsourcing facilities," and the user fee funds would have to be used "to supplement and not supplant" other available federal funds. A section of H.R. 3204 titled "Enhanced Communication" would direct the Secretary to receive information from state boards of pharmacy regarding (1) actions taken regarding compounding pharmacies (warning letters, sanctions or penalties, suspension or revocation of state license or registration, or recall of a compounded drug) or (2) "concerns that a compounding pharmacy may be acting contrary to [FFDCA] section 503A [21 USC 353a]." The Secretary would be required to consult with the National Association of Boards of Pharmacy in implementing the submission requirement and to immediately notify state boards of pharmacy when receiving submissions or when the Secretary determines that a pharmacy is acting contrary to FFDCA Section 503A. H.R. 3204 would require that the Comptroller General review pharmacy compounding in each state, review state laws and policies, assess available tools with which purchasers could determine the safety and quality of compounded drugs, evaluate the effectiveness of communication about compounding among states and between the states and FDA, and evaluate FDA's implementation of FFDCA Sections 503A [21 USC 353a] and 503B. The report would be due three years after the bill's enactment. A drug may change hands many times from the point at which it leaves the manufacturer until it reaches the dispenser who provides the drug to a patient. Each step along the way—involving the manufacturer, wholesale distributors, repackagers, third-party logistics providers, and dispensers—presents an opportunity for "contamination, diversion, counterfeiting, and other adulteration." Members of Congress, FDA, and industry groups within the supply chain, among others, have looked for a mutually agreeable system to trace and verify the identity of a drug as it travels through the chain. One goal was the development of a national policy that would be more feasible and effective than a patchwork of varying state requirements. Title II, the proposed Drug Supply Chain Security Act, would, among other things, require the creation and continuation of transaction information , transaction history , and transaction statements (beginning no later than January 2, 2015 for manufacturers, wholesale distributors, and repackagers; beginning July 1, 2015 for dispensers); a product identifier on each package and homogeneous case of a product, to include a standardized numerical identifier (SNI), lot number, and product expiration date (beginning no later than four years after enactment of this bill); required verification of the product identifier at the package level (with staggered starting dates: manufacturers four years after enactment of this bill, repackagers five years after enactment, wholesale distributors six years after enactment, and dispensers seven years after enactment); registration of wholesale distributors and third-party logistics providers in the states from which they distribute or by the Secretary if the state does not offer such licensure; that the Secretary develop standards for that registration; specific activities, following a specified timeline, to implement an interoperative unit-level traceability system ten years after enactment; and the development and maintenance of a uniform national policy for the tracing of drug products through the supply chain. To do so, Title II would amend the FFDCA by adding a subchapter titled Pharmaceutical Distribution Supply Chain that would contain proposed Sections 581 through 585, and by amending Sections 301 [21 USC 331] (prohibited acts), 303 [21 USC 333] (penalties), 502 [21 USC 352] (misbranding), and 503 [21 USC 353] (transaction statements upon wholesale distribution). Proposed FFDCA Section 582 would set out what would be requirements for specific types of entities/activities in the supply chain: manufacturers, wholesale distributors, dispensers, repackagers, and drop shipments. (Proposed Section 581 would provide definitions of the terms used. ) The next several paragraphs give an overview of those requirements. The Secretary would have to in consultation with federal officials and specified stakeholders and not later than one year after enactment, issue draft guidance to establish "standards for the interoperable exchange" of transaction information, transaction history, and transaction statements; establish processes by which supply chain entities could request waivers or exemptions to any requirements in the proposed Section 582 and by which the Secretary could determine specified exceptions; and finalize guidance not later than two years after enactment to specify whether and how to exempt products in the supply chain (before the effective date) from product identifier requirements. Other general provisions would provide several exemptions or alternative start dates for requirements relating to providing certain transaction information, transaction history, or transaction statements, or wholesale distributor and third-party logistics provider licensing, for products that were in the supply chain before January 1, 2015 or over the period until the effective dates of required regulations; allow an entity that changed a package label solely to add the product identifier (as would be required by this Act) to submit that change to the Secretary in its annual report; require, unless the Secretary allows otherwise through guidance, that product identifiers include applicable data in "a 2-dimensional data matrix barcode when affixed to, or imprinted upon, a package" and in "a linear or 2-dimensional data matrix barcode when affixed to, or imprinted upon, a homogeneous case"; and allow that verification of the product identifier occur using human- or machine-readable methods. The first five subsections of the proposed FFDCA Section 582 would set requirements for manufacturers, wholesale distributors, and repackagers. These requirements would generally concern product tracing, including responsibility when accepting or transferring a drug, transaction information for returns, and requests for information regarding suspect products; product identifiers, beginning with the requirement that manufacturers and repackagers affix a standardized graphic to each package and homogenous case; and verification of suspect product, including quarantine, validating the transaction history and transaction information, verifying product identifier, notification of trading partners and the Secretary, maintenance of an electronic database. Although the approach (regarding, for example, tracing, identifiers, and verification) is consistent across the various entities in the supply chain, the timing and some elements of those requirements vary. A second set of subsections in a proposed FFDCA Section 582 describes enhanced drug distribution security provisions, including the development and implementation of an interoperable system of electronic package-level tracing, establishment of national standards for wholesale distributors and third-party logistics providers, a uniform national policy rather than state-specific requirements for drug tracing, and requirements that the Secretary develop guidance documents, hold public meetings, and establish pilot projects. The bill would require that interoperable, electronic tracing of products at the package level go into effect 10 years after enactment (proposed FFDCA Sec. 582(g)). The process would involve transaction information and transaction statements being "exchanged in a secure, interoperable, electronic manner in accordance with the standards established under the guidance" document (described below). Transaction information would include the package-level product identifiers. The bill would require systems and processes, including the standardized numerical identifier, to verify package-level products (according to the proposed required guidance); to respond to requests by the Secretary for transaction information and transaction statements; to gather necessary information; to protect confidential commercial information and trade secrets; and to associate transaction information and transaction statements with a product to allow a saleable return. The proposed section would allow a dispenser to "enter a written agreement with a third party" to maintain required information and statements. The Secretary would be allowed to "provide alternative methods of requirements," such as compliance timelines or waivers, for small businesses or in the case of a dispenser's undue economic hardship. This section would require that the Secretary enter into a contract for a "technology and software assessment that looks at the feasibility of dispensers with 25 or fewer full-time employees conducting interoperable, electronic tracing of products at the package level." The contract, which would include consultation with small dispensers, would be required to begin no later than 18 months after final guidance (see below), with the assessment to be completed no later than 8½ years after enactment. The bill specifies the content of the assessment and requirements for public comment both on the statement of work and on the final assessment as well as a public meeting. The section would direct the Secretary to follow specific procedures when promulgating regulations. These would provide "appropriate flexibility" relating to small businesses and undue economic hardship on dispensers; consider results of pilot projects, public meetings, public health benefits and costs of additional regulations, the required assessment (see above) of small business dispensers. This requirement would not, however, delay the effective date of interoperable unit-level tracking. The Secretary would be required to issue several guidance documents through procedures outlined in the bill. The topics of the guidance documents, along with the timetable the Secretary would be required to meet, are: Identification of a suspect and illegitimate product ; due not later than 180 days after enactment; Recommendations for unit level tracing ; due not later than 18 months after a required public meeting; and Updated guidance on standards for interoperable data exchange ; to be finalized not later than 18 months after required public meeting. The Secretary would be required to hold at least five public meetings "to enhance the safety and security of the pharmaceutical distribution supply chain." The first meeting would not be able to be held until one year after enactment; the bill specifies the topics to be addressed in the meetings. The Secretary would be required to establish at least one pilot project, in coordination with manufacturers, repackagers, wholesale distributors, and dispensers "to explore and evaluate methods to enhance the safety and security of the pharmaceutical distribution supply chain." The bill directs the design of such pilots. The bill directs that neither the public meeting nor the pilot project requirements delay the effective date of interoperable unit-level tracking. Beginning 10 years after enactment—at which time the national, interoperable, unit-level tracing system would go into effect, as would be required by this act—several requirements of the act would have "no force or effect." These include the exchange of transaction histories among supply chain entities that would be required by proposed FFDCA Section 582. The bill would amend FFDCA Section 503(e) [21 USC 353], which currently requires, among other things, that a wholesale distributor (who is not the manufacturer or an authorized distributor of record) be licensed by the state from which it distributes the drug, and that each manufacturer maintain a current list of authorized distributors of record for each drug. A proposed amendment to Section 503(e) would add that if that state does not require licensure, the Secretary may provide the licensure (and may collect a fee to reimburse the costs of the licensure program and related periodic inspections). The wholesale distributor would also have to be licensed by the receiving state if that state requires licensure. The licenses would be required to meet the conditions that would be established by a separate section of the act. Other proposed requirements include that the owner or operator of a wholesale distributor be required to report to the Secretary annually on each license held and contact information of all its facilities. The wholesale distributor must also report on significant federal or state disciplinary actions. The Secretary would be required to establish by January 1, 2015, and regularly update, a publicly available database of authorized wholesale distributors. The Secretary would provide for state officials to have prompt and secure access to the licensing information. This act would not authorize the Secretary to disclose protected trade secrets or confidential information. The bill would amend the definition of wholesale distribution to include additional exclusions; would specify that a third-party logistics provider (as would be defined in the act) would not have to be licensed as a wholesale distributor if the third-party logistics provider never assumed ownership of the product; and would define a business entity affiliate. H.R. 3204 would add a proposed FFDCA Section 583, National Standards for Prescription Drug Wholesale Distributors, which would include standards for storage and handling, records, bonds or other means of security, mandatory background checks and fingerprinting, qualifications for key personnel, prohibited persons, and mandatory physical facility inspection. If the Secretary promulgates regulations pursuant to this section, the Secretary must issue a notice of proposed rulemaking, allow for a comment period, and have the final regulation take effect two years after its publication. This act would add a proposed FFDCA Section 584, National Standards for Third-Party Logistics Providers, which would require that a third-party logistics provider be licensed by the state from which it distributes the drug, or if that state does not require licensure, by the Secretary (who may collect a fee to reimburse the Secretary for the costs of the licensure program and related periodic inspections). The third-party logistics provider would also have to be licensed by the receiving state if that state requires licensure and the third-party logistics provider is not licensed by the Secretary. The bill would require annual reports by each facility of a third-party logistics provider to include its licensure and contact information. The Secretary would be required to issue regulations, not later than two years after enactment, regarding standards for the licensing of third-party logistics providers, to cover third-party accreditation, storage practices (including space, security, written policies and procedures), periodic inspection, prohibited personnel, mandatory background checks, provision of lists (upon request by licensing authority) of all manufacturers, wholesale distributors, and dispensers for which the third-party logistics providers provides services, and license renewal. For regulations promulgated regarding third-party logistics provider licensing, the Secretary would be required to provide a notice of proposed rulemaking, allow for a comment period, and set an effective date one year after the final regulation is issued. H.R. 3204 would establish a proposed FFDCA Section 585 that would address the relationship of the proposed supply chain requirements to state authorities. Specifically, it would prohibit, from the date of enactment, a state or political subdivision of a state to establish or continue "any requirements for tracing products through the distribution system (including any requirements with respect to statements of distribution history, transaction history, transaction information, or transaction statement of a product as such product changes ownership in the supply chain, or verification, investigation, disposition, notification, or recordkeeping relating to such systems, including paper or electronic pedigree systems or for tracking and tracing drugs throughout the distribution system) which are inconsistent with, more stringent than, or in addition to, any requirements applicable under section 503(e) (as amended by such Act) or this subchapter (or regulations issued thereunder), or which are inconsistent with—`(1) any waiver, exception, or exemption pursuant to section 581 or 582; or `(2) any restrictions specified in section 582." Similarly, this section would prohibit, from the date of enactment, a state or political subdivision of state to establish or continue "any standards, requirements, or regulations with respect to wholesale prescription drug distributor or third-party logistics provider licensure that are inconsistent with, less stringent than, directly related to, or covered by the standards and requirements applicable under section 503(e) (as amended by such Act), in the case of a wholesale distributor, or section 584, in the case of a third-party logistics provider." It would also prohibit a state from regulating third-party logistics providers as wholesale distributors. It would allow a state to collect fees for carrying out wholesale distributor and third-party logistics provider licensure. The proposed section would allow states to take specified enforcement, license suspension and revocation, and regulation of licensed entities "in a manner that is consistent with product tracing requirements" under the proposed FFDCA Section 582. The proposed section would also note an exception: "Nothing in this section shall be construed to preempt State requirements related to the distribution of prescription drugs if such requirements are not related to product tracing as described in subsection (a) or wholesale distributor and third-party logistics provider licensure as described in subsection (b) applicable under section 503(e) (as amended by the Drug Supply Chain Security Act) or this subchapter (or regulations issued thereunder)." The bill would amend FFDCA Section 301(t) [21 USC 331] making it a prohibited act to fail to comply with requirements in proposed FFDCA Sections 582 and 584 (referring to transaction requirements of entities in the supply chain and national standards for third-party logistics providers). It would also amend FFDCA Section 502 [21 USC 352] to deem a drug as misbranded if it fails to have the product identifier that would be required by proposed FFDCA Section 582.

The proposed Drug Quality and Security Act, H.R. 3204, is the current focus of congressional efforts to protect the public from unsafe, ineffective, or otherwise subquality compounded drugs and from the risks of counterfeit and subquality drugs entering the supply chain between the manufacturer and the dispenser. Majority and minority leadership of the House Committee on Energy and Commerce and the Senate Committee on Health, Education, Labor, and Pensions announced an agreement on September 25, 2013, following years of bicameral and bipartisan efforts. On September 27, 2013, Representative Fred Upton, the chair of the House committee, introduced the text, which would amend the Federal Food, Drug, and Cosmetic Act (FFDCA), as H.R. 3204. The House passed it by voice vote on September 28, 2013, sending it to the Senate on September 30, 2013. The bill now awaits Senate action. Title I, the Compounding Quality Act, would create the term outsourcing facility to apply to an entity that compounds sterile drugs in circumstances that go beyond activities that the FFDCA allows pharmacies to do under state regulation. As such, the proposed category could be conceptualized somewhere between a state-regulated pharmacy and a federally regulated drug manufacturer. The bill would direct the Secretary of Health and Human Services (HHS) to consult with the National Association of Boards of Pharmacy regarding submissions from states that concern a compounding pharmacy that may be acting outside what the FFDCA allows. The bill would also maintain the FFDCA section that addresses what is referred to as traditional compounding—wherein a pharmacist or physician compounds a drug to fill a prescription written for an individual patient. It would remove the provision, which has been challenged in court, that forbids a compounder from advertising or promoting a compounded drug. An entity that compounds sterile drugs and that may not obtain prescriptions for identified individual patients would be able to voluntarily register as an outsourcing facility. If it also complies with a set of listed requirements, an outsourcing facility would be exempt from certain FFDCA requirements on drug manufacturers: adequate directions for use labeling, sale only after FDA approval of a new drug application, and compliance with supply chain activities (that would be added by Title II of H.R. 3204). An outsourcing facility would have to label the product to include the statement "This is a compounded drug," list active and inactive ingredients, report annually to the HHS Secretary on drugs compounded, be subject to inspection, submit adverse event reports, and pay annual fees (that would be established by this bill) to cover the cost of overseeing outsourcing facilities. Title II, the Drug Supply Chain Security Act, would add FFDCA requirements to be implemented over the next few years. These include that manufacturers and repackagers put a product identifier, including a standardized numerical identifier, on each package or homogenous case. With certain exceptions, exchange of transaction information, histories, and statements would be required when a manufacturer, wholesale distributor, dispenser, or repackager transfers or accepts a drug. Also required would be a system of verification and notification when the Secretary or a trading partner within the supply chain suspects that a product may be illegitimate. The bill would require national standards for the licensing of wholesale distributors and third-party logistics providers. Requirements for the Secretary would include guidance documents, regulations, public meetings, and pilot projects. The act also would include a timetable and tasks involving the development of an interoperable, electronic, package-level tracking system to begin 10 years after enactment.

Article V of the U.S. Constitution provides two alternatives for amending the nation's fundamental charter: proposal of amendments to the states by vote of two-thirds of the Members of both houses of Congress, and proposal by a convention called as a result of applications from two-thirds of the states, the "Article V Convention." From the 1960s to the 1980s, supporters of Article V Conventions mounted vigorous but ultimately unsuccessful campaigns to call conventions to consider such issues as school busing to achieve racial balance, restrictions on abortion, apportionment in state legislatures, and a balanced federal budget. Since approximately 2010, after more than 20 years of comparative inaction, the Article V Convention alternative has drawn a new generation of supporters. Advocacy groups across a broad range of the political spectrum are pushing for conventions to consider various amendments. This report provides information for Members of Congress and congressional staff on current developments in Congress, the states, and the advocacy community on the Article V Convention alternative. Two companion reports provide more exposition and analysis of this issue: CRS Report R42592, The Article V Convention for Proposing Constitutional Amendments: Historical Perspectives for Congress ; and CRS Report R42589, The Article V Convention to Propose Constitutional Amendments: Contemporary Issues for Congress . In recent years, measures proposing applications for one or more of the alternative Article V Convention proposals have been introduced in many states. David F. Guldenschuh, an attorney and scholar of the Article V Convention process who is associated with the Heartland Institute (which supports the Article V approach), reported that as of August 1, 2017, 175 applications had been introduced in the legislatures of 40 states during their 2017 sessions. To date in 2017, three states have submitted applications for a convention to consider a balanced budget as proposed by the Balanced Budget Amendment (BBA) Task Force. Four states have joined the Convention of States Project, and one has applied for the Compact for America's Compact for a Balanced Budget. At the same time, Guldenschuh identified four states that had passed resolutions rescinding one or more applications submitted at an earlier time. The present status of the most prominent Article V Convention campaigns following state action through 2017 follows. Convention advocacy groups listed below are identified in greater detail later in this report. Balanced Budget Amendment Task Force (balanced federal budget amendment) claims 28 applications, including related "legacy" applications of the 1970s and 1980s. Convention of States project (amendments restricting authority of U.S. government) lists applications from 12 states. Wolf PAC (amendment repealing corporate personhood provisions of the Supreme Court's Citizens United decision) lists applications from five states. Compact for America (balanced federal budget amendment via an interstate compact) lists applications from five states for its Compact for a Balanced Budget interstate compact and Article V Convention. U.S. Term Limits (term limits for Congress amendment) lists one state application. Citizen Initiatives—Countermand Amendment (amendment providing state veto of federal laws, regulations, court decisions) lists one state application. Single Subject Amendment PAC (amendment to require public laws to include only one subject) lists one state application. Proposals for an Article V Convention are as old as the republic. According to one estimate, more than 700 have been filed since 1789, most of which have been proposed since 1900. They have included applications for a general convention and petitions for a convention to consider single-subject amendments in an estimated 47 issue areas. In the second half of the 20 th century, two campaigns for Article V Conventions approached the constitutional threshold of applications from two-thirds of the states, 34 at present. Mounted largely between 1964 and 1983, they concerned politically sensitive issues: apportionment in state legislatures, which gained 33 state applications between 1964 and 1969, and an amendment requiring a balanced federal budget under most circumstances, which gained 32 applications between 1975 and 1983. After reaching these high water marks, the reapportionment proposal lost momentum following the death of its leading advocate, while the balanced budget amendment campaign stalled in the face of growing opposition. The Article V Convention alternative returned to relative obscurity for more than 20 years. Between 1988 and 2010, 17 state legislatures passed resolutions rescinding their earlier calls for a convention. In some cases, these resolutions rescinded all previous Article V applications, while others specifically cited a convention for a balanced budget amendment. Late in the first decade of the 21st century, interest in the Article V Convention revived among a range of advocacy groups. Originally linked to the Tea Party movement and organizations generally characterized as conservative and populist, the most widely advocated convention subjects included an amendment or amendments to require a balanced federal budget, restrict the federal debt, and set general limitations on the authority and activities of the federal government. The Article V Convention's appeal spread, however, as self-identified progressive movements, such as Occupy Wall Street, began to advocate a convention for such purposes as overturning parts of the Supreme Court's Citizens United decision, changing the definition of corporate personhood, or banning allegedly restrictive state voter identification requirements. The convention option is arguably attractive on several grounds: It springs unquestionably from the "original intent" of the founders, the need for state applications suggests widespread popular grass-roots origins, and the prospect of proposing amendments directly to the states offers an alternative to what some have characterized as a legislative and policy deadlock at the federal level. The revival of the Article V Convention option is arguably reflected in the actions of state legislatures. According to the Balanced Budget Amendment Task Force, an Article V Convention advocacy group, since 2010, 15 states have reversed earlier rescissions of convention applications. Conversely, since 2016, five states have rescinded their earlier convention applications, suggesting the growth of "second thoughts" in some states. A number of questions have been raised concerning the standard for a valid Article V Convention application. One issue centers on the permissible scope of state applications. What sort of convention application meets Article V's constitutional requirements? Did the framers of Article V contemplate state applications for (1) a general convention; (2) a convention to consider a single issue, such as a balanced budget amendment; or (3) a convention to consider a specific amendment, the text of which has been included or identified in the petition? Or does it give sanction to all of these alternatives? Some observers hold that only applications for a "general" convention, those that do not cite a specific policy issue or amendment, are valid. Other commentators maintain that state applications for an Article V Convention must address the same issue in order to be counted toward the two-thirds threshold established by the Constitution. Most scholars agree that applications proposing a specifically worded amendment would not meet the constitutional standard. Congress has, however, received applications calling for an Article V Convention that would consider a particular, specifically worded, amendment. The practice was most common in the 1980s, utilized by the campaign for a convention to consider a balanced budget amendment. A number of states during that period included the text of the proposed amendment in their applications. At present, the following organizations, "Compact for America," "Single Subject Amendment," and "Restoring Freedom" all propose conventions to consider specifically worded amendments, notwithstanding the opinion expressed by the House Judiciary Committee in 1993 that an application requesting an up-or-down vote on a specifically worded amendment cannot be considered valid. Another question concerns the issue of timeliness or contemporaneity: is a state application for a convention valid forever, or does it have a limited "shelf life"? If so, how long does this period of validity last? Some argue that state applications are valid for seven years, the same length of time as the ratification window established in the 20 th century for most amendments proposed by Congress. Others suggest a shelf life of two to four years for state applications. Conversely, the great majority of Article V Convention supporters generally assert that state applications are valid indefinitely, and that Congress has no authority to set a deadline. A further issue centers on the question of whether states have the constitutional authority to repeal or rescind earlier applications for an Article V Convention. Over the years, some state legislatures have passed resolutions retracting either one, some, or all of their previous applications. For instance, as noted earlier, between 1988 and 2010, an estimated 17 states passed such resolutions, although some have since rescinded their rescissions. Do states have the authority to rescind applications for an Article V Convention? Opinion is divided: some hold that the application process is only preliminary, and that states may withdraw their applications, so long as the two-thirds threshold has not been crossed. Others dispute this assertion, maintaining that that an application carries the same weight as a state's ratification of a proposed constitutional amendment, and that an application cannot be revoked or rescinded. In the past, especially in connection with the late-20 th century movement for an Article V Convention to consider a balanced budget amendment, states also frequently added self-canceling clauses to their applications rendering them null and void if Congress proposed an amendment incorporating the application's stated goals. Many supporters of the Article V Convention claim that these various distinctions are immaterial, and that all state applications are equally valid, whether they propose a general convention, a convention to consider one or more policy issues, or one to consider an amendment containing a specific text. The framers, they maintain, deliberately avoided specific requirements for state applications to be counted toward the two-thirds threshold. One advocacy group, Friends of the Article V Convention (FOAVC), maintains that one application is as good as another, that applications are valid indefinitely, and that states cannot rescind their applications. It further asserts that as soon as Congress had received applications of any sort from two-thirds of the states in the union at that time, it had a constitutional obligation to call a convention. By their calculation, 49 of the 50 states have submitted an Article V petition at some point since 1789, and that Congress should have called a convention not later than 1911. All parties accept the constitutional requirement that an Article V Convention can be summoned only after the legislatures of two-thirds of the states (34) have submitted applications. As noted in the previous section, however, beyond that baseline, consensus begins to break down. Some convention advocates insist that Congress is obligated to call a convention immediately. FOAVC, cited earlier in this report, identifies over 700 applications on its website, filed from 49 states. Other groups suggest that the 34-state threshold has yet to be met for a convention to consider proposals in specific areas. Of currently active Article V Convention advocacy groups, the Balanced Budget Amendment Task Force claims the most, 28 applications. Another issue frequently cited by convention advocates is the existence, or lack thereof, of an "official list" of state applications for an Article V Convention. According to the National Archives, state applications have traditionally not been collected in a central repository, but are scattered through the holdings of the Center for Legislative Archives, generally filed with committee papers, and arranged by the Congress in which they were received. FOAVC has criticized this practice, asserting that "Congress has failed miserably (most likely by design) at its duty to track and keep a count of all Article V Convention applications (so that they will know when two thirds of the states have met the prerequisite number for a peremptory Article V Convention)." Beginning in 2013, Article V Convention activists accelerated their campaigns for an official congressional count of state applications, including petitions to both the House and Senate. The House of Representatives established new procedures governing state actions concerning an Article V Convention in the 114 th Congress, which continue in effect in the 115 th Congress. A rules change directed the chair of the House Judiciary Committee to designate for public availability all such new memorials received from the states, and at the chair's discretion, any memorial submitted by the states prior to the 114 th Congress. The resolution also directed the Clerk of the House of Representatives to make the designated memorials publicly available in electronic form, organized by state and year of receipt. In addition, H.R. 1742 , the "Article V Records Transparency Act of 2017," introduced in the 115 th Congress by Representative Luke Messer, would require the National Archives to make an organized compilation of all state applications for, and rescissions of applications for, an Article V Convention. Upon completion, the Archivist of the United States would transmit physical and electronic copies to the chairs of the Judiciary Committees of the Senate and House of Representatives for public availability. If this legislation were enacted and implemented, the proposed compilation would arguably meet the requirements demanded by the convention advocacy community over many years. Both congressional initiatives are examined at greater length later in this report. The Article V Convention option is currently promoted by multiple advocacy organizations which embrace different approaches to the issue and propose conventions to consider amendments in various issue areas. This section identifies selected organizations that promote an Article V Convention, lists them in alphabetical order, and provides brief analyses of their specific agendas. The author of this report has been unable to identify at the time of this writing any public policy and issue organizations that focus specifically on opposition to the Article V Convention alternative. A number of established policy advocacy groups, however, have criticized or issued position papers expressing their disapproval. These include, but may not be limited to, the John Birch Society, the Center on Budget Policy and Priorities, Eagle Forum, and Common Cause. Activities and positions of these groups are examined later in this report at the heading "Current Activity in the Policy and Advocacy Community." ArticleV.org traces its origins to the Occupy Wall Street movement of 2011-2012. It emphasizes the use of social media for communication among supporters and describes its mission as "educating Americans on the reasons to bring about an Article V convention," and persuading them to "[a]pply their energy to pressure Congress to call for a Convention." It does not appear to support or advocate either an amendment in a specific policy area or a specifically worded amendment, but offers a broad range of alternative amendments, accompanied by the admonition, "[m]ay the best amendments win." The Balanced Budget Amendment (BBA) Task Force advocates "a convention under Article V of the U.S. Constitution to exclusively consider a Federal Balanced Budget Amendment." Established in 2010, the BBA Task Force includes earlier unrescinded "legacy" applications for a balanced budget amendment convention submitted during the 1970s-1980s in its count of valid state petitions and could arguably be considered as a successor to this earlier Article V Convention movement, although it does not describe itself as such. It also campaigns actively for additional state applications. At the time of this writing, the BBA Task Force claims 28 applications, the largest number of any convention advocacy group. It may be noted, however, that some of these, dating to the 1970s and 1980s, might be questioned on the grounds of contemporaneity, an issue discussed earlier in this report. Citizen Initiatives promotes the use of the Article V Convention alternative to achieve "single subject" amendments on a range of public issues. It is self-described as "a facilitator, serving State Legislatures by coordinating Convention calls for proposed amendments by assisting in the passage of Delegate Resolutions by Legislatures in the Convention and ratification process." At the time of this writing, Citizen Initiatives lists one state application for a convention to consider the Countermand Amendment, which would authorize the states to override federal legislation, executive orders, or court orders whenever the legislatures of 60% (30) of the states agree to such a veto. A different approach to the Article V Convention question was advanced in 2013 by the Compact for America (CFA), a domestic nonprofit "501(c)(4)" corporation. The organization's Compact for a Balanced Budget Amendment is an interstate compact, which it asserts would transform "the otherwise cumbersome state-initiated amendment process under Article V into a 'turn-key' operation." The Compact includes a comprehensive program that its advocates claim meets all the requirements necessary to (1) apply for and convene a convention; (2) provide rules and operating procedures for the convention; (3) convene the convention; (4) present, approve, and propose a pre-drafted amendment for transmission to the states; and (5) provide for prospective state ratification of the amendment. The single action of the requisite number of states agreeing to the Compact would, its proponents argue, set in motion the convention process through a series of "conditional enactments," each of which would trigger the next step in the process, ultimately leading to ratification. Proponents claim the interstate compact device would speed up the process so that a convention could be called, convened, and adjourned and an amendment proposed and ratified within 12 months. The Compact seeks to anticipate and prescribe procedures for various elements in the Article V Convention process. A state's act of agreement to the Compact would constitute its application for an Article V Convention, the sole purpose of which would be to propose an amendment whose text is prescribed in the Compact. Participating states also agree to observe the Compact's provisions governing the convention's composition and rules of procedure. By agreeing to the Compact, states also commit themselves to "prospective" ratification of the proposed amendment. One distinguishing feature of the compact is its self-termination provision. The compact effectively limits itself to a seven-year lifespan: if it fails to gain membership by the requisite 38 states within seven years after the first state joins, the compact terminates, and is "repealed, void ab initio , and held for naught." Since the CFA initiative would use an interstate compact as its vehicle for the convention, and since the Constitution requires congressional approval for such a compact, CFA provides model legislation for a concurrent resolution that could be used by Congress to call the convention. H.Con.Res. 73 , a concurrent resolution incorporating the Compact for a Balanced Budget, was introduced in the 115 th Congress on July 26, 2017, by Representative Luke Messer. At the time of this writing, five states have joined the Compact for a Balanced Budget. The Convention of States is a project of Citizens for Self-Governance (CSG). In its "Jefferson Statement," CSG calls for an Article V convention for "the sole purpose of proposing amendments that impose fiscal restraints on the federal government, limit the power and jurisdiction of the federal government, and limit the terms of office for its officials and for members of Congress." The resultant Convention of States project emerged in 2014. This organization distinguishes itself from some other convention advocates by the fact that it calls for a convention for a general purpose , rather than a specific policy issue. This is the consideration and proposal of amendments to limit the authority of the federal government. The convention, therefore, would be authorized to propose a range of amendments related to this primary goal. Some of the following have been suggested: a balanced budget amendment; redefinition of the general welfare and commerce clauses of the Constitution; prohibition of the application of international treaties and law to govern domestic law in the United States; limitations on presidential executive orders and federal regulations; term limits on Congress and the Supreme Court; an upper limit on federal taxation; and sunsetting all existing federal taxes and a super-majority vote requirement to replace them. Reflecting the Tea Party experience of some of its founders, COS emphasizes grassroots organization, planning for "a viable political operation that is active in a minimum of 40 states." At the time of this writing, the legislatures of 12 states have applied for a convention on the COS model. The Friends of the Article V Convention (FOAVC), a self-identified nonpartisan group, has advocated the convention option since its founding in 2007. FOAVC supports the Article V Convention process, but it does not campaign for a convention to consider a specific amendment or a specific subject, such as the balanced budget. As noted previously, FOAVC's website maintains that all state applications are valid indefinitely, that rescissions are not valid, and that Congress should have called a convention as early as 1911. RestoringFreedom.org, a self-identified nonpartisan, nonprofit corporation chartered in Texas in 2009, originated the "National Debt Relief Amendment." This organization calls for states to apply for an Article V Convention to consider a specific proposal, under which any increase in the national debt would require the approval of a majority of the legislatures of the 50 states (26 or more) prior to enactment. As noted elsewhere in this report, the constitutionality of state applications for conventions to consider particular specifically worded amendments has been widely debated. Single Subject Amendment describes itself as a "527 organization and more specifically a Super PAC which is registered with the federal Elections Commission." It proposes an amendment that would limit the content of bills introduced in Congress to a single subject. Noting that 41 states have single-subject provisions in their constitutions, it maintains that a parallel federal requirement would "ensure accountability and transparency. Logrolling, earmarks, and pork barrel spending would be curtailed." Unlike most other Article V Convention groups, this organization advocates proposal of a relevant amendment by either of the two methods prescribed in the Constitution: by congressional resolution or by convention called on applications from the states. Consequently, it supports H.J.Res. 25 , a single-subject amendment introduced in the 115 th Congress on January 12, 2017, by Representative Tom Marino. This proposed constitutional amendment would require that each bill, resolution, or vote that must be submitted to the President should "embrace no more than one subject" which must be "clearly and descriptively expressed in the title." Single Subject Amendment lists one state application for an Article V Convention at the time of this writing. U.S. Term Limits has advocated term limits for elected officials at all levels of government, including Members of Congress. It has supported term limit amendments introduced in Congress—generally three terms for Representatives and two for Senators—since it was established in 1991. In 2015, the organization announced it was expanding its activities to support an Article V Convention for the purpose of proposing a term limits amendment applicable to Congress. At the time of this writing, one state has applied for a term limits amendment convention. As with ArticleV. org, Wolf PAC emerged roughly contemporaneously with the Occupy Wall Street movement of 2011-2012. This organization advocates an Article V Convention to propose an amendment that would reverse what it refers to as the "corporate personhood" aspects of the Supreme Court's Citizens United v. Federal Elections Commission decision. The Wolf PAC convention application passed by California's legislature declares that "money does not constitute free speech and may be legislatively limited" that "the rights that [corporations] enjoy under the United States Constitution should be more narrowly defined" and that corporations "should not be categorized as persons for purposes related to elections and ballot measures." Wolf PAC's plans also include extensive use of social media and online grassroots organizing in support of its objective. At the time of this writing, five states have applied for a convention to consider Wolf PAC's proposals. The Article V Convention issue continues to receive attention in the 115 th Congress, including (1) the aforementioned establishment of House of Representatives procedures for receipt and publication of state applications for a convention, (2) introduction of a proposed concurrent resolution to effectuate the Compact for America's Compact for a Balanced Budget, and (3) introduction of proposed legislation to authorize an official compilation by the National Archives of all Article V Convention applications received from the states. In the 114 th Congress, the House of Representatives established new procedures for the receipt and publication of state memorials related to the convention issue, including both applications for a convention and rescissions of previous applications. This requirement was continued for the 115 th Congress in Section 3(d) of H.Res. 5 , which provides rules for the House and reads as follows: Providing for Transparency With Respect to Memorials Submitted Pursuant to Article V of the Constitution of the United States.—With respect to any memorial presented under clause 3 of Rule XII purporting to be an application of the legislature of a State calling for a convention for proposing amendments to the Constitution of the United States pursuant to Article V, or a rescission of any such prior application— (1) the chair of the Committee on the Judiciary shall, in the case of such a memorial presented in the One Hundred Fourteenth Congress, and may, in the case of such a memorial presented prior to the One Hundred Fourteenth Congress, designate any such memorial for public availability by the Clerk; and (2) the Clerk shall make such memorials as are designated pursuant to paragraph (1) publicly available in electronic form, organized by State of origin and year of receipt. This action sets procedures for the systematic retention and public availability of state memorials pertaining to an Article V Convention by the House of Representatives, beginning with those received in the 114 th Congress. It arguably meets requests for an "official count" of state applications, at least going forward in time. The Clerk's website began to record state applications in February 2015. At the time of this writing, the website has recorded 134 applications from 46 states for an Article V Convention. Although some are notifications of recent action taken by state legislatures, others are duplicate referrals of applications forwarded to Congress as long ago as 1960. Applications for conventions were submitted that address a wide range of policy concerns, including a constitutional convention to consider some of the following proposals: a balanced federal budget, guaranteed and unrestricted sharing of federal income tax revenues with the states (revenue sharing), restrictions on abortion, restrictions on school assignment by race, a package of amendments to restrict federal government authority, changing the definition of corporate personhood with respect to contributions to campaigns for federal office, a line item veto for the President, term limits for federal elected office and for federal judges, prayer in schools and other public places, and various other issues. The Clerk's website has also recorded 21 rescissions from 20 states at the time of this writing. These include state resolutions rescinding all applications, applications for a convention to consider a balanced budget amendment, an application for a convention to consider an amendment authorizing states to apportion one house of their legislatures without respect to population differences among districts, and applications for a general Article V Convention. Two proposals directly related to the Article V Convention movement have been introduced to date in the 115 th Congress. On March 27, 2017, Representative Luke Messer introduced H.R. 1742 , the Article V Records Transparency Act of 2017 in the 115 th Congress. This bill would direct the Archivist of the United States to compile and transmit to Congress a list of all applications for, or rescissions of applications for, an Article V Convention to consider constitutional amendments. The compilation would be cataloged by year of submission and state, and the Archivist would also be directed to report on any missing applications or rescissions. The bill would establish a five-year schedule for this initiative based on when an application was transmitted to Congress, beginning with the most recent, and concluding with the earlier applications. The committees on the judiciary of the House and Senate would be directed to make the compilation permanently available to the public and update the compilation as necessary. The bill would also recommend procedures to be followed by the states when submitting applications and would provide direct funding and grants for the compilation program to the National Historical Publications and Records Commission at the National Archives. H.R. 1742 was referred to the House Judiciary Committee, the Oversight and Government Reform Committee, and the Rules Committee on March 27 and to the Judiciary Committee's subcommittee on the Constitution and Civil Justice on April 21. If enacted and implemented, the compilation authorized in H.R. 1742 would arguably respond to the demands for a comprehensive list of state convention applications advanced by convention advocates over many years. On July 26, 2017, Representative Luke Messer introduced H.Con.Res. 73 , entitled "Effectuating the Compact for a Balanced Budget," in the 115 th Congress. At the time of this writing, he has been joined by 10 cosponsors. If passed, this resolution would be the vehicle for the Compact for America's Compact for a Balanced Budget, which was examined earlier in this report. The measure's language states that it "effectuates" the Compact for a Balanced Budget, but some observers might question why the measure does not contain other language affirmatively declaring congressional approval of the compact, as provided for in the Constitution. It does affirmatively state that Congress calls the convention as contemplated under the compact, with a lifespan of not more than one year, and that Congress will refer to the states an amendment conforming to the compact's requirements. As noted earlier in this report, the compact incorporates a series of "conditional enactments" in which the states that join the compact would establish the convention, which itself would consider a specifically worded balanced budget amendment, which, if approved, the member states would further commit themselves prospectively to ratify. H.Con.Res. 73 was referred to the House Judiciary Committee on July 26, 2017, and subsequently referred to Judiciary's Subcommittee on the Constitution and Civil Justice and the Subcommittee on Regulatory Reform, Commercial and Antitrust Law, both on August 17, 2017. On July 27, 2017, House Judiciary Committee Chairman Bob Goodlatte convened a hearing of the full committee to consider a balanced budget amendment. Although the hearing focused on amending the Constitution by means of a congressional proposal to the states, one Member and one witness did refer to the Article V Convention process. Representative Steve Stivers noted the BBA Task Force's promotion of a convention in the states, particularly the Wisconsin legislature's then-pending action to apply for a balanced budget amendment convention. In addition, Nick Dranias, president and executive director of the Compact for America Educational Foundation, presented testimony on efforts by the Compact for America to promote its Compact for a Balanced Budget through the vehicle of an Article V Convention. H.J.Res. 34 , introduced in the 114 th Congress on February 13, 2015, by Representative John Culberson, proposed an amendment advocated by an Article V support group, Single Subject Amendment, identified earlier in this report. The resolution proposed a constitutional amendment that would have added to the original Article V Convention language. It would have authorized states to apply for, and for Congress to convene, a convention to consider "an identical amendment," which refers to a specifically worded amendment. This measure would resolve a frequently debated question as to whether an amendment of this type would be eligible for consideration in an Article V Convention. Sometimes referred to as the "Madison Amendment," supporters assert that by sanctioning a convention to consider a specifically worded amendment, this proposal would eliminate the possibility for a "runaway convention" by limiting it to consideration of only the amendment applied for by the states. This concurrent resolution was introduced in the 114 th Congress by Representative Paul A. Gosar on March 19, 2015. It would have effectuated the Compact for a Balanced Budget and was identical to H.Con.Res. 73 , as introduced in the 115 th Congress. No action was taken beyond referral to the House Judiciary Committee's Subcommittee on the Constitution and Civil Justice. In recent years, measures proposing applications for one or more of the alternative Article V Convention proposals have been introduced in many states. David F. Guldenschuh, an attorney and scholar of the Article V Convention process associated with the Heartland Institute, reported that as of August 1, 2017, 175 applications had been introduced in the legislatures of 40 states during their 2017 sessions. As noted earlier in this report, to date in 2017, three states have submitted applications for a balanced budget amendment as proposed by the BBA Task Force effort, four have joined the Convention of States Project, and one has applied for the Compact for America's Compact for a Balanced Budget. Guldenschuh also identified four states that had passed resolutions rescinding one or more applications submitted at an earlier time. Most recently, on November 7, 2017, the Wisconsin legislature completed action on an Article V application for a convention to consider the BBA Task Force's proposed balanced budget amendment, thus raising that organization's asserted total to 28. Organizations that both support and oppose an Article V Convention have mounted activities intended to build support for their preferred approach to the convention. In March 2017, the Arizona legislature passed a measure inviting states to a convention that would plan and recommend rules and procedures for an Article V Convention to consider a balanced federal budget amendment. It would also recommend to Congress the criteria for determining the date and location of such a convention once the constitutional threshold of state applications has been reached. In response, official delegations from 19 states and unofficial groups representing three other state legislatures met in Phoenix, Arizona, between September 12 and September 14, 2017, to consider planning issues for an Article V Convention and set non-binding rules for a convention. In September 2016, the Convention of States held a "simulated" convention in Williamsburg, Virginia. Meeting from September 21-23, unofficial delegates representing all 50 states adopted amendments in the following policy areas: require a balanced federal budget under most conditions; provide term limits for Congress; limit "federal overreach by returning the Commerce Clause to its original meaning"; provide a congressional veto of federal regulations; require a super-majority to increase or establish new federal taxes; repeal the 16 th (income tax) amendment; empower the states by a three-fifths vote to "abrogate any federal law, regulation, or executive order." In December 2015, the State Legislators Article V Caucus newsletter reported that the BBA Task Force joined with the National Federation of Independent Business and the Tea Party Express to conduct state legislator education programs in several states that may consider BBA Task Force applications in their future legislative sessions. The same issue reported that U.S. Term Limits, a policy advocacy group established in 1992 to promote term limits for all levels of elected officials, had initiated a campaign for an Article V Convention to consider an amendment to limit U.S. Representatives to six two-year terms, and U.S. Senators to two six-year terms, for a total of 12 years of service. Between July 23 and 25, 2015, the Balanced Budget Amendment Task Force sponsored a meeting to discuss convention procedures and coordinate pro-convention group activities. This meeting was held concurrently with that of the American Legislative Exchange Council (ALEC) which provides a forum for state legislators and private sector leaders to discuss and exchange information on state policy issues. ALEC focuses on issues such as "free markets, limited government and constitutional division of powers between the federal and state governments," and has a prepared handbook for state legislators on the Article V Convention process. According to one source, ALEC finalized model rules for convention procedures at a December meeting. Also in July 2015, the Convention of States founded a "Convention of States Caucus" for pro-convention state legislators. The caucus was expected to propose draft rules for an Article V Convention at the ALEC San Diego meeting. The issue of rules to govern a convention—who should make them and what they should include—has been controversial: "convention procedures" bills introduced in the late 20 th century asserted Congress's responsibility for setting rules and regulations for a convention, but some advocates of the process claim Congress has no role in the process beyond calling the convention. In January 2015, the CFA's Compact for a Balanced Budget Commission was established to provide an organizational framework and institutional presence for the compact and its member states. At the same time, opposition to the Article V Convention continues to be voiced by public policy advocacy organizations representing a broad segment of the political spectrum. In 2011, the Heritage Foundation cautioned against a convention: [A]n Article V convention is not the answer to our problems. The lack of precedent, extensive unknowns, and considerable risks of an Article V amendments convention should bring sober pause to advocates of legitimate constitutional reform contemplating this avenue. We are not prepared to encourage state governments at this time to apply to Congress to call an amendments convention. More recently, however, a 2016 Heritage study appeared to be noncommittal on the subject, balancing concerns about a "runaway convention" with "the need to maintain an overriding focus on holding Congress and the President, and, by extension, federal agencies accountable for the decisions they make today." Eagle Forum, which describes itself as a "pro-family" conservative public interest organization, founded and headed for many years by the late Phyllis Schlafly, has consistently opposed an Article V Convention since at least 1986, on the grounds that it could "jeopardize our most basic liberties enshrined in the Constitution and the Bill of Rights." In July 2017, "PS [Phyllis Schlafly] Eagles," a break-away group, also voiced opposition, asserting that anonymous financial supporters of a convention were pursuing a "hidden agenda of globalism and open borders, views that they conceal with broad platitudes like 'limit the power and jurisdiction of the federal government.'" In January 2017, the Center on Budget Policy and Priorities cautioned against both a balanced budget amendment and an Article V Convention, asserting that "state lawmakers considering such resolutions (applying for a convention) should be skeptical of claims being made by groups promoting the resolutions ... that states could control the actions or outcomes of a constitutional convention. A convention would likely be extremely contentious and highly politicized, and its results impossible to predict." The center defines itself as "a nonpartisan research and policy institute" pursuing "federal and state policies designed both to reduce poverty and inequality and to restore fiscal responsibility in equitable and effective ways." The John Birch Society, which describes itself as seeking "to bring about less government, more responsibility, and—with God's help—a better world[,]" has, by its own reckoning, opposed the Article V Convention for 30 years and expressed opposition to the Compact for America since that proposal was announced. The society claimed most recently that pro-convention groups such as Wolf PAC are funded indirectly by philanthropist and political activist George Soros. On April 4, 2017, Common Cause, which describes itself as "a nonpartisan grassroots organization dedicated to ... open, honest, and accountable government that serves the public interest, promote[s] equal rights, opportunity, and representation for all, ... an independent voice for change and a watchdog against corruption and abuse of power[,]" issued a statement by 230 public interest organizations declaring opposition to an Article V Convention and urging states to rescind their applications for a convention. It warned of the dangers of a runaway convention and noted, "There are no rules and guidelines in the U.S. Constitution on how a convention would work, which creates an opportunity for a runaway convention that could rewrite any constitutional right or protection currently available to American citizens." Earlier, in December 2015, Common Cause issued a position paper opposing an Article V Convention. The report observed that convention advocates cover a broad range of the political spectrum, but declared that "Common Cause strongly opposes an Article V convention, even as we strongly support a constitutional amendment to reverse Citizens United ." Specifically the report asserted that no existing judicial, legislative, or executive body would have authority over a convention; that lack of pre-existing procedures could lead to political manipulation of a convention; and that a convention could not be limited to a single issue, and that it might propose "additional changes that could limit or eliminate fundamental rights or upend our entire system of government." The Article V Convention alternative for amending the Constitution has enjoyed a revival in interest over the past decade. It has gained the support of activist organizations that embrace a broad range of the political spectrum, from the Tea Party to Occupy Wall Street and places in between. Its partisans appear to be active and committed, and the progress of some of these organizations toward their goal continues. It remains uncertain, however, whether any of them can attain the constitutional threshold of 34 convention applications. Several factors may contribute to this condition. One observer, attorney David Guldenschuh, suggests that the proliferation of advocacy groups may actually dilute support for the overall concept as they compete for the limited time and attention of state legislators. The same observer notes that the more complex "multi-subject" strategies pursued by some groups may further vitiate the force of their arguments. A single-issue approach, he suggests, might enjoy a greater chance of success. For example, the Balanced Budget Amendment Task Force, which advocates a convention that would consider only one issue—a balanced federal budget requirement—claims 28 applications, although 17 of these are "legacy" applications that filed more than 30 years ago and whose validity may be open to challenge. By comparison, no other Article V Convention advocacy group can claim more than 12 applications at this time. In addition, it is worth noting that the balanced federal budget amendment is arguably the best known and most widely supported of these proposals: Survey research results show consistent public support for a federal balanced budget amendment since at least 1994. Guldenschuh also cites what he claims is an apparent lack of coordination, noting that "different advocacy groups have somewhat supported each other in states where multiple resolutions have been introduced, [but] their overall failure to work together is causing confusion among legislators and hurting the effort's overall success rate." Further, it is arguable that the Article V Convention remains largely an Internet or social media phenomenon, where it enjoys multiple websites and frequent postings among diverse elements of the advocacy community, both pro and con. By comparison, however, traditional media coverage is comparatively sparse, and, notwithstanding the aforementioned public support for a balanced federal budget amendment, the convention alternative does not appear to command widespread attention or support among the general public at this time. The number of state applications for a convention has grown in the past two years. While only the BBA, with 28 applications, including its "legacy" states, is within striking distance of the constitutional threshold, the Convention of States added four applications in 2017, bringing its total to 12 states. These gains, however, have arguably been balanced by four states that rescinded earlier applications in 2017. Going forward, advocates may assert that applications by the state legislatures will continue at the same pace. Conversely, it could also be argued that the movement's progress could lead to the same sort of "second thoughts" that slowed, and then stalled, the BBA campaign of the 1980s. To this may be added constitutional questions concerning state applications that would likely be raised if or when a convention call seemed imminent. For instance, are state applications submitted over 30 years ago still valid, and, what is the constitutional status of state actions to rescind their earlier applications? Ultimately, it may be argued that the constitutional process is working as the founders planned. The Article V Convention device was intended to provide an alternative method of amendment, but it was also intended that a convention should enjoy a broad national consensus of support and meet similarly exacting standards as those that apply to amendments proposed in Congress. While the current campaign has generated considerable interest and advocacy among convention advocates, its awareness and support among the wider community appears to be limited. In order to succeed, the convention alternative would arguably need to attain the breadth of public awareness and active support necessary to meet the Constitution's demanding requirements.

Article V of the U.S. Constitution provides two procedures for amending the nation's fundamental charter: proposal of amendments by Congress, by a vote of two-thirds of the Members of both houses, and proposal by a convention, generally referred to as an "Article V Convention," called on the application of the legislatures of two-thirds (34) of the states. Amendments proposed by either method must be ratified by three-fourths (38) of the states in order to become part of the Constitution. This report provides information for Members of Congress and congressional staff on current developments in Congress, the states, and the relevant advocacy and policy communities concerning the Article V Convention alternative. From the 1960s to the 1980s, supporters of Article V Conventions mounted vigorous but ultimately unsuccessful campaigns to call conventions to consider amendments related to diverse issues, including school busing to achieve racial balance, abortion restrictions, apportionment in state legislatures, and, most prominently, a balanced federal budget. After more than 20 years of comparative inaction, the past decade has seen a resurgence of interest in, and support for, the Article V Convention alternative. Congress has responded to this development, particularly requests for broader public availability of state applications for a convention. In the 114th Congress (2015-2017), the House of Representatives provided for registration and public availability on the Clerk of the House's website of state memorials related to the convention issue received since the beginning of that Congress. The rules, which remain in effect for the 115th Congress, direct the chair of the Judiciary Committee to provide new convention applications and rescissions of previous applications to the Clerk for publication. They also authorize publication, at the chair's discretion, of applications for a convention previously forwarded to Congress. Relevant legislation has also been introduced in the 115th Congress. On March 27, 2017, Representative Luke Messer introduced H.R. 1742, the "Article V Records Transparency Act of 2017." This proposed legislation would direct the National Archives to make an organized compilation of all state applications and rescissions of applications for an Article V Convention currently held in its various collections. The Archives would also be directed to transmit physical and electronic copies to the Judiciary Committee chairs of the Senate and House of Representatives. One relevant constitutional amendment has also been introduced to date in the 115th Congress, H.Con.Res. 73. This measure, introduced by Representative Messer on July 26, 2017, would "effect" the Compact for America's Interstate Compact for a Balanced Budget, summon an Article V Convention, and propose the amendment approved by the convention to the states for ratification. Non-governmental advocacy groups across a broad range of the political spectrum continue to campaign for conventions to consider various amendments. Some of the issues and sponsoring organizations include a revival of the balanced budget amendment convention proposed in the 1970s-1980s (Balanced Budget Amendment Task Force); an interstate compact to call a convention and propose—and prospectively ratify—a balanced budget amendment (Compact for a Balanced Budget); an amendment or amendments to restrict the authority of the federal government (Convention of States); and an amendment to permit regulation of corporate spending in election campaigns, which is intended to nullify parts of the Supreme Court's decision in Citizens United v. Federal Election Commission (Wolf PAC). Activity continues in the states. According to one source, approximately 175 applications for one or more of the several pending Article V Convention variants have been introduced in the legislatures of 40 states to date in 2017. At the time of this writing, the Balanced Budget Amendment Task Force claims 28 applications, many of which originated in the 1970s and 1980s; the Convention of States claims 12; and the Compact for America and Wolf PAC each claim five. Two additional CRS Reports address other aspects of this issue. CRS Report R42589, The Article V Convention to Propose Constitutional Amendments: Contemporary Issues for Congress, identifies and analyzes the contemporary role of Congress in the Article V Convention process in greater detail. CRS Report R42592, The Article V Convention for Proposing Constitutional Amendments: Historical Perspectives for Congress examines the procedure's constitutional origins and history and provides an analysis of related state procedures. This report will be updated as warranted by events.

Two separate bills are advancing in the 111 th Congress that together could provide nearly $4 billion of supplemental funds for agricultural programs. Table 1 shows the agriculture-related provisions in these bills— H.R. 4213 , commonly known as the "tax extenders" bill; and H.R. 4899 , a supplemental appropriations bill for war spending and disaster response. The tax extenders bill ( H.R. 4213 ) would provide comparatively large amounts totaling up to $3.6 billion for agriculture-related programs. Both the House and Senate have passed versions of the bill. Rather than resolving differences in a conference committee, the House and Senate are trading substitute amendments. The House-passed version from May 28, 2010, includes $1.48 billion for agricultural disaster assistance, $1.15 billion for a settlement of the Pigford lawsuit against the U.S. Department of Agriculture (USDA) for past racial discrimination, $868 million to extend biodiesel tax credits for one year, and $190 million to extend a conservation tax deduction for one year. The Senate-passed version from March 10, 2010, does not contain funding for the Pigford settlement, but does include the other provisions, which total $2.5 billion. The other measure, the war supplemental appropriations bill ( H.R. 4899 ), would provide smaller appropriations for other agricultural programs, as well as rescind prior appropriations from various agricultural accounts. The House and Senate are trading amendments to reconcile difference between each chamber's version of the bill. The most recent House-passed version, from July 1, 2010, contains $1.4 billion for agriculture before rescissions, including $1.15 billion for the Pigford settlement (duplicated from H.R. 4213 because of procedural uncertainty about whether Pigford will remain in the tax extenders bill), $150 million for P.L. 480 Food for Peace, $50 million for The Emergency Food Assistance Program (TEFAP), $32 million for the farm loan program to support an additional $950 million of loans, $18 million for emergency forest restoration, and additional authorities to raise fees for the Section 502 rural housing loan guarantee program. The Senate-passed version from May 27, 2010, contains $200 million for agriculture before rescissions, including identical provisions for the loan programs and forestry, but does not have the Pigford or TEFAP funding. Rescissions from agriculture programs are significant in the most recent House-passed version of H.R. 4899 , totaling $1.0 billion. The House bill would rescind $487 million from reserve funds for the Supplemental Nutrition Program for Women, Infants, and Children (WIC), $422 million from rural development (including $300 million of rural broadband funding from the American Recovery and Reinvestment Act), and $70 million from unobligated balances from the Natural Resources Conservation Service. Both the House and Senate bills would offset $50 million by limiting mandatory outlays for the Biomass Crop Assistance Program (BCAP). After rescissions, the net cost of the agriculture provisions is $371 million in the most recent House-passed version of H.R. 4899 , and $150 million in the Senate-passed version. Both bills await further floor action to resolve differences between the chambers. In December 2009, the original House-passed version of the "tax extenders" bill, H.R. 4213 , had two agricultural-related tax provisions: Biodiesel Tax Credits. Section 401 would extend until December 31, 2010, retroactively, the expiration date for three biodiesel tax credits (biodiesel tax credit, small agri-biodiesel producer credit, and renewable diesel tax credit). These credits expired on December 31, 2009. The Joint Tax Committee estimates that these extensions would cost $634 million in FY2010 and $235 million in FY2011. Conservation Tax Deduction. Section 131 of the original House-passed bill would extend until December 31, 2010, retroactively, the expiration date for contributions of capital gain real property made for a qualified conservation purpose. A previous extension in the 2008 farm bill expired on December 31, 2009. The Joint Tax Committee estimates that the provision will cost $23 million in FY2010, and $190 million over 10 years. The Senate-passed version from March 10, 2010 ( H.R. 4213 , a Senate amendment to the House bill), includes both of the tax provisions above, plus emergency agricultural disaster assistance. Agricultural Disaster Assistance . Section 245 of the Senate-passed version of H.R. 4213 would provide $1.48 billion of agricultural disaster assistance to be paid from the Commodity Credit Corporation (CCC). The assistance includes about $950 million in direct payments to producers of program crops for 2009 crop losses in counties designated as primary natural disaster areas. Unlike prior-year disaster assistance, payments would be available for losses as small as 5%. Payments also would be allowed for producers with losses for specialty crops (a $300 million grant program to states), cottonseed ($42 million), and aquaculture ($25 million), as well as for a Hawaiian sugarcane cooperative ($21 million). Poultry producers would be allowed no-interest emergency loans for losses due to contract terminations with poultry integrators (an unspecified amount of loans supported by $75 million of budget authority). Also, the bill provides an additional $50 million for grazing losses in 2009 by altering the payment criteria for livestock forage disaster payments. USDA would receive $10 million for administrative costs. The creation of "permanent" agricultural disaster programs (e.g., SURE, the Supplemental Revenue Assistance Payments Program) in the 2008 farm bill was meant to forestall the need for this type of ad hoc disaster assistance. Biodiesel Tax Credits. Section 102 of the Senate-passed version contains the same extension to December 31, 2010, as the House version above. Conservation Tax Deduction. Section 114 of the Senate-passed version contains the same extension to December 31, 2010, as the House version above. Instead of going to a conference committee, a subsequent House amendment to the Senate amendment was passed by the House on May 28, 2010, to address differences between the chambers. It contains essentially the same agricultural disaster assistance and both of the tax extensions, and adds money for a settlement of the Pigford discrimination case against USDA. Agricultural Disaster Assistance . Section 604 of the House-passed amendment provides effectively identical disaster relief language as in the Senate-passed version above. Pigford Settlement . Section 608 of the House-passed amendment provides $1.15 billion of discretionary funds for a final settlement of the Pigford lawsuit against USDA for past racial discrimination in the farm loan programs. This appropriation supplements $100 million of mandatory funds that were provided in the 2008 farm bill, and thus would provide a total of $1.25 billion. The 2008 farm bill permitted any claimant in the original Pigford decision from 1999 who had not previously obtained a determination to petition in civil court for a determination. On February 18, 2010, UDSA and the Department of Justice announced a $1.25 billion settlement of these so-called Pigford II claims. The Administration requested the funds shortly after the settlement in February, but the House amendment to H.R. 4213 posted on May 20 would be the first bill to provide funds. A March 31, 2010, deadline for Congress to appropriate $1.15 billion has passed, giving the plaintiffs a right to void the February settlement. But because the settlement is a priority for USDA and the White House, and efforts are proceeding for the appropriation, plaintiffs have not exercised their right to void the settlement. Biodiesel Tax Credits. Section 202 of the House-passed amendment contains the same extension to December 31, 2010, as the versions above. Conservation Tax Deduction. Section 224 of the House-passed amendment contains the same extension to December 31, 2010, as the versions above. During Senate consideration of amendments to the House version during June, there was difficulty reaching agreement over the budget impact of the bill, and a desire for more offsets rather than emergency spending. This began to jeopardize the prospects that the ancillary provisions such as the agricultural disaster and Pigford funding would remain in the bill. The original House-passed version of H.R. 4899 from March 24, 2010—the other vehicle carrying supplemental appropriations for agriculture—did not provide any supplemental funding for agriculture. But it did contain two rescissions from agricultural accounts that would have provided $465 million of offsets for other programs in the bill. Women, Infants and Children (WIC). The March 24, 2010, House-passed bill would have rescinded $361.8 million of unobligated funds that were placed in reserve for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). The ARRA provided $500 million to WIC, "of which $400,000,000 [were] placed in reserve to be allocated as the Secretary deems necessary, ... to support participation should cost or participation exceed budget estimates." Rural Development Programs. The March 24, 2010, House-passed bill would have rescinded $102.7 million in budget authority from prior-year rural development appropriations (other than through ARRA) that were designated as emergency. Besides ARRA, the only emergency appropriations in rural development have been for the "water and waste water" facilities account. These were provided to help rural communities rebuild or restore their water infrastructure after natural disasters such as hurricanes, droughts, and floods. The rescission would sweep unobligated disaster funds from several different prior-year emergency appropriations. The Senate passed its version of H.R. 4899 , the Supplemental Appropriations Act, 2010, on May 27, 2010. This bill included $200 million of gross new budget authority and other provisions for several USDA programs. After offsets, the cost of the agricultural programs would be $150 million for the following programs. P.L. 480 "Food for Peace" Title II grants. USDA's Foreign Agricultural Service would receive an additional $150 million (to supplement the FY2010 base of $1.69 billion) for Food for Peace (P.L. 480) Title II humanitarian food aid grants. The supplemental responds to the January 2010 earthquake in Haiti. Report language ( S.Rept. 111-188 ) also encourages USDA to use existing funds in the Bill Emerson Humanitarian Trust if future food deliveries are complicated by transportation or other logistical difficulties. Farm Loan Program . USDA has been facing higher loan demand during the financial crisis because commercial lenders have constrained their own lending practices. Some USDA farm loan offices in the states have begun to deplete their FY2010 allocation to make loans. Nationally, some loan programs have used 80%-90% of the their fiscal year allocation in seven months. The Senate-passed version of the supplemental would allow USDA's Farm Service Agency to issue an additional $950 million in loans and guarantees (on top of a nearly exhausted FY2010 base of $5.1 billion). This additional loan authority would cost $32 million in budget authority ($31 million for loan subsidy plus $1 million for administrative expenses, on the FY2010 loan subsidy base of $141 million). Table 2 shows the specific amounts that would be provided to the various direct and guaranteed farm loan programs. Emergency Forest Restoration Program. USDA's Farm Service Agency would receive $18 million for a cost-share program to restore nonindustrial private forest land that is damaged by a natural disaster occurring after January 1, 2010. The Senate provision provides expedited rulemaking procedures to facilitate implementation of this 2008 farm bill program, which has yet to begin or receive any appropriation. Rural Development . USDA's Rural Housing Service would receive authority for an additional $697 million in loan guarantee authority (on the FY2010 base of $12 billion of loan guarantees) for the Section 502 Single-Family Housing Guaranteed Loan program. The cost of providing these additional guarantees would be offset by raising the guarantee fees charged to commercial banks for guarantees they receive on Section 502 loans to homeowners (from 1% to 3.5% of the principal of new loans being guaranteed). The increase in fees is permanent; the increase in loan authority is temporary. Therefore, this guaranteed loan program would be able to operate in the future with less subsidy. Demand for single-family housing loan guarantees was heavy in FY2009 during the financial crisis. By April of FY2010, heavy demand had depleted the large increase in guarantee authority over FY2009 levels (from $6.2 billion in FY2009 to $12 billion in the regular FY2010 appropriation). Biomass Crop Assistance Program (BCAP) . In current law, the BCAP is authorized to receive "such sums as necessary" of mandatory funds from the CCC. The 2008 farm bill created BCAP to encourage the production of cellulosic feedstocks for advanced biofuels. Incentives are available for harvest and post-production storage and transportation. In its March 2010 baseline, CBO projects that BCAP will need $602 million of budget authority in FY2010 and $432 million in FY2011. The Senate-passed supplemental appropriation would create a "change in mandatory program spending" (CHIMP) by allowing no more than $552 million in FY2010 and $432 million in FY2011. The difference between the CBO baseline estimates and the limits placed in the supplemental would create an estimated savings of $50 million in FY2010 and no change in FY2011 (assuming the supplemental is enacted before the final rule to implement the program is adopted and participants enroll). Food and Nutrition Service . The Senate report language accompanying the bill ( S.Rept. 111-188 ) directs USDA's Food and Nutrition Service (FNS) to review whether there is any need to reprogram funds within FNS for use through The Emergency Food Assistance Program (TEFAP) because of heavy demand on food banks and commodity assistance programs. No additional budget authority is provided to implement this recommendation. To resolve differences with the Senate version, the House subsequently passed amendments to the Senate version on July 1, 2010. H.Res. 1500 adopted all of the provisions in the Senate-passed version described above and made additional supplemental appropriations and rescissions. The additions to the Senate version in this most recent House-passed version include: Pigford Settlement. The House version from July 1, 2010, adds $1.15 billion for the Pigford settlement. This is duplicated from H.R. 4213 because of procedural uncertainty about whether Pigford will remain in the tax extenders bill. Emergency Food Assistance. The House version adds $50 million for The Emergency Food Assistance Program (TEFAP) to purchase food for distribution through local food networks. Rescissions. In addition to the $50 million offset from BCAP in the Senate-passed version above, the most recent House-passed version contains $979 million of other rescissions from agriculture accounts. Supplemental Nutrition Program for Women, Infants, and Children (WIC) . The House version would rescind $487 million from reserve funds for WIC, including $362 million from the American Recovery and Reinvestment Act (ARRA) and $125 million of other reserve funds. The first of these two WIC rescissions was in the original House bill; the second is new to the July version of the bill. Rural Development Programs . The most recent House version would rescind a total of $422 million from rural development. This includes $300 million of rural broadband funding from the ARRA (out of $2.5 billion appropriated for rural broadband in ARRA), and $122 million in budget authority from prior-year rural development appropriations (other than through ARRA) that were designated as emergency. As discussed for the original House version, these latter rescissions are for water and wastewater facilities accounts appropriated for prior natural disasters. Natural Resources Conservation Service. The House bill would rescind $70 million from unobligated prior-year balances from the Natural Resources Conservation Service.

Two separate bills are advancing in the 111th Congress that could provide nearly $4 billion of supplemental funds for agricultural programs in FY2010. The agricultural provisions in these bills have a relatively small funding impact compared with the nonagricultural provisions in the bills. H.R. 4213 (commonly known as the "tax extenders" bill) would provide up to $3.6 billion for agriculture-related programs. The House and Senate are trading amendments to reconcile differences between each chamber's version of the bill. The most recent House-passed version from May 28, 2010, includes $1.48 billion for agricultural disaster assistance, $1.15 billion for a settlement of the Pigford lawsuit against the U.S. Department of Agriculture (USDA), and $1.06 billion to extend tax provisions for biodiesel and conservation. The Senate-passed version from March 10, 2010, does not contain funding for the Pigford settlement, but does include the other provisions. Difficulty reaching agreement over the budget impact of the bill, and the need for offsets rather than emergency spending, may be jeopardizing the prospects that some of the agriculture provisions will remain in the bill. H.R. 4899 (a supplemental appropriations bill for war spending and disaster response) would provide relatively smaller appropriations for other agricultural programs, as well as rescind prior appropriations from various agricultural accounts. The House and Senate are trading amendments to reconcile difference between each chamber's version of the bill. The most recent House-passed version from July 1, 2010, contains $1.4 billion for agriculture before rescissions, including $1.15 billion for the Pigford settlement (duplicated from H.R. 4213 because of procedural uncertainty), $150 million for international food aid (P.L. 480 Food for Peace), $50 million for food purchases in a domestic nutrition assistance program (The Emergency Food Assistance Program, TEFAP), $32 million for the farm loan program (to support an additional $950 million of loans), $18 million for emergency forest restoration, and additional authorities to raise fees for the Section 502 rural housing loan guarantee program. The Senate-passed version from May 27, 2010, contains $200 million for agriculture before rescissions, including identical provisions for the loan programs and forestry, but does not have the Pigford or TEFAP funding. Rescissions from agriculture programs are significant in the most recent House-passed version of H.R. 4899, totaling $1.0 billion, and are much larger than in the Senate-passed bill. The House bill from July 1 would rescind $487 million from reserve funds for the Supplemental Nutrition Program for Women, Infants, and Children (WIC), $422 million from rural development (including $300 million of rural broadband funding), and $70 million from unobligated balances from the Natural Resources Conservation Service. Both the House and Senate bills would offset $50 million by limiting mandatory outlays for the Biomass Crop Assistance Program (BCAP). Both H.R. 4213 and H.R. 4899 await further floor action to resolve differences between the chambers.

Is there any practical replacement for gasoline and diesel fuel in automobiles? Since the oilcrises of the 1970s and the rise in the awareness of environmental and security issues, policy makershave often considered this question. For many reasons, the United States has searched foralternatives to petroleum fuels. These reasons include limiting dependence on imported petroleum,controlling the emissions of pollutants into the air, and limiting the emissions of greenhouse gases. Several fuels are considered alternative transportation fuels by the federal government. These fuels are electricity, natural gas, propane (liquefied petroleum gas, or LPG), ethanol, methanol,biodiesel, and hydrogen. Some of these fuels are similar to conventional fuels, and can be used inconventional vehicles with little or no modification to the vehicle. However, some of these fuels aresignificantly different, and require the use of completely different engine, fuel, and drive systems. Consequently, cost as well as performance of the associated alternative fuel vehicles (AFVs) mustbe part of the discussion. Key factors in the ultimate success or failure of any alternative fuel includethe relative cost of the fuel, the ability to develop and expand fueling stations, and the performanceand safety of the fuel. For various reasons -- notably cost, performance, and availability -- alternative fuels have yet to play a major transportation role in the United States. Many argue that the government must stepin. Congress, recent Administrations, and state governments have instituted some key programs topromote the use of alternative fuels. These programs include tax incentives for the purchase ofalternative fuels and alternative fuel vehicles (AFVs), purchase requirements for government andprivate fleets, and research grants for the study of alternative fuels. Despite these efforts, only about480 million gallons (1) of alternative fuels wereconsumed in 2004, just 0.3% of motor fuel demand(136 billion gallons of gasoline and 36 billion gallons of diesel). (2) The three most important statutes concerning alternative fuels are the Alternative Motor FuelsAct of 1988 (AMFA, P.L. 100-494 ), the Clean Air Act Amendments of 1990 (CAAA, P.L. 101-549 ),and the Energy Policy Act of 1992 (EPAct, P.L. 102-486 ). AMFA promoted federal governmentuse of alcohol- and natural gas-fueled vehicles. EPAct requires that federal and state agencies, aswell as private firms that distribute alternative fuels, must purchase for their fleets a certainproportion of vehicles that are capable of being fueled by specific non-petroleum fuels. Furthermore,EPAct grants the Department of Energy (DOE) the authority to make similar requirements of localgovernments and private fleets. In addition, EPAct provides tax incentives for private purchases(both individual and commercial) of AFVs. CAAA requires government and private fleets in citieswith significant air quality problems to use low-emission, "clean-fuel" vehicles. In addition to these laws, recent executive orders have also shaped alternative fuels policy in the United States. These include E.O. 12844, which urged federal agencies to exceed EPActpurchase requirements; E.O. 13031, which required that federal agencies meet EPAct requirementsregardless of budget; and E.O. 13149, which aims to drastically reduce federal governmentpetroleum consumption through the use of AFVs and hybrid vehicles. The major alternative fuelslegislation and relevant Executive Orders are summarized in Table 1 and discussed further below. Table 1. History of U.S. Alternative Fuel Vehicle Policies Beginning in FY1990, the Alternative Motor Fuels Act called for the federal government to acquire the "maximum practicable" number of light-duty alcohol and natural gas vehicles. Inaddition, AMFA established an Interagency Commission on Alternative Motor Fuels to develop anational alternative fuels policy. The act also established a commercial demonstration program tostudy the use of alcohol and natural gas in heavy duty trucks. Since 1991, DOE has supportedprojects in these areas, making the data publicly available through its Alternative Fuels Data Center(AFDC). (3) The Clean Air Act Amendments of 1990 established the Clean Fuel Fleet Program (CFFP). (4) This program requires cities with significant air quality problems to promote vehicles that meet cleanfuel emissions standards. In metropolitan areas in extreme, severe, or serious non-attainment forozone (5) or carbon monoxide, fleets of 10 light-dutyvehicles or more face purchase requirementssimilar to those for EPAct (discussed below). However, under CFFP, conventional vehicles areadmissible if they meet National Low Emission Vehicle (LEV) standards. Another key differencebetween the CFFP requirements and the EPAct requirements is that under CFFP, a vehicle mustalways be operated on the fuel for which it was certified. For example, if a dual-fuel ethanol vehicleis certified LEV using ethanol, but not using gasoline, the vehicle must be operated solely on ethanol. This provision avoids a perceived "loophole" in EPAct. The Energy Policy Act of 1992 was enacted to promote energy efficiency and energy independence in the United States. It includes programs that require or promote alternative fuelvehicles, as well as commercial and domestic energy efficiency, natural gas imports, and nuclearpower. Two key programs concerning alternative fuels are the AFV purchase requirements forfederal, state, and alternative fuel provider (6) fleets,and the AFV tax incentives. Fleet Requirements. EPAct (7) requires that acertain percentage of new light-duty vehicles (passenger cars and light trucks) purchased for certainfleets must be fueled by an alternative fuel. (8) Coveredfleets are those that operate 50 or more light-duty vehicles, of which at least 20 operate primarily in a metropolitanarea. Furthermore, the fleetsmust be capable of being fueled at a central location, such as the fleet motor pool. Law enforcementvehicles, emergency vehicles, combat vehicles, non-road vehicles, and vehicles used for testing areexempted from the requirement. Federal, state, and alternative fuel provider fleets are currentlyrequired to purchase AFVs. The purchase requirements were phased in between 1997 and 2001. (See Table 2 .) DOE was required to consider whether to include municipal and private fleets intheprogram, but recently determined that such a requirement would not significantly reduce energydependence. (9) Table 2. Light-Duty Alternative Fuel Vehicle Purchase Requirements under the Energy Policy Act Source: National Alternative Fuels Hotline, Department ofEnergy, September 1998. DOE currently recognizes the following as alternative fuels: methanol and denatured ethanol as alcohol fuels (mixtures that contain at least 70% alcohol), natural gas (compressed or liquefied),liquefied petroleum gas (LPG), hydrogen, coal-derived liquid fuels, fuels derived from biologicalmaterials, and electricity. (10) Covered vehicles maybe dedicated (11) or dual fuel. (12) There have been mixed results from the program. According to DOE, some federal and state agencies are exceeding their mandates, while others are far below their quota. As a whole, thefederal government is was compliance in 1998, mainly due to large purchases such as 10,000ethanol vehicles purchased by the U.S. Postal Service in that year. (13) However, according to acoalition of environmental groups, the government as a whole has failed to comply with EPAct sincethen. In a suit filed by Earthjustice (14) in SanFrancisco federal court, 18 federal agencies are accusedof failing to comply with the purchase requirements. (15) In July 2002, the court ruled that the federalgovernment had violated EPAct. Further, the court required the agencies to compile and makepublic, by January 31, 2003, reports on their non-compliance. Recently, the environmental groupsfiled a motion that the court find the agencies in contempt. Earthjustice argues that some agencieshave failed to submit reports entirely and that others have submitted unsubstantiated reports. (16) Inaddition, questions have been raised about the success of the program since other covered fleets,especially fuel provider fleets, have not reported their purchases to DOE. (17) A key concern over the fleet requirements is whether they actually support the goals of EPAct. This is because EPAct does not require the use of alternative fuels, only the purchase of AFVs. Fleets can purchase dual-fuel vehicles, operate them solely on gasoline or diesel fuel, and still meetthe EPAct requirements. The fleet program has been criticized because this use of dual-fuel vehiclesis seen by some as a "loophole." This criticism is another element of the lawsuit filed byEarthjustice. Tax Incentives. Another key provision of EPAct is a set of tax incentives for the purchase of new AFVs. (18) The act provides an electric vehicle (EV)tax credit of 10% of the purchase price, up to a maximum of $2,000 in 2005. In addition, it providesa Clean Fuel Vehicle (any alternative fuel) tax deduction of up to $1,000 in 2005 for light-dutyvehicles, with larger deductions for heavier vehicles. Vehicles are not eligible for both incentives,and vehicles purchased to meet mandated fleet requirements are ineligible for either incentive. TheEV tax credit and the Clean Fuel Vehicle tax deduction are being phased out, and are scheduled toreach zero after 2006. Three Executive Orders have also played a key role in developing alternative fuels policies. Executive Order 12844, issued on April 21, 1993, urged federal agencies to make every effort toexceed the mandatory purchase requirements set in EPAct. The order argued that the federalgovernment could provide impetus for the development and manufacture of alternative fuel vehicles,and the expansion of fueling stations and other infrastructure to support privately-owned AFVs. Executive Order 13031, issued December 13, 1996, expanded the Administration's policy on EPAct fleets. The order required that federal agencies must comply with EPAct regardless of theirbudgets. The order also required that agencies must submit a yearly progress report to the Office ofManagement and Budget (OMB) along with their yearly budgets. Further, it established penaltiesfor failing to meet the EPAct requirements. If an agency reported to OMB that it did not meet itsEPAct requirements, that agency must submit a detailed plan for meeting the requirements the nextyear. The Order also established credits for the use of medium- and heavy-duty vehicles and EVsto meet the requirements. Most recently, the Administration issued Executive Order 13149 on April 21, 2000. This order presents the goal of reducing the federal fleet's annual petroleum consumption by 20% below theFY1999 level by the end of FY2005. It suggests several strategies for attaining this goal, includingusing alternative fuel vehicles and high-efficiency hybrids. The order also requires that a majorityof EPACT vehicles must be fueled with alternative fuels by FY2005. This helps fix the "loophole"that allows dual-fuel EPACT vehicles to operate solely on conventional fuel. As noted above, several fuels are considered alternative fuels. This section will addressalternative fuels recognized by EPAct. Many technical and market factors affect the usability andultimate success of these fuels as alternatives to petroleum-based fuels. Since many of these fuelsrequire entirely new engines, or extensive modifications to conventional vehicles, the characteristicsof both alternative fuels and alternative fuel vehicles must be discussed together. Fuel cost andfueling infrastructure, vehicle cost, fuel and vehicle performance, and other factors for each fuel willbe addressed in turn in the discussion below. Table 3 presents a summary of the various alternativefuels. Table 3. Summary of Alternative Fuels Source: Department of Energy and California EnergyCommission. Notes: All estimates are for 2004. a GEG: Gasoline Equivalent Gallon. To compare variousfuels, an equivalency factor is used. In this case, it is theamount of energy in one gallon of gasoline. b As of December 3, 2004. c This does not include additional infrastructure/fuelingequipment costs or additional life-cycle vehicle costs (e.g.maintenance, resale). d Since biodiesel can be blended with conventional diesel,separate refueling sites are not necessary. e Biodiesel is used in conventional diesel engines. f 1,813 million GEG including ethanol in blended gasoline. g This does not include flexible fuel ethanol/gasoline vehiclesthat operate primarily or exclusively on gasoline. In 2002,there were approximately 4.1 million of these vehicles in the United States (Energy Information Administrationestimate). Liquefied petroleum gas (LPG) is produced as a by-product of natural gas processing and petroleum refining. (19) Because the componentsof LPG are gases at normal temperatures andpressures, the mixture must be liquefied for use in vehicles. In addition to vehicles, propane is alsoused in home heating as well as recreational activities. (20) Consumption. LPG is the most commonly used alternative fuel. Domestic consumption was approximately 242 million gasoline equivalent gallons(GEG) (21) in 2004, or about 0.2% of gasolinedemand. (22) This is greater than all other alternativefuelscombined. (23) Propane is used in both light- andmedium-duty vehicles, and there were approximately194,000 LPG vehicles on the road in 2004, (24) orabout 0.1% of the roughly 230 million gasoline anddiesel-fueled vehicles. (25) In 2003, the federalgovernment operated about 360 vehicles. (26) LPGvehicles tend to be custom vehicles; in fact, the only light-duty production vehicles with an LPGoption are the Ford F150 pickup and the GM Express and Savanna vans (the latter two supplied byQuantum). (27) Cost. On a GEG basis, fuel costs for LPG are approximately equal to those of gasoline, and tend to fluctuate with gasoline prices, although theycan fluctuate more dramatically in response to high heating costs or other factors. Between April2000 and October 2002, the price for LPG averaged approximately $1.16 to $1.95 (28) per GEG. Whilefuel costs are only slightly higher for LPG as compared to gasoline, there is an incremental purchasecost for an LPG vehicle, which ranges between $1,000 and $2,000. (29) This additional cost coversmodifications to the fuel system and the addition of a high-pressure fuel tank. Some of thisincremental cost currently may be defrayed by federal, state, local, or manufacturer incentives thatpromote the purchase of alternative fuel vehicles. Infrastructure. Because of its many uses, (30) therefueling system for LPG is extensive. There are approximately 3,500 refueling sites in all 50states, (31) which corresponds to roughly 3% of theapproximately 124,000 gasoline stations in theUnited States. (32) Because of its wide use, if thedemand for LPG as an alternative fuel were toexpand, it is likely that the supply infrastructure could expand proportionally. LPG is delivered to retailers through a pipeline and tanker truck system much like the gasoline delivery system. Therefore, an expansion of the LPG supply infrastructure would face few technicalbarriers. However, because the fuel must be kept under pressure, special equipment is required totransfer LPG to a vehicle. Addition of new refueling equipment would lead to additional capitalcosts for retailers. Performance. In terms of environmental performance, LPG vehicles tend to produce significantly lower ozone-forming emissions, althoughit can be difficult to quantify the differences. According to the California Energy Commission, LPGvehicles emit up to 33% fewer volatile organic compounds (VOCs), 20% less nitrogen oxides (NO x ),and 60% less carbon monoxide. (33) A key performance drawback to LPG is the somewhat decreased range as compared to gasoline. However, because LPG has the highest energy content (by volume) of the alternative fuels, this rangereduction is only about 26%. Further, larger LPG vehicles can carry a larger tank, and tend tomaintain a range of between 300 and 400 miles. However, to allow longer range, payload isdiminished due to the size and weight of the LPG tank. (34) Safety. LPG has a higher ignition temperature than gasoline, making it safer in that respect. Furthermore, LPG must be present in greaterconcentrations than gasoline to ignite. (35) BecauseLPG is stored under pressure, it must be stored inheavy-duty tanks. In order to prevent failure of the fuel tank, LPG tanks must undergo rigoroustesting. Further, LPG is odorless, so an odorant is added to make it detectable in air. (36) Other Issues. There are few major issues involving LPG fuels and vehicles other than those issues relevant to all alternative fuel vehicles, suchas the need to expand fueling infrastructure. However, because LPG is often derived from petroleumrefining, it may do little to diminish petroleum dependence. Natural gas is a fossil fuel produced from gas wells or as a by-product of petroleum production. Natural gas is composed of hydrocarbons, mainly methane. (37) It is used extensively in residences andby industry, and is therefore widely available. Because of its gaseous nature, natural gas must bestored onboard a vehicle either as compressed natural gas (CNG) or as liquefied natural gas (LNG). CNG is generally preferred for light-duty applications such as passenger cars, while both CNG andLNG are used in heavier applications, such as buses. Consumption. Vehicles consumed 170 million GEG of natural gas in the United States in 2004 (mostly as CNG). (38) This was about 0.1% ofgasoline demand, although consumption has been rising steadily over the past ten years. Afterpropane, CNG is the second most widely used pure alternative fuel. (39) Approximately 146,000 natural gas vehicles were in operation in the United States in 2004, and the number has been growing by approximately 20% per year. (40) These include CNG passenger carssuch as the Honda Civic, Toyota Camry, and Chevrolet Cavalier, as well CNG light trucks naturalgas transit buses. (41) In 2003, the federalgovernment operated approximately 18,000 CNG vehicles,and 50 LNG vehicles. (42) In fact, the federalgovernment consumes more CNG than all otheralternative fuels combined. Nearly 90% of the federal CNG vehicles are light duty vehiclespurchased to meet EPAct requirements; the rest are heavy trucks and buses. Cost. Using natural gas can cut fuel costs significantly, since natural gas tends to be a relatively inexpensive fuel (43) . The median price for oneGEG of CNG ranged from $0.89 to $1.19, (44) between April 2000 and October 2002, and the price forLNG was comparable. In addition to the low cost of the fuel, natural gas is also subject to a muchlower federal excise tax rate (5.4 cents per GEG (45) )than the gasoline excise tax rate (18.3 cents pergallon). Depending on fuel prices, natural gas vehicles can reduce annual fuel costs significantly. (46) While fuel costs tend to be lower for natural gas than for gasoline, equipment costs tend to be higher. Equipping a light-duty vehicle to operate on CNG typically costs between $4,000 and$6,000, though some of this incremental cost may be defrayed through federal and state incentives. In addition, although there are some public fueling stations, if in-home fueling is desired, a smallslow-fill unit can be installed for approximately $3,500. (47) Infrastructure. Refueling infrastructure for CNG is more broadly available than for most alternative fuels. There are approximately 900 public CNGrefueling sites and 60 LNG refueling sites in 44 states. (48) Again, this number is small compared tothe number of gasoline refueling stations. However, with the extensive natural gas system in theUnited States, the CNG refueling network could be greatly expanded. Furthermore, since slow-fillrefueling systems are available for home installation, consumers could fuel their vehicles overnight,and would only need to access public stations on longer trips. However, because the technologydiffers significantly from a gasoline pump, vehicle users or station operators would need to betrained in the use of natural gas pumps. Performance. Compared to gasoline vehicles, theenvironmental performance of natural gas vehicles is exceptional. Particulate emissions are virtuallyeliminated, carbon monoxide emissions are reduced by as much as 65% to 95%,VOC emissions arereduced by up to 80%, and nitrogen oxide (NOx) emissions by as much as 30%. (49) Furthermore,greenhouse gas emissions are also reduced compared with gasoline vehicles. (50) The key performance drawback to natural gas vehicles is their significantly shorter range. Most natural gas passenger cars can only travel 100 to 200 miles on a full tank of fuel. (51) This issignificantly less than the range of 300 to 400 miles for most gasoline-powered passenger cars. (52) Forthis reason, natural gas vehicles have been popular for use as delivery trucks or other fleets thatoperate in cities or other localized areas. Safety. Natural gas tends to be safer than gasoline for many reasons. First, the fuel is non-toxic, although in high gaseous concentrations it could leadto asphyxiation. Second, natural gas is more difficult to ignite than gasoline, and tends to dissipatefaster due to its lower density. However, since natural gas is colorless and odorless, like LPG, anodorant is added to the fuel to make it detectable in air. (53) A key safety concern with natural gas has to do with on-board storage. Because CNG is compressed under such high pressures, the rupture of a fuel tank would be extremely dangerous. Forthis reason, CNG tanks must undergo "severe abuse" tests such as collisions, fires, and evengunfire. (54) Other Issues. Besides the environmental benefits of natural gas, another benefit is the fact that over 80% of natural gas used in the United Statescomes from domestic sources. (55) Therefore, it hasbeen argued that natural gas vehicles can helppromote energy security in this country by lowering our reliance on imported fuel. However,because natural gas is used extensively in electricity production, significant increases in its use fortransportation could result in increased demand for other fuels for electricity. Biodiesel is a synthetic diesel fuel that is produced from fatty feedstocks such as soybean oil and recycled cooking oil. (56) Although moreexpensive than conventional diesel, it has someimportant advantages. The most notable advantage is that because biodiesel is very similar toconventional diesel, the fuel can be used in existing diesel engines. (57) Consumption. Currently, U.S. consumption is about 37 million gallons per year, (58) as comparedto approximately 36 billion gallons per year ofconventional diesel. (59) Because biodiesel can beused in existing diesel engines, there are no vehiclesdesigned specifically for its use. Cost. The most significant drawback to biodiesel is its increased cost as compared to conventional diesel. Diesel pump prices averaged between $1.15and $1.50 per gallon in 2003. (60) At the same time,median pump prices for B20 (a blend of 20%biodiesel in conventional diesel) ranged between $1.29 and $1.60. (61) This price difference(approximately 8 to 20 cents per gallon) implies that pure biodiesel costs as much as $1.00 more pergallon to produce. However, wholesale biodiesel prices have been dropping due to processimprovements and increases in production scale. Further, in some places, where recycled oil is used,wholesale prices of pure biodiesel may actually be lower than for conventional diesel. Relative to other alternative fuels, there is one key cost advantage of biodiesel. It can be used in existing diesel vehicles with little or no modification. Therefore, covered EPAct fleets -- andothers interested in reducing their petroleum consumption and improving their environmentalperformance -- may use biodiesel without the capital investments necessary for other alternativefuels. Infrastructure. Because biodiesel is chemically very similar to conventional diesel, it could be placed in the existing diesel distribution system withonly a few modifications. Most importantly, since biodiesel is a more effective solvent thanconventional diesel, it can cause deterioration of rubber and polyurethane materials (e.g. seals). Currently, most biodiesel supply involves purchase contracts by fleet owners, and delivery ofbiodiesel to fleet-owned dispensing sites. However, 177 biodiesel refueling stations have openedin 37 states in the past five years. (62) Performance. Biodiesel is generally mixed with conventional diesel at the 20% level. The resulting fuel, B20, can be used in existing diesel engineswith few or no engine modifications. Higher concentrations can be used, however, especially withnewer equipment. The use of biodiesel (B20 or higher concentrations) leads to substantial reductionsin emissions of VOCs, carbon monoxide, and particulate matter. (63) However, NO x emissions tendto increase with the use of biodiesel. Other than the changes in emissions, there seems to be little, if any, difference in performance between biodiesel and conventional diesel. Payload and range remain the same, and maintenancecosts may actually be decreased due to the lower sulfur content of the fuel. Some minormodifications may be necessary with concentrations above 20%, due to fact that biodiesel is a veryeffective solvent and can corrode engine seals. (64) Safety. There seem to be few additional safety concerns for biodiesel. Its safety properties are consistent with conventional diesel. However, itdoes have one advantage over conventional diesel. Because biodiesel has a higher flash point (65) thanconventional diesel, it is more difficult to ignite, reducing the risk of fire. (66) Other Issues. Biodiesel currently faces two key issues. The first has to do with the tax structure for biodiesel. Because biodiesel is a renewable fuel,there has been interest in creating a tax incentive similar to the ethanol tax incentive. This incentive,supporters argue, would allow biodiesel to compete and play a larger role in our fuel supply. In 2004Congress approved the American Jobs Creation Act ( P.L. 108-357 ). Among other provisions, theact established a tax credit of $1.00 per gallon for the production and use of biodiesel made fromagricultural products. The second issue involves a 1998 amendment to EPAct. This amendment (67) grants credits toowners of covered fleets who purchase biodiesel. These credits count toward the purchaserequirements for alternative fuel vehicles. Every 450 gallons of biodiesel purchased earns one credit. This allows fleet owners to meet their EPAct requirements without purchasing new vehicles andwithout modifying their existing fueling infrastructure. Environmentalists have charged that becausethe fuel is then blended at the 20% level, there is little impact on oil consumption or vehicleemissions. (68) Ethanol, or ethyl alcohol, is an alcohol made by fermenting and distilling simple sugars. (70) Ethylalcohol is in alcoholic beverages, and it is denatured (made unfit for human consumption) when usedfor fuel or industrial purposes. Although the broadest current use of fuel ethanol in the United Statesis as an additive in gasoline, in purer forms it can also be used as an alternative to gasoline. It isproduced and consumed mostly in the Midwest, where corn -- the main feedstock for ethanolproduction -- is produced. When used as an alternative fuel, ethanol is usually blended withgasoline at a ratio of 85% ethanol to make E85. As with other alternative fuels, there are manybenefits but also drawbacks associated with its use. Consumption. Ethanol is the most commonly used alternative fuel, although most of this is blended at the 10% level with 90% gasoline to makeE10, or "gasohol." Including its use in gasohol, 2004 ethanol consumption was approximately 3.1billion gallons, or 2.0 billion GEG. This corresponds to approximately 1% of annual gasolineconsumption. However, E10 is not recognized by EPAct as an alternative fuel because itswidespread use does not significantly diminish gasoline consumption. Consumption of E85 -- whichis recognized by EPAct -- is relatively low. Only about 22 million GEG of E85 were consumed in2004, although consumption has steadily increased since 1992. (71) As of 2004, there were approximately 146,000 E85 vehicles being fueled primarily by ethanol in use in the United States. (72) This number hasbeen growing, but is still negligible against the totalnumber of conventional vehicles on the road. However, many E85 vehicles can be fueled with E85,gasoline, or any mixture of the two. There are many more of these flexible fuel vehicles (FFV) thandedicated ethanol vehicles. Models of some popular production vehicles, including the FordExplorer and Ford Taurus now have E85/gasoline flexible fuel capability standard. Other vehicleswith the option of FFV capability include the Dodge Caravan, the Chevrolet Silverado pickup, andthe Mercedes-Benz C240 sedan. (73) The EnergyInformation Administration estimates thatapproximately 4.1 million ethanol FFVs were on the road in 2003. It is expected that the vastmajority of these vehicles will be fueled with gasoline. However, it is possible that the greateravailability of FFVs will spur the market for ethanol fuel. In 2002, the federal government operatedapproximately 53,000 ethanol FFVs, although most of these are fueled with gasoline. Cost. One of the key drawbacks to the use of ethanol is its cost. Per gallon, median E85 retail prices ranged from approximately $0.84 to $1.41 (74) between April 2000 and October 2002. In terms of GEG, ethanol costs ranged between $1.16 and$1.95. (75) When blended with gasoline, ethanolbenefits from an exemption to the motor fuels excisetax. (76) This benefit makes ethanol competitivewith gasoline as a blending agent. In fact, when usedto make E10, the exemption is a nominal 52 cents per gallon of pure ethanol. However, for neatfuels, the exemption is much less -- only a nominal 6.4 cents per gallon of pure ethanol for E85. While fuel costs are higher for E85, there is little, if any, incremental vehicle cost. (77) Further,ownership and maintenance costs tend to be equal for ethanol and gasoline vehicles. Infrastructure. Most of the current infrastructure for the delivery of ethanol is in the form of tanker trucks used to deliver ethanol to terminals forblending with gasoline. However, there were 205 E85 refueling sites nationally as of December2004, mostly in the Midwest, where ethanol is produced. (78) Since there is experience in storing anddelivering ethanol, and since the fueling systems are similar to gasoline, the refueling infrastructurecould expand to meet increased demand if the delivery costs were reduced. Performance. Because of its lower energy content, the key performance drawback of ethanol is lower fuel economy. Fuel economy is reducedby approximately 29%, resulting in reduced range. However, this reduction in range can bemitigated somewhat by increasing fuel tank size (with the associated drawbacks of a larger tank). Another problem with ethanol is that in cold weather, an ethanol-powered vehicle may be difficultto start. For this reason, most ethanol that is used in purer forms is E85. The 15% gasoline allowsfor easier ignition under cold-start conditions. There are few other technical concerns over theperformance of ethanol because of the relatively few modifications necessary to operate a vehicleon ethanol. There are key environmental advantages to ethanol, as well as some drawbacks. Ethanol-powered vehicles tend to emit 30 to 50 percent less ozone-forming compounds than similar gasoline-powered vehicles, includingsignificant reductions in carbon monoxide emissions. (79) In addition,ethanol tends to have a much lower content of toxic compounds such as benzene and toluene, leadingto lower emissions of most toxic compounds. However, ethanol-powered vehicles tend to emit moreformaldehyde and acetaldehyde, (80) although theseemissions can be largely controlled through the useof advanced catalytic converters. (81) Another key environmental advantage with ethanol is its relatively low life-cycle greenhouse gas emissions. (82) Ethanol-powered vehicles tendto emit lower levels of greenhouse gases thangasoline vehicles. Also, the growth process of the ethanol feedstock results in uptake of carbondioxide, further reducing net greenhouse gas emissions. Conversely, when the raw materials andpractices used to produce the feedstock and the fuel are taken into account, emissions for both fuelsare increased. According to a study by Argonne National Laboratory, the use of E85 results in a 14%to 19% reduction in life-cycle greenhouse gas emissions, and with advances in technology, thisreduction could be as high as 70% to 90% by 2010. (83) However, other studies cite lower efficiencyin the ethanol fuel cycle, leading to smaller reductions in greenhouse gas emissions. (84) Safety. Fuel ethanol tends to be safer than gasoline. At normal temperatures, E85 is less flammable than gasoline, and tends to dissipate morequickly. While an ethanol flame is less visible than a gasoline flame, it is still easily visible indaylight. (85) Other Issues. The most significant issue surrounding ethanol is the exemption from the motor fuels excise tax. Because a few producerscontrol a majority of ethanol production capacity in the United States, the exemption has been called"corporate welfare" by its opponents. Proponents of the exemption argue that it helps supportfarmers (through increased demand for their product), and helps compensate for added economicvalue from benefits to the environment, and to energy security because ethanol is produced fromdomestic crops. (86) Because of concerns over the fact that the exemption lowers receipts to the Highway Trust Fund, an income tax credit for ethanol blending was inserted into the American Jobs Creation Act( P.L. 108-357 ). The act replaces the existing exemption with a tax credit paid from the generaltreasury, as opposed to the Highway Trust Fund. Another key issue is the possible development of a renewable fuels standard (RFS). An RFS would require the use of a set amount or percentage of renewable fuel in gasoline. Although thereare several potential fuels that could be used to meet the standard (including biodiesel), it is likelythat most of the requirement would be met with ethanol (blended at the 10% level or lower). It hasbeen argued that an RFS would promote agricultural production and lessen the need for importedoil. Critics argue that the standard would increase gasoline prices with little effect on oil imports. Legislative proposals on an RFS are discussed below in the section on "Congressional Action." Methanol, the simplest alcohol, is also called "wood alcohol." (87) It is usually derived fromnatural gas, but can also be derived from coal or biomass. As a fuel, methanol is most often usedas a blend with gasoline called M85 (85% methanol, 15% gasoline), although the fuel can also beused in an almost pure (neat) form called M100. In addition to general transportation, Indianapolis-type race carsuse methanol exclusively. As a motor fuel it has many benefits, but also manydrawbacks. Consumption. Because of its drawbacks, methanol consumption is relatively low. In 2004, 0.3 million GEG of methanol were consumed. (88) This corresponds to roughly 1/1000th of 1% of the approximately 133 billion gallons of gasolinedemand. Methanol consumption peaked in 1996 and has decreased since. There are few methanol-powered vehicles operating in the United States. Consistent with the decline in methanol consumption, after a peak in 1996, the number of M85 and M100 vehicles hasdeclined. There were approximately 4,600 methanol vehicles in 2004. The federal governmentoperated only 70 methanol-fueled vehicles in 2003. (89) The major automobile manufacturers have notsold methanol-powered production cars since model year 2001. (90) Cost. A notable concern with methanol is its cost. Per GEG, methanol tends to be more expensive than gasoline. As of January 1, 2000, the price formethanol was between $0.95 and $1.20 per gallon. (91) However, due to the lower energy content ofmethanol, the fuel cost roughly $1.73 to $2.10 per GEG. (92) In addition to the fuel cost, incremental vehicle cost is higher with the use of methanol. The incremental cost for the purchase of a methanol-fueled vehicle (or the conversion of an existinggasoline-fueled vehicle) can range from $500 to $2,000, though some of this incremental costcurrently may be defrayed by purchase incentives. The most notable part of the incremental cost isreplacing parts (such as certain seals) that may be corroded by alcohol. Infrastructure. Another barrier to the wide use of methanol as a motor fuel is the lack of fueling infrastructure. While there were a few publicmethanol refueling stations, these stations have closed in recent years. Currently, the Departmentof Energy does not list any public refueling sites for methanol. (93) This lack of infrastructure makesit difficult for the methanol vehicle market to expand. In fact, due to lack of demand, methanolinfrastructure has declined in the past few years. However, existing gasoline tanks and pumpingequipment could be readily converted to store and deliver methanol, and vehicle users wouldexperience little difference between a methanol pump and a gasoline pump. Because methanol can be produced from natural gas and petroleum, a raw material shortage would be unlikely if methanol consumption increased. However, in terms of delivery to stations,most methanol is transported by tanker truck from the methanol plant. (94) This delivery method tendsto be less flexible and more costly compared to the existing gasoline infrastructure, which reliesprimarily on pipeline delivery. Methanol cannot travel through pipelines due to its physicalproperties. Performance. One of the key benefits of methanol vehicles is improved environmental performance over gasoline vehicles. M85 vehiclestend to emit 30% to 50% less ozone-forming compounds. And while formaldehyde emissions tendto be higher with methanol than gasoline, M85 vehicles would likely be able to meet new emissionsstandards. (95) A key performance drawback with methanol vehicles is a reduction in vehicle range. Since it requires 1.77 gallons of methanol to equal the energy in 1 gallon of gasoline, range per gallon isdecreased by approximately 40%. By increasing the size of the fuel tank, the loss of range can besignificantly improved or even eliminated. However, a larger fuel tank would decrease fuel economyand cargo space. Safety. On the whole, methanol fuel is safer than gasoline. Since methanol vapor is only slightly heavier than air, vapors disperse quickly comparedto gasoline. Furthermore, methanol vapors must be more concentrated than gasoline to ignite, andmethanol fires release less heat. Since methanol burns with a light blue flame, one key drawbackis that in bright daylight it may be difficult to see a methanol fire, although it may be possible to addcolorants to the fuel. (96) Fuel Cells. Methanol has been touted as potential step from gasoline to hydrogen in fuel cell vehicles because the fueling infrastructure is similar togasoline, while the fuel is much cleaner. (97) Fuelcells are a type of power system that generateselectricity from hydrogen (or a hydrogen-bearing compound) without combustion. The chemicalprocess is highly efficient and drastically reduces vehicle emissions. (98) For more information on fuelcells, see CRS Report RL30484 , Advanced Vehicle Technologies: Energy, Environment, andDevelopment Issues. Another potential advantage of methanol is that it can be derived from biomass waste products. Research is ongoing, and there have been a few, small-scale demonstration projects at landfills. Ifmethanol is produced instead from fossil fuel resources, it may be less likely to promote energyindependence. An electric vehicle (EV) is powered by an electric motor, as opposed to an internal combustion engine. Energy is supplied to the motor by a set of rechargeable batteries. When the vehicle is notbeing used, these batteries are recharged. Because no fuel is burned, there are no emissions from the vehicle, making it a zero emissions vehicle (ZEV). However, there are emissions from electricity production associated with electricvehicles. When the entire fuel cycle is considered, pollutant emissions from EVs are still lowrelative to gasoline vehicles. Like other AFVs, however, there are key cost and performancedrawbacks associated with these vehicles. Consumption. Approximately 12 million GEG of electric fuel were consumed in the United States in 2004 by approximately 56,000 electricvehicles. (100) Most of these vehicles werelocated in California, and several models were availableexclusively in that state. One of the most popular EVs was the General Motors (GM) EV1, althoughGM has discontinued production of the vehicle and has recalled all of its leases, due to limitedconsumer acceptance of the vehicles. Other manufacturers have also discontinued production oftheir electric vehicles (101) The federalgovernment operated approximately 1,300 electric vehicles in2003. (102) Cost. Electric fuel is considerably less expensive than using gasoline, about 2.5 to 3.3 cents per mile, as opposed to 4 to 6 cents per mile for a gasolinevehicle. (103) Despite the fuel cost advantages,a major drawback with EVs is the incremental vehiclepurchase cost, which can be as much as $20,000. Most of this cost is related to the batteries, whichare very expensive to produce. (104) Infrastructure. There are very few electric recharging sites in the United States. Currently, there are about 700 recharging sites, mostly inCalifornia. (105) With the extensive nature of theelectricity infrastructure in the United States, thereare few technical barriers to expanding EV recharging sites. However, with existing technology,only a few vehicles can access a single charger in one day, as opposed to a gasoline pump which canserve a new vehicle every few minutes. Performance. The environmental performance of EVs is very good. When the entire fuel cycle is considered, electric vehicles produce low overalllevels of toxic and ozone-forming pollutants. (106) Depending on the fuel mix for local electric powergeneration, overall emissions can be decreased by 90% or more as compared to gasoline vehicles. (107) A major performance drawback of EVs is their relatively short range. On a full charge, an electric vehicle can travel between 50 and 130 miles, as opposed to a range of 300 to 400 miles witha conventional vehicle. (108) Another drawbackis that fueling an electric vehicle takes between 3 and8 hours, as opposed to a few minutes for a conventional vehicle. (109) Safety. Few additional safety issues are associated with electric vehicles. Because no chemicals are transferred during fueling, there is norisk of spillage or inhalation, and with existing recharging systems, electric shocks are unlikely. Inthe event of an accident, there is no combustible fuel so there is no danger of fire or explosion. However, because of the acid contained in some types of batteries, there could be concern over acidleaks if batteries were to rupture in a collision. Further, because of the higher current in the electricalsystems, there is increased potential for shock to emergency responders in the case of a collision. Fuel Cell and Hybrid Vehicles. While battery-powered electric vehicles tend to be very expensive, and have many other drawbacks, there isgrowing interest in fuel cell and hybrid electric vehicles. Research into batteries, electric drivetrains,and lightweight materials will play a key role in the development of EVs, as well as both hybrid andfuel cell vehicle technology. For a more detailed discussion of fuel cell and hybrid technologies, see CRS Report RL30484 , Advanced Vehicle Technologies: Energy, Environment, and DevelopmentIssues. Fuel Cell Vehicles. Unlike a conventional vehicle, a fuel cell vehicle uses chemical reaction (as opposed to combustion) to produce electricity to poweran electric motor. Unlike a battery-powered EV, fuel cell vehicles have a fuel tank, eliminating thelong recharging time. These systems can be very efficient, although the technology is far fromcommercialization. A few auto manufacturers have offered a small number of fuel cell vehicles forlease in model year 2004, and several other manufacturers plan to introduce fuel cell vehicles in thenext few years. It is expected that these vehicles will be leased to corporations and that the leasecosts will be relatively high (compared to conventional vehicles). Hybrid Electric Vehicles. A hybrid electric vehicle combines an electric motor with a gasoline or diesel engine. This combination leads to very highfuel efficiency and low emissions while avoiding some of the problems associated with pure electricvehicles. Most hybrids operate solely on conventional fuel, with the engine providing power to thewheels and to an electric generator simultaneously. Therefore, hybrids can be fueled as quickly andconveniently as conventional vehicles, while achieving even longer ranges. A total of seven production vehicles are expected to be available by early 2005, and most of the major car companies plan to have hybrid models available in the next few years. (110) Although hybridelectric vehicles are not considered AFVs for compliance with EPAct requirements (because theyutilize conventional fuel), they do qualify for a Clean Fuel Vehicle Tax Deduction. Theenvironmental performance of hybrids has led to congressional interest in larger incentives topromote their commercialization. (111) Due to its presence in water, hydrogen is abundant, although it does not appear in pure form in any significant quantity. (112) The hydrogen inwater can be separated from oxygen through a processcalled hydrolysis. (113) Other key hydrogensources are fossil fuels and other hydrocarbons. Hydrogenfuel is of interest because it can be used in a zero-emission fuel cell. Because hydrogen fuel can bestored in sufficient quantity onboard the vehicle, fuel cell-powered electric vehicles do not face someof the range and fueling limitations as battery-powered electric vehicles. Currently, no production vehicles are powered by pure hydrogen, although all of the major domestic and foreign automobile manufacturers are researching hydrogen fuel cells, and a few haveintroduced a limited number of hydrogen fuel cell vehicles for lease in model year 2004. However,it is possible that the first publicly available fuel cell vehicles will be operated on a liquid fuel suchas gasoline or methanol, because these fuels are much easier to deliver and are more readily availableat present (see above section on methanol). In his January 28, 2003, State of the Union Address, President Bush announced a new five-year, $720 million research and development initiative for hydrogen fuel. This initiative is intended tocomplement the FreedomCAR initiative, which focuses on the development of fuel cell vehicles. The Administration's plan would dedicate a total of $1.8 billion over five years for hydrogen andfuel cells. Among other provisions, the conference committee report on H.R. 6 (thecomprehensive energy bill in the 108th Congress) would have authorized a total of $2.15 billion forthe initiatives. The Administration requested $257 million in FY2004 for these initiatives. However, while Congress approved an increase of $50 million over FY2003 levels, this was still $23million below the requested level. (114) ForFY2005, Congress appropriated $261 million, slightlybelow the Administration's request. (115) Consumption. Currently, hydrogen fuel consumption is very low. In fact, the Energy Information Administration does not report U.S.hydrogen consumption in its Alternatives to Traditional Transportation Fuels. Cost. Storage and delivery of hydrogen are complicated because at standard temperatures and pressures, hydrogen gas has a very low density. Therefore, the fuel must be compressed, stored in liquid form, or stored in some other manner (e.g.,bonded with other chemicals or stored in a container with complex geometry). Currently, each ofthese storage options has its drawbacks, which can include safety, cost, and the ability to storeenough hydrogen onboard the vehicle to provide acceptable range. In addition to the increased cost of storing hydrogen fuel on a vehicle, other system componets are currently prohibitively expensive. It is estimated that a fuel cell for passenger car applicationsis roughly 10 times more expensive than a conventional engine at today's costs. However, it isexpected that with technological advances and the use of mass production the price of a fuel cellsystem will decrease in the future. Currently, because hydrogen is produced in very low quantities for fuel use (it is used most as a process chemical in petroleum refining), it is considerably more expensive than gasoline at currentprices. Further, because the infrastructure to deliver hydrogen is vastly different from petroleuminfrastructure, expanding hydrogen delivery will also be complicated, and likely expensive. Infrastructure. There is very little infrastructure to deliver hydrogen fuel, and most current facilities are in place to serve small demonstration andtest fleets. As was stated above, expanding hydrogen infrastructure will likely be expensive. Performance. The potential environmental performance of hydrogen fuel could exceed all other alternative fuels. Fuel cells are significantlymore efficient than gasoline engines, and the only emissions from hydrogen fuel cells are heat andwater vapor. However, the fuel cycle emissions from the production of hydrogen fuel could diminishits environmental performance, depending on the primary fuel used. For example, if produced fromsolar energy, the total fuel cycle pollutant and greenhouse gas emissions could be very low or evenzero. But if fossil fuels are burned or reformed to generate hydrogen, depending on whetheremissions are captured, total emissions could equal or even exceed those of efficient gasoline anddiesel vehicles. Therefore, the ultimate feedstock for hydrogen production has become a significantpolicy concern. Safety. There are some key safety concerns and some likely benefits from the use of hydrogen fuel. Because of its low density in air, hydrogen fuelis likely to dissipate quickly in an open area, reducing safety concerns. Further, hydrogen rises,which may make it less likely than other fuels to lead to asphyxiation if released in an enclosed area. However, when hydrogen does burn, the flame is transparent. Further, hydrogen is highly reactive,and in the presence of a leak the fuel can be ignited with a small spark of static electricity. Otherconcerns include the safety of high-pressure or low-temperature onboard fuel storage, the safety ofhydrogen stations in populated areas, and the need to train first responders about hydrogen safety. Although EPAct recognizes coal-derived fuels as alternative fuels, these fuels have seen little commercial success. This is largely due to their high production costs and poor environmentalperformance. (116) However, research to reducecosts and improve environmental performance isongoing, mostly through support of the Department of Energy. (117) A potential advantage of coal-derived fuels is that the feedstock is an abundant domestic resource. Alternative fuels have reached varying levels of commercial success, although currently none are able to compete with conventional fuels. LPG and natural gas fuels and vehicles have beensuccessfully commercialized, and are widely used in both private and public fleets. Ethanol is acommon additive in gasoline, but is used sparsely as an alternative fuel. Other fuels, such asmethanol and electricity have had less commercial success, but may play a key role in the future oftransportation. The degree to which various alternative fuels have been used has been a result of economic factors, as well as government tax policies and regulatory mandates. Further, the performancecharacteristics of the fuels have also played a major role. In general, there are potential energy security benefits to alternative fuels, as most alternative fuels can be derived from domestic sources. Further possible benefits include lower emissions oftoxic pollutants, ozone-forming pollutants, and greenhouse gases. However, performance and costare key barriers to consumer acceptance. Without considerable advances in alternative fuel andvehicle technology, or significant petroleum price increases, it is unlikely that any fuel or fuels willreplace petroleum-based fuels in the near future. Recent policy debate has focused on American energy security. Because of this, discussion hasturned to alternative fuels. Proponents argue that expanding alternative fuel tax credits and otherincentives would promote improved air quality and energy security. Opponents argue that alternativefuel programs could lead to "corporate welfare" and that there are less expensive ways to reducepollution and cut fuel consumption, such as efficiency improvements and conservation. Forexample, an increase in fuel economy of one mile per gallon across all passenger vehicles in theUnited States could cut petroleum consumption more than all alternative fuels and replacementfuels (118) combined. (119) The Bush Administration's National Energy Policy (120) supports an increased role for alternativefuels, as did several bills in the 108th Congress. Provisions in various bills would have provided taxcredits for the purchase of alternative fuel and hybrid vehicles, and would have expanded the existingelectric vehicle tax credit. Further, some bills would have expanded the existing tax credits anddeductions for the installation of alternative fuel refueling infrastructure. Some bills also would haveprovided per-gallon tax credits for the retail sale of alternative fuels, and some bills would haveallowed states to exempt alternative fuel and/or hybrid vehicles from high occupancy vehicle (HOV)restrictions. Finally, some bills would have provided grants to schools, municipalities, and/or transitsystems for the purchase of alternative fuel vehicles, refueling infrastructure and/or fuel. Most notably, the Energy Policy Act of 2003 ( H.R. 6 ) contained several provisions on alternative fuels. The conference report ( H.Rept. 108-375 ) would have required the use of 5.0billion gallons of renewable fuel in gasoline by 2012 (renewable fuels standard). Further, the billwould have authorized the $2.15 billion over five years for hydrogen and fuel cell research anddevelopment. The bill also would have provided a tax credit for the purchase of fuel cell vehicles. Finally, the bill would have modified the way vehicle purchase credits are generated under EPAct. The House approved the conference report on November 18, 2003. On November 21, 2003, acloture motion on the bill was rejected in the Senate. It is likely that a similar bill will be introducedin the 109th Congress. Another key piece alternative fuel legislation in the 108th Congress was the CLEAR ACT ( H.R. 1054 and S. 505 ). These bills would have expanded the existing EVtax credit and infrastructure deduction, and created new credits for alternative fuel vehicles andhybrids. Further, the bills would have established a tax credit for the retail sale of alternative fuel. (121) Most notably, on October 22, 2004, the American Jobs Creation Act was signed into law ( P.L. 108-357 , H.R. 4520 ). Among other provisions, this act replaced the existing taxexemption for ethanol-blended fuel with a tax credit. In addition, it established a tax credit for theproduction and sale of biodiesel fuel.

The sharp increase in petroleum prices beginning in mid-1999, experiences with tighter supply, and international instability have renewed concern about our dependence on petroleum imports. Oneof the strategies for reducing this dependence is to produce vehicles that run on alternatives togasoline and diesel fuel. These alternatives include alcohols, gaseous fuels, renewable fuels,electricity, and fuels derived from coal. The push to develop alternative fuels, although driven byenergy security concerns, has been aided by concerns over the environment, because manyalternative fuels lead to reductions in emissions of toxic chemicals, ozone-forming compounds, andother pollutants, as well as greenhouse gases. Each fuel (and associated vehicle) has various advantages and drawbacks. The key drawback of all alternative fuels is that because of higher fuel and/or vehicle prices, alternative fuel vehicles(AFVs) are generally more expensive to own than conventional vehicles. And while many AFVshave superior environmental performance compared to conventional vehicles, their performance interms of range, cargo capacity, and ease of fueling may not compare favorably with conventionalvehicles. Furthermore, because there is little fueling infrastructure (as compared to gasoline anddiesel fuel), fueling an AFV can be inconvenient. Any policy to support AFVs must address the performance and cost concerns, as well as the issue of fueling infrastructure. Within this context, a "chicken and egg" dilemma stands out: Thevehicles will not become popular without the fueling infrastructure, and the fueling infrastructurewill not expand if there are no customers to serve. Three key laws, the Alternative Motor Fuels Act of 1988 ( P.L. 100-494 ), the Clean Air Act Amendments of 1990 ( P.L. 101-549 ), and the Energy Policy Act of 1992 ( P.L. 102-486 ), as well asthree Executive Orders, support the development and commercialization of alternative fuels andalternative fuel vehicles. These legislative acts and administrative actions provide tax incentives topurchase AFVs, promote the expansion of alternative fueling infrastructure, and require the use ofAFVs by various public and private entities. The 108th Congress considered comprehensive energy legislation, but a final bill was not submitted to the President for signature. H.R. 6 would have promoted the developmentof renewable fuels, especially ethanol and hydrogen. Further, it would have provided incentives forthe development and purchase of alternative fuel and advanced technology vehicles. In addition tothe energy bill, other bills were introduced to create vehicle purchase tax credits, promote researchand development of fuels, and require the use of alternative fuels. It is likely that similar legislationwill be introduced in the 109th Congress. This report reviews these issues. It will be updated as events warrant.

The country's immigration and naturalization laws have been subjects of episodic controversy since America's founding, but unauthorized migration only became an issue in the early 20 th century, when Congress passed the first strict restrictions on legal admissions. Unauthorized migration declined during the Great Depression and during and after World War II, when most labor migration occurred through the U.S.-Mexico Bracero program. Immigration control re-emerged as a national concern during the 1970s, when the end of the Bracero program, new restrictions on Western Hemisphere migration, and growing U.S. demand for foreign-born workers combined to cause a sharp increase in unauthorized migration flows. Congress responded in 1986 by passing the Immigration Reform and Control Act (IRCA, P.L. 99-603 ), which authorized a 50% increase in Border Patrol staffing, among other provisions. Border security has remained a persistent topic of congressional interest since then, and enforcement programs and appropriations have grown accordingly, as described in this report. Despite a growing enforcement response, however, unauthorized migration continued to increase over most of the next three decades. After 2005, unauthorized migrant apprehensions began to decline, suggesting a decrease in unauthorized migration. Apprehensions of unauthorized migrants at the U.S.-Mexico border fell from about 1.2 million in FY2005 to a 41-year low of 378,577 in 2011. Apprehensions then climbed to 479,371 in FY2014, before falling to 331,333 in FY2015. Additionally, it is estimated that after 2007 the number of unauthorized migrants living in the United States also declined. In 2014, the Obama Administration announced executive actions to "fix" the immigration system. These actions address several issues, including a security plan at the southern border. Some Members of Congress and state officials, however, disagree with the President's plan and have called on the Administration to do more to secure the border. Border security has been a recurrent theme in Congress's debate about immigration reform since 2005, and some Members of Congress have argued that Congress should not consider additional immigration reforms until the border is more secure. This report reviews efforts to combat unauthorized migration across the Southwest border in the nearly three decades since IRCA initiated the modern era in migration control. In reviewing such efforts, the report takes stock of the current state of border security and considers lessons that may be learned about enhanced enforcement at U.S. borders. The report begins by reviewing the history of border control and the development of a national border control strategy beginning in the 1990s. The following sections summarize appropriations and resources dedicated to border enforcement, indicators of enforcement outcomes, metrics for border security, and possible secondary and unintended consequences of border enforcement. The report concludes by reviewing the overall costs and benefits of the current approach to migration control and raising additional questions that may help guide the discussion of these issues in the future. Congress created the U.S. Border Patrol (USBP) within the Departments of Commerce and Labor by an appropriations act in 1924, two days after passing the first permanent numeric immigration restrictions. Numerical limits only applied to the Eastern Hemisphere, barring most Asian immigration; and the Border Patrol's initial focus was on preventing the entry of Chinese migrants, as well as combating gun trafficking and alcohol imports during prohibition. The majority of agents were stationed on the northern border. The Border Patrol became part of the new Immigration and Naturalization Service (INS) in 1933, and the INS moved from the Department of Labor to the Department of Justice in 1940. The Border Patrol's focus shifted to the Southwest border during World War II, but preventing unauthorized migration across the Southwest border remained a low priority during most of the 20 th century. Unauthorized migration from Mexico increased after 1965 as legislative changes restricted legal Mexican immigration at the same time that social and economic changes caused stronger migration "pushes" in Mexico (e.g., inadequate employment opportunities) and stronger "pulls" in the United States (e.g., employment opportunities, links to migrant communities in Mexico). Congress held hearings on unauthorized migration beginning in 1971, and after more than a decade of debate passed the Immigration Reform and Control Act of 1986 (IRCA, P.L. 99-603 ), which described border enforcement as an "essential element" of immigration control and authorized a 50% increase in funding for the Border Patrol, among other provisions. Congress passed at least 11 additional laws addressing unauthorized migration over the next two decades, 7 of which included provisions related to the border. Seventy years after it began operations, the Border Patrol developed its first formal national border control strategy in 1994, the National Strategic Plan. The plan was updated in 2004 and again in 2012. The National Strategic Plan (NSP) was developed in 1994 in response to a widespread perception that the Southwest border was being overrun by unauthorized migration and drug smuggling, and to respond to a study commissioned by the Office of National Drug Control Policy. The study recommended that the INS change its approach from arresting unauthorized migrants after they enter the United States, as had previously been the case, to focus instead on preventing their entry. Under the new approach, the INS would place personnel, surveillance technology, fencing, and other infrastructure directly on the border to discourage unauthorized flows, a strategy that became known as "prevention through deterrence." According to the 1994 INS plan, "the prediction is that with traditional entry and smuggling routes disrupted, illegal traffic will be deterred, or forced over more hostile terrain, less suited for crossing and more suited for enforcement." The strategy had four phases that began with the border patrol sectors with the highest levels of unauthorized migration activity. Phase I: San Diego, CA, and El Paso, TX, sectors; Phase II: Tucson, AZ, Del Rio, TX, Laredo, TX, and McAllen, TX, sectors; Phase III: El Centro, CA, Yuma, AZ, and Marfa, TX, sectors; and Phase IV: The northern border, gulf coast, and coastal waterways. The strategy yielded several initiatives aimed at stemming unauthorized migration and human smuggling, and interdicting drug trafficking. These initiatives included the following: Operation Gatekeeper was first initiated at the San Diego Border Patrol Sector and was later extended to the El Centro Border Patrol Sector. The initiative involved providing border patrol agents with additional resources, such as increased staffing and new technologies. Operation Safeguard was initiated at the Tucson Border Patrol Sector and was aimed at stemming unauthorized migration by pushing unauthorized migrants away from urban areas. Operation Hold the Line was initiated at the El Paso Border Patrol Sector and was aimed at the specific needs of the community. New border patrol agents were added to the area and innovative resources were deployed, including IDENT terminals. The initiative also included the installation of fences along parts of the border and other infrastructure improvements. Operation Rio Grande was initiated at the McAllen Border Patrol Sector and focused on increasing the number of border patrol agents. The implementation of Phase II and subsequent phases was to be based on the success of Phase I, with the plan describing several expected indicators of effective border enforcement, including an initial increase of border arrests and entry attempt to be followed by an eventual reduction of arrests, a change in traditional traffic patterns, and an increase in more sophisticated smuggling methods. As predicted, apprehensions within the San Diego and El Paso sectors fell sharply beginning in 1994-1995, and traffic patterns shifted, primarily to the Tucson and South Texas (Rio Grande Valley) sectors (see " Southwest Border Apprehensions by Sector "). A 1997 General Accounting Office (GAO, now called the Government Accountability Office) report was cautiously optimistic about the strategy. Congress supported the prevention through deterrence approach. In 1996, House and Senate appropriators directed the INS to hire new agents and to reallocate personnel from the interior to front line duty. And the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 ( P.L. 104-208 ) expressly authorized the construction and improvement of fencing and other barriers along the Southwest border and required the completion of a triple-layered fence along 14 miles of the border near San Diego where the INS had begun to install fencing in 1990. In the wake of the September 11, 2001, terrorist attacks, the USBP refocused its priorities on preventing terrorist penetration, while remaining committed to its traditional duties of preventing the illicit trafficking of people and contraband between official ports of entry. Shortly after the creation of DHS, the USBP was directed to formulate a new National Border Patrol Strategy (NBPS) that would better reflect the realities of the post-9/11 security landscape. In March 2004, the Border Patrol unveiled the National Border Patrol Strategy, which placed greater emphasis on interdicting terrorists and featured five main objectives: establishing the substantial probability of apprehending terrorists and their weapons as they attempt to enter illegally between the ports of entry; deterring unauthorized entries through improved enforcement; detecting, apprehending, and deterring smugglers of humans, drugs, and other contraband; leveraging "Smart Border" technology to multiply the deterrent and enforcement effect of agents; and reducing crime in border communities, thereby improving the quality of life and economic vitality of those areas. The NBPS was an attempt to lay the foundation for achieving "operational control" over the border, defined by the Border Patrol as "the ability to detect, respond, and interdict border penetrations in areas deemed as high priority for threat potential or other national security objectives." The strategy emphasized a hierarchical and vertical command structure, featuring a direct chain of command from headquarters to the field. The document emphasized the use of tactical, operational, and strategic intelligence and sophisticated surveillance systems to assess risk and target enforcement efforts; and the rapid deployment of USBP agents to respond to emerging threats. Additionally, the plan called for the Border Patrol to coordinate closely with CBP's Office of Intelligence and other federal intelligence agencies. CBP published a new Border Patrol Strategic Plan (BPSP) in May 2012 that shifted attention from resource acquisition and deployment to the strategic allocation of resources by "focusing enhanced capabilities against the highest threats and rapidly responding along the border." From an operational perspective, the 2012 plan emphasizes the collection and analysis of information about evolving border threats; integration of Border Patrol and CBP planning across different border sectors and among the full range of federal, state, local, tribal, and international organizations involved in border security operations; and rapid Border Patrol response to specific border threats. The Border Patrol's approach to border enforcement has been mirrored in broader DHS policies. In November 2005, the Department of Homeland Security announced a comprehensive multi-year plan, the Secure Border Initiative (SBI), to secure U.S. borders and reduce unauthorized migration. Under SBI, DHS announced plans to obtain operational control of the northern and southern borders within five years by focusing attention in five main areas: Increased staffing . As part of SBI, DHS announced the addition of 1,000 new Border Patrol agents, 250 new ICE investigators targeting human smuggling operations, and 500 other new ICE agents and officers. Improved detention and removal capacity . Historically, most non-Mexicans apprehended at the border were placed in formal removal proceedings. Yet backlogs in the immigration court system meant that most such migrants were released on bail or on their own recognizance prior to a removal hearing, and many failed to show up for their hearings. In October 2005, DHS announced plans to detain 100% of non-Mexicans apprehended at the border until they could be processed for removal. SBI supported this goal by adding detention capacity, initially increasing bed space by 2,000 to a total of 20,000. On August 23, 2006, DHS announced that the policy to "end catch and release" had been successfully implemented. Surveillance technology . SBI included plans to expand DHS's use of surveillance technology between ports of entry, including unmanned aerial vehicle (UAV) systems, other aerial assets, remote video surveillance (RVS) systems, and ground sensors. These tools were to be linked into a common integrated system that became known as SBI net (see " Surveillance Assets " below). Tactical infrastructure . SBI continued DHS's commitment to the expansion of border fencing, roads, and stadium-style lighting. Interior enforcement . SBI also included plans to expand enforcement within the United States at worksites and through state and local partnerships, jail screening programs, and task forces to locate fugitive migrants. Although not the subject of a formal public policy document like those discussed above, an additional component of CBP's approach to border control in recent years has been an effort to promote "high consequence" enforcement for unauthorized Mexicans apprehended at the border. Historically, immigration agents permitted most Mexicans apprehended at the border to voluntarily return to Mexico without any penalty. Since 2005, CBP has limited voluntary returns in favor of three types of "high consequence" outcomes: In general, these high consequence enforcement outcomes are intended to deter unauthorized flows by raising the costs to migrants of being apprehended and by making it more difficult for them to reconnect with smugglers following a failed entry attempt. To manage these disparate programs, CBP has designed the "Consequence Delivery System.... to uniquely evaluate each subject [who is apprehended] and identify the ideal consequences to deliver to impede and deter further illegal activity." USBP agents use laminated cards with matrices describing the range of enforcement actions available for a particular migrant as a function of the person's immigration and criminal histories, among other factors, and of the enforcement resources available in each Border Patrol sector. According to public comments by then CBP Commissioner Alan Bersin, the goal of the Consequence Delivery System, in certain sectors of the border, is to ensure that virtually everyone who is apprehended faces "some type of consequence" other than voluntary return. With the implementation of the Consequence Delivery System, the Border Patrol has initiated a system to estimate the deterrent effect of different enforcement outcomes. In particular, the Border Patrol tracks, for each of 10 different enforcement consequences, the percentage of migrants who were re-apprehended during the same fiscal year following repatriation (i.e., the recidivism rate). However, changes in recidivism rates may not be wholly attributable to differences among the consequences because the Border Patrol takes account of migrants' migration histories and other factors when assigning people to different enforcement outcomes. In a November 20, 2014, memo, Secretary Johnson "commissions" three Joint Task Forces. According to Secretary Johnson, the three Joint Task Forces will bring together personnel from CBP as well as other DHS agencies—U.S. Coast Guard (USCG), U.S. Immigration and Customs Enforcement (ICE), and U.S. Citizenship and Immigration Services (USCIS). The Joint Task Forces will also "integrate capabilities of the remaining [DHS] components as needed." According to Secretary Johnson, "Two of these task forces will be geographically based and one will be functionally focused." Joint Task Force East will cover "the Southern maritime border and approaches." Joint Task Force West will have responsibility for the southern land border and the West Coast, while an entity dubbed Joint Task Force Investigations "will focus on investigations in support of the geographic Task Forces." The memo lays out broad missions and objectives and sets a 90-day timeframe to "realign personnel and stand up headquarters capabilities within each Joint Task Force." Statutory and strategic changes since 1986 are reflected in border enforcement appropriations and in CBP's assets at the border, including personnel, infrastructure, and surveillance technology. This section reviews trends in each of these areas. Figure 1 depicts U.S. Border Patrol appropriations for FY1990-FY2015. Appropriations have grown steadily over this period, rising from $263 million in FY1990 to $1.4 billion in FY2002 (the last year before the creation of DHS), $3.0 billion in FY2010, and $3.8 billion in FY2015. The largest growth came following the formation of DHS in FY2003, reflecting Congress's focus on border security in the aftermath of 9/11. Appropriations reported in Figure 1 are only a subset of all border security funding for FY1990 to FY2015. These data do not include additional CBP sub-accounts. For example, in FY2016 funding was also provided to Headquarters Management and Administration ($1.4 billion), and Border Security Inspections and Trade Facilitation at Ports of Entry ($3.4 billion); and additional CBP accounts funding Border Security Fencing, Infrastructure, and Technology ($447 million); Automation Modernization ($829 million); Air and Marine Operations ($802 million) and Construction and Facilities Management ($340 million). A substantial portion of these accounts is dedicated to border security and immigration enforcement, as these terms are commonly used. And Figure 1 excludes border enforcement appropriations for other federal agencies—including the Departments of Justice, Defense, the Interior, and Agriculture, all of which play a role in border security—as well as funding for the U.S. federal court system. Accompanying this budget increase, Congress has passed at least four laws since 1986 authorizing increased Border Patrol personnel. USBP staffing roughly doubled in the decade after the 1986 IRCA, doubled again between 1996 and the 9/11 attacks, and doubled again in the decade after 9/11 (see Figure 2 ). In FY2015, USBP had 20,273 agents, including 17,522 posted at the Southwest border. The National Guard also is authorized to support federal, state, and local law enforcement agencies (LEAs) at the border. Basic authority for the Department of Defense (DOD, including the National Guard) to assist LEAs is contained in Chapter 18 of Title 10 of the U.S. Code, and DOD personnel are expressly authorized to maintain and operate equipment in cooperation with federal LEAs in conjunction with the enforcement of counterterrorism operations or the enforcement of counterdrug laws, immigration laws, and customs requirements. DOD may assist any federal, state, or local LEA requesting counterdrug assistance under the National Defense Authorization Act, as amended. Under Title 32 of the U.S. Code, National Guard personnel also may serve a federal purpose, such as border security, and receive federal pay while remaining under the command control of their respective state governors. National Guard troops were first deployed to the border on a pilot basis in 1988, when about 100 soldiers assisted the U.S. Customs Service at several Southwest border locations, and National Guard and active military units provided targeted support for the USBP's surveillance programs throughout the following decade. The first large-scale deployment of the National Guard to the border occurred in 2006-2008, when over 30,000 troops provided engineering, aviation, identification, technical, logistical, and administrative support to CBP as part of "Operation Jump Start." President Obama announced an additional deployment of up to 1,200 National Guard troops to the Southwest border on May 25, 2010, with the National Guard supporting the Border Patrol, by providing intelligence work and drug and human trafficking interdiction. The 2010 deployment was originally scheduled to end in June 2011, but the full deployment was extended twice (in June and September 2011). The Administration announced in December 2011 that the deployment would be reduced to fewer than 300 troops beginning in January 2012, with National Guard efforts focused on supporting DHS's aerial surveillance operations. In December 2012, DHS and the Department of Defense announced that the National Guard deployment would be extended through December 2013. In 2014 Texas Governor Greg Abbott deployed approximately 1,000 National Guard troops to the Southwest border in response to the increase in child migrants. In December 2015, Governor Abbott announced that he would extend their deployment to deal with newly increasing numbers of child migrants in the first months of FY2016. Additionally, on April 5, 2016, Alabama Governor Robert Bentley announced that he would be ordering Alabama National Guard support to the Southwest border to assist in protecting the border. He deployed one helicopter and three pilots to Marana, AZ. Border tactical infrastructure includes roads, lighting, pedestrian fencing, and vehicle barriers. Tactical infrastructure is intended to impede illicit cross-border activity, disrupt and restrict smuggling operations, and establish a substantial probability of apprehending terrorists seeking entry into the United States. The former INS installed the first fencing along the U.S.-Mexican border beginning in 1990 east of the Pacific Ocean near San Diego. Congress expressly authorized the construction and improvement of fencing and other barriers under Section 102(a) of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA), which also required the completion of a triple-layered fence along the original 14 mile border segment near San Diego. The Secure Fence Act of 2006 amended IIRIRA with a requirement for double-layered fencing along five segments of the Southwest border, totaling about 850 miles. IIRIRA was amended again by the Consolidated Appropriations Act, FY2008. Under that amendment, the law now requires the Secretary of Homeland Security to construct reinforced fencing "along not less than 700 miles of the southwest border where fencing would be most practical and effective and provide for the installation of additional physical barriers, roads, lighting, cameras, and sensors to gain operational control of the southwest border." The act further specifies, however, that the Secretary of Homeland Security is not required to install fencing "in a particular location along the international border of the United States if the Secretary determines that the use or placement of such resources is not the most appropriate means to achieve and maintain operational control over the international border at such location." As of May 2015, DHS installed 353 miles of primary pedestrian fencing, 300 miles of vehicle fencing (total of 653 miles), 36 miles of secondary fencing behind the primary fencing, and 14 miles of tertiary pedestrian fencing behind the secondary fence. The Border Patrol reportedly had identified a total of 653 miles of the border as appropriate for fencing and barriers. Figure 3 summarizes annual appropriations for tactical infrastructure (including surveillance technology) for FY1996-FY2016. Appropriations increased from $25 million in FY1996 to $298 million in FY2006, an 11-fold increase (8-fold when adjusting for inflation), and then jumped to $1.5 billion in FY2007 as DHS created a new Border Security Fencing, Infrastructure, and Technology (BSFIT) account and appropriated money to pay for the border fencing mandate in the Secure Fence Act of 2006. BSFIT appropriations decreased for seven consecutive years (from FY2007 through FY2013); however, in FY2016 BSFIT appropriations increased to $447 million (from $382 million in the previous fiscal year). The Border Patrol uses advanced technology to augment its agents' ability to patrol the border. USBP's border surveillance system has its origins in the former Immigration and Naturalization Service's (INS's) Integrated Surveillance Information System (ISIS), initiated in 1998. ISIS was folded into a broader border surveillance system named the America's Shield Initiative (ASI) in 2005, and ASI was made part of DHS's Secure Border Initiative (SBI) the following year, with the surveillance program renamed SBI net and managed under contract by the Boeing Corporation. Under all three of these names, the system consisted of a network of remote video surveillance (RVS) systems (including cameras and infrared systems), and sensors (including seismic, magnetic, and thermal detectors), linked into a computer network, known as the Integrated Computer Assisted Detection (ICAD) database. The system was intended to ensure seamless coverage of the border by combining the feeds from multiple cameras and sensors into one remote-controlled system linked to a central communications control room at a USBP station or sector headquarters. USBP personnel monitoring the control room screened the ICAD system to re-position RVS cameras toward the location where sensor alarms were tripped. Control room personnel then alerted field agents to the intrusion and coordinated the response. All three of these systems struggled to meet deployment timelines and to provide USBP with the promised level of border surveillance. DHS also faced criticism of ASI and SBI net for non-competitive contracting practices, inadequate oversight of contractors, and cost overruns. DHS Secretary Napolitano ordered a department-wide assessment of the SBI net technology project in January 2010 and suspended the SBI net contract in March 2010. The review confirmed SBI net 's history of "continued and repeated technical problems, cost overruns, and schedule delays, raising serious questions about the system's ability to meet the needs for technology along the border." DHS terminated SBI net in January 2011. Under the department's Arizona Surveillance Technology Plan, the Border Patrol deploys a mix of different surveillance technologies designed to meet the specific needs of different border regions. According to CBP officials, the department's acquisitions strategy emphasizes flexible equipment and mobile technology that permits USBP to surge surveillance capacity in a particular region, and off-the-shelf technology in order to hold down costs and get resources on the ground more quickly. In addition to these ground-based surveillance assets, CBP deploys manned and unmanned aircraft as well as marine vessels to conduct surveillance. Air and marine vessels patrol regions of the border that are inaccessible to other surveillance assets, with unmanned aerial systems (UAS) deployed in areas considered too high-risk for manned aircraft or personnel on the ground. As of October 2015, CBP's Air and Marine Operations (AMO) deployed 19 types of aircraft and three classes of marine vessels, for a total of 245 aircraft and 295 marine vessels operating from over 91 locations. For FY2014, the agency reported 90,740 flight hours (up from about 81,045 in FY2012) and 42,860 underway hours in marine vessels (down from about 47,742 in FY2012). As of March 2016, CBP operated a total of 9 UAS, up from zero in 2006. UAS accounted for 5,502 flight hours in FY2015, up from 4,611 hours in FY2014. With support from Department of Defense (DOD), CBP conducted an evaluation of two unmanned aerostat (tethered blimp) systems during the summer of 2012: the Persistent Ground Surveillance System (PGSS) and the Rapid Aerostat Initial Deployment (RAID). In addition, CBP evaluated PGSS and RAID towers, which support aerostat deployment as well as ground-based technologies. These two systems have been deployed by the military to conduct area surveillance. As a result of the evaluation, CBP concluded that these systems could provide useful support to CBP operations on the border; and CBP reportedly is working with DOD to identify opportunities to transfer ownership of aerostats returning from overseas to CBP. For 90 years, the Border Patrol has recorded the number of deportable migrants apprehended in the United States; and migrant apprehensions remain the agency's primary indicator of immigration enforcement. The agency also collects several additional measures of immigration enforcement, including unique apprehensions, migrant recidivism, and estimated turn backs and got aways. These enforcement outcomes provide insight into the state of the border, as discussed in this section, but they confront certain limitations when it comes to estimating unauthorized border inflows (see " Metrics of Border Security "). Figure 4 depicts total USBP apprehensions of deportable and removable migrants for FY1960-FY2015. Apprehensions are widely understood to be correlated with unauthorized flows, and the data in Figure 4 reflect historical trends in unauthorized migration (see " Border Patrol History and Strategy "). Apprehensions were very low in the 1960s, but climbed sharply in the two decades after 1965. Apprehensions reached an all-time high of 1.7 million in 1986 and again in 2000, and an average of more than 1.2 million apprehensions per year were recorded 1983-2006, reflecting high levels of unauthorized migration throughout this period. As Figure 4 also illustrates, apprehensions have fallen sharply since 2000, and particularly since 2006. The 340,252 apprehensions observed in 2011 were the lowest level since 1971, and the 364,768 apprehensions in 2012 were the second-lowest level since that time. Falling apprehensions may reflect fewer unauthorized inflows between 2006 and 2012, though the degree to which reduced inflows were a result of effective enforcement versus other factors like the recent U.S. economic downturn remains subject to debate (see " How Secure is the U.S. Border? "). However, apprehensions increased from FY2012 to FY2014, rising to 486,651 in FY2014, before falling to 337,117 in FY2015. The overwhelming majority of apprehensions take place along the Southwest border. In FY2015, the Border Patrol apprehended 331,333 migrants along this border, a decrease of 148,038 from the previous year. Forty-four percent of these apprehensions occurred in the Rio Grande Valley Sector (see discussion below). Figure 5 depicts apprehensions along the Southwest border for FY1990-FY2015, broken down by certain Border Patrol sectors. The sector-specific apprehension pattern generally adheres to the predictions of the 1994 National Strategic Plan. Increased enforcement in the El Paso and San Diego sectors was associated with high apprehensions in those sectors during the early 1990s, and then with falling apprehensions by the middle of the decade. Apprehensions in the San Diego and El Paso sectors remained well below their early-1990s levels throughout the following decade—findings that suggest border enforcement in those sectors has been broadly effective. Falling apprehensions in San Diego and El Paso during the late 1990s initially were more than offset by rising apprehensions in the Tucson, AZ, sector and other border locations, including the Laredo and Del Rio, TX, sectors. In FY2014, apprehensions in Tucson fell to their lowest level since 1993. Apprehensions in the Rio Grande Valley increased from FY2011 to FY2014, before falling in FY2015. Nonetheless, apprehensions in the Rio Grande Valley now account for more than a third of Southwest border apprehensions. Thus, since the initiation of the prevention through deterrence approach in the mid-1990s, it appears that success in San Diego and El Paso may have come at the expense of Tucson and other sectors. Overall apprehensions data record apprehension events , and therefore count certain individuals more than once if they enter and are apprehended multiple times. Since 2000, the Border Patrol also has tracked the number of unique subjects the agency apprehends per year by analyzing biometric data (i.e., fingerprints and digital photographs) of persons apprehended. Figure 6 depicts annual Southwest border recidivism rates, which USBP has tracked since 2005. The Border Patrol defines the annual recidivism rate as the percentage of unique subjects apprehended more than once in a given fiscal year. A goal of the Consequence Delivery System has been to deter migrants from re-entering—that is, to reduce recidivism. As Figure 6 illustrates, recidivism rates increased slightly between FY2005 (25%) and FY2007 (29%), but have fallen since that time, reaching 14% in FY2015. Border Patrol stations and sectors estimate the number of unauthorized entrants who successfully travel to the U.S. interior and who USBP ceased pursuing, or "got aways." Stations and sectors also estimate "turn backs," the number of people who cross the border unauthorized but then cross back to Mexico. USBP uses the sum of got aways, turn backs, and apprehensions to estimate the total number of known unauthorized entries . The agency has used these data since 2006 to inform tactical decision making and to allocate resources across Southwest border sectors, but the Border Patrol has not published them or viewed them as reliable metrics of border security because of challenges associated with measuring got aways and turn backs across different border sectors. While the Border Patrol has data on various enforcement outcomes , these enforcement data were not designed to measure overall border security or unauthorized inflows. Furthermore, enforcement data depends on enforcement resources. In general, USBP enforcement outcomes (e.g., apprehensions, estimated got aways) are a function of (1) the underlying unauthorized flows and (2) the agency's ability to detect such flows. Enforcement data alone cannot disentangle these two factors. As a result, enforcement data may tend to overestimate unauthorized flows where resources are robust, and to under-estimate such flows where resources are scarce. Thus, DHS officials have testified that current enforcement data do not offer a suitable metric to describe border security. Given the limits of existing border enforcement data, over time, DHS and USBP have developed different metrics for estimating unauthorized border flows and describing border security. Border security metrics are used at both the strategic and operational levels. At the strategic level, DHS uses metrics to understand its ability to meet border security objectives. The department is currently working to develop a new metric of border security, the unauthorized flow of migrants into the United States . The estimate will be generated through the use of the repeated trials method, also known as the capture-recapture method. Additionally, DHS also reports two other metrics of border security on its annual performance reports. First, the percentage of people apprehended multiple times along the Southwest border, or the recidivism rate, is used to capture USBP's ability to deter migrants from re-entering the United States. Second, the rate of interdiction effectiveness along the Southwest border between ports of entry , or the effectiveness rate, measures USBP's ability to apprehend unauthorized migrants. At the operational level, USBP conducts risk assessments that use a range of metrics. Its methodology, "State of the Border Risk Methodology," estimates the magnitude of risk through the use of intelligence information, a detailed awareness of threats at the border, and a standardized measure of risk. Though these assessments are not used as metrics themselves, USBP's methodology monitors certain metrics at the sector level that may be able to speak to USBP's performance (such as the recidivism rate and effectiveness rate). USBP conducts these risk assessments at the sector level and employs them to make day-to-day decisions with regard to how it uses its resources. While no single metric accurately and reliably describes border security, most analysts agree, based on available data, that the number of unauthorized border crossers fell sharply between about 2005 and 2011, with some rise in unauthorized flows from 2012 to 2014, and a decrease in 2015. This conclusion is supported by key Border Patrol enforcement data described above, including the drop in total apprehensions and the drop in estimated got aways and total estimated known entries across eight out of nine Border Patrol sectors. Survey data confirm an apparent drop in unauthorized inflows, and measure such effects away from the border. For example, according to data collected by the Princeton Mexican Migration Project, an average of about 2% of all Mexican men initiated a first unauthorized trip to the United States each year between 1973 and 2002; but that percentage has fallen sharply since 2002, to below 0.4% in 2008-2011. Another study found that the annual probability of a Mexican individual taking an initial unauthorized trip to the United States averaged .009 (ranging from .003 to .014) from 1970 to 2007. Estimates of the unauthorized population in the United States report drops of about 1 million unauthorized migrants, from approximately 12.2 million in 2007 to 11.3 million in 2014. Furthermore, the Pew Hispanic Center estimates that net (i.e., northbound minus southbound) migration between Mexico and the United States has resulted in a net loss of 140,000 from 2009 to 2014, meaning more Mexicans have returned to Mexico than have migrated to the United States. According to GAO's analysis of Border Patrol metrics, eight out of nine Border Patrol sectors (all except the Big Bend sector) showed improved effectiveness rates between FY2006 and FY2011. In the Tucson sector, the main focus of GAO's analysis, the effectiveness rate improved from 67% to 87% during this period. The San Diego, El Centro, Yuma, and El Paso sectors all had effectiveness rates in FY2011 of about 90%; the Del Rio and Laredo sectors (along with Tucson) had rates above 80%; and the Big Bend and Rio Grande Valley sectors had rates between 60% and 70%. Border enforcement is only one of several factors that affect unauthorized migration. Thus, if unauthorized entries indeed fell after 2006, to what degree is this change attributable to enforcement versus other developments, such as the U.S. economic downturn since 2007, and/or economic and demographic changes in Mexico and other countries of origin? Disentangling the effects of enforcement from other factors influencing migration flows is particularly difficult in the current case because many of the most significant new enforcement efforts—including a sizeable share of new border enforcement personnel, most border fencing, new enforcement practices at the border, and many of the new migration enforcement measures within the United States—all have occurred at the same time as the most severe recession since the 1930s. Nonetheless, the drop in recidivism rates suggests that an increasing proportion of migrants are being deterred by CBP's enforcement efforts. For example, one study found that border enforcement did not affect the likelihood of Mexican migrants making their first unauthorized trip to the United States but that it does have a pronounced effect on their likelihood of making additional trips. Surveys of unauthorized migrants repatriated to Mexico in 2005 and 2010 also suggest that enforcement is increasingly likely to deter future immigration. Furthermore, academic research from 2012 provides evidence that border enforcement has contributed to a reduction in unauthorized flows. These findings are noteworthy, in part, because they contradict earlier academic research, much of which found that border enforcement had a limited impact or even was counter-productive when it came to migration control efforts (also see " Migration Flows: "Caging" Effects and Alternative Modes of Entry "). This research suggests that the recent build-up in immigration enforcement at the border and within the United States may have had a greater deterrent effect on unauthorized migration than earlier efforts. Nonetheless, some uncertainty will remain about the true level of border security as long as U.S. employment demand remains below historic levels. The preceding discussion includes estimates of what may be described as the primary costs and benefits of border enforcement, defined in terms of congressional appropriations and deployment of enforcement resources on one hand, and migrant apprehensions and other indicators of successful enforcement on the other. A comprehensive analysis of the costs and benefits of border enforcement policies may also consider possible unintended and secondary consequences. Such consequences may produce both costs and benefits—many of which are difficult to measure—in at least five areas: border-area crime and migrant deaths, migrant flows, environmental impacts, effects on border communities, and U.S. foreign relations. Unauthorized border crossing is associated with a certain level of border crime and violence and, in the most unfortunate cases, with deaths of unauthorized border crossers and border-area law enforcement officers. Unauthorized migration may be associated with crime and mortality in several distinct ways. First, unauthorized migration is associated with crime—apart from the crime of unauthorized entry—because some unauthorized migrants contract with immigrant smugglers and because unauthorized migrants may engage in related illegal activity, such as document fraud. Yet fear of the police may make unauthorized migrants less likely to engage in other types of criminal activity, and research on the subject finds low immigrant criminality rates, especially when accounting for education levels and other demographic characteristics. Second, unauthorized border crossers face risks associated with crossing the border at dangerous locations, where they may die from exposure or from drowning. Border enforcement therefore may affect crime and migrant mortality in complex ways. On one hand, the concentration of enforcement resources around the border may exacerbate adverse outcomes by making migrants more likely to rely on smugglers. The 1994 National Strategic Plan predicted a short-term rise in border violence for these reasons. On the other hand, to the extent that enforcement successfully deters unauthorized crossers, such prevention should reduce crime and mortality. The concentration of law enforcement personnel near the border may further enhance public safety and migrant protection, especially where CBP has made a priority of protecting vulnerable populations. The empirical record suggests that there is no significant difference in the average violent crime rate in border and non-border metropolitan areas. Indeed, the border cities El Paso, TX, and San Diego, CA, are regularly listed among the safest large cities in the country based on their rankings among similarly sized cities in the Federal Bureau of Investigation's Uniform Crime Report. The specific impact of border enforcement on border-area crime is unknown, however, because available data cannot separate the influence of border enforcement from other factors. With respect to mortality, available data about migrant deaths along the Southwest border are presented in Figure 7 . The figures come from academic research based on local medical investigators' and examiners' offices in California, Arizona, New Mexico, and Texas between 1985 and 1998 (the University of Houston's Center for Immigration Research, CIR); Mexican foreign ministry and Mexican media counts compiled by the American Civil Liberties Union of San Diego; and data compiled by DHS based on bodies recovered on the U.S. side of the border. All three data sources reflect known migrant deaths, and therefore likely undercount actual migrant deaths since some bodies may not be discovered. Additionally, U.S. data sources generally do not include information from the Mexican side of the border and therefore further undercount migration-related fatalities. As Figure 7 illustrates, data from the CIR indicate that known migrant deaths fell from a high of 344 in 1988 to a low of 171 in 1994 before climbing back to 286 in 1998. According to DHS data, known migrant deaths climbed from 249 in 1999 to 492 in 2005, and averaged 431 deaths per year in 2005-2009. DHS's count fell to an average of 369 per year in 2010-2011, but increased to 471 in FY2012 before falling again to 445 in FY2013 and to a low of 240 in FY2015. From FY1998 to FY2015, 6,571 migrants have died, averaging 365 deaths a year. The ACLU found that known migrant deaths increased from just 80 per year in 1994-1997 to 481 per year in 1998-2008. The apparent increase in migrant deaths in the past decades is noteworthy in light of the apparent decline in unauthorized entries during the same period. These data offer evidence that border crossings have become more hazardous since the "prevention through deterrence" policy went into effect in the 1990s, though (as with crime) the precise impact of enforcement on migrant deaths is unknown. With unauthorized border crossing becoming more dangerous and more expensive, some unauthorized migrants appear to have adapted their behavior to avoid crossing the border via traditional pathways. Most notably, social science research suggests that border enforcement has had the unintended consequence of encouraging unauthorized migrants to settle permanently in the United States rather than working temporarily and then returning home, as was more common prior to the mid-1980s. The primary evidence for this so-called "caging" effect is that unauthorized migrants appear to be staying longer in the United States and raising families here more often rather than making regular trips to visit families that remain in countries of origin. One study found that, prior to 1986, the average probability of return to Mexico for authorized migrants was .52 and that for unauthorized migrants it was .55. However, in 2006 the probability of return for authorized migrants increased to 1.0, while unauthorized migrants' probability of return dropped to .21. Furthermore, the study found that "each million dollar increase in the real value of the [Border Patrol's] budget reduces the odds of yearly return migration by 44%." Although other factors also likely contribute to these changes, survey results appear to confirm that border enforcement has been a factor behind these longer stays. A second unintended consequence of enhanced border enforcement between ports of entry may have been an increase in unauthorized entries through ports of entry and other means. According to UCSD Mexico Migration Field Research Program research, unauthorized Mexican migrants from one community in Mexico interviewed in 2009 used six different methods to enter the United States, with one in four such unauthorized migrants passing through a port of entry by using borrowed or fraudulent documents or by hiding in a vehicle. Based on three different surveys conducted between 2008 and 2010, UCSD researchers found that the probability of being apprehended while passing through a port of entry without authorization was about half as high as the probability of being apprehended while crossing between the ports. CBP's Passenger Compliance Examination (COMPEX) System reportedly detects very little unauthorized migration through ports of entry, however. There is also anecdotal evidence that unauthorized migrants have recently turned to maritime routes as alternative strategies to cross the U.S.-Mexican border. A third set of potential unintended consequences concern the effect of border enforcement on the environment. As with the effects of enforcement on border crime and violence, the effects of enforcement on the environment are complex because they reflect changes in migrant behavior and the secondary effects of enforcement per se. On one hand, many unauthorized border crossers transit through sensitive environmental areas, cutting vegetation for shelter and fire, potentially causing wildfires, increasing erosion through repeated use of trails, and discarding trash. Thus, to the extent that border enforcement successfully deters unauthorized flows, enforcement benefits the environment by reducing these undesirable outcomes. On the other hand, the construction of fencing, roads, and other tactical infrastructure may damage border-area ecosystems. These environmental considerations may be especially important because much of the border runs through remote and environmentally sensitive areas. For this reason, even when accounting for the possible environmental benefits of reduced unauthorized border flows, some environmental groups have opposed border infrastructure projects because they threaten rare and endangered species as well as other wildlife by damaging ecosystems and restricting the movement of animals, and because surveillance towers and artificial night lighting have detrimental effects on migrant birds. Although economists disagree about the overall economic impact of unauthorized migration, unauthorized migrants may impose a number of costs at the local level, including through their use of schools and other public programs. Some are also concerned that unauthorized migration undermines the rule of law. For these reasons, successful border enforcement may benefit border communities by reducing unauthorized inflows. Yet some business owners on the Southwest and Northern borders have complained that certain border enforcement efforts threaten their economic activities, including farming and ranching activities that are disrupted by the deployment of USBP resources to the border and commercial activities that suffer from reduced regional economic activity. More generally, some people have complained that the construction of barriers divides communities that have straddled international land borders for generations. Some people have raised additional concerns about the effects of border enforcement on civil rights. Some residents of Southwest and Northern border communities see enhanced border enforcement as leading to racial profiling and wrongful detentions. On top of this general concern, some people argue that Operation Streamline raises additional questions about whether migrants receive adequate legal protections during fast-tracked criminal procedures. And some have argued that mistreatment and abuse are widespread in CBP detention facilities. An additional concern that some have raised about CBP's focus on high consequence enforcement is the possibility that focusing scarce judicial and prosecutorial resources on immigration enforcement diverts attention from more serious crimes. A 2013 Justice Department study found that the number of immigration defendants in federal courts increased 664% between 1995 and 2010 (from 5,103 to 39,001); and that immigration cases accounted for 60% of the overall increase in pretrial detentions during that period. More generally, immigration offenders accounted for 46% of federal arrests in 2010, outnumbering all other crimes and up from 22% a decade earlier. Additionally, a 2008 study by the Administrative Office of the U.S. Courts found that while Congress had provided short-term funding to allow the courts to respond to increased prosecutions, the courts faced a shortage of suitable courthouse and detention facilities in some border locations. What are the effects of U.S. border enforcement policies on U.S. relations with its continental neighbors, Mexico and Canada? The United States and Canada have a strong record of collaborative border enforcement, including through 15 binational, multi-agency Integrated Border Enforcement Teams (IBETs) operating at 24 locations at and between U.S.-Canadian ports of entry. In February 2011, President Obama and Prime Minister Harper signed the Beyond the Border declaration, which described their shared visions for a common approach to perimeter security and economic competitiveness; and the countries released an Action Plan on December 7, 2011, to implement the agreement. While some Canadians have raised objections to some of the information sharing and joint law enforcement provisions of the agreement, border enforcement between the ports has not been identified as a significant source of bilateral tension. The United States and Mexico also cooperate extensively on border enforcement operations at the Southwest border. Yet immigration enforcement occasionally has been a source of bilateral tension. And with Mexicans being the most frequent target of U.S. immigration enforcement efforts, some Mexicans have expressed concerns about the construction of border fencing, the effects of border enforcement on migrant deaths, and the protection of unaccompanied minors and other vulnerable groups, among other issues related to immigration enforcement. The United States has focused substantial resources along its land borders to prevent and control unauthorized migration since the 1980s, with investments in personnel, fencing, and surveillance assets all up significantly in the post 9/11 period, in particular. Since 2005, CBP also has transformed its approach to managing enforcement outcomes, through its Consequence Delivery System. Measuring the effects of border enforcement is difficult. On one hand, after reaching a high point in 2000, Border Patrol apprehensions fell sharply in 2007-2011, reaching a 42-year low in FY2011. Apprehensions then increased from 2012 to 2014, before falling in 2015. The Border Patrol's IDENT database also indicates a declining proportion of migrants are apprehended more than once (i.e., recidivism is down). Estimates based on enforcement and survey data and accounting for estimated apprehension and deterrence rates suggest that total unauthorized inflows in 2009-2011 were well below levels observed in the two decades after IRCA's passage, but that unauthorized inflows increased somewhat in 2012. On the other hand, there is also some evidence that migrants have adapted to more difficult conditions at the border by using other means to enter the United States and by remaining longer. A comprehensive accounting also may consider various potential unintended consequences of border enforcement on the civil rights of legal residents and U.S. citizens in the border region, on migrants' human rights, on the quality of life in border communities, on the environment and wildlife, and on U.S.-regional relations. What do these findings mean for Members of Congress who oversee border security and immigration policy? Especially in light of current fiscal constraints, some Members of Congress may evaluate future border enforcement in terms of expected returns on America's investments, and they may consider the possibility that certain additional investments at the border may be met with diminishing returns. Border infrastructure may offer an example: with 651 miles of fencing and barriers already in place along the Southwest border, each additional mile would be in ever more remote locations, and therefore more expensive to install and maintain and likely to deter fewer unauthorized migrants. Similarly, some Members of Congress may question the concrete benefits of deploying more sophisticated surveillance systems across the entire northern and southern borders, including vast regions in which too few personnel are deployed to respond to the occasional unauthorized entry that may be detected. Deciding how to allocate border resources therefore requires a clear definition of the goals of border security. Zero admissions of unauthorized migrants may not be a realistic goal when it comes to migration control, as noted above, and is a higher standard than is expected of most law enforcement agencies. While this report focuses on migration control at U.S. borders, border security also encompasses the detection and interdiction of weapons of mass destruction (WMD), narcotics, and other illicit goods; policies to combat human trafficking; and other security goals. These diverse goals are often conflated in an undifferentiated debate about "border security"; but each of these goals may suggest a different mix of border investments, as well as different metrics and different standards for successful enforcement outcomes. Should policies to prevent unauthorized migration be held to the same standards as policies to prevent the entry of WMDs, for example? Regardless of how these questions are answered in principle, debates about immigration control and border security may benefit from better metrics of border security and unauthorized migration, and from a more analytical approach to program design. The Border Patrol has taken a step in this direction by analyzing recidivism data as a function of different enforcement outcomes through its Consequence Delivery System. This report also identifies several metrics for measuring border security, all of which have advantages and disadvantages. In the context of immigration policy and a possible immigration reform bill, Members of Congress may choose to focus on the total number of unauthorized migrants in the United States, in addition to border flows, since border enforcement is just one of many factors (along with interior enforcement, visa policies, etc.) influencing the size of the unauthorized population, and because more is known about the population number than about border flows.

Border enforcement is a core element of the Department of Homeland Security's effort to control unauthorized migration, with the U.S. Border Patrol (USBP) within the U.S. Customs and Border Protection (CBP) as the lead agency along most of the border. Border enforcement has been an ongoing subject of congressional interest since the 1970s, when unauthorized immigration to the United States first registered as a serious national problem; and border security has received additional attention in the years since the terrorist attacks of 2001. Since the 1990s, migration control at the border has been guided by a strategy of "prevention through deterrence"—the idea that the concentration of personnel, infrastructure, and surveillance technology along heavily trafficked regions of the border will discourage unauthorized migrants from attempting to enter the United States. Since 2005, CBP has attempted to discourage repeat unauthorized migrant entries and disrupt migrant smuggling networks by imposing tougher penalties against certain unauthorized migrants, a set of policies eventually described as "enforcement with consequences." Most people apprehended at the Southwest border are now subject to "high consequence" enforcement outcomes. Across a variety of indicators, the United States has substantially expanded border enforcement resources over the last three decades. Particularly since 2001, such increases include border security appropriations, personnel, fencing and infrastructure, and surveillance technology. In addition to increased resources, the USBP has implemented several strategies over the past several decades in an attempt to thwart unauthorized migration. In 2014, the Obama Administration announced executive actions to "fix" the immigration system. These actions address several issues, including a revised security plan at the southern border. The Border Patrol collects data on several different border enforcement outcomes; this report describes trends in border apprehensions, recidivism, and estimated "got aways" and "turn backs." Yet none of these existing data are designed to measure unauthorized border flows or the degree to which the border is secured. Thus, the report also describes methods for estimating border security at the strategic and operational levels. Drawing on multiple data sources, the report reviews the state of border security. Robust investments at the border were not associated with reduced unauthorized inflows during the 1980s and 1990s, but a range of evidence suggests a substantial drop in unauthorized inflows from 2007 to 2011, followed by a rise from 2012 to 2014 and a decrease in 2015. Enforcement, along with the 2007 economic downturn in the United States, likely contributed to the drop in unauthorized migration, though the precise share of the decline attributable to enforcement is unknown. Enhanced border enforcement also may have contributed to a number of secondary costs and benefits. To the extent that border enforcement successfully deters unauthorized entries, such enforcement may reduce border-area violence and migrant deaths, protect fragile border ecosystems, and improve the quality of life in border communities. But to the extent that migrants are not deterred, the concentration of enforcement resources on the border may increase border area violence and migrant deaths, encourage unauthorized migrants to find new ways to enter and to remain in the United States for longer periods of time, damage border ecosystems, harm border-area businesses and the quality of life in border communities, and strain U.S. relations with Mexico and Canada.

The President submitted his fiscal year 2003 budget request to Congress on February 4, 2002.The House Subcommittee on Military Construction forwarded its markup to the full AppropriationsCommittee on June 12, which completed its mark on June 24. The bill ( H.R. 5011 , H.Rept. 107-533 ) was introduced to the House on June 25, considered on June 27, and passed 426-1(Roll No. 277). The Senate received the bill on June 28. The Senate Appropriations Committeemarked its version ( S. 2709 , S.Rept. 107-202 ) on June 27 and reported on July 3. TheSenate substituted the text of S. 2709 and passed the amended H.R. 5011 on July 18 (96-3), appointed conferees, and informed the House of its action. The House rejected theSenate amendment on September 10, 2002, and appointed conferees. Conferees met on October 8.The House accepted the conference report ( H.Rept. 107-731 ) 419-0 on October 10 (Roll No. 458).The Senate adopted the conference report by unanimous consent on October 11. The bill was sentto the President on October 18 and enacted on October 23 as P.L. 107-249 , one of the twoappropriations bills enacted during the second session of the 107th Congress. Defense authorization legislation ( H.R. 4546 ) cleared the House Committee on Armed Services and passed by recorded vote (359-58) on May 10. (1) It was received by the Senateon May 14. Equivalent authorization legislation ( S. 2514 ) was marked up by the SenateCommittee on the Armed Services on May 9 and reported with additional and minority views onMay 15 ( S.Rept. 107-151 ). S. 2514 was debated and amended in the Senate betweenJune 19 and June 27, when it passed with amendments 97-2 (Record Vote No. 165). Its text wasincorporated into H.R. 4546 and passed by unanimous consent. On July 25, the Houseamended the Senate amendment and appointed conferees. The Senate disagreed to the amendmentand appointed conferees. Conferees met on September 5 and reported the bill to the House onNovember 12 ( H.Rept. 107-772 ), where it was agreed to by voice vote. The Defense AuthorizationBill was enacted into law ( P.L. 107-314 ) by the President on December 2, 2002. Text relating to military construction was added by the Senate to H.J.Res. 2 (Omnibus Appropriation, introduced at the opening of the 108th Congress). Conferees began meetingon February 10, 2003 (see below). The Department of Defense (DOD) manages the world's largest dedicated infrastructure, covering more than 40,000 square miles of land and a physical plant worth more than $500 billion. The military construction appropriations bill provides a large part of the funding to enhance andmaintain this infrastructure. The bill funds construction projects and some of the facilitysustainment, restoration and modernization of the active Army, Navy and Marine Corps, Air Force,and their reserve components; (2) additionaldefense-wide construction; U.S. contributions to theNATO Security Investment Program (formerly known as the NATO Infrastructure Program); (3) andmilitary family housing operations and construction. The bill also provides funding for the BaseRealignment and Closure (BRAC) account, which finances most base realignment and closure costs,including construction of new facilities for transferred personnel and functions and environmentalcleanup at closing sites. (4) The military construction appropriations bill is one of several annual pieces of legislation that provide funding for national defense. Other major appropriation legislation includes the defenseappropriations bill, which provides funds for all non-construction military activities of theDepartment of Defense and constitutes more than 90% of national security-related spending, and theenergy and water development appropriations bill, which provides funding for atomic energy defenseactivities of the Department of Energy and for civil projects carried out by the U.S. Army Corps ofEngineers. Two other appropriations bills, VA-HUD-Independent Agencies andCommerce-Justice-State, also include small amounts for national defense. (5) No funds may be expended by any agency of the federal government before they are appropriated. (6) In addition, for nearly half a centuryCongress has forbidden the Department ofDefense to obligate funds for any project or program until specific authorization is granted. (7) Thisexplains why, for defense funds, both authorization and appropriations bills are required. Twoseparate defense appropriations bills are written annually, a "Military Construction AppropriationsAct" dedicated to military construction, and a "National Defense Appropriations Act" covering allother defense appropriations. (8) Normally only one"National Defense Authorization Act" is passedeach year to authorize both of these appropriations. (9) Therefore, major debates over defense policyand funding issues, including military construction, can be associated with any of these bills.Because issues in the defense authorization and appropriations bills intertwine, this report includessalient parts of the authorization bill in its discussion of the military construction appropriationprocess. The separate military construction appropriations bill dates to the late 1950s. Traditionally, military construction was funded through annual defense or supplemental appropriations bills. However, the Korean War prompted a surge of military construction, followed by a steady increasein military construction appropriations. Given the strong and enduring security threat posed by theSoviet Union, a relatively high level of spending on military infrastructure appeared likely tocontinue. The appropriations committees established military construction subcommittees andcreated a separate military construction bill. The first stand-alone military construction bill waswritten for FY1959 (P.L. 85-852). Military construction appropriations are not the sole source of funds available to defense agencies for facility investment. The defense appropriations bill funds so-called minor constructionand property maintenance within its operations and maintenance accounts. In addition, constructionand maintenance of Morale, Welfare, and Recreation-related facilities are partially funded throughproceeds of commissaries, recreation user fees, and other non-appropriated income. Several special accounts are included within the military construction appropriation. Among these are the Homeowners Assistance Fund (Defense), (10) and the Department of Defense FamilyHousing Improvement Fund, (11) both of whichperform functions ancillary to the direct building ofmilitary infrastructure. Most funds appropriated by Congress each year must be obligated in that fiscal year. Military construction appropriations, though, are an exception. Because of the long-term nature ofconstruction projects, these funds can generally be obligated for up to five fiscal years. Consideration of the military construction budget begins when the President's budget is delivered to Congress each year, usually in early February. This year, the President submitted hisbudget request on February 4, 2002. Elective Quality of Life Construction. In recent years, attention has been focused on funding improvements to military housing, workplaces, andinstallation infrastructure (such as roads, utility services, and the like). Subcommittee hearingsduring previous congressional sessions contained lengthy discussions of the leveraging ofappropriated funds through the privatization of utility services at military installations and of somemilitary family housing. (12) Subcommittees havealso addressed the allocation of sufficient budgetauthority to support improved housing and workplace quality at overseas bases. During the mid-1990s, the Department of Defense evaluated more than half of its existing family housing as being substandard. In 1996, then-Secretary of Defense William Cohen set FY2010as the target date for the elimination of all substandard military housing. Private development wasseen as a way to speed refurbishment or replacement while concurrently reducing the burden onappropriated funds, and Congress authorized DOD to use a set of "alternative" business practicesin its negotiations with private contractors, to include the creation of long-term public-private jointventures at locations where they might prove beneficial. Since 1996, when the first agreement was concluded at Naval Air Station Corpus Christi/Naval Air Station Kingsville, Texas, contracts for sixteen separate projects have been awarded under this"Military Housing Privatization Initiative." These range in size from 150 housing units in Phase IIof the venture at Naval Air Station Kingsville, Texas, to 5,912 units at Fort Hood, Texas. Projectscovering 24,518 housing units are now underway at installations operated by all four militaryservices. An additional 41,503 units in 26 projects are currently pending solicitation, and another 32projects with 54,193 units are being planned. (13) DOD is exploring ways to extend the privatizationprogram to include the improvement of some unaccompanied housing. (14) In 1996, DOD set a target of FY2010 for the elimination of all substandard military housing. With recent increases in budget authority appropriated by Congress, DOD has revised this target dateto bring it forward to FY2007. The FY2003 budget authority request of $4.25 billion for militaryfamily housing exceeds the FY2002 enactment by $151 million. DOD also created a Defense Reform Initiative (DRI) during the 1990s in order remove itself from ownership, management, and responsibility for the operation of the public utilities at as manymilitary bases as feasible. (15) Congress authorizedthe service secretaries to do this by conveying theseutilities to private ownership by a local utility company or other entity. (16) The award of privatizationcontracts is expected to be completed by September 30, 2003. (17) Integrated with quality of life construction is the consolidation of overseas military facilities. By reducing the number of small installations and combining personnel onto fewer large bases, DODexpects to improve living and working conditions for those stationed overseas through more efficientutilization of its funds. Consolidation agreements have been concluded with both the FederalRepublic of Germany and the Republic of Korea. The commander of U.S. forces in Europe hasrequested funds for three construction projects to increase the capacity of the U.S. installation atGrafenwoehr, Germany. "Graf" is expected to accept personnel from 13 separate smaller facilitiesthat will be closed as part of the command's "Efficient Basing East" plan. A similar program, calledthe "Land Partnership Plan," has been negotiated between the commander of U.S. forces in Koreaand the government of the Republic of Korea. (18) This 10-year plan will close approximately half ofthe U.S. facilities currently located in South Korea and consolidate U.S. military personnel onto theremaining installations, which will be upgraded to accept them. Environmental Remediation on Closed Military Bases. Through legislation passed during its first session, the 107th Congressauthorized a new round of military base realignments and closures (BRAC). Criteria to select basesfor inclusion in the new BRAC will be created and members will be appointed to a BRAC reviewcommission during FY2003, with realignment and closure action scheduled to begin duringFY2005. (19) A significant portion of the federal property at closed installations during the 1995 BRAC round has been cleaned under the Defense Environmental Restoration Program (DERP) and title has beentransferred, but the process is not yet complete. For example, the 1995 BRAC round tasked theDepartment of the Army with closing and conveying title to approximately 248,800 acres of Armyproperty. As of February, 2002, the Army had disposed of 115,000 acres, or 46% of its total.Department of the Army has cited environmental remediation requirements as the principal reasonthat more property had not been conveyed. (20) DODmaintains as its goal the transfer of all 1995BRAC property before beginning the 2005 round and has requested $545 million in FY2003 BRACfunds. (21) The President requested $545.1 million in BRAC funding for FY2003, which the House passed. The Senate Appropriations Committee has recommended that an additional $100.0 million beappropriated in a BRAC Environmental Cleanup Acceleration Initiative in order to speed the transferof ownership of former military property to local authorities. Of this additional funding, $20 millionis to be allocated to the Army, $55 million to the Navy, and $25 million to the Air Force for their useat the most pressing unfunded environmental cleanup sites. Efficient Facilities Initiative. On August 3, 2001, the General Counsel of Department of Defense submitted legislative language to Congress for aprogram termed the "Efficient Facilities Initiative," or EFI. The EFI included DOD's plan for a roundof base realignments and closures during FY2003 and the permanent authorization and expansionto all services of the Brooks Air Force Base Development Demonstration Project. (22) This languagewould have granted the service secretaries the authority to convey title to some or all of the federalproperty on a military installation to a non-federal entity (such as a local economic developmentauthority) with the intention of leasing back only those facilities needed to support the base's militarymission. Congress incorporated the authority for both base realignment and closure and the EFI in the National Defense Authorization Act for FY2002 ( S. 1438 , P.L. 107-107 ). Title XXXof the Act established the procedure for carrying out a FY2005 (vice FY2003) BRAC round. Section2813, instead of granting the requested permanent authority for conveyance and lease-back,permitted the three service secretaries to nominate two military installations in each militarydepartment for a 4-year pilot project aimed at determining its potential for increasing the efficiencyand effectiveness of operations. To date, no facilities have been nominated for the pilot project. Table 1 shows the key legislative steps necessary for the enactment of the FY2003 militaryconstruction appropriations. It will be updated as the appropriation process moves forward. Table 1. Status of Military Construction Appropriations, FY2003 Dashes indicate no action yet taken. House Appropriations Action. The House Subcommittee on Military Appropriations held a series of hearings on thebudget request dealing with the construction and family housing requirements of theindividual services, both active and reserve components, and the European andPacific commands between February 6 and April 17, 2002. The Subcommitteemarked its bill June 12, and the full Committee followed on June 24. The bill( H.R. 5011 , H.Rept 107-533 ) was introduced on June 25, and the RulesCommittee introduced a rule ( H.Res. 462 ) on June 26. H.R. 5011 was considered, amended, and passed on a vote of 426-1 (Roll No. 277) onJune 27, 2002. The bill was received in the Senate on June 28.The House rejected theSenate amendment on September 10, 2002, and appointed conferees. Senate Appropriations Action. The Senate Committee on Appropriations Subcommittee on Military Constructionheld hearings during March. Committee markup on its version of the bill wascompleted on June 27, 2002. The bill ( S. 2709 , S.Rept. 107-202 ) wasreported on July 3 and placed on the Legislative Calendar under General Orders(Order No. 479). The bill was read twice in the Senate and placed on the LegislativeCalendar under General Orders on July 8, 2002 (Calendar No. 486). On July 17, theSenate substituted the language of S. 2709 for that of H.R. 5011 . The Senate passed the amended H.R. 5011 (96-3, Roll No. 181)in lieu of S. 2709 and appointed conferees on July 18, 2002. Conference Action. Conferees met on October 8. The House accepted the conference report ( H.Rept. 107-731 ) onOctober 10 on a 419-0 vote (Roll No. 458). The Senate adopted the conference reportby unanimous consent on October 11, 2002. The completed bill was sent to thePresident on October 18. Its companion authorization bill, H.R. 4546 ,had not been passed as of that date. The President signed the bill on October 23 as P.L. 107-249 . The Military Construction Appropriation Act and the National Defense Authorization Act for FY2003 each contain more than 700 line items, individualconstruction projects for which new budget authority has been granted by Congress.Of these, more than 300 were adjusted (increased or decreased) during the periodbetween budget submission in February until enactment in October and December,respectively. In the Appendix , Tables 10 and 11 list the line items that wereadjusted during the legislative process, indicating the amount of new budget authorityrequested by the President, appropriated in the House, the Senate, and the finalconference versions of the Military Construction Appropriations Act, and authorizedby the National Defense Authorization Act. It is possible to follow the changes inproposed legislation by consulting these tables, ascertaining where each product wasintroduced, adjusted, or eliminated as the Congress exercised its oversight andfunding responsibilities. A couple of examples may serve to illustrate how these tables can be used. 1. Table 10 shows a presidential budget request of $38 million to fund Phase IV in the construction of an ammunition demilitarization facility at Pueblo Depot,Colorado, an installation intended to disassemble and destroy munitions stockpiles.Congress assigned responsibility for this program to the Department of Defense, andDOD has, in turn, passed executive responsibility for the program to the Departmentof the Army. The presidential submission placed this construction funding in theArmy budget, but Congress neither appropriated nor authorized the funding (zeroingout the request). Instead, Table 10 indicates funding for Pueblo Depot under theDefense-Wide (DOD) budget, with the House granting the full $38 million, theSenate passing a slightly reduced $36.1 million, and both appropriators andauthorizers agreeing on the requested amount of $38 million. The effect was toremove the project from the Army's budget and place it under the Department ofDefense. 2. A second example is the Air Force alteration of the Graduate Education Facility at Wright-Patterson Air Force Base, Ohio. No funds were requested by the President,but both chambers added $13 million in appropriations and authorization for theproject. Table 11 can be similarly used for examining the military family housing portion of military construction appropriations. The first Army project listed is asingle housing unit in Stuttgart, Germany. The budget submission requested $990thousand for the work. The House passed an appropriation for the full amount, whilethe Senate reduced the project to $500 thousand. Neither the appropriationsconference nor the authorization included any funding (zeroing out the request). Several issues regarding military construction have gained visibility during thelegislative deliberations of the current session of Congress. Among these are: overalland specific account funding levels requested by the Administration; congressionaladditions to the military construction budget request; military housing (including theencouragement of private sector financing of housing construction and maintenance);and funding requested through the Defense Emergency Response Fund. Overall and Specific Account Funding Levels. The FY2003 budget submitted by the President on February4, 2002, requested $8.987 billion in new budget authority, an amount $1.62 billionbelow the 2002 enactment. Subsequent additional requests included in the DefenseEmergency Response Fund (DERF) raised the total request to $9.578 billion in timefor House consideration of its bill. An additional $122.5 million in Army DERFrequests was later received by Congress and will be considered by the Senate. Thisraises the total Presidential budget request for FY2003 to $9.66 billion. The Senateis also expected to consider a $200 million Army and Air Force TransformationInitiative intended to appropriate a funding pool to accelerate the creation ofinfrastructure to support the Army's Interim Brigade Combat Team and Air ForceC-17 aircraft mobility programs. This and the upward adjustment of BRACenvironmental cleanup funding was not reckoned with by the House. The SenateAppropriations Committee has recommended a total of $10.62 billion in new militaryconstruction budget authority for FY2003. Within the overall military construction appropriation, there was a substantial change in how budget authority was allocated between the FY2002 enactment, theFY2003 request, and the bills as passed by the House and the Senate as reflected in Table 2 . Increases in budget authority are evident in the construction and renovation of military family housing both within the United States and at overseas installations,offset somewhat by a reduction in the unspecified location accounts devoted tomaintenance, management, provision of utilities, etc. There is also an increase infunding requested for general military construction overseas, reflecting a DOD effortto increase the quality of life in the workplace for military personnel stationed there. Table 2. Budget Authority by Location ($000) Sources: Calculated by project from DOD Comptroller, Construction Programs (C-1), Department of Defense Budget, Fiscal Year 2003 , February 2002, H.Rept.107-323 , S.Rept. 107-202 , and H.Rept. 107-731 . a. These figures include the additional requests of the FY2003 DERF as considered by the House and Senate, respectively. b. Examples of location unspecified projects are energy conservation funding, somemajor and minor construction projects, and classified projects for militaryconstruction; and maintenance, furnishings and utilities accounts for familyhousing, among others. c. Special accounts include BRAC, the NATO Security Investment Fund, theHomeowners Assistance Fund (zeroed out this year), and the DOD FamilyHousing Improvement Fund. The most noticeable reduction in budget authority is seen in domestic military construction. Table 3 compares military construction budget authority betweenFY2002 and FY2003 for military construction projects located within the UnitedStates, divided between the active duty and reserve (National Guard and federalreserves) components. Table 3. Domestic Military Construction, Active Duty and Reserves ($000) Source: DOD Comptroller, Construction Programs (C-1), Department of Defense Budget, Fiscal Year 2003 , February 2002. a. These figures do not include the additional funds requested for the FY2003 DERF. These figures represent decreases of 38.8% in active duty and 71.9% in reserve construction funding between FY2002 and FY2003. Secretary of Defense DonaldRumsfeld and DOD Comptroller Dov Zakheim stated in a press briefing on February4, 2002, that they expected a 20 to 25% reduction in military bases during theFY2005 BRAC round and anticipated this with a reduced construction request. (23) Thisdecrease in construction was to be offset by an increase in sustainment funds. (24) Table4 compares the DOD sustainment funds requested for FY2003 with those actuallyexpended in FY2001 and appropriated for FY2002. (25) Table 4. Sustainment Funding Trend, FY2001-FY2003 (Current $000) Source: DOD Comptroller, Operation and Maintenance Programs (O-1): Department of Defense Budget for Fiscal Year 2003 , February 2002. Note: Total Obligational Authority (TOA). Sustainment includes all DODfacilities sustainment, restoration, and modernization (FSRM) accounts. * These figures do not include additional funds requested for the FY2003DERF. The table shows that sustainment funding rose $267 million between FY2001 and FY2002. If the same rate of increase (4.8%) occurred between FY2002 andFY2003, DOD would have been expected to request $6.089 billion. Instead, DODrequested $6.488 billion, or approximately $398 million beyond the normalexpectation. This increase may be considered to constitute the substantive additionalfunds devoted to maintaining existing property. In addition, some Members have deemed DOD funding requests for the Army National Guard, the Air National Guard, and the federal reserves particularlyinadequate. (26) Until the late 1980s, the amount ofmilitary construction fundingappropriated by Congress for the Guard and Reserve rose steadily, closely matchingthe amounts requested by DOD. For FY1989, though, the Administration began todecrease its requests for Guard and Reserve construction. Congress responded byappropriating funds in excess of the request (see Figure 1 ). Senator ChristopherBond commented during floor debate on FY1996 military constructionappropriations that "National Guard forces traditionally have been underfunded" inconstruction requests submitted by the Pentagon. (27) Since FY1989, Congress hasconsistently appropriated more than the Administration request, and the gap betweenrequest and enactment has grown considerably. The House, after including the DERFrequest, passed an appropriation for Guard and Reserve construction $210 millionabove that asked for by the Administration. The Senate Appropriations Committeerecommended adding $290 million to the Administration's Guard and Reserveconstruction request. Military Housing. Military housing for both families and unaccompanied has been a highly visible militaryconstruction issue for several years. In the mid 1990s, then-Secretary of DefenseWilliam Cohen announced a goal of the elimination of substandard military housingby 2010. He proposed to do this using an increase in traditional DOD-fundedconstruction and renovation, plus less orthodox methods such as partnering withprivate enterprise to build and maintain housing and increasing the military BasicAllowance for Housing (BAH) to cover the cost of off-base housing. (28) At the presenttime, approximately one-third of military families live in government-ownedhousing. At the outset of the effort, DOD estimated that more than half of existing military family housing did not meet its own minimum housing standards withrespect to living space, amenities, etc. In addition, BAH compensation covered only85% of the cost (accommodation and utilities) of living off-base. DOD and Congressthen initiated several programs to encourage private investment and to increasefunding of traditional housing construction for both families and unaccompaniedmembers, and to increase the percentage of off-base housing costs covered bymilitary allowances. DOD now estimates that substandard housing will disappear forall military members and their families by 2007 and that out-of-pocket expensesassociated with living on the local economy will be eliminated by 2005. (29) Because improvement and expansion of adequate housing on military installations may encourage the movement of significant numbers of military familiesonto bases, some members have expressed concern that local school districts servinglarge military communities may find their facility and personnel plans unexpectedlydisrupted. Language included in the House report for the Bob Stump NationalDefense Authorization Act ( H.Rept. 107-436 accompanying H.R. 4546 )directs DOD to report by March 1, 2003, on the situations at three Army and AirForce installations (Ft. Bragg, North Carolina, Ft. Hood, Texas, and Lackland AirForce Base, Texas) where large housing privatization projects are underway. (30) Defense Emergency Response Fund. The Administration defense budget request for operations andmaintenance (considered part of the defense appropriation, not the militaryconstruction appropriation) contained a single new entry for $20.1 billion entitled theDefense Emergency Response Fund (DERF). (31) This is intended for use by DOD torespond to or protect against acts of terrorism. The request contained detailedjustification for $10.1 billion, or about half of the total request, of which DODidentified approximately $594 million as appropriate for consideration as militaryconstruction to enhance physical security at military installations. (32) The DERF is atransfer fund, which is used to shift appropriations between accounts withoutadherence to normal congressional reprogramming or notification requirements. TheHouse Appropriations Committee considered $594 million of the DERF to be partof the Administration's military construction appropriation request and added it tothe suitable appropriations accounts. The Administration forwarded an additionalDERF request too late for House consideration but in time for Senate and conferenceaction. DERF funding, as requested by the President and recommended by theconference committee, is shown in Table 5 . Additional Omnibus Appropriations. Additional defense and military constructionappropriations language was included in Division M (Other Matters), Title I (DefenseRelated Technical Corrections) of the Senate amendment to H.J.Res. 2 of the 108th Congress (the Omnibus Appropriations Act) (January 15, CRS988-S909). Several provisions of the bill amend P.L. 107-249 (the MilitaryConstruction Act for FY2003). Section 103 of the bill amends Section 124 of the original legislation, which had stated that "None of the funds appropriated or made available by this Act may beobligated for Partnership for Peace Programs in the New Independent States of theformer Soviet Union," to read "Not more than $2,000,000 of the funds appropriatedor made available by this Act may be obligated for Partnership for Peace Programs." Section 104 reduces the overall appropriation for Air Force military construction by $18,600,000 and transfers it to Air Force Reserve military construction, a 28%increase in the latter account (see Table 7 ). Section 105 permits the $15,000,000 appropriated for land acquisition at Nellis Air Force Base to be transferred to the U.S. Fish and Wildlife Service to fulfillobligations under the Military Lands Withdrawal Act of 1999. (33) The USFWS is thenpermitted to grant these funds to the National Fish and Wildlife Foundation toreplace public lands withdrawn from public use under the 1999 Act. The bill also amended P.L. 107-248 , the National Defense Appropriations Act for Fiscal Year 2003. Included under those provisions were changes in variousreprogramming thresholds, a raise in the limit placed on expense/investment valuefor items purchased with Operation and Maintenance funds from $100,000 to$250,000, various transfers of defense appropriations between accounts, and anadditional appropriation of $3.89 billion. (34) Additional discussion of H.J.Res. 2 can be found in CRS Report RL30343 , Continuing Appropriations Acts: Brief Overview of Recent Practices , by[author name scrubbed]. (35) Table 5. DERF Military Construction Allocation by Account ($000) Sources: S.Rept. 107-202 , H.Rept. 107-731 . Between FY1985 and FY1998, funding devoted to military constructiondeclined steadily as DOD and Congress struggled with a changing strategicenvironment, a shrinking military force, and the uncertainties associated with severalrounds of base realignments and closures. Appropriations began to rise with FY1998as Congress sought to replace outdated facilities and improve the quality of life formilitary personnel at home and in the workplace. Administration requests for militaryconstruction funding (not including BRAC and family housing) continued to declineuntil FY2000, but have risen forFY2001 and 2002. The request for FY2003 dips, butDOD projects that its annual construction requests will approximately triple betweenFY2003 and FY2007 (see Figure 2 ). Prior to FY1994, Congress considered Administration requests to exceed realconstruction requirements, typically appropriating less new budget authority thanrequested. This pattern reversed with the FY1995 budget. Every year since then,Congress has added to Administration requests, countering what Members havetermed "inadequate" funding for military construction. The DOD request forconstruction funds for FY2003 fell relative to both its FY2002 request and thesubsequent enactment, anticipating the FY2005 round of base realignments andclosures, according to statements made by Secretary of Defense Donald Rumsfeldand DOD Comptroller Dov Zakheim. DOD projects that future requests for militaryconstruction will rise steadily and rapidly. Table 6 shows overall military construction program funding since FY1999 (including BRAC and Family Housing). Table 7 breaks down the FY2003 requestby appropriations account and compares it to FY2002 levels. Table 8 showscongressional action on current military construction appropriations by account. Table 9 compares Administration military construction requests and enactments forGuard and Reserve projects from FY1993-2003. H.R. 4775 (Young). Making supplemental appropriations for the fiscal year ending September 30, 2002, and for other purposes. This bill does notcontain significant military construction funding. Introduced as an original bill onMay 20, 2002, by the House Committee on Appropriations with H.Rept. 107-480 andplaced on the Union Calendar (Calendar No. 289). Passed in the House on May 24,2002, 280-138 (Roll No. 206), and laid before the Senate on June 3. The Senatestruck all after the Enacting Clause and substituted the text of S. 2551 in its place. It was then placed on the Legislative Calendar under General Orders(Calendar No. 405). Debate and amendment of the bill began on June 4, 2002, andcontinued through June 6. On June 7, the Senate passed the bill with an amendment,substituting the text of its own version of the bill ( S. 2551 ), by a vote of71-22 (Record Vote No. 145), insisted on its amendment, and appointed conferees.The House disagreed with the amendment and appointed its own conferees on June12 (CR H3459-H3461). A conference report was filed on July 19 ( H.Rept. 107-593 ,CR H4935-H4985). The House took up the conference report as unfinished businesson July 23 (CR H5201-H5229, H5289) and agreed with it on a roll call vote (397-32,Roll no. 328). The Senate considered the conference report on July 24(S7263-S7282) and agreed with a 92-7 vote (Record Vote Number 188). The actionwas reported to the House and the bill was cleared for the President. The bill wasenacted by the President on August 2, 2002 ( P.L. 107-206 ). H.R. 5011 (Hobson). Making appropriations for military construction, family housing, and base realignment and closure for the Departmentof Defense for the fiscal year ending September 30, 2003, and for other purposes.The House Committee on Appropriations Subcommittee on Military Constructionheld a series of hearings between February 6 and April 17, 2002. The Subcommitteemarkup was forwarded to the full Committee on June 12. The full Committee marktook place on June 24. The bill was reported on June 25 ( H.Rept. 107-533 , CRH3914, H3927). A rule was reported ( H.Res. 462 ) on the bill on June26 (CR H4039, H4064, H4067). H.R. 5011 was considered and passedon a 426-1 vote (Roll No. 277). The bill was read twice in the Senate and placed onthe Legislative Calendar under General Orders on July 8, 2002 (Calendar No. 486).On July 17, the Senate substituted the language of S. 2709 for that of H.R. 5011 (CR S6931-S6934). The Senate passed the amended H.R. 5011 (96-3, Roll No. 181) and appointed conferees on July 18,2002 (CR S6972-S6976). The House rejected the Senate amendment and appointedits conferees on September 10, 2002. Conferees met on October 8. The Houseaccepted the conference report ( H.Rept. 107-731 ) on October 10 on a 419-0 vote(Roll No. 458). The Senate adopted the conference report by unanimous consent onOctober 11. The completed bill was sent to the President on October 18, thoughwithout the companion authorization bill ( H.R. 4546 ), which had notbeen passed as of that date. The President signed the bill on October 23 as P.L.107-249 . S. 2709 (Feinstein). The Senate Committee on Appropriations Subcommittee on Military Construction held hearings during March. The Senatereceived the House Military Construction Appropriations Bill ( H.R. 5011 ) on June 28 (CR S6317). The Senate Appropriations Committee marked itsversion of the bill, recommending $10.62 billion in new budget authority, on June 27.The bill was reported on July 3 ( S.Rept. 107-202 , CR July 8, 2002, S6361) andplaced on the Legislative Calendar under General Orders (Calendar No. 479). TheSenate amended H.R. 5011 by substituting the language of S. 2709 on July 18, 2002, and passed the amended H.R. 5011 in lieu of S. 2709 (see paragraph above). H.R. 4546 (Stump, by request). (36) To authorize appropriationsfor FY2003 for military activities of the Department of Defense, and for militaryconstruction, to prescribe military personnel strengths for FY2003, and for otherpurposes. Introduced on April 23, 2002, and referred to the Committee on ArmedServices, it was further referred to the Subcommittees on Military Personnel, MilitaryInstallations and Facilities, and Military Readiness (amendment added) on April 25and returned to the full Committee on the same day. The Subcommittee on MilitaryInstallations and Facilities, which exercises jurisdiction over the military constructionportion of the authorization bill, defeated (3-13-2) an amendment that would haverepealed existing authority to conduct an FY2005 round of base realignments andclosures (BRAC). The bill was referred to the Subcommittees on MilitaryProcurement and Military Research and Development on April 30 and returned to thefull Committee the same day. The full Committee considered the bill on May 1,2002, and ordered it reported, rejecting an identical BRAC-stopping amendment(19-38). The bill was reported on May 3, 2002 ( H.Rept. 107-436 , CR H2104-2105),and placed on the Union Calendar (Calendar No. 258). A supplemental report (adissenting opinion, H.Rept 107-436 , Part II, CR H2108) was filed on May 6. Broughtto the floor on May 9, 2002, subject to a rule (H.Res.415, H.Rept.107-450 ). H.R. 4546 was debated, amended, and passed by recorded vote (359-58,Roll no 158) on May 10. The bill was received in the Senate on May 14, 2002, andon May 16 was placed on the Legislative Calendar under General Orders (CalendarNo. 379). The bill was amended in the Senate on June 27 by the substitution of thetext of S. 2514 (see below) after the enabling clause CR S6225). The billwas passed by unanimous consent and the Senate appointed conferees. A messageon the Senate action was sent to the House on July 8. On July 25, the RulesCommittee reported to the House ( H.Res. 500 ) the rule for considerationof the amended bill. The House amended the Senate amendment and appointedconferees and voted to instruct them (419-2, Roll no. 349). The Senate disagreed byUnanimous Consent to the House amendment on July 26 and appointed conferees.The conferees began meeting on September 5, 2002. On October 10, the House voted391-0 to instruct its conferees (Roll No. 463). The Military ConstructionAppropriations bill ( H.R. 5011 ) was sent to the President on October 18and enacted as P.L. 107-249 . Conferees reported the authorization bill to the Houseon November 12 ( H.Rept. 107-772 ), where it was agreed to by voice vote. ThePresident enacted the bill as P.L. 107-314 on December 2, 2002. H.R. 4547 (Stump, by request). To authorize appropriations for FY2003 for military activities of the Department of Defense and to prescribe militarypersonnel strengths for FY2003. Companion bill to H.R. 4546 ,introduced on April 23, to authorize the $10.0 billion designated as incrementalfunding for ongoing operations in the war on terrorism (the "war reserve fund"), asspecified in the Budget Resolution for FY2003 ( H.Con.Res. 353 ). Alsoknown as the Costs of War/Substitute Amendment, the original bill was amended onMay 1 to authorize the war reserve fund. Of this, $3.7 billion would be used toreplace equipment destroyed in the war in Afghanistan, upgrade equipment anddefray other war-related costs, and offer war-related pay to military personnel. HouseArmed Services Committee held its markup on July 18, 2002, and reported the bill( H.Rept. 107-603 ) on July 23 (Union Calendar, Calendar No. 365). On a motion tosuspend the rules and pass the bill (2/3 required), the bill was passed (413-3, Roll no.335) early on July 24. The bill was received in the Senate on July 24 and referred tothe Committee on Armed Services. S. 2514 (Levin). (37) An original bill to authorize appropriations forFY2003 for military activities of the Department of Defense, for militaryconstruction, and for defense activities of the Department of Energy, to prescribepersonnel strengths for such fiscal year for the Armed Forces, and for other purposes.Introduced as an original measure by the Senate Committee on Armed Forces on May15, 2002 ( S.Rept. 107-151 , CR S4387). Placed on the Legislative Calendar underGeneral Orders (Calendar No. 370). Debate on the defense authorization bill beganin the Senate on June 19 (CR beginning S5727). S. 2514 was passed onJune 27 with amendments on a vote of 97-2 (Record Vote No. 165). It was thenincorporated into H.R. 4546 and passed by unanimous consent (CRS6178-80, S6182). H.J.Res. 2 (Young). The 107th Congress passed only two (defense and military construction) of the usual 13 appropriations bills for FY2003.At the convening of the 108th Congress on January 7, 2003, the chairman of theHouse Appropriations Committee introduced a bill making further appropriations forFY2003. The bill was passed on January 8 (CR H121) and received in the Senate onJanuary 9. It was placed on the Legislative Calendar under General Orders (CalendarNo. 1) and laid before the Senate be unanimous consent on January 15 (CRS340-S839). Senator Stevens offered an amendment in the nature of a substitute.Numerous additional amendments were offered between January 15 and January 23,when the Senate passed the amended bill by a Yea-Nay vote of 69-29 (Record VoteNumber 28, CR S1379-S1419). The Senate insisted on its amendment and appointedconferees. On January 29, the House disagreed with the Senate amendment andagreed without objection to a conference (CR H224-9). Mr. Obey moved that theconferees be instructed, but the House defeated the motion 200-209 (Roll no. 17).The Speaker then appointed conferees. The conferees began meeting on February 10,2003. Table 6. Military Construction Appropriations, FY1999-FY2003 (new budget authority in millions of dollars) Source: Actual FY1999-2001 data, Estimate FY2002 and Request FY2003 from Department of Defense (DOD), Financial Summary Tables , February 2002 andprevious years' reports, H.Rept. 107-731 . Notes: "Actual" and "Estimated" budget authority differs from "Enacted" amountsby funds reprogrammed (transferred) by the Department of Defense betweenappropriations accounts. Military Construction in this table includes BRAC funding,but not NSIP. * Includes $612 million in DERF, as considered by the conference committee. Table 7. Military Construction Appropriations by Account: FY2002-FY2003 (new budget authority inthousands of dollars) Source: Data for FY2002 Enacted from FY2003 Budget Request, Conference Report from H.Rept. 107-731 . Note: FY2002 Enacted includes P.L. 107-64 Sec. 130 (here listed as "Foreign Curr.Fluct.") and Sec. 132 rescissions. * Includes $692 million in DERF, as considered by the conference committee, doesnot include additional appropriations included in H.J.Res 2 of the 108thCongress. Table 8. Military Construction FY2003 Appropriations by Account; Congressional Action (inthousands of dollars) Sources: H.Rept. 107-533 , S.Rept. 107-202 , H.Rept. 107-731 . * Includes $712 million in DERF, as considered by the Senate, and $692 million asconsidered by the conference committee, does not include additional appropriationsincluded in H.J.Res 2 of the 108th Congress. Table 9. Congressional Additions to AnnualDOD Budget Requests for National Guard and Reserve Military Construction,FY1993-FY2003 (current year dollars in thousands) Source: Department of Defense, Financial Summary Tables, successive years. * Includes DERF requests of $594 million (House) and $717 million (Request andSenate), does not include additional appropriations included in H.J.Res 2 of the 108th Congress. CRS Report RL31010 . Appropriations for FY2002: Military Construction , by Daniel Else. CRS Report RL31305 . Authorization and Appropriations for FY2003: Defense , by [author name scrubbed] and [author name scrubbed]. CRS Report RL31349(pdf) . Defense Budget for FY2003: Data Summary , by [author name scrubbed] and [author name scrubbed]. CRS Report RL31187(pdf) . Terrorism Funding: Congressional Debate on Emergency Supplemental Allocations , by [author name scrubbed] and Larry Q. Nowels, CRS Report RL31005 . Appropriations and Authorization for FY2002: Defense , coordinated by [author name scrubbed] and [author name scrubbed]. CRS Report RL30002(pdf) . A Defense Budget Primer , by [author name scrubbed] and [author name scrubbed]. CRS Report RL30440 . Military Base Closures: Where Do We Stand , by [author name scrubbed]. CRS Report RL30051 . Military Base Closures: Time for Another Round? , by [author name scrubbed]. CRS Issue Brief IB96022. Defense Acquisition Reform: Status and Current Issues , by [author name scrubbed]. Legislative Branch Sites House Committee on Appropriations http://www.house.gov/appropriations/ Senate Committee on Appropriations http://www.senate.gov/~appropriations/ CRS Appropriations Products Guide http://www.crs.gov/products/appropriations/apppage.shtml Congressional Budget Office http://www.cbo.gov/ General Accounting Office http://www.gao.gov/ U.S. Department of Defense Sites U.S. Department of Defense, Office of the Under Secretary of Defense (Comptroller), FY2003 Budget Materials http://www.dtic.mil/comptroller/fy2003budget/ U.S. Department of Defense, Installations Home Page http://www.acq.osd.mil/installation/ White House Sites Executive Office of the President, Office of Management and Budget, Budget Materials http://www.whitehouse.gov/omb/budget/ Office of Management & Budget http://www.whitehouse.gov/omb/ These tables include only those projects and other line items that were eitherrequested by the President or appropriated or authorized by Congress. Table 10 shows changes to military construction projects and line items, while Table 11 doesthe same for family housing. Many DERF items show presidential requests and noHouse-recommended appropriations. This was caused by the late submission by thePresident of much of the DERF request. Table 10. Changes in Project Funding, Military Construction Fiscal Year 2003 Appropriations and Authorization ($000) Sources: FY2003 Budget Request, H.Rept. 107-533 , S.Rept. 107-202 , H.Rept. 107-731 , H.Rept.107-772 . a. Standard postal abbreviations for states are used. GR=Greece; IT=Italy; ZC=Unspecified Location,Classified Project; ZU=Unspecified Location, Unclassified Project. Table 11. Changes in Project Funding, Military Family Housing Fiscal Year 2003 Appropriations and Authorization ($000) Sources: FY2003 Budget Request, H.Rept. 107-533 , S.Rept. 107-202 , H.Rept. 107-731 , H.Rept.107-772 . a. Standard postal abbreviations for states are used. GY= Federal Republic of Germany; GR=Greece; ZU=Unspecified Location, Unclassified Project.

The military construction (MilCon) appropriations bill provides funding for (1) military construction projects in the United States and overseas; (2) military family housing operations andconstruction; (3) U.S. contributions to the NATO Security Investment Program; and (4) the bulk ofbase realignment and closure (BRAC)costs. On February 4, 2002, the Administration submitted a $379 billion FY2003 defense budget request. Of this, $9.0 billion was designated for accounts falling within the jurisdiction of theAppropriations Committees' subcommittees on military construction. This request wasapproximately $1.7 billion less than that appropriated for FY2002. The decrease resulted from a$2.1 billion reduction in domestic military construction that was offset somewhat by increases forfamily housing and for building at military installations overseas. The Department of Defense statedthat some projects were withheld anticipating the FY2005 base realignments and closures (BRAC)round. To offset the decrease, DOD increased its request to maintain and rehabilitate existing defenseproperty (funded from other appropriations) by approximately $677 million above the amountenacted in FY2002. $4.2 billion of this year's request is devoted to military construction projects.According to the President's current national defense budget estimate, requests for these sameaccounts are expected to rise to $12.7 billion by FY2007. Amendments to the FY2003 militaryconstruction appropriation are included in H.J.Res. 2 of the 108th Congress. In a separate action for the Defense Emergency Response Fund (DERF), the Administration requested an additional $594 million (subsequently raised to $717 million) in military constructionbudget authority. This report contains information on how this has been apportioned between theservices. For the current status of DERF legislation, see CRS Report RL31305 , Authorization andAppropriations for FY2003: Defense , by [author name scrubbed] and [author name scrubbed]. Authorization of military construction is included within the defense authorization bill. The House passed its version of the bill ( H.R. 4546 ) on May 10. The Senate Armed ServicesCommittee marked its authorization bill ( S. 2514 ) and reported it on May 15. TheSenate substituted the text of S. 2514 for that of H.R. 4546 , passed theamended bill, and appointed conferees on June 27, 2002. The House further amended the bill andappointed conferees on July 26. Conferees began meeting on September 5, 2002, reporting the billon November 12 ( H.Rept. 107-772 ). The President enacted the bill as P.L. 107-314 on December2. Military construction appropriations markup by the House Appropriations Committee occurred on June 24. The bill ( H.R. 5011 ) was introduced on June 25 and passed on June 26. TheSenate Appropriations Committee marked its version of the bill ( S. 2709 ) on June 27. On July 17, the Senate substituted the language of S. 2709 for that of H.R. 5011 , passed the amended bill on July 18, and appointed conferees. The House rejected the Senateamendment on September 10. The House and Senate adopted the conference report ( H.Rept.107-731 ) on October 10 and 11, respectively, and the bill was enacted by the President on October23 as P.L. 107-249 . This report will be updated as necessary. Key Policy Staff * FDT = Foreign Affairs, Defense, and Trade Division of the Congressional Research Service.

The Foreign Intelligence Surveillance Act (FISA) provides a statutory framework by which government agencies may, when gathering foreign intelligence for an investigation, obtain authorization to conduct electronic surveillance or physical searches, utilize pen registers and trap and trace devices, or access specified business records and other tangible things. Authorization for such activities is typically obtained via a court order from the Foreign Intelligence Surveillance Court (FISC), a specialized court created to act as a neutral judicial decisionmaker in the context of FISA. Shortly after the 9/11 terrorist attacks, Congress enacted the USA PATRIOT Act, in part, to "provid[e] enhanced investigative tools" to "assist in the prevention of future terrorist activities and the preliminary acts and crimes which further such activities." That act and subsequent measures amended FISA to enable the government to obtain information in a greater number of circumstances. At the time of enactment, these expanded authorities prompted concerns regarding the appropriate balance between national security interests and civil liberties. Perhaps in response to such concerns, Congress established sunset provisions which apply to three of the most controversial amendments to FISA: Section 6001(a) of the Intelligence Reform and Terrorism Prevention Act (IRTPA), also known as the "lone wolf" provision, which simplifies the evidentiary showing needed to obtain a FISA court order to target non-U.S. persons who engage in international terrorism or activities in preparation therefor, specifically by authorizing such orders in the absence of a proven link between a targeted individual and a foreign power; Section 206 of the USA PATRIOT Act, which permits multipoint, or "roving," wiretaps (i.e., wiretaps which may follow a target even when he or she changes phones) by adding flexibility to the manner in which the subject of a FISA court order is specified; and Section 215 of the USA PATRIOT Act, which authorizes orders compelling a person to produce "any tangible thing" that is "relevant" to an authorized foreign intelligence, international terrorism, or counter-espionage investigation. These provisions were originally set to expire on December 31, 2005, but were extended multiple times, with slight modifications, through June 1, 2015. In summer 2013, media began reporting on several foreign intelligence activities conducted by the National Security Agency (NSA), including the bulk collection of telephone metadata under Section 215. The controversy surrounding Section 215 complicated efforts to reauthorize all three of the expiring provisions, and they eventually expired on June 1, 2015. One day later, Congress enacted the USA FREEDOM Act, which placed new limitations on the scope of the government's foreign intelligence activities, while simultaneously extending the expired provisions through December 15, 2019. FISA, enacted in 1978, provides a statutory framework which governs governmental authority to conduct, as part of an investigation to gather foreign intelligence information, electronic surveillance and other activities to which the Fourth Amendment warrant requirement would apply if they were conducted as part of a domestic criminal investigation. Its statutory requirements arguably provide a minimum standard that must be met before foreign intelligence searches or surveillance may be conducted by the government. The three amendments to FISA covered by this report are the "lone wolf," "roving wiretap," and Section 215 provisions. Although the amendments are often discussed as a group and may implicate similar questions regarding what legal standards govern the FISC's determinations, unique historical and legal issues apply to each amendment. As a result of the leaks by Edward Snowden, Section 215 has come to be the most controversial provision in recent years, as well as the provision with the most extensive legislative and litigation history. Section 215 of the USA PATRIOT Act broadened federal officials' access to materials in investigations to obtain foreign intelligence information not concerning a United States person or to protect against international terrorism or clandestine intelligence activities. It both enlarged the scope of materials that may be sought and lowered the standard for a court to issue an order compelling their production. Prior to the USA PATRIOT Act, FISA authorized the production of only four types of business records in foreign intelligence or international terrorism investigations. These were records from common carriers, public accommodation facilities, storage facilities, and vehicle rental facilities. The USA PATRIOT Act expanded the scope of records to authorize the production of "any tangible things." The scope of documents potentially covered by Section 215 was not changed by the USA FREEDOM Act. Section 215 of the USA PATRIOT Act also modified the evidentiary standard the FISC would apply before issuing an order compelling the production of documents. Prior to enactment of Section 215, an applicant had to have "specific and articulable facts giving reason to believe that the person to whom the records pertain is a foreign power or an agent of a foreign power." In contrast, under Section 215 as originally enacted, the applicant only needed to "specify that the records concerned [were] sought for a [foreign intelligence, international terrorism, or espionage investigation.]" In 2005, Congress further amended FISA procedures for obtaining business records. The applicable standard was changed to require "a statement of facts showing that there are reasonable grounds to believe that the tangible things sought are relevant to a [foreign intelligence, international terrorism, or espionage investigation.]" Under this standard, records are presumptively relevant if they pertain to: a foreign power or an agent of a foreign power; the activities of a suspected agent of a foreign power who is the subject of such authorized investigation; or an individual in contact with, or known to, a suspected agent of a foreign power who is the subject of such authorized investigation. Beginning in 2006, the government began to use orders of the FISC issued pursuant to Section 215 to collect large amounts of domestic telephone metadata in bulk with the goal of helping to detect and identify individuals who were part of terrorist networks. This program is frequently described as collecting telephone metadata "in bulk" to distinguish it from the narrower collection of metadata pertaining to an identified individual or group of individuals that is commonplace in both law enforcement and national security investigations. Following the public disclosure of these bulk intelligence activities, Section 215 was amended by the USA FREEDOM Act to additionally require the use of a "specific selection term" (SST) to "limit collection to the greatest extent reasonably practicable." An SST was defined as "a term that specifically identifies a person, account, address, or personal device, or any other specific identifier." These amendments also expressly prohibited orders under Section 215 that are limited only by broad geographic terms (such as a state or zip code) or named communications service providers (such as Verizon or AT&T). A slightly relaxed standard can be used under the amended Section 215 to obtain telephone metadata on an ongoing basis, but only for international terrorism investigations. Whereas a standard order under Section 215 would produce only those records that are responsive to an approved SST, an order seeking telephone records for an international terrorism investigation can also be used to produce a second set of telephone records that are not themselves responsive to an approved SST, but that are connected to one of the records that was directly produced by an SST. For example, if Alice called Bob, and Bob also called Charles, then a single Section 215 order that used Alice's phone number as an SST could obtain records of the call to Bob as well as records of the call from Bob to Charles. In order to take advantage of this increased scope of production, the government would need to demonstrate to the FISC that there was a "reasonable articulable suspicion" that the SST is associated with a foreign power, or an agent of a foreign power, who was engaged in international terrorism. Orders issued under Section 215, as amended, are accompanied by nondisclosure orders prohibiting the recipients from disclosing that the FBI has sought or obtained any tangible things pursuant to a FISA order. However, the recipient may discuss the order with other persons as necessary to comply with the order, with an attorney to obtain legal advice or assistance, or with other persons as permitted by the FBI. The recipient must identify persons to whom disclosure has been made, or is intended to be made, if the FBI requests, except that attorneys with whom the recipient has consulted do not need to be identified. The USA PATRIOT Improvement and Reauthorization Act of 2005 provided procedures by which a recipient of a Section 215 order may challenge orders compelling the production of business records. Once a petition for review is submitted by a recipient, a FISC judge must determine whether the petition is frivolous within 72 hours. If the petition is frivolous, it must be denied and the order affirmed. The order may be modified or set aside if it does not meet the requirements of FISA or is otherwise unlawful. Appeals by either party may be heard by the Foreign Intelligence Court of Review and the Supreme Court. Judicial review of nondisclosure orders operates under a similar procedure, but such orders are not reviewable for one year after they are initially issued. If the petition is not determined to be frivolous, a nondisclosure order may be set aside if there is no reason to believe that disclosure may endanger the national security of the United States, interfere with a criminal, counterterrorism, or counterintelligence investigation, interfere with diplomatic relations, or endanger the life or physical safety of any person. A petition to set aside a nondisclosure order may be defeated if the government certifies that disclosure would endanger the national security or interfere with diplomatic relations. Absent any finding of bad faith, such a certification is to be treated as conclusive by the FISC. If a petition is denied, either due to a certification described above, frivolity, or otherwise, the petitioner may not challenge the nondisclosure order for another year. Appeals by either party may be heard by the Foreign Intelligence Court of Review and the Supreme Court. Commonly referred to as the "lone wolf" provision, Section 6001(a) of IRTPA simplifies the evidentiary standard used to determine whether an individual, other than a citizen or a permanent resident of the United States, who engages in international terrorism, may be the target of a FISA court order. It does not modify other standards used to determine the secondary question of whether the electronic surveillance or a physical search of the subject of a court order is justified in a specific situation. The historical impetus for the "lone wolf" provision involved Zacarias Moussaoui, one of the individuals believed to be responsible for the 9/11 terrorist attacks. During the examination of the events leading up to the attacks, it was reported that investigations regarding Moussaoui's involvement were hampered by limitations in FISA authorities. Specifically, FBI agents investigating Moussaoui suspected that he had planned a terrorist attack involving piloting commercial airliners, and had detained him in August 2001 on an immigration charge. The FBI agents then sought a court order under FISA to examine the contents of Moussaoui's laptop computer. However, the agency apparently concluded that it had insufficient information at that time to demonstrate that Moussaoui was an agent of a foreign power as then required by FISA. Prior to its amendment, FISA authorized the FISC to approve, among other things, physical searches of a laptop only if probable cause existed to believe the laptop was owned or used by a foreign power or its agent. The definition of a "foreign power" included "groups engaged in international terrorism or activities in preparation therefor." Individuals involved in international terrorism for or on behalf of those groups were considered "agents of a foreign power." In the weeks leading up to the attacks, it appears that the FBI encountered an actual or perceived insufficiency of information demonstrating probable cause to believe that Moussaoui was acting for or on behalf of an identifiable group engaged in international terrorism. Following these revelations, a number of legislative proposals were put forth to amend the definition of "agents of a foreign power" under FISA so that individuals engaged in international terrorism need not be linked to a specific foreign power. One such amendment was ultimately enacted with passage of the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA). Section 6001 of the legislation, known as the "lone wolf" provision, provides that persons, other than citizens or permanent residents of the United States, who are engaged in international terrorism are presumptively considered to be agents of a foreign power. The provision obviates any need to provide an evidentiary connection between an individual and a foreign government or terrorist group. Critics of the "lone wolf" provision argued that the laptop in the Moussaoui case could have been lawfully searched under FISA or the laws governing generic criminal warrants. Critics also expressed concern that the simplified "lone wolf" standard would lead to "FISA serving as a substitute for some of our most important criminal laws." Proponents of the provision noted that the increased self-organization among terror networks has made proving connections to identifiable groups more difficult. Thus, a "lone wolf" provision is necessary to combat terrorists who use a modern organizational structure or who are self-radicalized. Section 206 of the USA PATRIOT Act amended FISA to permit multipoint, or "roving," wiretaps by adding flexibility to the degree of specificity with which the location or facility subject to electronic surveillance under FISA must be identified. It is often colloquially described as allowing FISA wiretaps to target persons rather than places. Prior to enactment of Section 206, the scope of electronic surveillance authorized by a court order was limited in two ways. First, the location or facility that was the subject of surveillance had to be identified. Second, only identifiable third parties could be directed by the government to facilitate electronic surveillance. Conducting electronic surveillance frequently requires the assistance of telecommunications providers, landlords, or other third parties. Furthermore, telecommunications providers are generally prohibited from assisting in electronic surveillance for foreign intelligence purposes, except as authorized by FISA. In cases where the location or facility was unknown, the identity of the person needed to assist the government could not be specified in the order. Therefore, limiting the class of persons that could be directed to assist the government by a FISA court order effectively limited the reach to known and identifiable locations. Section 206 of the USA PATRIOT Act amended Section 105(c)(2)(B) of FISA. It authorizes FISA orders to direct "other persons" to assist with electronic surveillance if "the Court finds, based on specific facts provided in the application, that the actions of the target ... may have the effect of thwarting the identification of a specified person." In a technical amendment later that year, the requirement that the order specify the location of the surveillance was also changed so that this requirement only applies if the facilities or places are known. These modifications have the effect of permitting FISA orders to direct unspecified individuals to assist the government in performing electronic surveillance, thus permitting court orders to authorize surveillance of places or locations that are unknown at the time the order is issued. This section was further amended by the USA PATRIOT Improvement and Reauthorization Act of 2005 to require that the FISC be notified within 10 days after "surveillance begins to be directed at any new facility or place." In addition, the FISC must be told the nature and location of each new facility or place, the facts and circumstances relied upon to justify the new surveillance, a statement of any proposed minimization procedures (i.e., rules to limit the government's acquisition and dissemination of information involving United States citizens) that differ from those contained in the original application or order, and the total number of facilities or places subject to surveillance under the authority of the present order. The Fourth Amendment imposes specific requirements upon the issuance of warrants authorizing searches of "persons, houses, papers, and effects." One of the requirements, referred to as the particularity requirement, states that warrants shall "particularly describ[e] the place to be searched." Under FISA, roving wiretaps are not required to identify the location that may be subject to surveillance. Therefore, some may argue that roving wiretaps do not comport with the particularity requirement of the Fourth Amendment. It is not clear that the Fourth Amendment would require that searches for foreign intelligence information be supported by a warrant, but prior legal challenges to similar provisions of Title III of the Omnibus Crime Control and Safe Streets Act may be instructive in the event that challenges to Section 206 are brought alleging violations of the particularity requirement of the Fourth Amendment. Similar roving wiretaps have been permitted under Title III since 1986 in cases where the target of the surveillance takes actions to thwart such surveillance. The procedures under Title III are similar to those currently used under FISA, but two significant differences exist. First, a roving wiretap under Title III must definitively identify the target of the surveillance. Fixed wiretaps under Title III and all wiretaps under FISA need only identify the target if the target's identity is known. FISA permits roving wiretaps via court orders that only provide a specific description of the target. Second, Title III requires that the surveilled individuals be notified of the surveillance, generally 90 days after surveillance terminates. FISA contains no similar notification provision. In United States v. Petti , the U.S. Court of Appeals for the Ninth Circuit was presented with a challenge to a roving wiretap under Title III alleging that roving wiretaps do not satisfy the particularity requirement of the Fourth Amendment. The court initially noted that the test for determining the sufficiency of the warrant description is whether the place to be searched is described with sufficient particularity to enable the executing officer to locate and identify the premises with reasonable effort, and whether there is any reasonable probability that another premise might be mistakenly searched. Applying this test, the Ninth Circuit held that roving wiretaps under Title III satisfied the particularity clause of the Fourth Amendment. The court in this case relied upon the fact that targets of roving wiretaps had to be identified and that they were only available where the target's actions indicated an intent to thwart electronic surveillance. Critics of roving wiretaps under FISA may argue that Section 206 increases the likelihood that innocent conversations will be the subject of electronic surveillance. They may further argue that the threat of these accidental searches of innocent persons is precisely the type of injury sought to be prevented by the particularity clause of the Fourth Amendment. Such a threat may be particularly acute in this case given the fact that there is no requirement under FISA that the target of a roving wiretap be identified, although the target must be specifically described. As noted above, these three FISA amendments have been extended until December 15, 2019. If that date were to arrive without any extension, the amended FISA authorities would revert to their text as it appeared before the enactment of the USA PATRIOT Act. For example, in the context of roving wiretaps, Section 105(c)(2) of FISA would read as it did on October 25, 2001, eliminating the authority for FISA court orders to direct other unspecified persons to assist with electronic surveillance. Likewise, regarding FISA orders for the production of documents, Sections 501 and 502 of FISA would read as they did on October 25, 2001, restricting the types of business records that are subject to FISA and reinstating the requirement for "specific and articulable facts giving reason to believe that the person to whom the records pertain is a foreign power or an agent of a foreign power." However, a grandfather clause applies to each of the three provisions. The grandfather clauses authorize the continued effect of the amendments with respect to investigations that began, or potential offenses that took place, before the provisions' sunset date. Thus, for example, if a non-U.S. person were engaged in international terrorism before the sunset date, he would still be considered a "lone wolf" for FISA court orders sought after the provision has expired. Similarly, if an individual is engaged in international terrorism before that date, he may be the target of a roving wiretap under FISA even if authority for new roving wiretaps expired.

Two amendments to the Foreign Intelligence Surveillance Act (FISA) were enacted as part of the USA PATRIOT Act. Section 206 of the USA PATRIOT Act amended FISA to permit multipoint, or "roving," wiretaps by adding flexibility to the degree of specificity with which the location or facility subject to electronic surveillance under FISA must be identified. Section 215 enlarged the scope of materials that could be sought under FISA to include "any tangible thing." It also lowered the standard required before a court order may be issued to compel their production. A third amendment to FISA was enacted in 2004, as part of the Intelligence Reform and Terrorism Prevention Act (IRTPA). Section 6001(a) of the IRTPA changed the rules regarding the types of individuals who may be targets of FISA-authorized searches. Also known as the "lone wolf" provision, it permits surveillance of non-U.S. persons engaged in international terrorism without requiring evidence linking those persons to an identifiable foreign power or terrorist organization. In summer 2013, media began reporting on several foreign intelligence activities conducted by the National Security Agency (NSA), including the bulk collection of telephone metadata under Section 215 of the USA PATRIOT Act. After a one-day lapse in the expiring authorities, Congress enacted the USA FREEDOM Act, which placed new limitations on the scope of the government's foreign intelligence activities, while simultaneously extending the expired provisions through December 15, 2019. Although these provisions are set to sunset at the end of 2019, grandfather clauses permit them to remain effective with respect to investigations that began, or potential offenses that took place, before the sunset date.

The Bipartisan Campaign Reform Act of 2002 (BCRA), P.L. 107-155 ( H.R. 2356 , 107 th Congress) significantly amended federal campaign finance law. Shortly after President Bush signed BCRA into law, Senator Mitch McConnell filed suit in U.S. District Court for the District of Columbia against the Federal Election Commission (FEC) and the Federal Communications Commission (FCC) arguing that portions of BCRA violate the First Amendment and the equal protection component of the Due Process Clause of the Fifth Amendment to the Constitution. Likewise, the National Rifle Association (NRA) filed suit against the FEC and the Attorney General arguing that the law deprives it of freedom of speech and association, of the right to petition the government for redress of grievances, and of the rights to equal protection and due process, in violation of the First and Fifth Amendments to the Constitution. Ultimately, eleven suits challenging the law were brought by more than 80 plaintiffs and were consolidated into one lead case, McConnell v. FEC. On May 2, 2003, the U.S. District Court for the District of Columbia issued its decision in McConnell v. FEC, striking down many significant provisions of the law. The three-judge panel, which was split 2 to 1 on many issues, ordered that its ruling take effect immediately. After the court issued its opinion, several appeals were filed and on May 19 the U.S. district court issued a stay to its ruling, leaving BCRA, as enacted, in effect until the Supreme Court ruled. Under the BCRA expedited review provision, the court's decision was directly reviewed by the U.S. Supreme Court. On September 8 the Supreme Court returned to the bench a month before its term officially began to hear four hours of oral argument in the case, and issued its decision in December. In its most comprehensive campaign finance decision since its 1976 decision in Buckley v. Valeo, the U.S. Supreme Court in McConnell v. FEC upheld against facial constitutional challenges key portions of BCRA. The most significant portion of the Court's decision is the 119 page majority opinion coauthored by Justices Stevens and O'Connor, joined by Justices Souter, Ginsburg, and Breyer, in which the Court upheld two critical features of BCRA: the limits on raising and spending previously unregulated political party soft money, and the prohibition on corporations and labor unions using treasury funds—which is unregulated soft money—to finance electioneering communications. Instead, BCRA requires that such ads may only be paid for with corporate and labor union political action committee (PAC) funds, also known as hard money. In general, the term "hard money" refers to funds that are raised and spent according to the contribution limits, source prohibitions, and disclosure requirements of the Federal Election Campaign Act (FECA), while the term "soft money" is used to describe funds raised and spent outside the federal election regulatory framework, but which may have at least an indirect impact on federal elections. In upholding BCRA's "two principal, complementary features," the McConnell Court readily acknowledged that it was under "no illusion that BCRA will be the last congressional statement on the matter" of money in politics. "Money, like water, will always find an outlet," the Court predicted, and therefore, campaign finance issues that will inevitably arise, and corresponding legislative responses from Congress, "are concerns for another day." Indeed, in 2007, the Court in FEC v. Wisconsin Right to Life, Inc. (WRTL II) determined that BCRA's "electioneering communications" provision was unconstitutional as applied to ads that Wisconsin Right to Life, Inc., sought to run, thereby limiting the law's application. Title I of BCRA prohibits national party committees and their agents from soliciting, receiving, directing, or spending any soft money. As the Court noted, Title I takes the national parties "out of the soft-money business." In addition, Title I prohibits state and local party committees from using soft money for activities that affect federal elections; prohibits parties from soliciting for and donating funds to tax-exempt organizations that spend money in connection with federal elections; prohibits federal candidates and officeholders from receiving, spending, or soliciting soft money in connection with federal elections and restricts their ability to do so in connection with state and local elections; and prevents circumvention of the restrictions on national, state, and local party committees by prohibiting state and local candidates from raising and spending soft money to fund advertisements and other public communications that promote or attack federal candidates. Plaintiffs challenged Title I based on the First Amendment as well as Art. I, § 4 of the U.S. Constitution, principles of federalism, and the equal protection component of the Due Process Clause of the 14 th Amendment. The Court upheld the constitutionality of all provisions in Title I, finding that its provisions satisfy the First Amendment test applicable to limits on campaign contributions: they are "closely drawn" to effect the "sufficiently important interest" of preventing corruption and the appearance of corruption. Rejecting plaintiff's contention that the BCRA restrictions on campaign contributions must be subject to strict scrutiny in evaluating the constitutionality of Title I, the Court applied the less rigorous standard of review—"closely drawn" scrutiny. Citing its landmark 1976 decision, Buckley v. Valeo, and its progeny, the Court noted that it has long subjected restrictions on campaign expenditures to closer scrutiny than limits on contributions in view of the comparatively "marginal restriction upon the contributor's ability to engage in free communication" that contribution limits entail. The Court observed that its treatment of contribution limits is also warranted by the important interests that underlie such restrictions, i.e. preventing both actual corruption threatened by large dollar contributions as well as the erosion of public confidence in the electoral process resulting from the appearance of corruption. Determining that the lesser standard shows "proper deference to Congress' ability to weigh competing constitutional interests in an area in which it enjoys particular expertise," the Court noted that during its lengthy consideration of BCRA, Congress properly relied on its authority to regulate in this area, and hence, considerations of stare decisis as well as respect for the legislative branch of government provided additional "powerful reasons" for adhering to the treatment of contribution limits that the Court has consistently followed since 1976. Responding to plaintiffs' argument that many of the provisions in Title I restrict not only contributions but also the spending and solicitation of funds that were raised outside of FECA's contribution limits, the Court determined that it is "irrelevant" that Congress chose to regulate contributions "on the demand rather than the supply side." Instead, the relevant inquiry is whether its mechanism to implement a contribution limit or to prevent circumvention of that limit burdens speech in a way that a direct restriction on a contribution would not. The Court concluded that Title I only burdens speech to the extent of a contribution limit: it merely limits the source and individual amount of donations. Simply because Title I accomplishes its goals by prohibiting the spending of soft money does not render it tantamount to an expenditure limitation. Unpersuaded by a dissenting Justice's position that Congress' regulatory interest is limited to only the prevention of actual or apparent quid pro quo corruption "inherent in" contributions made to a candidate, the Court found that such a "crabbed view of corruption" and specifically the appearance of corruption "ignores precedent, common sense, and the realities of political fundraising exposed by the record in this litigation." According to the Court, equally problematic as classic quid pro quo corruption, is the danger that officeholders running for re-election will make legislative decisions in accordance with the wishes of large financial contributors, instead of deciding issues based on the merits or constituent interests. As such corruption is neither easily detected nor practical to criminalize, the Court reasoned, Title I offers the best means of prevention, i.e., identifying and eliminating the temptation. Title II of BCRA created a new term in FECA, "electioneering communication," which is defined as any broadcast, cable or satellite communication that "refers" to a clearly identified federal candidate, is made within 60 days of a general election or 30 days of a primary, and if it is a House or Senate election, is targeted to the relevant electorate. Title II prohibits corporations and labor unions from using their general treasury funds (and any persons using funds donated by a corporation or labor union) to finance electioneering communications. Instead, the statute requires that such ads may only be paid for with corporate and labor union political action committee (PAC) regulated hard money. The Court upheld the constitutionality of this provision. In Buckley v. Valeo, the Court construed FECA's disclosure and reporting requirements, as well as its expenditure limitations, to apply only to funds used for communications that contain express advocacy of the election or defeat of a clearly identified candidate. Numerous lower courts have since interpreted Buckley to stand for the proposition that communications must contain express terms of advocacy, such as "vote for" or "vote against," in order for regulation of such communications to pass constitutional muster under the First Amendment. Absent express advocacy, according to most lower courts, a communication is considered issue advocacy, which is protected by the First Amendment and therefore, may not be regulated. Effectively overturning such lower court rulings, the McConnell Court held that neither the First Amendment nor Buckley prohibits BCRA's regulation of "electioneering communications," even though electioneering communications, by definition, do not necessarily contain express advocacy. When the Buckley Court distinguished between express and issue advocacy, the McConnell Court found, it did so as a matter of statutory interpretation, not constitutional command. Moreover, the Court announced that by narrowly reading the FECA provisions in Buckley to avoid problems of vagueness and overbreadth, it "did not suggest that a statute that was neither vague nor overbroad would be required to toe the same express advocacy line." "[T]he presence or absence of magic words cannot meaningfully distinguish electioneering speech from a true issue ad," according to the Court. While Title II prohibits corporations and labor unions from using their general treasury funds for electioneering communications, the Court observed that they are still free to use separate segregated funds (PACs) to run such ads. Therefore, the Court concluded that it is erroneous to view this provision of BCRA as a "complete ban" on expression rather than simply a regulation. Further, the Court found that the regulation is not overbroad because the "vast majority" of ads that are broadcast within the electioneering communication time period (60 days before a general election and 30 days before a primary) have an electioneering purpose. The Court also rejected plaintiffs' assertion that the segregated fund requirement for electioneering communications is under-inclusive because it only applies to broadcast advertisements and not print or Internet communications. Congress is permitted, the Court determined, to take one step at a time to address the problems it identifies as acute. With Title II of BCRA, the Court observed, Congress chose to address the problem of corporations and unions using soft money to finance a "virtual torrent of televised election-related ads" in recent campaigns. In upholding BCRA's extension of the prohibition on using treasury funds for financing electioneering communications to non-profit corporations, the McConnell Court found that even though the statute does not expressly exempt organizations meeting the criteria established in its 1986 decision in FEC v. Massachusetts Citizens for Life (MCFL), it is an insufficient reason to invalidate the entire section. As MCFL had been established Supreme Court precedent for many years prior to enactment of BCRA, the Court assumed that when Congress drafted this section of BCRA, it was well aware that it could not validly apply to MCFL-type entities. Subsequently, in the 2007 decision FEC v. Wisconsin Right to Life, Inc. (WRTL II), the Supreme Court held that Title II of BCRA was unconstitutional as applied to ads that Wisconsin Right to Life, Inc., sought to run. While not expressly overruling its 2003 ruling in McConnell v. FEC, the Court limited the law's application. Specifically, it ruled that advertisements that may reasonably be interpreted as something other than an appeal to vote for or against a specific candidate are not the functional equivalent of express advocacy and, therefore, cannot be regulated. The Court invalidated BCRA's requirement that political parties choose between coordinated and independent expenditures after nominating a candidate, finding that it burdens the right of parties to make unlimited independent expenditures. The Court invalidated BCRA's prohibition on individuals age 17 or younger making contributions to candidates and political parties. Determining that minors enjoy First Amendment protection and that contribution limits impinge on such rights, the Court determined that the prohibition is not "closely drawn" to serve a "sufficiently important interest."

McConnell v. FEC, a 2003 U.S. Supreme Court decision, upheld the constitutionality of key portions of the Bipartisan Campaign Reform Act of 2002 (BCRA) against facial challenges. (BCRA, which amended the Federal Election Campaign Act [FECA], codified at 2 U.S.C. § 431 et seq., is also known as the McCain-Feingold campaign finance reform law). A 5 to 4 majority of the Court upheld restrictions on the raising and spending of previously unregulated political party soft money, and a prohibition on corporations and labor unions using treasury funds to finance "electioneering communications," requiring that such ads may only be paid for with corporate and labor union political action committee (PAC) funds. The Court also invalidated a requirement that parties choose between making independent expenditures or coordinated expenditures on behalf of a candidate, and a prohibition on minors age 17 and under making campaign contributions. A 2007 Supreme Court decision, FEC v. Wisconsin Right to Life, Inc. (WRTL II), while not expressly overruling McConnell, narrowed the application of BCRA. Finding that the BCRA "electioneering communications" provision was unconstitutional as applied to ads that Wisconsin Right to Life, Inc., sought to run, the Court in WRTL II held that advertisements that may reasonably be interpreted as something other than as an appeal to vote for or against a specific candidate cannot be regulated. For further discussion of WRTL II, see CRS Report RS22687, The Constitutionality of Regulating Political Advertisements: An Analysis of Federal Election Commission v. Wisconsin Right to Life, Inc., by [author name scrubbed].

Feed is the single largest input cost for cattle feeders, dairy, hog, and poultry producers, who are wary of government policies that can raise feed prices. These include commodity support or conservation programs that take cropland out of production, or ethanol incentives that bid up the price of corn, a key feed ingredient. Such incentives have already helped to boost significantly the portion of the total U.S. corn crop going to ethanol; a possible energy title in the next (2007) farm bill could further bolster feed grain demand and prices, animal producers worry. Unlike major crops such as grains, cotton, and oilseeds, animal products are not recipients of commodity price and income support program benefits. An exception is milk, where producers benefit from a combination of administered pricing under federal milk marketing orders, surplus dairy product purchases, and milk income loss payments. Also, some cattle and hog producers in a limited number of states are participating in livestock revenue insurance programs being administered by the U.S. Department of Agriculture's (USDA's) Risk Management Agency (RMA). A new farm bill likely will continue some form of milk price and/or income support and possibly could continue or even expand revenue insurance for livestock producers. Also see: CRS Report RL32712, Agriculture-Based Renewable Energy Production CRS Report RL34594, Farm Commodity Programs in the 2008 Farm Bill CRS Report RL34036, Dairy Policy and the 2008 Farm Bill CRS Report RL33037, Previewing a 2007 Farm Bill Animal producers who do not raise crops commercially lack access to federally subsidized crop insurance. Congress or the Administration has periodically made animal producers in declared disaster areas eligible for ad hoc federal payments, mainly to help defray the cost of purchasing off-farm feed following a disaster affecting on-farm feed production, or permitted producers to use conservation lands for haying and grazing. Issues include whether the government should assume more of livestock and poultry producers' disaster risks as they have for crop farmers, and whether Congress should establish a "permanent" aid program automatically triggered in times of disasters, in lieu of ad hoc legislation in virtually every recent year. Also see: CRS Report RS21212, Agricultural Disaster Assistance CRS Report RL31095, Emergency Funding for Agriculture: A Brief History of Supplemental Appropriations, FY1989-FY2009 Changes in the structure and business methods of the livestock and meat sectors appear to be rapidly transforming U.S. animal agriculture. Animal farms continue to diminish in number and expand in average size. A relative handful of large firms process animal products, and these firms increasingly seek to control or at least better coordinate all phases of production and marketing, often to meet the specific requirements of large retail chains that want to satisfy consumer demand for a range of lower-cost products. Critics assert that these trends have undermined the traditional U.S. system of smaller-scale, independent, family-based farms and ranches, by eroding farmers' negotiating power, lowering farm prices, and forcing all but the largest operators out of business. Others counter that the sector's structural changes are a desirable outgrowth of factors such as technological and managerial improvements, changing consumer demand, and more international competition. In 2007, various bills have been proposed to address perceived "competition" problems. Among them are proposals to regulate meat packer ownership or acquisitions of cattle ( S. 305 ; S. 786 ); to give farmers more options to dispute provisions in contracts with processors (in 2007, S. 221 ); and to broaden protections under, and strengthen administration, of the Packers and Stockyards Act and other antitrust laws ( S. 622 ). These or other so-called competition options could become the basis for a proposed competition title in a new 2007 farm bill. See also: CRS Report RL33325, Livestock Marketing and Competition Issues Outbreaks of animal diseases like avian influenza (AI), foot and mouth disease (FMD), BSE, brucellosis, and tuberculosis are seen as perhaps the greatest potential threats to animal production. Even where U.S. cases have been few (as with BSE) or quickly contained (as with various strains of AI), the impacts can be economically devastating, causing production losses, closed export markets, and a decline in consumer confidence. Some animal diseases, like AI and BSE, have the potential to harm humans. Cattle producers, meat processors, and the feed industry are anticipating an upcoming decision by the U.S. Food and Drug Administration (FDA) on whether to finalize or amend a proposed rule that would prohibit the use of higher-risk cattle parts (i.e., those more likely to harbor the BSE agent) in all animal feeds. The proposal would be more restrictive than the FDA's rule that now bans most mammalian parts from cattle feed only, as a way to prevent BSE's spread through animal feeding. However, the industry believes the economic costs of the proposed rule could be extremely high. Many producers appear to agree that a nationwide animal identification (ID) system that can trace animals from birth to slaughter is a critical tool for quickly finding and controlling future animal diseases. More foreign markets are demanding animal traceability, and other meat-exporting countries are adopting ID programs, it is noted. Despite several years of USDA effort and public funding totaling an anticipated $118 million through FY2007, a universal U.S. system is not expected to be in place for some time, as policy makers debate numerous questions about its design and purpose. Should animal ID be mandated? What data should be collected and who should hold it, government or private entities? To what extent should producer records be shielded from the public and government agencies? Should traceability be expanded to follow meat and poultry products from farm to consumer, and/or used for other purposes such as food safety or certification of labeling claims? How much will it cost, and who should pay? In the 110 th Congress, H.R. 1018 would prohibit mandatory ID and address privacy concerns. Other bills intended to address many of these questions could emerge, possibly as farm bill items. Also see: CRS Report RL32199, Bovine Spongiform Encephalopathy (BSE, or "Mad Cow Disease"): Current and Proposed Safeguards CRS Report RL32012, Animal Identification and Meat Traceability Another possible, and somewhat related, item is country-of-origin labeling (COOL), which the 2002 farm bill required of many retailers of fresh produce, red meats, seafood, and peanuts. Although the seafood labeling rules are in place, Congress has delayed implementation for red meats, produce, and peanuts until September 30, 2008, while lawmakers continue to debate the need for, and anticipated costs and benefits of, COOL. In the 110 th Congress, bills ( H.R. 357 ; S. 404 ) have been introduced that would require implementation by September 30, 2007. See also: CRS Report RS22955, Country-of-Origin Labeling for Foods The United States is one of the leading exporters of livestock and poultry products, which have been among its fastest-growing categories of agricultural exports. However, U.S. market share is being challenged, and for some products surpassed, by highly competitive foreign exporters such as Brazil, Australia, India, Argentina, and New Zealand in beef/veal, Canada and Brazil in pork, and Brazil in poultry. U.S. exporters also face foreign trade barriers such as high import tariffs and divergent foreign food safety and animal health measures (sometimes regarded as baseless by the exporters). Examples of recent problems include Russia's restrictions on U.S. beef and pork exports, purportedly over animal disease concerns, Japan's and Korea's slowness in ramping up U.S. beef imports due to a limited number of cases here of bovine spongiform encephalopathy (BSE or mad cow disease), and a longstanding European Union ban on importation of meat from animals treated with growth hormones approved for use here. Trade Promotion Authority (TPA), which permits the President to negotiate trade deals and present them to Congress for an up or down vote without amendment, expires on June 30, 2007, making renewal a topic in the 110 th Congress. The Administration has used TPA to pursue an ambitious series of bilateral and regional free trade agreements (FTAs) as well as to participate in negotiations for new multilateral trade rules under the World Trade Organization (WTO). U.S. interests seek assurances that any new agreements will not favor foreign over U.S. animal products. Many farmers and ranchers also are wary of signing new agreements when, in their view, some countries have not fulfilled obligations under existing agreements to lower tariffs and/or non-tariff barriers that have blocked meat and poultry exports. Also see: CRS Report RL33144, WTO Doha Round: The Agricultural Negotiations CRS Report RL33463, Trade Negotiations During the 110th Congress CRS Report RL33472, Sanitary and Phytosanitary (SPS) Concerns in Agricultural Trade Questions about the applicability of federal environmental laws to livestock and poultry operations have been controversial and have drawn congressional attention. As animal agriculture increasingly concentrates into larger, more intensive production units, concerns arise about impacts on the environment, including surface water, groundwater, soil, and air. Some environmental laws specifically exempt agriculture from regulatory provisions, and some are designed so that farms escape most, if not all, of the regulatory impact. The primary regulatory focus for large feedlots is the Clean Water Act, since contaminants from manure, if not properly managed, also affect both water quality and human health. Operations that emit large quantities of air pollutants may be subject to Clean Air Act regulation. In addition, concerns about applicability of Superfund to livestock and poultry operations are of growing interest. Bills to exempt animal manure from federal Superfund requirements have been introduced in the past and could re-emerge in the 110 th Congress. The House and Senate Agriculture Committees do not have direct jurisdiction over federal environmental law, but they do have a role in the issue. For example, under the conservation title of recent farm bills, the Environmental Quality Incentives Program (EQIP) has provided financial and technical assistance to farmers to protect surrounding resources; livestock receives 60% of the funds. Also see the following reports: CRS Report RL31851, Animal Waste and Water Quality: EPA Regulation of Concentrated Animal Feeding Operations (CAFOs) CRS Report RL32948, Air Quality Issues and Animal Agriculture: A Primer CRS Report RL33691, Animal Waste and Hazardous Substances: Current Laws and Legislative Issues CRS Report R40197, Environmental Quality Incentives Program (EQIP): Status and Issues USDA's Food Safety and Inspection Service (FSIS) is responsible for inspecting most meat, poultry, and processed egg products for safety and proper labeling. The Food and Drug Administration (FDA) is responsible for ensuring the safety of all other foods, including seafood, and also regulates animal feed ingredients. For years Congress has monitored the efforts of FSIS and industry to address the problem of microbial contamination, which has caused outbreaks of severe and sometimes fatal foodborne illness. A long-standing issue is the effectiveness of these efforts and the need, if any, for policy changes (such as increased FSIS resources or more efficient ways of assigning existing resources to the highest risk plants or products). Another concern is the use of antibiotics to control disease, promote growth, and address well-being in food-producing animals. Some argue that antibiotic overuse in animal production can lead to resistance to related drugs used in humans, and that FDA should discontinue unnecessary animal uses. Others counter that such assertions have not been scientifically proven and that restrictions would raise production costs by millions of dollars and harm the quality of animal products. Various proposals related to meat safety have been offered in recent years, including proposals to clarify USDA's use of microbial performance standards; to allow state-inspected meat and poultry products to be sold outside the state (to which they are currently restricted); to give USDA more authority to recall suspect meat and poultry products; to tighten controls on imports; and to restrict nontherapeutic use of medically important antibiotics in livestock (e.g., H.R. 962 and S. 549 in the 110 th Congress). Some would reorganize federal food safety responsibilities, possibly within a single new agency (e.g., H.R. 1148 , S. 654 ). See also: CRS Report RL32922, Meat and Poultry Inspection: Background and Selected Issues Biotechnology—a term often used as a synonym for such technologies as genetic engineering, genetic modification, transgenics, recombinant DNA techniques, and cloning—has been promoted as a way to improve animal productivity and quality; to introduce new food, fiber, and medical products; and to protect the environment. Criticisms range from food safety and social resistance to potential negative impacts on animal welfare and on ecosystems. In the 110 th Congress, early interest focuses on FDA's publication in the January 3, 2007 Federal Register of a long-awaited draft risk assessment which finds that meat and milk from cloned cattle, pigs, and goats and their offspring are as safe to eat as those of conventionally bred animals, although animal health problems may be more frequent than in other assisted reproductive technologies. Members may be asked to review the benefits and costs of cloning and other biotechnologies, and to refine existing laws to ensure adequate oversight. S. 414 and H.R. 992 , for example, would require the labeling of foods from cloned animals or their offspring; H.R. 1396 and S. 536 would not permit organically labeled foods to be derived from such animals. Also see: CRS Report RL33334, Biotechnology in Animal Agriculture: Status and Current Issues Farm animals are not covered by the Animal Welfare Act, which requires minimum care standards for many other types of warm-blooded animals. Farm animals are covered by federal laws addressing humane transport and slaughter, however. Animal activists periodically seek new legislation that would further regulate on-farm or other animal activities, such as bills to prohibit the slaughter of horses for human food (one passed the House but not the Senate in September 2006; another has been introduced in the 110 th Congress as H.R. 503 / S. 311 ), to require the federal government to purchase products derived from animals only if they were raised according to specified care standards, and to prohibit the slaughter for food of disabled livestock (introduced in 2007 as H.R. 661 and S. 394 ), among others. Members of the House and Senate Agriculture Committees generally express a preference for voluntary approaches to humane methods of care. For example, Smithfield Farms, the largest U.S. pork producer, recently announced that it would require its producers to phase out the use of gestation crates, which many animal welfare advocates believe provide far too little room for hogs to move around. See: CRS Report RS21978, Humane Treatment of Farm Animals: Overview and Issues CRS Report RS21842, Horse Slaughter Prevention Bills and Issues CRS Report RS22493, The Animal Welfare Act: Background and Selected Legislation , by [author name scrubbed]

The value of animal production on the 1.3 million U.S. dairy, livestock, and poultry farms (2002 Census of Agriculture) averages about $124 billion annually, more than half the total value of all U.S. agricultural production. The United States produces—and consumes—more beef/veal, pork, poultry, and milk than almost any other single country (China leads in pork). U.S. exports have grown rapidly in recent decades, as has integration of U.S. meat production and processing with that of Mexico and Canada. Farming, processing, and marketing have all trended toward larger and fewer operations (often called consolidation). Increasingly, many phases of production and marketing may be managed or controlled by a single entity (sometimes called vertical integration). Complying with environmental and food safety regulations, and addressing changing consumer preferences about how food is produced, have added to costs and operational complexities for producers and processors alike. In Congress, policy debate has revolved around impacts of the sector's structural and technological changes on farm prices, on the traditional system of smaller-sized, independent farms and ranches, and on rural communities and workers. Also at issue are implications for consumers, the environment, and trade. Inherent in these questions, which could be addressed during consideration of a new farm bill in 2007, is the appropriate role of government in intervening in or assisting the livestock, meat, and poultry industries. The following brief overview of selected issues is drawn from the CRS reports noted here, where sources and additional details can be found.

The purpose of this report is to provide data on the size and composition of USPS's workforce between FY1995 and FY2014. Reforms to the size and composition of the workforce have been an integral part of USPS's strategy to reduce costs and regain financial solvency, particularly after the onset of substantial revenue losses in FY2007. Historical context on USPS's workforce size and composition is therefore useful to understanding the magnitude of these workforce reforms and their impact on USPS's financial condition. Between FY1995 and FY2014, the size of USPS's workforce decreased 29.4%, from 874,972 employees to 617,877 employees ( Table 2 ). Data on the overall workforce during this 20-year period show a rise in employees in the 1990s and a decline in employees from the 2000s through the present. During this time, USPS's workforce peaked in FY1999 with 905,766 employees. The USPS workforce experienced the steepest decrease in the past two decades between FY2008 and FY2009—a decrease of 53,006 employees, or 7.4% of the overall workforce. It can be noted that the Great Recession occurred between these years, which might have contributed to the decrease. In FY2013, USPS operated with its smallest workforce in at least 20 years ( Figure 1 ). Figure 2 shows the USPS workforce by state. USPS categorizes its workforce into two types of employees: career and non-career. Career employees serve in permanent positions on a full-time or part-time basis and typically receive full federal benefits. Non-career employees, in contrast, serve in time-limited or otherwise temporary positions on a full-time or part-time basis. In many cases, non-career employees earn lower wages and are not provided benefits that are provided to career employees. For example, non-career employees are not eligible for federal life insurance and are not covered under the Federal Employees Retirement System (FERS). Figure 3 shows trends in career and non-career USPS employment from FY1995 to FY2014. The number of career employees decreased 35.2% between FY1995 and FY2014, from 753,384 to 488,300. The number of non-career employees, in contrast, increased 6.6% over that time period, from 121,588 to 129,577 ( Table 2 ). Table 1 illustrates career and non-career employees as a percentage of the USPS workforce over the past 20 years. Career employees have constituted the vast majority of USPS's workforce during the past two decades. The proportion of non-career employees, however, has risen since FY1995. The percentage of USPS's workforce that is non-career increased from 13.9% in FY1995 to 21.0% in FY2014. In contrast, the percentage of USPS's workforce consisting of career employees declined from 86.1% to 79.0% between FY1995 and FY2014. ( Figure 4 , Table 1 ). Figure 4 shows the yearly percentage change in USPS workforce size, disaggregated by career and non-career employees. As the trend lines indicate, the percentage change in career employees has remained relatively stable, though it has been negative for the past decade. In contrast, the percentage change in non-career employees shows greater variance over time. There was a discernible uptick in the non-career workforce between FY2011 and FY2013—the percentage change in non-career employees increased from a 1.0% gain between FY2010 and FY2011, to a 42.8% gain between FY2011 and FY2013. USPS reported data in 19 total career categories since FY1995, though this number includes some categories in which the position had yet to be instituted in FY1995 (N/A in the last column of Table 2 ) or discontinued by FY2014 (-100.00% in the last column of Table 2 ). Thirteen career employment categories have remained intact between FY1995 and FY2014. Of these categories, 10 had fewer employees in FY2014 than in FY1995. The "Professional Administrative and Technical Personnel" category experienced the greatest percentage decrease in employees from FY1995 to FY2014, with a 60.4% decrease (6,634 fewer employees). Three of the 13 categories of employees populated from FY1995 through FY2014 experienced an increase in their level of employment. "Headquarters" experienced the largest increase in percentage change (60.8%), while "Rural Delivery Carriers—Full-Time" experienced the largest increase in actual numbers (20,260 more employees). USPS stated the increase in the number of headquarters employees is primarily attributable to the agency's efforts to centralize certain local, district, and area functions at the headquarters level. Such efforts shifted positions from non-headquarters to headquarters-related categories. For example, USPS centralized human resources (HR) functions at an HR Shared Services Center, which prompted the agency to reallocate positions from field offices to headquarters. While the percentage change in the "Headquarters" category has increased over the past 20 years, the increase is primarily attributable to a significant uptick in employees between FY2003 and FY2004 (41% increase). Since FY2004, the percentage increase in headquarters employees has slowed to 8.3%. In addition, the remaining headquarters-related employment categories that were in place in FY1995 have since decreased. USPS has reported data in eight non-career categories since FY1995, which includes categories that were established or eliminated after FY1995. Decreases occurred in three of the four non-career employee categories that have remained intact since FY1995. The number of casuals, or temporary employees who do not receive full-time employee benefits, dropped 93.7% from 26,401 employees in FY1995 to 1,658 in FY2014. The number of "Non-Bargaining Temporary" employees decreased approximately 53.7% from 596 in FY1995 to 276 in FY2014. The number of "Rural Subs/RCA/RCR/AUX" employees decreased 4.3% from 50,269 in FY1995 to 48,099 in FY2014. One non-career category, "PM Relieve/Leave Replacements," experienced an increase of 433 employees (3.4%) from FY1995 to FY2014. Since FY2011, USPS has established three new non-career employee categories: Postal Support Employees (PSEs), City Carrier Assistants (CCAs), and Mail Handler Assistants (MHAs). As of September 30, 2014, USPS had 24,781 PSEs, 36,081 CCAs, and 5,475 MHAs. PSEs, CCAs, and MHAs were created pursuant to USPS's contract agreement with, respectively, the American Postal Workers Union (APWU), National Association of Letter Carriers (NALC), and National Postal Mail Handlers Union (NPMHU). The three positions are part of their unions' bargaining units and are eligible for raises, health benefits, and leave. Although the size of each employment category has shifted over the past 20 years, three overarching trends are apparent. First, the category of full-time rural delivery carriers exhibited moderate growth, rising 43.9% from 46,113 in FY1995 to 66,373 in FY2014. In contrast, the number of city delivery carriers dropped 31.4% from 239,877 in FY1995 to 164,626 in FY2014. USPS has indicated that 65% of population growth occurred in rural areas for much of the 20-year period. USPS further indicated that USPS mail volume increased in these areas through 2009, leading to a greater need for delivery carriers in those areas. Second, two categories of USPS employees involved in the transportation of mail prior to its delivery grew in the 1990s, peaked around FY2000, and declined below their FY1995 levels in FY2014. The number of mail handlers was 57,352 in FY1995, 62,247 in FY1998, and 38,910 in FY2014. Motor vehicle operators numbered 8,029 in FY1995, 9,347 in FY2000, and 6,603 in FY2014. These downward trends might be due to a decline in mail volume, as well as increased automation of mail transportation functions, over the 20-year period. Third, the number of non-bargaining temporary employees increased by 493.5% from 596 in FY1995 to 3,537 in FY2012, but has since dropped to 276 in FY2014. In recent years, the USPS has experienced significant financial challenges. After running modest profits from FY2004 through FY2006, the USPS lost $51 billion between FY2007 and FY2014. As USPS's finances have deteriorated, its ability to absorb operating losses has diminished. Between FY2005 and FY2014, USPS's debt rose from $0 to $15 billion. The Government Accountability Office (GAO) added the USPS's financial condition "to the list of high-risk areas needing attention by the Congress and the executive branch." Among the causes for the USPS's financial downturn is the large drop in mail volume in that stretch of time. Between FY2007 and FY2014, the number of mail pieces delivered per year fell from 212 billion to 155 billion. As a result, operating revenues were $7 billion lower in FY2014 ($67.8 billion) than in FY2007 ($74.8 billion). The USPS's challenging financial circumstances have prompted it to undertake cost-cutting measures. One strategy has been to reduce the size and cost of the USPS workforce, as personnel costs comprise the majority of USPS's expenses. In FY2014, for example, personnel costs represented 78% of USPS's total operating expenses. Two initiatives that USPS pursued between FY2007 and FY2014 to reduce workforce size and cost included (1) attrition and separation incentives, and (2) increased utilization of non-career employees. USPS has reduced its workforce size through voluntary attrition and separation incentives to retire or resign. Between FY2007 and FY2014, there was a reduction of 168,052 employees from USPS's workforce. To increase the voluntary attrition rate, USPS has offered certain employees separation incentives to resign or retire early. Those incentives have ranged from $10,000 to $20,000 per person. Between FY2010 and FY2014, 55,473 employees accepted a separation incentive ( Table 3 ). USPS has utilized separation incentives to avoid reductions in force (RIFs), which involve involuntary employee layoffs upon the abolishment of agency positions. On January 9, 2015, however, USPS implemented a reduction in force for 249 postmasters who did not accept a separation incentive offered in FY2014. Of the 249 postmasters subject to the reduction in force, 169 opted for a Discontinued Service Retirement (DSR), and the remaining 80 who were not eligible for DSR received severance pay based on their age and years of service. According to USPS, all postmasters affected by the RIF were offered part-time career positions at USPS. It is unclear if USPS will continue to use separation incentives to reduce the size of its career workforce. USPS's 2012-2017 business plan, which was updated in April 2013, included a goal to reduce its career workforce to approximately 404,000 employees through attrition by 2017. This represents a 17.3% decrease (84,300 fewer employees) from FY2014 staffing levels. In October 2015, USPS staff stated that the agency was developing an updated five-year business plan. It is possible that the updated plan might contain new strategies for increasing the cost efficiency of the workforce, including the alteration or removal of workforce reduction goals. The use of separation incentives, therefore, might be affected by such altered goals. USPS has also increased its use of non-career employees in an effort to contain costs. The number of non-career employees increased by 28.1% between FY2007 and FY2014, from 101,167 to 129,577. The number of career employees, in contrast, decreased by 28.7% over the same time period, from 684,762 to 488,300. The most substantial increases occurred between FY2011 and FY2014, during which time the number of non-career employees rose by 46.1% (40,878 more employees). The influx of non-career employees during that time period was primarily attributable to the creation and staffing of PSEs (FY2011), CCAs (FY2013), and MHAs (FY2013). These three employee categories constituted 51% of the USPS non-career workforce in FY2014. According to USPS and the USPS Office of the Inspector General (OIG), PSEs, CCAs, and MHAs were created to reduce the costs of, and provide more flexibility in, certain agency functions. Employees in these three positions can often perform the full range of duties undertaken by their career counterparts, but at lower wages. For instance, CCAs can perform the duties of career city letter carriers at a starting rate of $15.00 versus $16.71 per hour. The wage difference between CCAs and city letter carriers is even greater after accounting for benefits and overtime ($19.35 versus $46.11 per hour, respectively), according to a 2014 GAO report. USPS asserted that CCAs reduced the cost of the city mail delivery function by $120 million in FY2013. In addition, the USPS OIG reported that PSEs could be used in place of career employees earning overtime, and thus could reduce compensation costs. USPS's use of certain non-career employees is governed by postal labor union contracts, which limit the number of non-career employees that can comprise the total USPS workforce. More recent labor contracts that created PSEs, CCAs, and MHAs, however, raised the number of non-career employees that can be used for certain functions ( Table 4 ). For example, the 2006-2011 contract between USPS and the National Association of Letter Carriers (NALC) limited the total number of non-career transitional employees to no more than 3.5% of the total number of career city letter carriers covered by the agreement or 6% of the total number of career carriers in a postal district. The 2011-2016 contract, however, raised the limit to 15% of the total number of career carriers in a district. USPS's initiatives to reduce the size and cost of its workforce have contributed to lowered compensation expenses in recent years. USPS's total compensation costs decreased $526 million from FY2013 to FY2014. A 2015 Postal Regulatory Commission (PRC) report found that 36.1% of that amount ($190 million) resulted from increased use of non-career employees and a decrease in employee work hours. The remaining 63.9% of the reduced amount ($336 million) reflected a one-time cost of separation incentives that were paid in FY2013, according the PRC report. A 2014 GAO report on the USPS workforce, however, found that USPS's overall expenses did not decline alongside reduced workforce size and employee work hours. Rather, the report found that USPS's total expenses fluctuated between FY2006 and FY2014. The report attributed the fluctuation to required annual Retiree Health Benefits Fund (RHBF) payments, which varied by year. USPS's overall expenses still declined at a slower rate compared to employee work hours (7.1% versus 24%, respectively) when excluding RHBF payments, according to the report. In response to the GAO report, USPS attributed the slower rate of decline in overall expenses to increased hourly wage and benefit costs, increased non-personnel expenses, and other fixed costs that do not decline with decreases in mail volume. USPS's 2012-2017 business plan includes several legislative proposals that could affect the size and cost of the workforce. However, USPS staff have indicated that these legislative proposals are no longer being pursued. The agency is focusing on consensus building among stakeholders rather than pursuing a specific legislative agenda. Career Employees Area Offices Personnel: Includes persons who work in the USPS administrative units that oversee postal operations in USPS's nine geographic areas throughout the United States. Building and Equipment Maintenance Personnel: Includes persons who maintain and repair USPS facilities. Clerks: Includes persons who work directly with the public in USPS retail facilities and who manually sort mail. City Delivery Carriers: Includes persons who deliver mail in urban and non-rural areas. Headquarters: Includes persons who work in a variety of capacities at the two central offices of the U.S. Postal Service, which are located in Washington, DC, and Rosslyn, VA. Headquarters—Related Field Units: Includes persons in offices administered from USPS's headquarters, but who are located elsewhere. Inspection Service—Field: Includes persons who work for the Postal Inspection Service, which protects USPS property and employees and investigates alleged misuse of the mails for criminal purposes. Inspector General: Includes persons who work for the USPS Office of Inspector General, which audits and investigates USPS activities. Mail Handlers: Includes persons who move mail containers in mail processing centers. Motor Vehicle Operators: Includes persons who drive mail trucks. Nurses: Includes persons who work in USPS medical units and attend to injured employees. Postmasters/Installation Heads: Includes persons who serve as managers of retail postal facilities. Professional Administrative and Technical Personnel: Includes persons performing administrative assistance and technical support duties. Regional Offices: Included persons in the administrative unit that oversaw USPS operations within geographic regions. Regional offices were replaced with area offices. Rural Delivery Carriers— Full-time: Includes persons who deliver mail in non-urban areas. Special Delivery Messengers: Discontinued position that employed persons to make deliveries that required expedited delivery. Supervisors/Managers: Includes persons who supervise other persons or who manage programs or processes. Vehicle Maintenance Personnel: Includes persons who perform preventive maintenance and repair of USPS vehicles. Non-Career Employees Casuals: Includes persons hired temporarily to assist USPS career employees in mail processing facilities. City Carrier Assistant: Time-limited position created in 2013 that provides the USPS with flexibility in hiring for the city delivery function. City Carrier Assistants may perform the full range of duties undertaken by career City Delivery Carriers and are entitled to certain employee benefits such as raises, health benefits, and leave. Mail Handler Assistant: Time-limited position created in 2013 that provides the USPS with flexibility in hiring for the mail delivery function. Mail Handler Assistants may perform the full range of duties undertaken by career Mail Handlers and are entitled to certain employee benefits such as raises, health benefits, and leave. Non-bargaining Temporary: Includes persons hired temporarily to perform administrative duties in USPS offices. Postal Support Employees: Time-limited position created in 2011 that provides the USPS with flexibility in hiring within the clerk craft and the maintenance and motor vehicle craft. Pursuant to a bargaining agreement, Postal Support Employees are entitled to certain employee benefits such as raises, health benefits, and leave. Postmaster Relief/Leave Replacements: Includes persons who serve temporarily as managers of retail postal facilities. Rural Subs/RCA/RCR/AUX: Includes rural substitute carriers, rural carrier associates, rural carrier relief carriers, and auxiliary carriers, all of whom provide temporary assistance to USPS in the delivery of mail in non-urban areas. Transitional Employees: Includes persons who staff USPS's Remote Encoding Centers (RECs), which provide assistance concerning mail processing machines.

This report provides data from the past 20 years on the size and composition of the U.S. Postal Service's (USPS's) workforce. Reforms to the size and composition of the workforce have been an integral part of USPS's strategy to reduce costs and regain financial solvency, particularly between FY2007 and FY2014. Since 2007, USPS has experienced significant revenue losses that have affected its ability to manage its expenses. Personnel costs are one of the primary drivers of USPS's operating expenses. As such, USPS has employed strategies to reform the size and composition of its workforce in an effort to cut personnel costs, primarily through attrition and separation incentives and increased use of lower-cost employees. These strategies reduced personnel expenses between FY2013 and FY2014. The sustainability of these reduced expenses and their overall impact on USPS's ability to regain financial solvency, however, is unclear. The size of the USPS workforce has declined in the past 20 years. The number of employees has dropped by 257,095 (29.4%) in the past 20 years, from 874,972 in FY1995 to 617,877 in FY2014. USPS, however, had 163 more employees at the end of FY2014 than it did at the end of FY2013. Declines in workforce size between FY2010 and FY2014 were driven, in part, by USPS's efforts to reduce its workforce size through attrition and separation incentives. Between FY2010 and FY2014, 55,473 career employees accepted a separation incentive to retire or resign early. On January 9, 2015, USPS instituted a reduction in force for 249 postmasters who did not accept a separation incentive offered in 2014. The composition of USPS's workforce has also changed over the past two decades. USPS categorizes its workforce into two types of employees: career and non-career. Career employees serve in permanent positions on a full-time or part-time basis and typically receive full federal benefits. Non-career employees serve in time-limited or otherwise temporary positions and can often perform the full range of duties of career counterparts at lower wage rates, which might lower personnel costs. USPS has increased the number of non-career employees in an effort to reduce personnel costs, particularly since FY2011. Between FY2011 and FY2014, the number of non-career employees increased by 46.1%, from 88,699 to 129,577 employees. The influx in non-career employees since FY2011 is primarily attributable to the establishment of three new non-career positions: postal support employees, city carrier assistants, and mail handler assistants. Labor union contracts governing these positions, which went into effect in 2011 and 2013, effectively raised the total number of non-career employees that can comprise the USPS workforce. Career employees, however, continued to comprise the majority of the total workforce in FY2014 (79%). This report will be updated as events warrant.

The relationship between the livestock and poultry industries and animal protection groups is an antagonistic one, at best. The table egg industry, led in the United States by the United Egg Producers (UEP), has been widely criticized for decades for raising laying hens in cages. Many have argued that conventional cage systems widely used in the United States and elsewhere provide little or no welfare for laying hens because hens are not able to express natural behaviors. The Humane Society of the United States (HSUS) is one of many animal protection organizations that have led campaigns advocating cage-free egg production and the elimination of all cages. Given the history between the egg industry and animal protection groups, UEP stunned the animal agriculture community in July 2011 with an announcement that it would work jointly with HSUS to push for federal legislation to regulate how U.S. table eggs are produced. The agreement between UEP and HSUS was signed July 7, 2011, and called for legislation that would set cage sizes, establish labeling requirements, and regulate other production practices. The goal of the agreement is to have federal legislation in place by June 30, 2012. As part of the agreement, HSUS agreed to immediately suspend state-level ballot initiative efforts in Oregon and Washington to end the use of conventional cages. Legislation—the Egg Products Inspection Act Amendments of 2012—was introduced in both the Senate and House during the 112 th Congress to address the UEP and HSUS agreement and goal to establish federal table-egg cage standards. No action was taken on these measures. Almost identical bills—the Egg Products Inspection Act Amendments of 2013 ( S. 820 and H.R. 1731 )—were introduced in the 113 th Congress on April 25, 2013. These bills also reflect the 2011 agreement between UEP and HSUS and would establish uniform, national cage size requirements for table egg-laying hen housing over a 15- to 16-year phase-in period. The bills also include labeling requirements to disclose how eggs are produced, and air quality, molting, and euthanasia standards for laying hens. UEP views the bills as being in the long-term survival interest of American egg farmers, and a wide range of groups have expressed support for the legislation. However, some agricultural and livestock producers, including some egg farmers, strongly oppose the bills, viewing them as an intrusion into their farming practices. Some animal protection groups have also opposed the bills. This report provides an overview of the U.S. egg industry, the UEP-HSUS agreement, and the provisions of S. 820 and H.R. 1731 introduced in the 113 th Congress. The report also discusses supporting and opposing views of the bills, and some animal welfare issues for laying hens. On April 25, 2013, the Egg Products Inspection Act Amendments of 2013 were introduced in the Senate ( S. 820 ) and House ( H.R. 1731 ). The two bills are identical and reflect the 2011 agreement between UEP and HSUS (see " UEP-HSUS Agreement ," below) that would establish uniform, national cage size requirements for table egg-laying hen housing over a 15- to 16-year phase-in period. The bills also include labeling requirements to disclose how eggs are produced, and air quality, molting, and euthanasia standards for laying hens. The two bills are nearly identical to those introduced in the 112 th Congress, with the exception of language specific to egg production in California, exceptions for temporary excess ammonia levels, and exemptions for research institutes, single cages, and other livestock and poultry. (See " Pending Table Egg Legislation ," below, for more information on the bills.) As in 2012, industry views on the egg legislation are divided. UEP supports Congress addressing egg legislation in the farm bill, while other livestock groups continue to strongly oppose it. Reportedly, Senate Agriculture Committee Chairwoman Stabenow considered including the egg bill in the committee draft of the 2013 omnibus farm bill. Senator Johanns expressed the view that the inclusion of egg legislation in the farm bill "will bring the farm bill down," and that egg regulations should be left up to the states. The egg legislation was not included in the committee draft, nor was it considered during the May 14, 2013, Senate Agriculture Committee markup of the 2013 farm bill. During the floor debate on the Senate farm bill ( S. 954 ), Senator Feinstein submitted the egg bill as S.Amdt. 1057 , but it was not considered by the Senate. During the House Agriculture Committee markup of the 2013 farm bill ( H.R. 1497 ) on May 15, 2013, no egg bill amendment was offered, but Representative King's (IA) amendment—the Protect Interstate Commerce Act (PICA)—was offered and agreed to on a voice vote. PICA, often referred to as the King amendment (see " King Amendment "), which was included in the 2012 House reported farm bill, H.R. 6083 , would have prohibited states from setting standards or conditions for the production or manufacture of agricultural products that are produced in other states and sold in interstate commerce, if the standard or condition exceeded federal and state laws that apply where the agricultural product is produced or manufactured. The amendment would have curtailed state laws that could interfere with interstate commerce, such as California's ban on the sale of eggs that are produced in cages, no matter where produced, after January 1, 2015. PICA covered agricultural products as defined in Section 207 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1626). During markup, Representative Denham offered a second-degree amendment that would have exempted some states and state standards from the King amendment. The Denham amendment failed on a committee roll call vote (13 yeas to 33 nays). During the June 17, 2013, Rules Committee hearing on H.R. 1947 , Representative Denham offered an amendment to replace Section 12314 of H.R. 1947 with the text of the egg bill, H.R. 1731 . The Rules Committee rejected the Denham amendment. After the House failed to pass H.R. 1497 , the King amendment was included in the new House version of the farm bill, H.R. 2642 , which the House passed on July 11, 2013. The Senate farm bill, S. 954 , had no similar provision. The farm bill conference committee, which commenced October 30, 2013, considered the King amendment, but the conference report ( H.Rept. 113-333 ) to H.R. 2642 , released January 27, 2014, did not include it. On January 23, 2012, H.R. 3798 —Egg Products Inspection Act Amendments of 2012—was introduced in the House by Representative Schrader of Oregon. The bill was referred to the House Committee on Agriculture and then to the Subcommittee on Livestock, Dairy, and Poultry. There was no further action on H.R. 3798 . On May 24, 2012, a companion bill, S. 3239 , was introduced by Senator Feinstein of California. The bill was referred to the Senate Committee on Agriculture, Nutrition, and Forestry. During the 112 th Congress, 153 cosponsors signed on to H.R. 3798 , and 19 Senate cosponsors signed on to S. 3239 . Prior to the Senate floor debate on the omnibus 2012 farm bill ( S. 3240 ), Senator Feinstein offered S.Amdt. 2252 , which would have inserted the language from S. 3239 into the Senate farm bill. However, the amendment was not one of the 77 amendments considered during the Senate farm bill floor debate of June 19-21. Reportedly, the amendment was withdrawn with the understanding that the Senate Agriculture Committee would address S. 3239 and the issues confronting egg producers. On July 26, 2012, the Senate Agriculture Committee held a hearing on S. 3239 with testimony from Senator Feinstein and four egg producers. Three producers testified in favor of S. 3239 and one opposed the legislation. During the House Agriculture Committee markup of the 2012 farm bill on July 11, 2012, no amendment was offered to include the language of H.R. 3798 in the House farm bill ( H.R. 6083 ). However, Representative King (IA) offered the Protect Interstate Commerce Act (PICA), an amendment designed to protect the U.S. Constitution's commerce clause (see " 113th Congress " and " King Amendment "). The House Agriculture Committee adopted the amendment by voice vote. According to Representative King (IA), the Protect Interstate Commerce Act (PICA) is necessary because of the 2010 California law that requires all eggs brought into or sold in the state to be produced in the manner required in California. King views California's 2010 egg law as protectionism and constitutional overreach, with one state attempting to impose its standards at the national level, when only the federal government can regulate interstate trade. The King amendment garnered support from livestock groups such as the National Cattlemen's Beef Association and the National Pork Producers Council. Supporters believed the amendment would have prevented a patchwork of states laws from setting agricultural production standards and protected free interstate movement of agricultural products. Opponents of the King amendment argued that it undercut state voters' rights to determine their state laws. In addition, opponents contended that the definitions of agricultural products and production and manufacturing are broad and would preempt hundreds of state laws and regulations. Opponents pointed to a compiled list of 150 state laws, covering such areas as animal welfare, environment, public health, and labor, that they argued would have been affected by the King amendment. In addition, in a letter to Ranking Member Peterson, 151 Members of Congress expressed their opposition to the King amendment. Some analyses of the amendment concluded that the actual affect was subject to interpretation and uncertainty, with courts making the final decision on the effects. The King amendment was not included in the Agricultural Act of 2014 ( P.L. 113-79 ), and the challenge to the California egg law has shifted to the courts. On February 3, 2014, Missouri filed a lawsuit in the U.S. District Court in California to challenge the legality of the egg law (see " Missouri Lawsuit "). Other states that are large producers of eggs and ship eggs to California would be expected join Missouri in challenging the California egg law. In 2011, U.S. egg farmers produced 79 billion table eggs from a laying flock of 282 million birds. The vast majority of U.S. table egg production is concentrated in a few flocks. In 2011, more than 98% of the laying hens (277 million birds) were in flocks of 30,000 birds or larger. From 2001 to 2010, table egg production averaged 76 billion eggs, and the laying flock averaged nearly 283 million birds. Table egg productivity has improved over the past 10 years, as egg output has increased an average of about 1% each year while the laying flock has remained relatively flat. In 2011, each hen averaged nearly 281 eggs, compared to 264 eggs 10 years earlier. In 2011, total egg production (including 13 billion hatching eggs) was valued at $7.4 billion. Geographically, U.S. table egg production is concentrated in the Midwest, with pockets of production in Pennsylvania, California, and Texas (see Figure 1 ). Iowa produces nearly twice as many table eggs as any other state. In 2011, Iowa's table-egg-laying flock totaled 52.2 million hens and produced more than 14.3 billion eggs ( Table 1 ). Ohio follows, with a flock of 27.2 million birds, and Pennsylvania and Indiana have flocks of over 20 million birds. The midsize producing states of California, Texas, and Michigan have flocks ranging from 10 million to 19 million, and the bottom of the top 10, Minnesota, Florida, and Nebraska, have flocks from 9 million to nearly 10 million birds. The top 10 egg-producing states account for 70% of the total table-egg-laying flock. A complete breakdown of table egg production is not available because table egg production for 4 of the top 10 states is not disclosed by USDA due to reporting confidentiality rules. But the proportion of table-egg-laying hens to total hens indicates that the large majority of the four-state egg production is table eggs. An estimated 95% of all eggs in the United States are produced in conventional cage systems, sometimes called battery cages. Generally, conventional cages are wire cages that may hold 6-10 laying hens, and usually have automated feeding, watering, and egg collecting systems. According to UEP, conventional cage systems typically provide each laying hen an average of 67 square inches of floor space. In some egg operations, hens have less space. Egg producers started adopting conventional cage systems in the 1950s because they reduced disease and provided cleaner eggs compared with traditional barnyard production. Egg farmers also found that cage systems proved to be more economically efficient as systems were automated and more laying hens could be managed in less space. Over time, conventional cage systems have been heavily criticized for providing poor welfare for laying hens, especially in Europe (see " Europe's Ban on Battery Cages ," below). The other 5% of eggs are produced in either cage-free or free-range systems. There are two principal types of cage-free systems—floor and aviary. In both of these cage-free systems, laying hens have access to the barn or housing floor, usually covered with litter, and nesting boxes for egg laying. Aviaries provide several levels of perches that allow laying hens to be off the floor. In cage-free systems, laying hens are kept indoors. The free-range system is similar to the cage-free system, but laying hens have access to the outdoors. The relatively new enriched cage systems—also called furnished, modified, or enriched colony cages—were developed in the 1980s in Europe in response to criticisms of conventional cages and legislation on cages. Enriched cages are larger and include perches, scratching pads, and nesting boxes designed to allow laying hens to express natural behaviors (see " Egg Production Systems and Hen Welfare ," below). United Egg Producers (UEP) is the largest U.S. egg producer group in the United States. UEP is a Capper-Volstead cooperative of egg farmers that raise about 90% to 95% of all egg-laying hens in the United States. UEP members produce eggs in conventional cage, enriched cage, cage-free, free-range, and organic systems and also produce processed egg products. According to UEP, it provides leadership in legislative and regulatory affairs for its membership. UEP has taken the lead in setting laying-hen welfare standards for the egg industry through its UEP Certified program, established in April 2002. UEP Certified was the result of the work of an independent Scientific Advisory Committee for Animal Welfare, formed in 1999, that presented recommendations to UEP on animal husbandry for laying hens raised in conventional cages. Egg producers who want to market eggs as UEP Certified have to provide laying hens with 67-86 square inches of floor space for optimal welfare. In addition, producers have to follow guidelines on such flock management practices as beak trimming, molting, handling, catching, and transporting laying hens. Guidelines also cover euthanasia, bio-security, and keeping public trust. UEP Certified egg producers are to be annually audited to assure that UEP Certified guidelines are being followed. The Humane Society of the United States (HSUS), established in 1954, is the largest animal protection organization, with a reported membership of 11 million in the United States. The HSUS states its mission as "Celebrating Animals, Confronting Cruelty," and part of that mission is to fight animal cruelty, exploitation, and neglect. Besides conducting well-known animal advocacy campaigns against cruelty in dog fighting or cockfighting, puppy mills, and wildlife protection, HSUS has conducted campaigns covering farm animals, particularly against animal confinement such as egg-laying hen cages and sow and veal crates. In January 2005, HSUS launched its "No Battery Eggs" campaign to persuade food companies, retailers, restaurants, and other food providers to switch to eggs from cage-free production systems. HSUS has characterized laying hens as the "most abused animals in agribusiness" because of their cage conditions. HSUS has worked with state legislatures, local governments, corporations, and universities to change laws and egg buying practices. Most recently, HSUS trumpeted Burger King's announcement on April 25, 2012, that it would switch to cage-free eggs in its restaurants by 2017. Burger King began working with HSUS in 2007 to start phasing out the use of eggs from conventional cages. HSUS has pursued ballot initiatives in states with that option to add farm animal welfare provisions on laying hens, sows, and calves to state laws. HSUS was most successful in the 2008 California ballot initiative, where voters chose to ban the use of cages after January 1, 2015 (see " California Proposition 2 ," below). HSUS also has waged campaigns in other states that have resulted in laws on laying-hen cages. In October 2009, Michigan enacted a law to phase out cages by 2019, and in June 2010, Ohio agreed to place a moratorium on the construction of new conventional cages as part of an agreement to stop a ballot initiative. On July 7, 2011, UEP and HSUS announced that they had reached an "unprecedented agreement" to jointly work together to enact federal legislation that would greatly alter production conditions for egg-laying hens in the United States. The agreement included seven key provisions pertaining to the production of shell eggs and egg products that would: require, over a phase-in period, that conventional cage systems be replaced with enriched cage systems that double the amount of floor space per laying hen; require that the new enriched cage systems provide perches, nesting boxes, and scratching areas so that laying hens can express natural behaviors; mandate labeling on all egg cartons nationwide to inform consumers of the housing method used to produce the eggs; prohibit withholding of feed or water to force molting to extend the laying cycle; require standards approved by the American Veterinary Medical Association for euthanasia for egg-laying hens; prohibit excessive ammonia levels in henhouses; and prohibit the buying and selling of eggs and egg products that do not meet the standards. UEP and HSUS have been adversaries for many years over the use of conventional cages in table egg production, and the agreement is a marked shift in direction for both organizations. UEP approached its position on conventional cage production based on what the available science indicated provided welfare for laying hens. That was the basis for more than a decade of work through its Scientific Advisory Committee and the UEP Certified program. Prior to this agreement, the HSUS position was firmly held that only cage-free systems provided adequate welfare for laying hens (see " Egg Production Systems and Hen Welfare ," below). Under the agreement, all U.S. egg producers would have to end the use of conventional cages by the end of the phase-in period and meet production standards defined in law. For its part, in addition to reversing its cage-free stance, the HSUS agreed (1) to suspend its ballot initiatives in Oregon and Washington; (2) to not initiate, fund, or support other state ballot initiatives or legislation; (3) to not initiate, fund, or support litigation or investigations of UEP or its members; and (4) to not fund or support other organizations' efforts that would undermine the agreement. For HSUS, the agreement to work with a major livestock group could result in significant federal farm animal welfare legislation. The agreement was the result of negotiations that became possible when UEP learned that HSUS might be open to discussing enriched cages for the U.S. egg industry in lieu of cage-free standards. According to Wayne Pacelle, HSUS president and CEO, visits to EU egg farms that were implementing enriched cage systems led to consideration of such systems in the United States. Both UEP and HSUS have indicated that it was in the interest of both sides to halt costly state-by-state battles over caged eggs that result in a variety of laws across the country. The decision by UEP to enter into the agreement with HSUS was made through several votes by UEP's executive committee; the votes were not unanimous. The agreement was not put to vote of UEP's general membership, and reportedly the board members who voted for the agreement represented 45% of the egg industry. On April 25, 2013, the Egg Products Inspection Act Amendments of 2013 ( S. 820 and H.R. 1731 ) were introduced in the Senate and House. Both of the bills would amend the Egg Products Inspection Act (see box below) by adding cage size and production requirements for shell eggs. The bills are the result of the negotiations between UEP and HSUS and reflect their agreement of July 7, 2011, to establish uniform national cage size requirements for table-egg-laying hens. The bills also include labeling requirements, and air quality and treatment standards for egg-laying hens. The bills are similar to S. 3239 and H.R. 3798 , introduced in the 112 th Congress. The main differences between the bills introduced in the 113 th Congress and those from the 112 th Congress are the more detailed provisions for California egg producers. For California, S. 820 and H.R. 1731 set deadlines for adding enrichments and expanding floor space requirements based on whether cages are new or existing (see " Housing Requirements ," below). In addition, the legislation includes a four-step phase-in period for California (see " Phase-In Conversion Requirements ," below). The legislation also requires that any eggs bought or sold in California meet the California requirements in the legislation, no matter where the eggs are produced. Because California law bans the use of conventional cages after January 1, 2015 (see " California Proposition 2 " below), this provision could protect California egg producers from a flood of eggs from egg producers in other states who have not yet converted operations to the new national requirements. Besides the California differences, S. 820 and H.R. 1731 include a new provision that allows for excess ammonia levels because of special circumstances. Also, three exemptions are added to the legislation. Educational and research institutes and cages with one egg-laying hen are exempt, and the legislation explicitly states that the provisions apply only to commercial egg production, and exempt other livestock and poultry production. S. 820 and H.R. 1731 would prohibit the commercial buying and selling of shell eggs and egg products from laying hens that are not raised according to the new housing requirements. For California, the bills contained different standards during the phase-in period in recognition that California state law, adopted through the ballot initiative process in 2008, has laying hen requirements that are scheduled to go into force on January 1, 2015 (see " California Proposition 2 ," below). The bills would require that cages used to house egg-laying hens include environmental enrichments, such as perch spaces, dusting or scratching areas, and nesting areas. The Secretary of Agriculture is to define these enrichments based on the best available science at the time the regulations are written. Environmental enrichments for new cages would need to be in place within 9 years of the enactment of the legislation, and for existing cages (cages in use prior to December 31, 2011) would need to be in place within 15 years of enactment. For California, environmental enrichments for new cages would need to be in place three months after enactment, and enrichments for existing cages must be in place by January 1, 2024. S. 820 and H.R. 1731 would set minimum floor space requirements for existing and new cages. For existing conventional cages in use on or before December 31, 2011, egg farmers would have four years from the date of enactment of the legislation to provide each white laying hen a minimum of 67 square inches of floor space, and each brown laying hen 76 square inches. Fifteen years after enactment, laying hens would need to have 124 and 144 square inches. For new cage systems, the floor requirements for laying hens would have been phased in during the 15 years following the enactment of the legislation. Table 2 lists the floor space requirements that would have been phased in over 15 years, culminating in cages of 124 and 144 square inches. For California, S. 820 and H.R. 1731 would require that cages have 116 square inches for white hens and 134 square inches for brown hens from January 1, 2015, through December 31, 2023. Beginning January 1, 2024, California cages would need to be 124 and 144 square inches, the standard for all laying hen cages, but California would reach the national standard about four years earlier than other states. In addition to environmental enrichments and floor space measures, the egg legislation would require that within two years of enactment of the legislation egg producers (1) keep ammonia levels in the air in egg-laying houses to less than 25 parts per million, except for temporary periods due to extraordinary weather or unusual circumstances; (2) not withhold feed or water to force laying hens to molt (lose their feathers to rejuvenate egg laying); and (3) follow the guidelines set out by the American Veterinary Medical Association (AVMA) for euthanasia. Current law also gives USDA the authority to inspect egg imports. Egg and egg product imports, like meat and poultry, are allowed into the United States under equivalency agreements. This means that imported products are produced and inspected in foreign countries in a manner that provides equivalent food safety as in U.S. domestic production. S. 820 and H.R. 1731 would amend import provisions to require that imported eggs and egg products be produced according to the standards of the EPIA. This import aspect potentially could become a trade issue in the future if foreign egg and egg product imports were required to meet U.S. production standards. However, U.S. egg imports are relatively small and from few countries, and this likely would not arise as a trade issue until the U.S. egg industry has fully transitioned to enriched cages in the future. Also, the legislation would prohibit the introduction of new conventional cages that have less than 67 and 76 square inches for white and brown laying hens, and to which environment enrichments could not be added. S. 820 and H.R. 1731 would establish several benchmarks for the egg-laying industry to meet as it transitions to new enriched cage systems. The goal is to have at least 25% of the commercial egg-laying hens in cages that afford 90 and 102 square inches for white and brown laying-hens six years after enactment of the legislation. In the period 12 years after enactment, the target is for 55% of commercial egg-laying hens to have 113 and 130 square inches of floor space. Then in the final phase, all egg-laying hens would have to have a minimum of 124 and 144 square inches and environmental enrichments as of December 31, 2029. The phase-in periods would be different for California. The first phase-in period would be 2½ years after enactment of the legislation and would require that 25% of cages provide 116 and 134 square inches for white and brown laying hens. Five years after enactment, 50% of cages would have to meet the first phase-in period space requirement, and after 7½ years, 75% would have to meet the space requirement. Finally, 10 years after enactment, all California cages would have to provide 124 and 144 square inches of floor space. At the end of the six-year phase-in period, the Secretary of Agriculture would use data from an independent national survey of the industry to determine if the phase-in targets have been met. If the targets have not been achieved, then existing conventional cage systems that had been in operation prior to January 1, 1995, would have to meet the 90 and 102 square inch requirement beginning January 1, 2020. If California has not met its requirement, then one year after the Secretary's finding, all cages would be required to provide 124 and 144 square inches for white and brown laying hens. The legislation also would require the Secretary of Agriculture to submit compliance reports to the House and Senate Agriculture Committees after the 12-year mark and after December 31, 2029. The legislation would amend the EPIA to require housing labels on shell eggs and egg products that are legible markings on the side or top of packages. The four label options are: Eggs from free-range hens —eggs or egg products from laying hens not housed in cages and provided with outdoor access; Eggs from cage-free hens —eggs or egg products from laying hens not housed in cages; Eggs from enriched cages —eggs or egg products from laying hens housed in cages with adequate environmental enrichments and a minimum of 101 and 116 square inches of individual floor space per white and brown hens; and Eggs from caged hens —eggs or egg products from laying hens housed in cages without adequate environmental enrichments and less than the minimum of 101 and 116 square inches of individual floor space per white and brown hens. The responsibility for ensuring that shell eggs and egg products were properly labeled with the method of housing would fall to USDA. The housing label requirement would go into force one year after the enactment of the bill. S. 820 and H.R. 1731 would provide six exemptions to the new requirements: (1) egg farmers who installed new cages between January 1, 2008, and December 31, 2011, would have until December 31, 2029, to meet the floor space requirements; (2) laying-hen flocks that are in production when the bill was enacted would be exempt from the provisions until the flocks are removed from production; (3) small egg producers—defined as those with less than 3,000 laying hens—would be exempt from the requirements; (4) the provisions do not apply to educational and research institutions; (5) the enrichment provisions do not apply to cages with one egg-laying hen; and (6) the provisions of the legislation do not apply to production of pork, beef, turkey, dairy, broiler chicken, veal, or other livestock or poultry. The provisions of H.R. 3798 and S. 3239 were endorsed by agricultural, veterinary, consumer, and animal protection groups. Egg farmers and other family farms in more than 30 states also endorsed the bills. In what some supporters of H.R. 3798 and S. 3239 considered significant backing for the bill, the executive board of the American Veterinary Medical Association (AVMA) voted to support H.R. 3798 in March 2012. AVMA explained, "The decision was not made lightly. There was extensive deliberation, and the board reasoned that the standards are consistent with AVMA policy, as well as industry long-term expectations about changes in egg-production practices.'' Supporters of H.R. 3798 and S. 3239 also pointed to consumer support for changes in egg cages. In a two-part survey commissioned by UEP, survey respondents indicated by a 4-to-1 margin that they would support legislation transitioning from conventional cages to enriched cages. In the second part of the survey, respondents indicated support for federal legislation by a 2-to-1 margin. According to Dr. Jeffrey Armstrong, who has been a member of UEP's Scientific Advisory Committee from its beginnings, public perception is turning against conventional cages, and the UEP-HSUS agreement affords egg producers the chance to regain public trust. Other groups representing agriculture and livestock producers, such as the American Farm Bureau Federation (AFBF), the National Cattlemen's Beef Association (NCBA), and the National Pork Producers Council (NPPC), said that they vigorously opposed H.R. 3798 and S. 3239 . After the UEP-HSUS agreement was announced, NCBA stated, "Cattlemen are rightfully concerned with the recent UEP-HSUS agreement to seek unprecedented federal legislation to mandate on-farm production standards." In its statement, the NPPC called such legislation on egg cages a "dangerous precedent," and was "gravely concerned that such a one-size-fits-all approach will take away producers' freedom to operate in a way that's best for their animals." In a December 6, 2011, letter to the House Agriculture Committee, eight farm groups expressed their opposition to any proposed legislation resulting from the USP-HSUS agreement. Although some animal welfare groups signed on with HSUS in endorsing the shift to enriched cages, other related groups remained strongly opposed to H.R. 3798 and S. 3239 because of their view that an enriched cage is still a cage that harms laying-hen welfare. The Humane Farming Association (HFA) is leading a campaign to "Stop the Rotten Egg Bill" emphasizing that H.R. 3798 and S. 3239 could nullify already enacted state law, take away citizens' right to vote on cages, and prevent state legislatures from passing laws to protect laying hens. UEP and supporters of the egg legislation argue that this legislation is the best path for the egg industry in order to avoid constant fights and growing costs to defend current production methods. According to Gene Gregory, president of UEP: Egg farmers believe a single national standard is the only way to shape their own future as sustainable, family-owned businesses. It is the only way to have some control over their own destiny and avoid a bleak future of overlapping, inconsistent, unworkable, state-based animal welfare standards that will result from ballot initiatives our industry cannot win even if we raise millions of dollars to try to educate the public, as we did in California in 2008. Opponents argue that pursuing legislation at the federal level had consequences that could impact all livestock and poultry producers. In addition, the costs are likely to be high and especially costly for small egg farmers. Several issues are highlighted below. UEP recognizes that federally mandated production methods would be a significant change, but one that is necessary to keep the egg industry from confronting a variety of inconsistent state standards. UEP believes that the egg market would function more efficiently if there were a single national standard. California and Michigan—two large egg-producing states—have enacted legislation that will require egg producers to abandon cage production by 2015 and 2019, potentially putting them at a cost disadvantage to caged production. It also is costly for the egg industry to challenge state ballot initiatives or proposed legislation on a state-by-state basis. Opponents argue mandatory standards are being driven "largely on the political goals of an animal rights group that seeks to eventually shut down animal agriculture by government mandate." Current animal welfare law, the Animal Welfare Act (7 U.S.C. §§2131-2159), does not apply to farm animals. Other federal laws and regulations cover areas such as animal health and food safety, but do not prescribe how U.S. farmers raise their animals. Most livestock and poultry groups have developed voluntary guidelines on "best practices" for animal welfare that most producers follow. Opponents of H.R. 3798 and S. 3239 wanted producers to maintain control of production methods. According to Gene Gregory, UEP president, UEP forwent negotiating voluntary guidelines, similar to the UEP Certified program, which would have encouraged egg farmers to transition to enriched cages because of unresolved antitrust lawsuits that have been brought against UEP and some egg producers. UEP has been accused of using the UEP Certified welfare standards that increase cage space per laying hen to reduce egg production and drive up prices, as well as encouraging egg producers to cull flocks when feed prices climbed in 2008. In order to avoid affecting the production practices of other livestock sectors in the legislation, UEP and HSUS pushed their proposed legislation through an amendment to the EPIA, which only addresses the egg industry and not the livestock or poultry sectors. Both UEP and HSUS pointed out that the egg legislation could succeed in Congress only if the industry was in agreement. Similar legislation for other livestock or poultry industries seemed unlikely. Reportedly, UEP and HSUS agreed that if any similar legislation or amendments were proposed that involved other livestock or poultry sectors, the two groups would abandon their support for the bills. Although cage requirements would have been embedded in law that applied only to eggs and egg products, opposition groups believed that successful enactment of H.R. 3798 and S. 3239 would have encouraged future federal legislation mandating other animal husbandry practices. This view probably was held most strongly by many hog producers, whose use of sow gestation crates (small confined crates where sows birth their piglets) has been under attack for several years. The use of gestation crates is already being phased out by some state laws, and is banned in the EU in 2013. One of the main criticisms of the egg legislation is that cage requirements are not based on specific scientific research that says the requirements are optimal for laying-hen welfare. But as the AVMA pointed out when evaluating its position on H.R. 3798 , the available science suggests that the proposed standards of H.R. 3798 would likely still improve the lives of egg-laying hens. The AVMA also recognized opposition to the agreement among egg producers, and stated that it would work to make sure the legislation results in welfare improvements with minimal impacts on producers, associated industries, and consumers. Opponents were also concerned that the egg legislation would be a move away from the long established position shared among animal agriculture groups that animal husbandry decisions affecting welfare should be based on the best available science. Opponents argued that U.S. producers already raise and manage their animals with practices that are science-based and overseen by veterinarians, and that animal welfare is a priority for livestock and poultry producers. Most livestock and poultry groups have established voluntary programs, such as the pork producers' Pork Quality Assurance (PQA) and the cattlemen's Beef Quality Assurance (BQA), that include animal welfare guidance. Furthermore, opponents of the egg legislation argue that if standards were codified into law, then future science-based innovations in animal management and/or welfare could be limited, and that Congress would end up regularly amending federal standards as the science changed. Transition and production costs were a major concern for egg producers, especially small producers, because of the substantial investment required to convert from conventional cages to enriched cages. Estimated egg industry costs of H.R. 3798 and S. 3239 varied greatly. The July 2011 UEP-HSUS agreement announcement included an estimate of $4 billion over the transition period. Opponents of the bill said that the cost to the egg industry was much higher, at $8 billion-$10 billion. Most likely the cost would vary across egg farms, because some operations would have to invest in more than just new enriched cages, as some new housing structures would have to be built to accommodate enriched cages. Houses with enriched cages could also require more heating as there would be less natural heating as birds are spaced further apart. This could be a comparative advantage for house expansion in the South as compared to the colder Midwest. The lead group on the December 2011 letter to the House Agriculture Committee opposing federal legislation was the Egg Farmers of America, a group composed of small egg producers. Egg Farmers of America was formed to oppose the UEP-HSUS agreement and H.R. 3798 and S. 3239 . According to one of its members, the per-hen cost to convert to enriched cages is $25-$30, nearly four times the cost of conventional cages. The member estimated that converting his 300,000 laying-hen flock would cost about $8 million-$9 million. In addition, conventional cages have a useful life of 25-30 years, which means that some farms could have to convert when their conventional cages were still useful. Obtaining bank loans when credit is tight could be difficult, especially if there was still a useful life for a farmer's conventional cages. The shift to enriched cages could also lead to an acceleration of consolidation in the egg industry as the largest egg farms continue to expand, and capital costs squeeze small egg producers. An analyst at the Egg Industry Center at Iowa State University noted that medium egg farms (under 1 million laying hens) might try to expand or just exit the business, while the very small egg farms could produce eggs for niche markets such as cage-free or organic. Besides the large capital investment required to transition to enriched cages, questions have arisen about what future egg production operating costs would be compared with the current model using conventional cages. One study indicated that eggs produced in cage-free systems would cost 25% more than those produced in conventional cages. However, enriched cage production would not be exactly comparable to cage-free production. In a limited sample, JS West and Companies, a commercial egg producer in California, built an enriched cage house in 2010 and in January 2012 released results comparing production in its enriched cage (116 square inches) and conventional cage (67 square inches) systems. According to JS West: the hen mortality rate in the enriched cages was less than in conventional cages, 4.22% vs. 7.61%; egg output per hen was higher in the enriched cages by 22 eggs, 421 vs. 399 eggs; the average weight of a case of eggs was higher from the enriched cages, 49.4 pounds compared to 47.93 pounds; feed use per 100 hens was 22.60 pounds in the enriched cages and 20.45 pounds in the conventional cages; and feed use per dozen eggs was 3.19 pounds for the enriched cages vs. 3.00 pounds for the conventional cages. These limited data suggest that feed costs may be somewhat higher in an enriched cage system because of increased feed use, but there appear to be offsetting productivity gains that could make up for higher feed costs. On June 1, 2012, UEP released a new study of the economic impacts of converting to enriched cages. The report estimated a baseline for capital investment, production costs, and consumer prices that will occur over the next 18 years under current table egg production methods. The study also estimated this for production under the provisions of the bills. In summary, the study found that production under enriched cages would require an additional $2.6 billion in capital investment ($3.1 billion v. $5.7 billion). The production costs for eggs from enriched cages are estimated to be about $0.06 (+8%) per dozen higher in 2030, the end of the phase-in period, than under current production methods. For retail eggs, the per-dozen price in 2030 is also estimated $0.06 higher, but would be a 3% increase over expected prices from current production methods. It should be noted that this study examines the table egg industry in aggregate. Egg farmers could face different costs depending on individual circumstances. Animal welfare has become an increasingly salient public issue over the past decade. More recently, social media publication of graphic videos of the treatment of laboratory animals (e.g., apes, cats, dogs), commercial pet breeding operations (e.g., "puppy mills"), and farm animals (e.g., slaughter houses, swine and poultry farms) has contributed to rising public awareness of how humans use animals, and how these animals are treated. Some of this awareness has been expressed in appeals for more vigorous enforcement of state and local animal abuse and cruelty laws. Other individuals and groups, citing animal welfare issues, environmental issues, and/or social justice issues, have called for significantly reducing or even ending the consumption of meat and animal products. As the UEP-HSUS agreement and H.R. 3798 and S. 3239 suggest, animal agricultural producers likely will face more animal welfare campaigns and growing public interest in farm animal welfare. The following sections discuss recent animal welfare issues as they pertain to hens. Approximately 95% of laying hens in the United States are confined in conventional battery cages. The use of conventional battery cages accompanied the increasing concentration of the egg production sector. Producers found that the cages reduced their production costs (e.g., feed costs). There is little controversy over the idea that conventional battery cages cause many hen welfare problems. Battery cages are cramped structures that prevent hens from engaging in their most basic natural behaviors, such as fully turning their heads, stretching their wings, roosting, nesting, and standing upright. Battery cages typically have slanted wire mesh flooring and may be stacked several tiers high. Thousands of hens may be housed in a single laying house. Other housing systems, however, may create other types of hen welfare concerns. Hen welfare is determined by, among other factors, genetics, disease, pest and parasite loads, stress, nutrition, and the birds' natural behaviors. Research on the influence of these factors on hen welfare is still in the early stages. Different housing systems have different effects on hen welfare. One housing system can improve hen welfare in some respects, while exacerbating other welfare issues. To better understand the relationship of housing and hen welfare, the Poultry Science Association convened an international symposium on the Social Sustainability of Egg Production in 2010. At this symposium, 11 animal scientists from U.S. and European universities and research laboratories presented a review of 202 research articles on hen behavior and housing systems published over the past three decades. This review outlined the welfare impacts attendant on four different housing systems: (1) conventional cages, (2) enriched cages, (3) cage-free systems, and (4) free-range outdoor systems. Two central findings from the review of the research on housing and hen welfare are that "assessing hen health and welfare is difficult and multifactorial" and that "no single housing system is ideal from a hen welfare perspective." Characteristics of the various housing systems and their potential effects on hen behavior and welfare examined in the review are discussed briefly below. Conventional cages inherently restrict hens from expressing "highly motivated behaviors" for their entire laying lives. Behaviors associated with body maintenance (e.g., wing flapping, tail wagging, stretching), locomotion, and regulating body temperature are significantly curtailed in conventional cages. At high densities, hens suffer plumage damage from rubbing against the cages and lose capacity to regulate body temperature. High densities and little space limit access to food and water as other hens block the path to food and more aggressive breeds defend the feeder from other hens. Higher densities can increase the incidence of feather pecking, cannibalism, and smothering, although these risks can be reduced by beak trimming and group selection. Nesting behavior is a behavioral priority, and conventional cages lack materials for nest building. The absence of nest building material is thought to reduce hen welfare given that hens seem to prefer depositing eggs in molded nests rather than slanted wire floors. Enriched cages (furnished cages or enriched colonies) were developed in response to the criticisms about conventional cages. Enriched cages typically have a nesting box, perches, and a dustbathing area. The review noted that these features permit hens more behavioral freedom than found with conventional cages. However, enriched cages have limited space per hen thus limiting their ability to run or flap their wings. Exercise is significantly restricted. Nesting and perching may also be restricted. Litter inside the cages may be quickly depleted and cause stress to the hens who are excluded from dustbathing by more dominant hens. While some regard enriched cages as an improvement over conventional battery cages, others see little improvement in this housing system. Cage-free systems provide "sufficient space for performance of a full repertoire of locomotory and body-maintenance behaviors." With larger flock sizes (>1,000), the review noted that cannibalism and feather pecking can increase, although beak trimming can lessen these behaviors, as can reducing flock size. Stocking densities in cage-free systems can have a bearing on hen behavior, with low densities possibly triggering aggressive defense behavior around certain resources in the cage-free housing. Cage-free systems may have all slatted floors or all litter floors, or a combination of the two. The opportunity to forage in litter is important for hen welfare. Foraging in litter can reduce the incidence of cannibalism and feather pecking. Accessibility to litter, quality of the litter, and experience with litter during rearing appear to be critical variables affecting behavior in cage-free systems. The research review also noted that perches appear to reduce aggression in hens, although in the United States, cage-free systems generally do not provide adequate perch space for all hens to perch at night. Some cage-free systems do not provide perches. Free-range (outdoor) systems permit hens to spread out when foraging and, in general, increase the hens' behavioral options. Outdoor systems permit the hens to eat preferred foods such as grass seeds, earthworms, and flying insects. They also can sun themselves and dust bathe. Cannibalism, feather pecking, and piling, however, can increase in larger free-range flocks. While the greater environmental complexity of free-range systems increases behavioral opportunity for hens, according to the research review, this complexity can also introduce difficulties in managing disease and parasites. Indoor barn systems, while not permitting access to the outdoors, may offer some compromise between cage and non-cage systems. As this research review of egg production systems shows, very little research on hen housing and welfare is available that compares all factors affecting welfare under different housing systems. Mortality is greater in conventional cages than in enriched cage systems. In non-cage systems, mortality can be significant. Free-range housing may increase behavioral options for hens, but disease and parasite management can be more difficult, and welfare problems from cannibalism and predation can increase. The authors of the survey also noted that the overall management of each housing system is a critical component of hen welfare. Housing systems that may be superior along certain dimensions of hen welfare can be compromised by poor management. The authors conclude that the "right combination of housing design, breed, rearing conditions, and management is essential to optimize hen welfare and productivity." The Animal Welfare Act (AWA, P.L. 91-579, 7 U.S.C. §§2131-2159) is the primary United States statute governing the treatment of animals, including marine mammals, and animals used in research. The AWA is administered by USDA's Animal and Plant Health Inspection Service. Animal health standards (e.g., medical treatment, feeding, watering, sanitation, enclosures, handling), transportation standards (e.g., carriers, primary means of conveyance, care in transit), animal exhibitions (e.g., zoos, carnivals, circuses), and animal fighting are major areas regulated under the AWA. However, the AWA explicitly excludes farm animals from its regulatory oversight. While most states have laws related to animal cruelty or animal welfare, most of these statutes also exclude farm animals from coverage. Farm animal welfare is, then, largely a matter of the actions of individual producers. Producer organizations (e.g., NCBA, NPPC, and UEP) may develop best-practice standards of animal care for their members, but these standards are voluntary and do not carry the force of law. Legislation has been introduced in the past several congresses to address farm animal welfare. In the 110 th Congress, the Farm Animal Stewardship Purchasing Act ( H.R. 1726 ) would have required that government purchases of animal products be restricted to livestock products from animals raised under specific welfare conditions. The Farm Animals Anti-Cruelty Act ( H.R. 6202 ) would have promoted farm animal well-being by imposing fines on producers who abuse animals in food production. In the 111 th Congress, the Prevention of Farm Animal Cruelty Act ( H.R. 4733 ) would, like H.R. 1726 , have required that government purchases of animal products be restricted to livestock products from animals raised under specific welfare conditions. None of these bills were enacted. With the exception of H.R. 3798 and S. 3239 , no other bills addressing farm animal welfare have been introduced in the 112 th Congress. Proposition 2, or the Standards for Confining Farm Animals, was a 2008 ballot initiative in California. The proposition, sponsored by HSUS, was approved by nearly 64% of the voters. Proposition 2 requires that all farm animals, "for all or the majority of any day," not be confined or tethered in a manner that prevents them from lying or sitting down, standing up, turning around or fully extending their limbs without touching another animal or an enclosure such as a cage or stall. The law will go into effect on January 1, 2015. In July 2010, California bill A.B. 1437 was enacted, requiring that all shelled (whole) eggs sold in California come from cage-free hens. The intent of the law is to "protect California consumers from the deleterious health, safety, and welfare effects of the sale and consumption of eggs derived from egg-laying hens that are exposed to significant stress and may result in increased exposure to disease pathogens including salmonella." This law will also go into effect on January 1, 2015. While Proposition 2 applies only to laying hens in California, the effect of the 2010 law will require that egg farms in other states abide by California's law regarding layers if they wish to sell eggs in the state. On May 6, 2013, the California Office of Administrative Law approved California Department of Food and Agriculture regulations setting standards for cage sizes. Under the approved regulation, enclosures with nine or more table-egg-laying hens must have a minimum of 116 square inches of floor space per bird. The regulation also includes a formula for calculating floor space requirements for enclosures with fewer than nine laying hens. Proposition 2 has been challenged in state courts by California egg producers three times since the law was enacted, primarily due to the vagueness of the law. These lawsuits were dismissed. Challenges to California's shell egg laws moved to federal court in February 2014 when Missouri challenged the 2010 law in U.S. District Court. In December 2010, a commercial egg producer in California, JS West and Companies, filed suit against HSUS and the state of California to clarify what type of housing for hens was acceptable under Proposition 2, claiming that the statute did not define how much space is required for the specified animal behaviors. The egg company opened an "enriched colony" system in 2010 that provided 116 square inches of space per hen, significantly larger than the egg industry standard of 67-87 inches. The HSUS, in response, stated that Proposition 2 requires "cage-free environments." While Proposition 2 does not specifically state cage sizes, the living conditions required by Proposition 2 would effectively require cage-free environments. The Association of California Egg Farmers (ACEF), representing 70% of California's egg farmers, joined the suit in March 2011. In July 2011, the California Superior Court ruled that JS West could not challenge California at the time because the state had not yet established a position on what types of housing would meet Proposition 2 requirements. In April 2012, William Cramer, a California egg farmer in Riverside County, filed suit in the U.S. District Court, Central District of California, claiming that Proposition 2 is unconstitutionally vague and violates the U.S. Constitution's commerce clause. According to Cramer's complaint, California egg farmers cannot know if they are violating the law because of the vagueness of Proposition 2, and farmers will exit the egg business because it creates an uncertain investment environment. In addition, Cramer stated that California consumers will be harmed because egg prices will rise. The lawsuit also contended that the California law on egg production violates the commerce clause because it will interfere with the interstate sales of eggs. In September 2012, the District Court rejected Cramer's claims that Proposition 2 is vague and violated the commerce clause. In November 2012, the ACEF filed another suit asking the Fresno County Superior Court to find that the language of Proposition 2 was unconstitutionally vague according to California's constitution. The ACEF claimed that the lack of size and density requirements in Proposition 2 make it impossible for California egg producers to alter cage sizes to comply with the January 1, 2015, deadline. On August 22, 2013, the court ruled against the plaintiffs, stating that "[t]he fact that the statute defines confinement limitations in terms of animal behaviors rather than in square inches or other precise measurements does not render the statute facially vague." On February 3, 2014, the Missouri Attorney General filed a lawsuit in the U.S. District Court in Fresno, CA, to challenge the 2010 California egg law. Missouri claims that California's law violates the interstate commerce clause of the U.S. Constitution by imposing production requirements on out-of-state egg farmers. According to the lawsuit, Missouri ships about one-third of its 1.7 billion annual egg production to California, and Missouri egg producers would have to spend $120 million to meet the California cage requirements. In September 2009, Michigan became the second state to enact legislation (HB 1527) to restrict the use of conventional cages for laying hens. Similar to the California law, the Michigan law prohibits gestating sows, calves raised for veal, and egg-laying hens from being confined in a manner that prevents them from lying down, standing up, fully extending limbs, and turning around freely. The provisions of the Michigan legislation were the result of negotiations between the Michigan Pork Producers Association, the Michigan Allied Poultry Industries, the Michigan Agri-Business Association, and the HSUS. The legislation stopped the HSUS from pursuing a ballot initiative campaign in Michigan on animal confinement during 2010. The Michigan provisions for egg-laying hens go into force in 2019. Article 13 of the Treaty on the Functioning of the European Union recognizes animals as sentient beings and requires that full regard be given to the welfare of animals when formulating and implementing EU policy. A 1964 book — Animal Machines —significantly increased awareness of animal welfare in the EU, particularly the welfare of farm animals. The book also helped create public pressure in the EU to end the use of battery cages, the production method most in use in OECD countries. Subsequent research on non-cage systems led to an EU Directive that first specified a minimum size for battery cages in 1986. The Farm Animal Welfare Council, established by the UK government in 1979, issued an analysis of hen welfare and egg production systems in 1986, followed by two additional reports in 1991 and 1997 on the welfare of laying hens. On June 17, 1999, the European Union announced passage of a new directive that would, over 13 years, phase out the use of battery cages for laying hens. The ban, effective January 1, 2012, and relying on advice from the EU's Scientific Veterinary Committee, prohibits the use of conventional battery cages for hens. Egg production in the EU now allows only enriched caging systems or non-cage systems. Enriched cages (sometimes referred to as colony cages) have a small perch, a litter area for scratching, and a nesting box. The enriched cage is somewhat higher than the conventional battery cage and has slightly more space per hen. The European Commission announced plans in January 2012 to take legal action against 13 member states who are in breach of the new rules—Belgium, Bulgaria, Cyprus, Greece, Hungary, Italy, Latvia, the Netherlands, Poland, Portugal, Romania, Slovakia, and Spain. The EU Commission sent formal notices asking each of the 13 noncompliant member states for information about how it would correct deficiencies in implementing the ban on battery cages. The EU Commission noted that noncompliance had animal welfare consequences, and also distorted the egg market. By November 2012, only Cyprus, Greece, and Italy were not in compliance with the EU hen cage rules. Some EU countries transitioned to enriched cages ahead of the 2012 deadline for compliance. Sweden banned the use of conventional cages by the end of 2002; Austria banned their use by the end of 2008; and Germany followed by the end of 2009. Austria and Belgium also plan to ban enriched cages by 2020 and 2024, respectively. Outside the EU, Switzerland banned battery cages in 1992. Battery cages are still legal in non-EU countries, and there is no current ban on the import into the EU of eggs produced in non-EU countries in battery cages. Such eggs will require a country-of-origin label and must indicate that the farming method used to produce the eggs is "non-EC standard." Implementation of the ban has imposed increased costs for eggs in the EU. According to the EU Commission, egg supplies fell and egg prices "surged considerably" in the weeks following the implementation of the January 2012 ban. Data released by the Commission showed that table egg prices increased 44% by March 2012 from the end of 2011. Prices for eggs used by the food industry—normally as much as 50% less expensive than supermarket eggs—also increased 10%-20% in price. The EU wholesale prices for whole pasteurized liquid egg increased 102% year-over-year. Based on the experience of Germany, which banned conventional cages in 2007, the Commission noted that they expected egg prices to stabilize by early May, even as they expect total egg production to fall by 2.5% in 2012. Indeed, EU egg prices peaked in March, remained relatively high in April, but moved lower throughout the rest of the year. Although 2012 EU egg prices were higher than a year earlier because of high input costs, the November 2012 price was 16% lower than the March peak. On February 15, 2012, the European Commission issued its general strategy for the protection and welfare of animals. The EU already had directives on various aspects of animal welfare including transportation; slaughtering; and specific requirements for housing calves, pigs, laying hens, and broilers. EU rules on organic production also include high animal welfare standards for cattle, pig, and poultry production. The new EU strategy will consider introducing a simplified legislative framework with animal welfare principles for all animals. This framework would use science-based animal welfare indicators to simplify the legal framework, provide more information to consumers on animal welfare, create a common set of requirements for personnel handling animals, and establish a EU network of animal welfare centers.

The United Egg Producers (UEP), the largest group representing egg producers, and the Humane Society of the United States (HSUS), the largest animal protection group, have been adversaries for many years over the use of conventional cages in table egg production. In July 2011, the animal agriculture community was stunned when the UEP and HSUS announced that they had agreed to work together to push for federal legislation to regulate how U.S. table eggs are produced. The agreement between UEP and HSUS called for federal legislation that would set cage sizes, establish labeling requirements, and regulate other production practices. As part of the agreement, HSUS agreed to immediately suspend state-level ballot initiative efforts in Oregon and Washington. On April 25, 2013, the Egg Products Inspection Act Amendments of 2013 (S. 820 and H.R. 1731) were introduced in the 113th Congress. The bills are nearly identical to the legislation that was introduced during the 112th Congress (S. 3239 and H.R. 3798). The provisions in S. 820 and H.R. 1731 reflect the 2011 agreement between UEP and HSUS to establish uniform, national cage size requirements for table egg-laying hens. The bills would codify national standards for laying-hen housing over a 15- to 16-year phase-in period, including labeling requirements to disclose how eggs are produced, and set air quality, molting, and euthanasia standards for laying hens. Compared with the bills from the 112th Congress, S. 820 and H.R. 1731 add provisions specific to California that establish deadlines based on whether or not cages are new or existing, and add a four-step phase-in period for California producers. The legislation also requires that any eggs bought or sold in California meet the California requirements in the legislation, no matter where the eggs are produced. The agreement and legislation were a marked shift in direction for both UEP and HSUS. UEP views the legislation as being in the long-term survival interest of American egg farmers. It says that egg producers would benefit from national egg standards that halt costly state-by-state battles over caged eggs that result in a variety of laws across the country. For HSUS, which has actively campaigned for cage-free egg production, accepting enriched cages was a compromise, but one that could result in significant federal farm animal welfare legislation. Egg legislation has been endorsed by a wide range of agricultural, veterinary, consumer, and animal protection groups. Farm group opponents have criticized egg legislation for several reasons. First, they are concerned that the bills federally mandate management practices for farm animals, something that has not been done in the past. These groups argue that the bills could set a precedent, paving the way for future legislation on animal welfare for other livestock and poultry industries. Opponents hold the view that the cage requirements are not science-based, and undermine long-standing views that animal husbandry practices should be based on the best available science. They also argue that codifying cage standards today ignores innovations that could appear in the future. Additionally, opponents are concerned that the capital cost of transitioning to enriched cages would be high, and could be prohibitive for small producers. UEP and HSUS and other supporters favor moving egg legislation forward through the farm bill process, but other livestock groups strongly oppose this legislative route. Reportedly, S. 820 was considered for inclusion in the Senate Agriculture Committee 2013 farm bill draft, but it was not included. Senator Feinstein's submitted egg bill amendment (S.Amdt. 1057) was not considered during the Senate farm bill (S. 954) floor debate. The House-passed farm bill (H.R. 2642) included Section 12312, known as the King amendment, which would have prohibited states from imposing standards on agricultural products produced in other states. The final Agricultural Act of 2014 (P.L. 113-79) did not include the amendment.

Natural gas markets in North America had a tumultuous year in 2008. This contrasted with the relative stability of 2007. In early 2008, the market tightened and prices moved up. In the summer, supply area spot prices went much higher than in the past, then decreased through the rest of the year to end lower than at the start of the year. This report examines current conditions and trends in the U.S. natural gas markets. Key market elements examined include prices, consumption, production, imports, and infrastructure. Expectations about the future, as reflected in recent official forecasts, are also incorporated here. Natural gas remains an important and environmentally attractive energy source for the United States and supplied approximately 24% of total U.S. energy in 2008. Domestic supply has recently increased significantly. New developments in Alaska increase the likelihood that a pipeline from the North Slope will proceed, although uncertainty remains regarding this undertaking. The natural gas industry continues to attract capital for new pipeline and storage infrastructure to link shifting loads and supply sources. In 2008, liquefied natural gas (LNG) imports decreased 54% from the record levels of 2007, decreasing already low utilization factors at import facilities. The Federal Energy Regulatory Commission (FERC) approved two more major import terminals in 2008. Given the generally adequate functioning of natural gas markets, congressional attention may address development of new supply sources (such as deep shale gas), unexpected price volatility or behavior, or import and other supply issues. In the longer term, industry pressure for increased access to public lands for exploration and production may continue as a policy concern. This report reviews key factors likely to affect market outcomes. These factors include weather, the economy, oil prices, and infrastructure development. Table A -1 to Table A -6 (in Appendix A ) present selected highlight statistics that illustrate current market status. Briefly, important developments in natural gas markets during 2008 include the following: Domestic natural gas production increased to 20.5 trillion cubic feet, the most since 1974. Hurricanes Gustav and Ike reduced Gulf of Mexico production but did not affect market prices significantly. There was an unusual price pattern in the first half of 2008, with citygate (delivered) prices lower than Henry Hub spot prices. Citygate prices have seldom exceeded Henry Hub prices. The natural gas spot price at Henry Hub peaked on July 3, 2008, at $13.32 per million Btu and declined to under $6 by end of year. During the 2007-2008 heating season (October to March), average wellhead prices increased more than 30%, according to the U.S. Energy Information Administration (EIA) estimates. Natural gas for power has reduced seasonal variation in use because gas-for-power peaks in summer, versus the total natural gas use peak in winter. The power generation sector used more natural gas than any other sector in 2008 and 2007. Storage levels towards the end of the 2007-2008 heating season dropped below five year averages. In the first storage report after the 2007-2008 heating season, working gas storage was at 1,234 billion cubic feet (Bcf) – the lowest level since April 30, 2004. However, as of December 2008, working gas storage was at 2,840 Bcf. LNG imports in 2008 dropped 54% from the 2007 record level of 77.1 billion cubic feet. The future outlook is uncertain. FERC approved 2 import facilities in 2008, with an import capacity increase of 2 billion cubic feet per day. Natural gas infrastructure development continued to advance, with more pipeline and storage projects successfully completed in 2007 and more underway in 2008. Industrial gas use had some growth in 2008, continuing increases since 2006. Unlike the global oil market, natural gas markets remain generally regional, with global trade in LNG growing. For the most part, North America has a continent-wide market that is integrated through a pipeline network that connects the lower-48 states, the most populous provinces of Canada, and parts of Mexico. Prices throughout this integrated market are influenced by demand (which may be influenced by weather, economic conditions, alternative fuel prices, and other factors), supply, and the capacity available to link supply sources and demand loads (transmission and distribution systems). The U.S. natural gas market is the major component of the North American natural gas market. It accounts for about 81% of North American consumption and about 70% of North American supply. The key price point in North America is Henry Hub. Henry Hub is a major pipeline hub near Erath, Louisiana, that is used as the designated pricing and delivery point for the New York Mercantile Exchange (NYMEX) gas futures contracts and other transactions. The price difference between other locations and Henry Hub is called the "basis differential." When there is spare capacity available to move natural gas from Henry Hub, or the Gulf of Mexico region in general, to the relevant price point area, the basis differential tends to be low, approximating the costs of fuel used to move the gas to the location. When capacity availability is tight, basis differentials can grow because the driving force can become the value of the natural gas at the delivery point, rather than the cost of getting the natural gas to that point. Natural gas prices also incorporate costs for distributing the gas from the wholesale marketplace to retail customers. These rates are generally determined by state regulators and involve both (1) the approval of costs and rates of return and (2) the allocation of costs among customer classes (e.g., residential, commercial, industrial firm, industrial interruptible). Although the North American natural gas market remains a distinct regional market, it is connecting to a global gas marketplace through international LNG trade. Oil prices still affect U.S. natural gas prices and this evolving relationship is discussed later in this report. The key elements of the market are prices, consumption, and supply. This section provides highlights from recent market developments relating to these factors. The price stability of 2006 and 2007 ended in 2008. Early 2008 prices increased at a faster pace than in 2007. According to EIA figures, spot prices at Henry Hub increased about 70% from January 1 to July 3, 2008, peaking at $13.31 per million Btu (MMBtu). The price then decreased to $5.83 per MMBtu by the end of December 2008, ending the year about 28% below the start-of-year price. (See Figure 1 for price graph.) The U.S. Energy Information Administration reports producer price data for its wellhead price series. During the 2007-2008 heating season (October to March), EIA estimates the average wellhead price increased more than 30%, to $8.06 per MMBtu. The highest monthly value was $10.52 per MMBtu in June. The EIA citygate price series reflects the unit prices delivered to consuming areas. The average U.S. citygate price increased $1.03 to $9.15 per thousand cubic feet (mcf) from 2007 to 2008. From 2006 to 2007, LNG import prices continued to decrease, from $7.19 per mcf to $7.07. (EIA full year 2008 LNG price data are not yet available.) At the retail level, average U.S. residential natural gas prices were $13.52 per MMBtu in 2008, with a high of $19.74 in July. This average was about 5% increase from 2007. The average commercial price was $11.76 per MMBtu, an increase of about 6% from 2007. Industrial prices increased about 25% to $9.61 per MMBtu. Yearly totals are not yet available for natural gas sold for electric power; as of September 2008, prices had increased 25% versus September 2007 however. (See Figure 2 for price chart.) The spot price of natural gas is a key indicator of the price that producers or LNG importers are receiving for spot sales in the major producing area of the Gulf of Mexico. From there, the gas generally moves to markets to the north (e.g. Chicago), to the east (e.g. New York), or around the Gulf (e.g. Florida). This transmission to market generally leads to a transport cost add-on and a higher price at the delivery point. Since the Henry Hub spot price was first reported in 1993 until 2008, this price has exceeded the EIA citygate (delivered price) in only eleven months (see Figure A -1 in Appendix A ). In the first half of 2008, the Henry Hub spot price exceeded the EIA reported citygate price in three consecutive months (April, May, and June). The spot price at Henry Hub appears to have increased quickly in the first half of 2008, and this price at Henry Hub (a supply area price benchmark) actually exceeded the EIA estimated average citygate (the "delivery points" in consumption areas) price. CRS has found no discussion of this price anomaly in market monitoring documents from that period. One possible explanation for this anomaly is that the citygate price includes multi-month contracted-for supplies that would include natural gas from earlier months when prices were lower than the current spot price. Greater production from shale areas near markets or storage gas withdrawal could be other explanations. Total U.S. consumption of natural gas grew almost 1% from 2007 to 2008, according to EIA. Power sector use of natural gas decreased about 2.8% in 2008. Commercial and residential sectors grew more than 3% each and industrial use (without lease and plant use) increased 0.3%. The power sector led end-use consumption for the first time in 2007 and maintained its position as the sector using the most gas in 2008. Power and industrial use were essentially equal for 2008. ( Table 1 shows the consumption data.) U.S. natural gas supply comes from domestic production, pipeline imports, imported LNG, and net withdrawals from storage. In a major shift, domestic supplies increased more than 7% between 2007 and 2008. Total production for 2008 exceeded 20.5 trillion cubic feet, the most since 1974. Net imports decreased in 2008. The dry gas production increased 7.8% to 20,571 billion cubic feet in 2008, reflecting in part the increase in drilling activity in response to price increases, as indicated in the natural gas rig count. The U.S. natural gas rig count has trended upward since 2002. In 2002, the average monthly rig count was about 600. The count reached 1,606 in September 2008, before decreasing to 1,366 late in the year. Recent news accounts report that natural gas rigs have declined about 45% since September 2008, the most rapid decline since 2002. In 2008, U.S. consumers received most of their supply, 91%, from domestic production. Net imports (pipeline and LNG) decreased over 20% to 2,996 Bcf in 2008. Imports via pipeline from Canada decreased 5%. LNG imports in 2008 decreased 54% from 2007 after increasing 32%, to a record level, between 2006 and 2007. (See Table 2 .) In 2008, available LNG supplies were sometimes bid away to European terminals for higher prices. Nevertheless, new U.S. LNG infrastructure went into service in 2008 and still more received approvals from FERC. To compete effectively for supply in the global LNG market, natural gas prices at the U.S. delivery points would have to increase to attract LNG deliveries. Location of import facilities is an important factor in the value of landed LNG. The United States appears more likely to be receiver-of-last-resort for LNG shipments in the near-to-mid term than to outbid Europeans, given the recent interruptions in Russian supplies. On the other hand, lack of storage in Europe and Asia may lead to continued U.S. receipts of LNG, even at relatively low prices, because new LNG export facilities serving the Atlantic Basin are expected to reach completion soon. EIA forecasts an increase of less than 20 Bcf of LNG for 2009 to 369 Bcf. In addition, an LNG import facility in eastern Canada largely focused on exporting to the United States was originally expected to enter service in 2008, but remains under construction. It may enter service in 2009. There are several trends under way in natural gas markets of interest to policy makers. They include: strong lower-48 onshore production a decrease in seasonal demand swings strong gas-for-power use changing international trade in LNG continuing progress in natural gas infrastructure development The natural gas supply picture for the lower-48 improved during 2008. Advances in unconventional gas production led to a 7.7% increase in lower-48 production, even though outer continental shelf (OCS) production lost almost 350 billion cubic feet due to hurricanes Gustav and Ike. The domestic supply has shifted from shallow Gulf of Mexico to deep Gulf of Mexico and unconventional sources in Texas, the Rocky Mountains and elsewhere. As new resources grow in importance, the need for increased gas leasing of on- and offshore federal lands is evolving. The U.S. natural gas reserve base has recently continued to increase. EIA reserves and production data indicate that the latest reserves-to-production ratio (2007) is 12.2, an increase from the prior year's ratio of 11.4 and 2000's ratio of 9.2. The Potential Gas Committee (PGC) is expected to release an assessment of the nation's natural gas supplies in the spring of 2009. This will provide an authoritative update on the natural gas supply situation for the United States. The PGC consists of more than 100 "voluntary experts" from industry, academia, and government. They are primarily geologists or engineers recruited because of their experience preparing resource estimates within their area. It was created in 1964 to address conflicting predictions of long term gas supply at that time. Consumption of natural gas in the United States remains highly seasonal for three major sectors, reflecting the importance of space heating; residential and commercial use of natural gas peaks in winter. Reflecting the importance of air conditioning load and the role of natural gas as the marginal fuel source for power generation, electric power use of natural gas peaks in summer. (Industrial use is relatively stable throughout the year.) Figure 4 illustrates that the combination of these seasonal patterns has led to a decrease in the overall seasonal swing and the development of a secondary peak in the summer due to gas-for-power use. Interestingly, some continue to call for more storage because of the growing consumption of natural gas, thinking that higher consumption levels require more storage volume. The decrease in the seasonal swing, however, through a decrease in the high month volume and an increase in the low month volume, means that less storage may be capable of serving the annual seasonal cycling needs of the U.S. markets. Those trading natural gas may want additional storage for arbitrage uses, but the fundamental needs related to system reliability may decrease somewhat with a decrease in the difference between minimum and maximum consumption rates. The secondary peak in gas for power was less in 2008 than in the previous years. This is explained by a decrease in the number of cooling degree days for summer 2008, ending a trend of increasing cooling degree days for several years. (See Table A -7 for data.) Another noteworthy seasonal feature observed by EIA was that as of 2007, natural gas price volatility was "considerably higher" in colder months than in other times. The pattern in 2008, however, appears contrary to this observation. From 2006 to 2007 deliveries to electric power customers increased by 615 Bcf, more than 45% of the consumption growth for the year. For the first time, electric power use of natural gas became the largest end use sector for natural gas. In 2008, gas-for-power use declined but this sector remained the largest gas user. The relative increase in electric generator use of natural gas during winter is also significant. In 2007, FERC's Division of Energy Market Oversight noted that November-March volumes increased 14% between winter 2005/06 and winter 2006/07. More recent data are not yet available. Industrial gas use in 2006 was approximately 13% lower than the 7,507 Bcf consumed in 2002. In 2007, industrial use increased by 2% over the 2006 level. In 2008, industrial gas increased about 0.3%. LNG monthly imports in 2008 varied from a high of 35.4 Bcf in August to a low of 22.8 Bcf in November. Because little of the LNG is imported under long term contracts, U.S. importers compete on the global LNG spot market for deliveries. In December 2008, European natural gas prices were in the $7.80-$9.50 per MMBtu range. New England citygates were at $10.06 per MMBtu and Henry Hub was at $8.85 per MMBtu. Thus, some import points could compete successfully in the global spot market for LNG and others could not. There is excess physical capacity at existing LNG import facilities to handle about ten times the imports of 2008. The North American natural gas industry has continued to add new infrastructure to the system. As noted in Table 4 and Table 5 , FERC identifies facilities that went into service in 2007 and 2008. These facilities appear responsive to serving fundamental market needs, such as new capacity from the growing production areas. Given the major economic shock to the energy markets during 2008, forecasts mean even less today than they usually do. In its Short Term Energy Outlook, EIA forecasts a 1% decrease in natural gas use for 2009, relative to 2008 because of weak economic conditions. A small increase in residential use will be offset by a larger decrease in commercial, industrial, and electric power demand. EIA forecasts increased U.S. production of less than 1%, primarily because of lower natural gas prices and decreased demands because of the economic downturn. EIA expects LNG imports to increase 20% in 2009, rebounding somewhat from the 42% drop in 2008. However, low summer demand in Europe could mean the United States will receive more LNG than forecast. EIA forecasts average Henry Hub prices to decrease roughly 35% in 2009, to $5.62 per MMBtu, due to weak economic conditions, increased U.S. production, and lower demand. EIA's forecast of natural gas prices depends on certain assumptions embedded in the forecast. These factors have uncertainty associated with them, as discussed next. Weather affects natural gas consumption through both the significant space heating loads in the residential and commercial sectors and the cooling load served by gas-fired power generation. EIA incorporates National Oceanic Atmospheric Administration (NOAA) weather forecasts in its short and long term forecasts. To the extent that actual heating degree days exceed the temperature scenario from NOAA, that will tend to increase demand for natural gas in the heating season and increase prices for natural gas during those periods. Similarly, if the actual cooling degree day requirements exceed those incorporated in the EIA scenario, then this will increase natural gas use in the cooling season via increased gas-fired power for air conditioning and increase the price for natural gas in the relevant cooling season. Natural gas prices and oil prices have long had a correlation. As the extent of oil/gas fuel switching has declined, this linkage has changed. For many years, the key relationship was between the delivered price of natural gas to New York and the price of alternative fuels (residual fuel oil, No. 6, or distillate fuel oil, No. 2). Historically, when natural gas prices in the northeast market area reached a price at which a significant industrial or utility load could save fuel costs by switching to a petroleum alternative, the users would switch fuel. This would limit the price to this alternative. There was a time when almost 1 trillion cubic feet of natural gas load could switch. As illustrated in Figure 5 , natural gas prices have generally been lower than either alternative fuel since the beginning of 2007. The exceptions have been limited periods of extreme cold in the Northeast. This suggests a delinkage in prices that may have resulted from environmental restrictions limiting the quantity of fuel-switchable load. The convergence of No. 6 oil and natural gas prices appears more likely to be due to oil prices falling more drastically than natural gas prices in the second half of 2008. Economic growth affects consumers' demand for natural gas and their ability to purchase it. EIA appears to have incorporated an economic outlook that expects less growth than in its recent forecasts. Given the relative stability in the residential and commercial sector consumption, the changed economic outlook would most likely affect industrial and power generation natural gas use most directly. Natural gas markets in North America continue to function well relative to other energy markets. Consumers and producers managed the tumultuous prices of 2008 without suffering major apparent damage. This market appears to continue responding appropriately to price signals. New pipelines and storage facilities have been built where price differentials have indicated need and value for these facilities. Current investment in LNG import capacity may prove excessive for the 2008-2009 heating season. There is the potential, given the higher prices in summer than in the heating season, that retail customers may face prices higher than spot prices because of risk management contracts signed by local gas utilities during the 2008 period of high prices. Weather and the overall economy remain important factors for natural gas demand and price levels. These factors remain uncertain and beyond human forecasting capability. Appendix A. Selected Statistics Appendix B. Acronyms

In 2008, the United States natural gas market experienced a tumultuous year, and market forces appeared to guide consumers, producers and investors through rapidly changing circumstances. Natural gas continues to be a major fuel supply for the United States, supplying about 24% of total energy in 2008. The year began with a relatively tight demand/supply balance, and this generated upward spot price movement. For the 2007-2008 heating season, the Energy Information Administration (EIA) reported a price increase of more than 30% (beginning to end of season). The key "benchmark" price for the United States, the Henry Hub spot price, generally rose through the first half of 2008 to a peak of $13.32 per million British thermal units (Btu) on July 3, 2008. By the end of 2008, the Henry Hub spot price had decreased 56% to $5.83 per million Btu, lower than the $7.83 per million Btu price on January 2, 2008. Closer to consumers, the EIA average citygate price increased 47% from January to $12.08 per million Btu in July and then decreased to $7.94 per million Btu as of December, a 2% drop from the start of 2008. Residential consumers saw a 68% increase through July and then a decline that had December 5% above January's average price. The supply outlook for the lower-48 states began a potentially important change in 2008. Onshore production in Texas and the Rocky Mountain region increased by 15%, especially because of the production of unconventional natural gas (e.g., deep shale gas). Noteworthy events in 2008: The national natural gas market experienced an unusual price pattern in the first half of the year, with EIA reporting average citygate (delivery area) prices lower than Henry Hub (supply area) spot prices. The normal pattern is the prices in delivery areas, which include transportation costs, are higher than supply area prices. Lower-48 onshore natural gas production increased 10% to reach more than 20.5 trillion cubic feet, a level not achieved since 1974. This production, along with other factors such as the weakened economy, appears to have prevented the 350 Bcf of lost gas production due to Hurricanes Gustav and Ike in the Gulf of Mexico from increasing prices. Liquefied natural gas (LNG) imports decreased 54% from the record level in 2007. Average use was less than 10% of reported capacity at operational LNG import facilities. The Federal Energy Regulatory Commission (FERC) approved another 2 Bcf per day of new import facilities in 2008. Gas for power use decreased 2.4% from 2007 and electric power remained the largest end use category for natural gas consumption for a second year. Going forward, current economic turbulence may contribute to natural gas market challenges, in terms of investment or attempts at market mischief. Vigilance in market oversight could grow in importance.

T he number of people incarcerated in federal prisons increased dramatically over the past three decades. The total number of inmates in the federal prison system increased from approximately 25,000 in FY1980 to over 219,000 in FY2013. Since the peak in FY2013, the number of inmates in the federal prison system decreased each subsequent fiscal year, falling to approximately 186,000 inmates in FY2017. However, even with the recent decrease in the number of federal prison inmates, the federal prison population is more than seven times larger than it was three decades ago. While research indicates that the expanded use of incarceration during the 1980s and 1990s contributed to the declining crime rate, the effect was likely small, and it has likely reached the point of diminishing returns. Concerns about both the economic and social consequences of the country's burgeoning prison population have resulted in a range of organizations including the American Civil Liberties Union, Right on Crime, and the American Conservative Union's Center for Criminal Justice Reform calling for reforms to the nation's criminal justice system. Congress also formed the Charles Colson Task Force on Federal Corrections to examine the growth of the federal prison population and provide recommendations for reforms. There are two, not mutually exclusive, methods to reduce the number of incarcerated individuals in the United States: send fewer people to prison (e.g., placing offenders on probation or in a diversion program like a drug court) and/or shorten prison sentences (e.g., allowing inmates to serve a portion of their prison sentence on parole or granting them early release by allowing them to earn time off their prison sentence). While diverting "low-level drug offenders" from prison or granting nonviolent offenders early release have been popular proposals to reduce the prison population, the crime someone is convicted of is not the best proxy for the risk that person might pose to the community. For example, an offender who has no history of violence and who poses a low risk for future violence might be convicted of what is legally defined as a violent crime (e.g., illegal gun possession or driving the get-away car for someone who committed an armed robbery). On the other hand, an offender with a history of violence might be sentenced to prison for a nonviolent crime or have a violent offense downgraded to a nonviolent offense as a result of a plea deal. The assessment of offender risk was originally a matter of professional judgment. Prison staff, based on their own experience and training, would typically determine at intake which offenders were more or less likely to be a safety or security risk. These assessments would then be used to assign inmates to the appropriate institution or unit based on their risk determination. Over time, the limitations of using professional judgment alone were increasingly recognized, and beginning in the 1970s actuarial tools to assess risk were developed and implemented in correctional settings. Subsequent research on these tools revealed that they were better at predicting future criminal behavior than professional judgment alone. Since then, a variety of risk assessment tools have been developed and implemented incorporating important advances suggested by research, including adding factors because they are theoretically relevant (versus adding factors that are simply available in correctional data systems), adding factors that are changeable (e.g., dynamic factors), and conducting risk assessment in the context of a risk and recidivism reduction model. Because courts and correctional officials make decisions every day about who can safely be diverted from incarceration or granted early release, they may benefit from tools that can help in this process. Actuarial risk assessment tools may serve this purpose. Needs assessments could also help correctional officials make determinations about which offenders need higher levels of supervision and/or match them to the appropriate rehabilitative programming. The use of risk and needs assessment in the criminal justice system is not without controversy, however. Proponents of assessment assert that the tools used to measure the risk and needs of inmates are better than the independent judgment of courts and corrections officials alone, and that research on the tools has demonstrated their ability to make relevant distinctions between high- and low-risk offenders. Nonetheless, risk and needs assessment is not 100% accurate. Two experts in the field note that "[a]lthough statistical risk assessment reduces uncertainty about an offender's probable future conduct, it is subject to errors and should be regarded as advisory rather than peremptory. Even with large data sets and advanced analytical techniques, the best models are usually able to predict recidivism with about 70% accuracy—provided it is completed by trained staff." Legislation has been introduced in the current Congress that would require the Bureau of Prisons (BOP) to implement a risk and needs assessment system. Currently, BOP utilizes a classification and designation tool to make determinations about inmates' risk of institutional misconduct. This assessment is used to place inmates in facilities commensurate with their security needs. However, BOP does not currently use their classification and designation tool to assess inmates' risk of post-release recidivism, nor is it used to place inmates in corresponding recidivism risk reduction programming. The system that would be established by legislation before Congress would evaluate inmates and be used to determine appropriate levels of supervision and place them in rehabilitative programs and productive activities that match their needs. Under the proposed system, some inmates would be eligible for earned time credits for participating in rehabilitative programs that reduce their risk of recidivism. Such credits would allow inmates to be placed in prerelease custody earlier than under their original sentences. This report provides information on the use of risk and needs assessment instruments. It starts with an overview of risk and needs assessment. This includes a discussion of the Risk-Needs-Responsivity principles, which have become the dominant paradigm for reducing the likelihood of recidivism among convicted offenders. The report concludes with a discussion of the issues policymakers might consider if they debate legislation to expand the use of risk and needs assessment in the federal prison system. A risk and needs assessment instrument measures offenders' criminogenic risk factors and specific needs that if addressed will reduce the likelihood of future criminal activity. Assessment instruments typically consist of a series of questions that help guide an interview with an offender in order to collect data on behaviors and attitudes that research indicates are related to the risk of recidivism. Data collected during the interview are typically supplemented with information from an official records check, such as a criminal history records check. The risk and needs assessment instrument generates a total score that places the offender into a risk category (typically "low," "moderate," or "high"). Generally speaking, risk and needs assessment instruments consist of both static and dynamic risk factors. Static risk factors do not change over time. Examples include age at first arrest, gender, past problems with substance or alcohol abuse, prior mental health problems, or a history of violating terms of supervision (e.g., parole or probation). Dynamic risk factors, also called "criminogenic needs," change and/or can be addressed through interventions. Examples include current age, education level, marital status, employment status, current substance use, and residential stability. In general, research indicates that most commonly used risk and needs assessment instruments can, with a moderate level of accuracy, predict who is at risk for recidivism. It also indicates that of the most commonly used risk and needs assessments, no one instrument is superior to any other when it comes to predictive validity. One group of researchers concluded that "[o]verall, our results showed that all of the nine tools predicted violence at above-chance levels, with medium effect sizes, and no one tool predicting [sic] violence significantly better than any other. In sum, all did well, but none came first." Two scholars have posited two explanations for why well-validated risk and needs assessment instruments have similar levels of performance. First, some evidence suggests that there is a "natural limit" to the predictive utility of instruments. Simply stated, there is a limit to how accurately recidivism can be predicted given the current level of knowledge about the causes and correlates of criminal behavior. Second, well-validated instruments may show similar levels of performance because they are tapping "common factors" or shared dimensions of risk, even though the instruments utilize different items or have different approaches. For example, research has found that assessment instruments typically gauge four overlapping dimensions: criminal history, persistent antisocial lifestyle, psychopathic personality, and alcohol/mental health issues. The Risk-Needs-Responsivity (RNR) model is one of the most dominant paradigms in the risk and needs assessment field. It has emerged as a prominent framework for guiding offender assessment and treatment because it is one of the few comprehensive theories of how to provide effective recidivism reduction interventions to offenders. Experts in the field of risk and needs assessment assert that assessment systems should adhere to the RNR model. As the Vera Institute of Justice notes, "[u]nderlying the development of evidence-based practices in the criminal justice system are the risk , need , and responsivity principles" [emphasis original]. The RNR model of risk and needs assessment and offender treatment incorporates evidence-based practices for reducing recidivism. As the name implies, the model has three main principles: assessing risk, addressing criminogenic needs, and providing treatment that is responsive to the offender's abilities and learning style. The RNR model is based on the social psychology of offending, which posits that individuals and social/situational factors intersect to create values, cognitions, and personality orientations that are conducive to criminal conduct. These ways of thinking and responding are learned and become reinforced through feedback, and eventually result in individual differences in the propensity for criminal behavior. Many other theories of criminal behavior focus on the social causes of criminal behavior, factors that cannot be addressed through individual-level treatment. On the other hand, the RNR model focuses on the proximate causes of criminal behavior, which can be the targets of evidence-based correctional treatment. The risk principle has two aspects: (1) the risk of criminal behavior can be predicted, and (2) the level of intervention should be matched to the risk level of the offender. The risk principle states that high-risk offenders need to be placed in programs that provide more intensive treatment and services while low-risk offenders should receive minimal or even no intervention. The needs principle states that effective treatment should focus on addressing criminogenic needs, that is, dynamic risk factors that are highly correlated with criminal conduct. Also, according to the needs principle, effective treatment should not focus on addressing noncriminogenic needs, because changes in noncriminogenic needs are not associated with reduced recidivism. The responsivity principle states that rehabilitative programming should be delivered in a style and mode that is consistent with the ability and learning style of the offender. The responsivity principle is further divided into two elements. The general responsivity principle states that cognitive-behavioral and social learning therapies are the most effective form of intervention. The specific responsivity principle states that treatment should consider the relevant characteristics of the offender (e.g., the offender's motivations, preferences, personality, age, gender, ethnicity, and cultural identification, along with other factors). The developers of the RNR principles identified what they deem the "central eight" risk and needs factors. These risk and needs factors include the "big four," which they believe to be the "major predictor variables and indeed the major causal variable in the analysis of criminal behavior in individuals." The remaining four risk and needs factors are referred to as the "moderate four." The "central eight" risk and needs factors are presented in Table 1 . Even though antisocial behavior is the most prominent of the "central eight" risk and needs factors, a common mistake in risk assessment is conflating past antisocial behavior with current antisocial behavior. The seriousness of the current offense is not a risk factor. A history of antisocial behavior is what is correlated with the risk of future offending. Research on the risk principle suggests that targeting high-risk offenders for programs where they receive intensive levels of services has the greatest effect on recidivism. In some instances, research also found that low-risk offenders who were placed in intensive treatment programs actually had an increased likelihood of recidivism. This could be because placing low-risk offenders in intensive programming interrupts support structures or self-correcting behaviors that already exist, or because it exposes low-risk offenders to high-risk offenders who may have a negative influence on low-risk offenders' thoughts or behaviors. Research suggests that programs that adhere to the RNR principles are more effective at reducing recidivism. Specifically, the more RNR principles a treatment program adheres to, the greater the reduction in the risk of recidivism. Research also indicates that treatment can be more effective when provided in a community setting, though treatment that adheres to the RNR principles can still be effective when provided in a custodial setting (i.e., prison or jail). The developers of the RNR principles argue that research on risk assessments reveals that the "central eight" risk and needs factors are the best predictors of future criminal behavior. A review of the research on the relationship between certain risk and needs factors and criminal behavior found that both the "big four" and the "moderate four" risk factors were statistically significant predictors of future offending. There is legislation before Congress (see, for example, S. 1917 , S. 1994 , and H.R. 3356 ) that would establish a risk and needs assessment system in BOP. This section of the report discusses some of the issues that might arise if Congress considers legislation related to risk and needs assessment. An overarching issue policymakers might consider is whether BOP should use risk and needs assessment to classify offenders by risk level and identify the criminogenic needs that might be addressed by prison programming. Research suggests that assessment instruments can make distinctions between high-, medium-, and low-risk offenders with some degree of accuracy. Furthermore, the latest research suggests that assessment systems and offender programming that adhere to the RNR principles are more effective at reducing recidivism than those that do not. Implementing an assessment system and offender programming regime that adheres to the RNR principles in federal prisons is, based on the current research, an evidence-based way to better match inmates with the rehabilitative programming they need, and when combined with earned time credits for some inmates who complete rehabilitative programs and productive activities, it might provide a means for reducing the federal prison population without increasing the risk to public safety. However, risk and needs assessment systems are not flawless. There will likely be some false positives (e.g., inmates who are identified as high-risk but who do not recidivate) and false negatives (e.g., inmates who are identified as low-risk but go on to commit new crimes). Even though the predictive accuracy of instruments has improved over the years with more research into the correlates of crime, the recognition that the assessments need to be validated on the population they are being used for, and the development of a theory of criminal behavior and effective rehabilitation (i.e., the RNR model) that serves as a guiding framework for building an effective correctional system, under the best conditions, risk assessment correctly predicts recidivism 70% of the time. One prominent concern is that the widescale use of risk and needs assessment might exacerbate racial disparities in the nation's prison systems. While there might be concern about what effect risk and needs assessment could have on other racial and ethnic minorities, females, or members of the lesbian, gay, bisexual, and transgender (LGBT) community, research on potential discriminatory effects of risk and needs assessment has largely focused on blacks, especially black men, because of disproportionate representation in the criminal justice system and past concerns about whether the criminal justice system discriminates against them. Research by investigative journalists and data scientists with ProPublica on risk classifications generated by the Correctional Offender Management Profiling for Alternative Sanctions (COMPAS) instrument in Broward County, FL, has heightened the debate about racial disparities in risk and needs assessment. ProPublica found that among defendants who did not go on to reoffend, black defendants were assessed as being medium- or high-risk for recidivism at twice the rate of white defendants. However, the company that sells COMPAS, Northpointe, argues that the instrument is racially neutral because black and white defendants with similar risk scores reoffended at roughly the same rate. What explains these contradictory results? In short, algorithms used in risk assessment cannot meet both ProPublica's (minimizing error rates) and Northpointe's (predictive parity) definition of fairness. Researchers at Stanford University who reexamined the data from ProPublica's study found the following: Within each risk category ("low" and "medium-high"), the proportion of defendants who reoffend was approximately the same regardless of race (Northpointe's definition of fairness). The overall recidivism rate for black defendants was higher than for white defendants (52% compared to 39%). Black defendants were more likely to be classified as medium- or high-risk (58% compared to 33%). Black defendants who did not reoffend were more likely to be assessed as medium- or high-risk than white defendants who did not reoffend (ProPublica's criticism of the algorithm). These researchers note that [i]f the recidivism rate for white and black defendants is the same within each risk category, and if black defendants have a higher overall recidivism rate, then a greater share of black defendants will be classified as high risk. And if a greater share of black defendants are classified as high risk, then ... a greater share of black defendants who do not reoffend will also be classified as high risk. If Northpointe's definition of fairness holds, and if the recidivism rate for black defendants is higher than for whites, the imbalance ProPublica highlighted will always occur. Another study reexamined the data ProPublica used in their research and found no evidence of racial bias in the COMPAS instrument. Among several criticisms of ProPublica's methodology, the authors of the study assert that ProPublica did not test for bias within accepted standards (i.e., the Standards for Educational and Psychological Testing). Their examination of the data, conducted using published standards, showed that black defendants were more likely to be rearrested, both for any reason and for violent offenses; low-, medium-, and high-risk black defendants were more likely to be rearrested (both for any arrest and for violent arrests) than similarly assessed white defendants; COMPAS was a good predictor of both types of arrest and it predicted outcomes equally well across both races; COMPAS did not predict outcome differently across groups of black and white defendants; in other words, a given COMPAS score translated into roughly the same likelihood of recidivism, regardless of race. These researchers also offer the following critique of the main finding of the ProPublica research: While it is problematic that they collapsed medium- and high-risk defendants into one category that was then compared against the low-risk defendants, more problematic is their interpretation of what information COMPAS scores provide. Just as medicine uses actuaries to inform patient prognoses and the auto insurance industry uses actuaries to inform probabilities of risky driving behavior, the COMPAS is based on an actuary designed to inform the probability of recidivism across its three stated risk categories. To expect the COMPAS to do otherwise would be analogous to expecting an insurance agent to make absolute determinations of who will be involved in an accident and who won't. Actuaries just don't work that way. Some policymakers might be concerned that inmates of color will be assessed as being at a higher risk for recidivism and this will result in detrimental outcomes (e.g., being incarcerated for longer periods). This is a valid concern. Even in instances where a risk and needs assessment instrument is shown to have no inherent racial biases, the application of an instrument can have a disparate racial effect. However, while there might be concerns about racial bias in risk and needs assessment instruments, it is argued that utilizing actuarial rather than clinical (i.e., professional judgment alone) risk assessment makes the process more objective and less susceptible to rater bias. As mentioned earlier, before the use of actuarial assessments, decisions about who was to be assigned to which treatment program and who was to be released on parole were left to criminal justice professionals who made assessments based on their own experiences and sets of standards, which might have been influenced by overt or subconscious biases. Policymakers might be interested in steps that can be taken to reduce the potential for bias in risk and needs assessment. The Council of State Governments identifies three things that can be done to reduce bias in assessments: Validate the assessment instrument using an independent third party, and assess the instrument's predictive accuracy by race and gender. Assess if the instrument is being administered properly. This includes determining whether any assessed bias is the result of the instrument itself (e.g., certain items are weighted in a way that is contributing to unintentional bias) or if it is a result of assessor error (e.g., assessors are not scoring the instrument according to established guidelines), and conducting inter-rater reliability exercises and focus groups to review how scoring protocols are being utilized. Develop a plan to address any bias in the risk and needs assessment instrument resulting from the instrument itself or the way it is being used. This includes monitoring how the instrument is being administered, providing regular booster training to assessors, or using another instrument, if necessary. The recommendations of the Council of State Governments are consistent with requirements in legislation before Congress that would require DOJ to validate the proposed risk and needs assessment instrument on the federal prison population, use the best available research on risk and needs assessment when developing the proposed risk and needs assessment system, make regular adjustments to the system to ensure that it does not result in any unwarranted disparities, train assessors on how to properly use the system, and monitor and assess the use of the system and periodically audit its use in BOP facilities. One issue policymakers might consider is whether certain inmates should be excluded from receiving earned time credits for participating in rehabilitative programs and productive activities. Legislation before Congress would, among other things, exclude inmates who were convicted of certain offenses (e.g., violent or sex offenses, drug offenses, and fraud offenses) from earning additional time credits for participating in rehabilitative programming. Research suggests that inmates should be assessed for risk and needs, and decisions about programming and supervision should be based on those assessments regardless of the inmate's current offense. However, many still argue that inmates who are convicted of certain offenses, such as violent or sex offenses, should be ineligible for early release, regardless of what they do to reduce their risk of recidivism and prepare for life outside of prison. A related issue that policymakers might consider is whether excluding inmates convicted of certain offenses would have a disparate effect on racial or ethnic minorities. Given the statistics presented later, some policymakers might be concerned that excluding inmates convicted of certain offenses from being eligible to receive additional time credits under the proposed assessment system might mean that, all else being equal, inmates of color would serve longer prison sentences. However, this would only be true to the extent that inmates of color are more likely to be convicted of offenses that would make them ineligible for earned time credits. The Bureau of Justice Statistics (BJS), through its Federal Criminal Case Processing Statistics program, publishes data on defendants sentenced in federal courts and inmates held in federal prisons. The data can be used to examine things such as the offense for which inmates were incarcerated and inmates' race/ethnicity (see Table 2 ). However, the most recent year for which data are available is FY2014. The data published by BJS do not allow for an examination of the implications of all of the proposals before Congress (for example, data are not available on how many inmates are repeat offenders), so the following discussion is meant to provide a sense, not an exact prediction, of what proportion of inmates might not be eligible to receive earned time credits under the proposed legislation. Legislation before Congress would make most inmates convicted of violent or sex offenses ineligible to receive earned time credits. Data from BJS are not detailed enough to assess the implications of some of the exclusions outlined in the three bills with a high level of specificity, but they can provide insight into the characteristics of the federal prison population by the offense type for which they were incarcerated. Most inmates held in federal prisons at the end of FY2014 were incarcerated for something other than a violent or sex offense; inmates convicted of violent or sex offenses accounted for 11% of the federal prison population. Although a relatively small percentage of federal prison inmates were incarcerated because of a conviction for a violent or sex offense, there are large differences in their races/ethnicities. At the end of FY2014, 24% of white inmates, 7% of black inmates, 3% of Hispanic inmates, 60% of Native American inmates, and 9% of Asian/Pacific Islander inmates were incarcerated for a violent or sex offense. These are the inmates that would be ineligible for earned time credits because they were incarcerated for a violent or sex offense. In contrast, of the total federal prison population at the end of FY2014, white inmates accounted for 27%, black inmates 35%, Hispanic inmates 35%, Native American inmates 2%, and Asian/Pacific Islander inmates 1%. Thus, relative to their proportion of the federal prison population, Native American and Asian/Pacific Islander inmates are disproportionately represented among inmates convicted for violent and sex offenses and are the racial groups that would be disproportionately impacted if inmates incarcerated for these offenses were ineligible for earned time credits. Other proposals would prohibit inmates incarcerated for a drug offense from eligibility for earned time credits. While a policy that prohibits inmates incarcerated for a violent or sex offense from eligibility for earned time credits would exclude 11% of federal inmates, excluding inmates convicted of drug offenses would prohibit a much larger percentage of the federal prison population, given that half of all inmates held in BOP facilities at the end of FY2014 were incarcerated for drug offenses, especially drug trafficking offenses. Some bills would make certain drug offenders (i.e., those convicted manufacturing or distributing a controlled substance where use resulted in death or serious bodily injury, and those with a third or subsequent drug trafficking offense) ineligible for earned time credits. Inmates who would be ineligible to earn additional time credits under the legislation before Congress are a subset of all drug offenders in federal prison, and since data on the race of this subset of all drug offenders are unavailable, it cannot be determined whether this exclusion would have a disproportionate effect on inmates of color. Some legislation before Congress would make inmates convicted of certain fraud offenses ineligible to receive earned time credits, while other legislation would also make inmates convicted of a federal fraud offense for which they were sentenced to more than 15 years imprisonment ineligible to receive earned time credits. Some bills would also make inmates convicted of bribery, racketeering, and racketeering influenced and corrupt organizations (RICO) offenses ineligible for receiving earned time credits. BJS provides data on the proportion of inmates convicted for fraud (5%), bribery (less than 1%), and racketeering and extortion (3%), but these figures likely include some inmates who would be eligible to receive earned time credits. However, publicly available data from BJS cannot be used to determine whether the exclusions related to fraud, bribery, racketeering, and RICO offenses would have a disproportionate effect on inmates of color . Policymakers might consider whether the proposed risk and needs assessment system should focus on high-risk inmates. The RNR principles state that high-risk individuals should be the focus of rehabilitative programming. Research on the risk principle suggests that the greatest improvements in recidivism can be made when the focus is on placing high-risk offenders in programs where they receive intensive levels of evidence-based services. In some instances, research has also found that low-risk offenders who were placed in intensive treatment programs actually had an increased likelihood of recidivism. This could be because placing low-risk offenders in intensive programming can interrupt support structures or self-correcting behaviors that already exist, or because it exposes low-risk offenders to high-risk offenders who may have a negative influence on low-risk offenders' thoughts or behaviors. Some legislation before Congress is silent as to whether high-risk inmates should be the primary target of rehabilitative programming. The legislation would require BOP to make rehabilitative programming and productive activities available to all inmates, but it would give BOP several years to do so, and the requirement is subject to the availability of appropriations. This might raise a few issues that policymakers could consider. Will BOP have the resources it needs to expand evidence-based rehabilitative programming and productive activities so that they can be offered to all inmates? Legislation before Congress would require the Department of Justice (DOJ) to use savings realized by implementing the risk and needs assessment system and placing inmates in lower-cost prerelease custody earlier to help expand rehabilitative programming and productive activities. But what if those savings are not adequate to fund the needed expansion of these programs? BOP might not be able to realize any significant savings in their operating expenses until the prison population decreases enough that they can start to close prisons and reduce staff. In addition, there is an argument to be made that BOP has been underfunded for several years. Therefore, any near-term reductions in the prison population might only get BOP to the point where they can start to provide an adequate level of services. If evidence-based rehabilitative programming and productive activities cannot be expanded at an adequate rate, should BOP be required to give priority to high-risk inmates? As noted above, targeting high-risk offenders for intensive levels of treatment and services has the greatest effect on recidivism, and low-risk inmates should receive minimal or even no intervention. Should low-risk inmates be placed in prerelease custody earlier to help free up spots for moderate- and high-risk inmates? It could be argued that if BOP cannot expand the capacity of its rehabilitative programming at a quick enough rate, it might make sense to place inmates at low risk of recidivism in the community earlier if doing so would allow BOP to provide high-quality rehabilitative programming to medium- and high-risk inmates. Should an agency like the National Institute of Corrections (NIC) be required to conduct regular process evaluations to ensure that rehabilitative programs are being implemented with fidelity to the program model? As previously mentioned, research indicates that rehabilitative programming that closely adheres to the RNR principles is the most effective at reducing recidivism. Legislation before Congress would only require NIC to evaluate recidivism reduction programs to "determine whether such programming or activities may be certified as evidence-based and effective at reducing or mitigating offender risk and recidivism." Another issue policymakers might consider is whether risk and needs assessment should be used in sentencing to help identify low-risk offenders who could be diverted to community supervision rather than incarcerated. As discussed previously, research suggests that low-risk offenders should not be subjected to intensive treatment (and some research indicates that it might be criminogenic) and that they could be effectively supervised in the community. Legislation before Congress would require BOP, to the extent practicable, to house low-risk inmates together, which might mitigate some of the criminogenic effects of placing low-risk offenders in prison. The legislation would also provide ways to place some inmates in prerelease custody earlier (e.g., allowing inmates to earn additional time credits that would allow them to serve a greater proportion of their sentence in a Residential Reentry Center, in home confinement, or on supervised release in the community). However, if the purpose of the legislation is to reduce the federal prison population and save money without negatively affecting public safety, it is significantly cheaper to place low-risk offenders on community supervision than incarcerate them. While some scholars have argued for integrating risk assessment into sentencing guidelines to help judges determine the appropriate sentences for offenders, research suggests that if risk assessment were to be integrated into sentencing, it might be best to use it as a way to screen out low-risk offenders from prison. However, if risk assessment were integrated into sentencing decisions, there is a risk of false negatives, which would mean that an offender who is assessed to be at low risk for recidivism might be diverted from incarceration to some form of community supervision but still go on to recidivate. During the Obama Administration, DOJ, while acknowledging the important role evidence-based programs and practices play in the effective rehabilitation and reentry of inmates, raised concerns about making risk assessment a part of determining sentences for federal offenders. DOJ echoed previously mentioned concerns that risk assessment bases individual-level decisions on group dynamics and that determining someone's risk of reoffending on, in part, static risk factors might place certain groups of offenders at a disadvantage (e.g., being denied pretrial release or being incarcerated for longer periods for factors that can never be changed). DOJ also argued that using risk assessment in determining sentences would erode certainty in sentencing, something Congress attempted to address when it passed the Sentencing Reform Act ( P.L. 98-473 ), which eliminated parole for federal inmates and established a determinate sentencing structure under the federal sentencing guidelines. DOJ also argued that sentencing should primarily be about holding offenders accountable for their criminal behavior and not about the likelihood of future offending. If Congress were to consider legislation to implement risk and needs assessment in the federal prison system, policymakers might consider whether implementing a policy of making decisions based on an offender's risk level is compatible with the desire of many for long prison sentences for certain offenders. Legislation before Congress would exempt inmates convicted of certain crimes from being eligible for earned time credits. This would mean that offenders convicted of certain offenses would be required to serve a greater proportion of their sentences in prison even if they are deemed to be at a low risk for recidivism. As discussed previously, it is an offender's past history of antisocial behavior, among other factors, and not the offender's current offense, that is indicative of a risk for recidivism. Therefore, the policy of requiring certain offenders to serve most of their sentences in prison might undermine the potential effectiveness of a risk and needs assessment system. Recent research has explored the effectiveness of incarceration as a way to reduce crime. It suggests that while incarceration contributed to lower violent crime rates in the 1990s, there are declining marginal returns associated with ever-increasing levels of incarceration. The diminishing level of return resulting from higher levels of incarceration might be explained by the fact that continued increases in incarceration are likely to include more offenders who are either at the end of their criminal careers or who are not committing crimes at a high rate. Another possible reason for diminishing marginal returns might be that more of the individuals incarcerated over the past three decades have been incarcerated for crimes where there is a high level of replacement. For example, if a street-level drug dealer is incarcerated and there is no decrease in demand for drugs in the drug market, it is possible that someone will step in to take that person's role; therefore, few or no further crimes would be averted by incarcerating the street-level dealer. It is also possible that being imprisoned with other offenders will have a criminogenic effect, especially for low-risk offenders for whom prison may serve to increase their risk of recidivism rather than reduce it. Research on the psychology of punishment also provides insight into why incarceration might provide a limited deterrent effect. For punishment to be successful at suppressing behavior, it requires the immediate delivery of a punishment, catching and punishing criminals for every offense, not allowing the offender to be able to escape from the consequences of the behavior, making the intensity of the punishment associated with the behavior greater than the intensity of the rewards, and the punishment be consistent with the characteristics of the offender. However, "the necessary conditions for effective punishment are virtually impossible to meet for the criminal justice system. Police cannot be everywhere to ensure the certainty of detection, the courts cannot pass sentence quickly without violating due process, and correctional officials have difficulties ensuring adequate supervision and monitoring." There is also an argument to be made about the purpose of incarceration. While there might be a minimal general deterrent effect associated with incarceration, it does provide for incapacitation, which can reduce the number of crimes an incarcerated offender can commit. Sentencing someone to prison for several years, or even decades, could also be viewed as a way for society to say that there are certain behaviors that will not be tolerated, and those who commit such transgressions must be severely punished.

The number of people incarcerated in federal prisons increased dramatically over the past three decades. While the number of inmates in the federal prison system has decreased since FY2013, the federal prison population remains substantially larger than it was three decades ago. Concerns about both the economic and social consequences of the country's reliance on incarceration have led to calls for reforms to the nation's criminal justice system, including improving the federal prison system's ability to rehabilitate incarcerated offenders by better assessing their risk for recidivism and addressing their criminogenic needs. "Criminogenic needs" are factors that contribute to criminal behavior that can be changed and/or addressed through interventions. There have been legislative proposals to implement a risk and needs assessment system in federal prisons. The system would be used to place inmates in appropriate rehabilitative programs. Under the proposed system some inmates would be eligible for earned time credits for completing rehabilitative programs that reduce their risk of recidivism. Such credits would allow inmates to be placed on prerelease custody earlier. The proposed system would exclude inmates convicted of certain offenses from being eligible for earned time credits. Risk and needs assessment instruments typically consist of a series of items used to collect data on offender behaviors and attitudes that research indicates are related to the risk of recidivism. Generally, inmates are classified as being at a high, moderate, or low risk of recidivism. Assessment instruments are comprised of static and dynamic risk factors. Static risk factors do not change (e.g., age at first arrest or gender), while dynamic risk factors can either change on their own or be changed through an intervention (e.g., current age, education level, or employment status). In general, research suggests that the most commonly used assessment instruments can, with a moderate level of accuracy, predict who is at risk for violent recidivism. It also suggests that of the most commonly used risk assessments none distinguishes itself from the others when it comes to predictive validity. The Risk-Needs-Responsivity (RNR) model has become the dominant paradigm in risk and needs assessment. The risk principle states that convicted offenders need to be placed in programs that are commensurate with their risk level; in other words, provide more intensive treatment and services to high-risk offenders while low-risk offenders should receive minimal or even no intervention. The need principle states that effective treatment should also focus on addressing the criminogenic needs that contribute to criminal behavior. The responsivity principle states that rehabilitative programming should be delivered in a style and mode that is consistent with the ability and learning style of the offender. There are several issues policymakers might contemplate should Congress choose to consider legislation to implement a risk and needs assessment system in federal prisons, including the following: Is there the potential for bias in the use of risk and needs assessment? Should certain inmates be ineligible for earned time credits? Should prison programming focus on inmates at high risk of recidivism? Should risk assessment be incorporated into sentencing? Should there be a decreased focus on long prison sentences?

In September 2012, the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA), the Tennessee Department of Health, and other state health departments began investigating a rare, non-contagious outbreak of fungal meningitis. As of June 3, 2013, 20 states had reported 745 infections (including fungal meningitis and other conditions), and 58 deaths were traced to injections of contaminated, preservative-free methylprednisone acetate produced by the New England Compounding Center (NECC). NECC, which self-identified as a compounding pharmacy – not a manufacturer – and was licensed by the state of Massachusetts, produced large volumes of drugs that were shipped across state lines to health care providers. Unlike traditional pharmacy practices, NECC produced drugs without individual prescriptions and made copies of existing commercially-manufactured drugs. These serious adverse events drew attention to compounded drugs (CDs). Six congressional hearings were held in 2012-2013 to understand the factors that led to these adverse events and ways to prevent future such incidents; these hearings are listed in Appendix B . In these hearings Members of Congress and stakeholders raised questions regarding how best to improve the safety of CDs while maintaining patient access to needed drugs. Issues raised at these hearings include the following: (1) what are CDs; (2) how are CDs made and by whom; (3) what is the role of CDs in health care delivery; (4) what are the federal and state roles in oversight of CDs; (5) how safe are CDs, and (6) what steps could be taken to prevent adverse events from CDs. This report provides background information about these issues that may be used to inform the policy discussion as Congress considers legislation. This report focuses on (1) available background information on CDs and compounding pharmacies; (2) changes in the role of CDs in healthcare delivery; (3) factors leading to an increase of compounding; (4) safety of CDs, including a table of selected publicly available adverse events; and (5) a brief summary of policy issues raised to date. This report includes material on CDs for human patients and does not include a discussion of veterinary drug compounding or the compounding of dietary supplements. Issues of public health and safety of CDs are tied to the regulation and oversight of CDs. This report includes brief information on federal, state, and professional efforts to increase the safety of CDs. Information on the federal regulation of CDs is addressed in other CRS reports: CRS Report R40503, FDA's Authority to Regulate Drug Compounding: A Legal Analysis , by Jennifer Staman, and CRS Report R43038, Federal Authority to Regulate the Compounding of Human Drugs , by [author name scrubbed]. Information on the regulation of commercially manufactured drugs can be found in CRS Report R41983, How FDA Approves Drugs and Regulates Their Safety and Effectiveness , by [author name scrubbed]. Compounding has been traditionally defined as a process where a pharmacist or a physician combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient. Traditionally CDs are made in response to an individual prescription from a licensed health provider in the context of a pharmacist's and health care provider's professional relationship with a specific patient. CDs provide alternatives to standard commercially-manufactured drugs when such drugs do not meet the unique medical needs of a patient (e.g., due to a need for an allergen-free drug, weight-based dosing, or alternate modes of delivery), or are unavailable due to discontinuation, unavailability, or shortages. Shortages of sterile generic drugs and hospital outsourcing are cited as causes of increased the reliance of health care providers on CDs. Some have suggested that certain activities not traditionally associated with compounding be considered compounding. Such activities include the large-scale production of drugs to ease certain drug shortages, to meet outsourcing needs of hospitals, and to supply physician-administered drugs. Non-traditional compounding may include (1) the production and shipping of large volume of drugs across state lines; (2) production of drugs that are copies of FDA-approved commercially available drugs; (3) production of drugs outside of a personal relationship with a patient and without a prescription for an individual patient to receive a compounded version; and (4) providing products to third parties, such as hospitals, clinics, physician offices, and home health providers. These activities may be considered more akin to manufacturing than traditional compounding, which is considered part of the traditional practice of pharmacy. In this report, references to these types of activities will be called "non-traditional compounding." This report will be updated as necessary. Adverse events stemming from CDs in 2012 are the starting point for the current policy debate about existing regulatory oversight of CDs. The 2012 fungal meningitis outbreak was triggered by contaminated sterile CDs, injectable methylprednisolone, and was the worst recorded adverse event involving CDs, with news reports indicating that up to 14,000 individuals were exposed to this product. Contaminated sterile drugs pose the most serious threats to human health, and can cause death. Details on this event are listed in the following text box. The safety of CDs has been a concern of Congress for over two decades due to the expansion of non-traditional compounding. Potential safety risks for CDs include problems with potency (i.e., the dosage is inaccurate, either too strong or too weak), purity (e.g., the drug contains other chemicals that could be harmful), and contamination (the drug is contaminated with a bacteria, fungus, or virus). The FDA conducted surveys in 2001 and 2006 to assess identity, strength, quality and purity issues for CDs. In a non-random survey of compounded drugs available over the Internet, about one-third (33%) failed analytic testing, mostly regarding potency or uniformity of dosage. In these surveys, the rates of analytic testing failures for compounded drugs were higher than those for commercially-available drugs, where only 2% of drugs failed analytic testing. There is no specific federal or state requirement that an individual CD be tested for potency, purity, and sterility prior to being sold or administered. The compounder of a product may voluntarily perform such tests along with other quality control processes. Safety issues with CDs also have been found by state pharmacy boards. Certain states have started testing a certain percentage of compounded drugs for non-disciplinary purposes. For example, the State of Missouri Board of Pharmacy initiated a testing program in 2003 for compounded drugs and each year tests a certain number of finished products. Over the course of the testing program, 15% - 25% of the CDs were found to have problems with drug potency, ranging from a sub-potent drug with 0%—no active ingredient present—to a super-potent drug with almost 400% of the prescribed dosage. An inaccurate dose may present a risk of harm to the patient through a risk of toxicity (super-potent) or the risk of ineffective treatment (sub-potency) (see for example, Table C-1 , years 2010, 2007). The lack of resources to carry out testing of CDs appears to be a problem in several states. For example, a newspaper reported that Texas passed a law to provide for inspections of compounding pharmacies, but did not authorize funds for such purposes until 2007; once funded, testing dropped by two-thirds in 2012 compared to 2010 due to state budget cuts. There is no federal requirement for producers of CDs to report adverse events, so the actual number of individuals harmed by CDs is unknown. Policymakers have had concerns with CDs that date back almost two decades; these include reports of contamination of products that should be sterile, sub- or super-potent dosages, and impurities. Table C-1 provides a selected compilation of publicly available reports of adverse events involving CDs and other compounded medical products with details about the date, the number of states affected, the number of people affected, mortality (if any), drug involved, condition treated, and other characteristics, such as whether the product was shipped across state lines or was an off-label use. The vast majority of these adverse events involve sterile compounded products. Sterile compounded products include injectable drugs, IV-delivered drugs and solutions, inhalation drugs, and parenteral nutrition that are administered directly into the body and must be sterile to assure patient safety. There is no specific federal requirement for the reporting of adverse events with CDs; so that this information is by nature selective and cannot be used to draw inferences about the overall risks of CDs. Reports of incidents with CDs that do not rise to adverse events are excluded from the table. Table C-1 also includes other characteristics of CDs, including where it was evident that CDs were shipped across state lines, an element of non-traditional compounding and high-volume facilities, whether CD were prescribed for off-label uses, and whether a drug shortage was in effect. For example, a shortage of generic preservative-free methylprednisolone was reported by some sources prior to the 2012 fungal meningitis outbreak, which was caused by compounded versions of that drug. The 2012 fungal meningitis outbreak led to greater scrutiny by federal and state authorities of sterile CDs. In 2013, FDA and state authorities inspected certain facilities that produce sterile CDs and found a variety of safety concerns. Later, some, but not all, of these compounders issued product recalls due to sterility concerns. The next adverse event linked to a non-traditional compounding pharmacy occurred on May 24, 2013, when the FDA reported infections linked to contaminated sterile injectables; on May 28, 2013, the compounder recalled certain sterile products. Recalls of sterile CDs for 2013 are listed in the following text box. Traditional compounding is a process where a pharmacist or a physician "combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient" in response to a prescription from a health care provider. CDs can include different formulations of drugs (e.g., liquid instead of tablet), doses, and certain ingredients (e.g., allergen-free, dye-free). This report will use the phrase "traditional compounding" to reference the historical use of the term compounding. CDs can provide patients drugs tailored to their individual health needs. The benefits of traditional compounding include (1) providing individualized drugs when commercially-produced drugs do not meet the health requirements of an individual patient; and (2) maintaining access to certain prescription drugs that are not commercially available due to shortages, unavailability, or discontinuation, among other factors. The number of CDs made cannot be determined due to the lack of publicly available information. Currently no federal reporting requirement exists for producers of CDs with respect to their compounding activities. The most recent attempt to assess the number of CDs was through a survey commissioned by the FDA in 2001. This report estimated that 650 pharmacies filled about 13 million prescriptions for compounded prescription drugs per year. Some stakeholders estimate that anywhere from 1-5% of all prescriptions filled annually are for CDs, but the basis of this information cannot be verified. There is also no publicly available information on the types of CDs made, for instance, the percentage of CDs that include dosage, formulation, or ingredient alterations, or that are produced in response to shortages of commercially-manufactured drugs. The lack of information on the current scope of compounding presents challenges for public health authorities and policy makers. Pharmacists, or technicians supervised by a licensed pharmacist, and physicians can produce CDs. Compounding is part of the standard practice of pharmacy and is within the scope of state licensure of pharmacists and pharmacies. The number of pharmacists engaged in compounding on a regular basis is difficult to evaluate due to a lack of publicly available information. The most recent attempt to survey pharmacists, commissioned by the FDA, found that the majority of compounded prescriptions are filled by a small number of pharmacies, and for some, CDs are the majority of their business. Others provide different estimates. Janet Woodcock, Director of the FDA Center for Drug Evaluation and Research (CDER), stated in a recent interview that 28,000 pharmacies compound drugs nationwide. The American Pharmacists Association (APhA), a trade association of pharmacists, reports that there are 7,500 pharmacies in the United States that specialize in compounding. The International Academy of Compounding Pharmacies, a trade association representing the compounding profession, has 2,700 members. As of January, 2013 there were 163 pharmacies in the United States accredited by the Pharmacy Compounding Accreditation Board, which offers a voluntary accreditation process for compounding pharmacies. Existing sources of publicly available information on specific CD products include those listed by compounding pharmacies on their websites, products described by professional associations, products mentioned in scientific journals, and on CDC and FDA websites due to warning and other notices. These CDs include, among others, drugs for: pain management (including alternate delivery, combined medications, dosage variations), hormone replacement therapies for women (including bioidentical hormones) and men (e.g., testosterone), men's and women's health, sports medicine, weight-loss, dental care, veterinary care, pediatric patients, and hospice care. Some compounded products include items advertised as treatments for Autism/ADHD, "adrenal fatigue," or fat-elimination; the FDA and others have raised questions regarding these claims. As noted earlier, some enterprises have engaged in certain activities not traditionally associated with compounding, but have asserted that these activities should be considered compounding. Such activities include the large-scale production of drugs to ease certain drug shortages, to meet outsourcing needs of hospitals and to supply physician-administered drugs. Non-traditional compounders make a variety of products, including sterile injectables, parenteral nutrition, and drugs on the FDA shortage list. Sterile injectable CDs include epidurals (for childbirth and pain management), nerve-blocking agents, drugs for pain management, and antibiotics. Individuals might receive these products in a hospital, doctor's office, or other medical facility as a medication, an IV solution or nutrition. Some non-traditional compounders have large numbers of customers. For example, PharMedium, a large scale compounder, reported 2,300 hospital customers for a variety of compounded products. NECC, the compounder involved in the fungal meningitis outbreak of 2012, was listed on a FDA website as having over 20,000 customers, including physicians, clinics, and hospitals. Drug compounding has historically been the focus of state governments through their regulation of pharmacies. Recently questions have arisen regarding the extent the federal government can regulate the practice of compounding through the FFDCA. This section discusses federal and state authorities, as well as industry self-regulation. Federal authority over compounding largely stems from the Federal Food Drug and Cosmetics Act (FFDCA), enacted in 1938, and its subsequent amendments, including the Food and Drug Administration Modernization Act (FDAMA) of 1997, which added compounding-specific provisions to the FFDCA in Section 503A. Litigation over Section 503A's advertising provisions has created doubt, however, over the legal effect of FDAMA's compounding provisions. The precise limit to federal authority with respect to drug compounding remains uncertain as the federal authority to regulate traditional drug compounding has been discussed by very few courts, and each court that has approached the issue did so from a unique factual setting that colored the eventual outcome of the case. Courts appear to agree that the federal government can regulate compounding activity that is akin to manufacturing (i.e., non-traditional compounding), and courts have afforded deference to the FDA's interpretation of when a compounder is acting like a manufacturer, which appears to be within the FDA's discretion. However, there is not a bright-line distinction between behaviors that are "akin to manufacturing" and those of a traditional compounding pharmacy. As a result, uncertainty remains regarding the possible limits to the FDA's current authority to regulate traditional compounding practices. Even assuming that FDA has the authority to regulate traditional compounding, as a matter of policy, the FDA has generally declined to test the current limits of its authority to regulate compounding, preferring instead to defer to state governments with respect to the regulation of "traditional compounding." Traditional compounding is a component of the practice of pharmacy and has typically been regulated by the states as "part of their regulation of pharmacies" and the licensing of pharmacists as health care professionals. There is great variety in existing state legislation addressing CDs. Certain states have passed new laws, or are considering revisions of laws and regulations for compounding pharmacies, in part due to recent events. The National Association of Boards of Pharmacies (NABP) has listed summaries of approved and proposed state changes to permitted compounding practices. State boards of pharmacy evaluate pharmacists and pharmacies on compounding practices and facilities. Compounding from bulk ingredients is generally an approved part of pharmacy practice, with some states requiring all licensed pharmacies to offer compounding services. Some states follow NABP model language and permit a pharmacist to compound drugs to patients only upon receipt of a valid prescription from a doctor or other medical practitioner licensed to prescribe medication. Some states require a special license for compounding sterile medications, which requires special facilities and adherence to sterile methods. Other states license a separate class of pharmacy facility that produces drugs for pharmacies or other providers, such as central fill pharmacies. Finally, some states permit pharmacies to make exact copies of commercial products in response to discontinued products or drug shortages. Professional programs in pharmacy are accredited and pharmacists generally receive formal education and professional training with respect to the practice of compounding drugs. Pharmacists can participate in a voluntary accreditation process for compounding established by professional pharmacy organizations, and the U.S. Pharmacopeial Convention (USP). As of December 2012, 163 facilities nationwide have this accreditation. Professional standards and guidelines for CDs are established by the USP in published standards: Chapter 797 "Pharmaceutical Compounding – Sterile Preparations" for sterile products and Chapter 795 "Pharmaceutical Compounding – Non-Sterile Preparations." USP Standard 797 includes standards for facilities, procedures, and staff in order to produce safe sterile drugs, such as sterilizing equipment, a sterile clean room, special ventilation, and decontamination processes. Not all pharmacies or compounders adhere to these USP standards and these standards, unless required by state law, are voluntary. To date, 20 states have laws that require full adherence to USP Standard 797. USP standards are designed for pharmacy compounding and may not be suitable for large-scale production of CDs. Commercial production of drugs is addressed by the current good manufacturing practices (cGMP) required by Section 501 of the FFDCA for commercial manufacturers; cGMP requires certain manufacturing practices as well as adverse event reporting. Some believe that the number and types of CDs and other products (IV and parenteral nutrition) are increasing, coinciding with increasing demand for certain compounded products due to a variety of reasons, including (1) an increase in hospital outsourcing of CDs; (2) drug shortages, unavailability, and discontinuation of FDA-approved drugs; (3) interest in individualized products by physicians and consumers; and (4) an increased interest by pharmacists in new markets. As noted earlier, the exact number of business facilities engaged in non-traditional compounding is unclear. In 2013, the FDA inspected non-traditional compounding facilities that were engaged in sterile compounding and lists 39 facilities that it inspected located around the country. Some of these facilities, such as Central Admixture Pharmacy Services and PharMEDium Services have multiple locations. Press and other sources indicate growth of centralized compounding facilities that provide outsourcing and related activities to pharmacies and hospitals. Some of these compounding facilities include compounding pharmacies, central fill pharmacies, and outsourcing pharmacies. Some states, but not all, permit certain types of consolidated services, such as "shared services" or "central fill IV pharmacies," which make products for distribution among a variety of providers. For example, Med Prep Consulting, Inc. lists itself as a state-licensed central fill pharmacy and provides products to other pharmacies. Hospitals commonly compound drugs, IV solutions, and IV nutrition. For example, children's hospitals compound a variety of products such as pediatric dosages or products that are not commercially available. One source reports that increases in use of drugs dosed by weight, rather than in commercially-available dosing, and the expansion of treatment of disorders that require personalized dosing have led to a growth of hospital-based compounding. Trends in health care include increasing hospital consolidation and integration of hospitals, leading to consolidated purchasing and centralized production, including the production of CDs. For example, the Cleveland Clinic Health System, a network of 10 hospitals and 15 pharmacies, reported that in 2012, approximately 870,000 doses were compounded at its central facility. Cleveland Clinic reported that 56% of its products were compounded for the needs of specific patients; 44% were made in anticipation of patient needs in a large hospital, such as the preparation of syringes used in the operating room, epidurals, narcotic infusions, doses not commercially available, and medications that were unavailable due to drug shortages. Smaller facilities in rural areas may increase the outsourcing of CDs due to need for specialty intravenous products without the facilities to produce such products. Reductions in staff or insufficient staff or facilities to continue compounding; streamlining workflow; and cost savings may also be factors related to outsourcing by facilities. As noted earlier, there is limited information on the numbers of outsourced compounded products, as the records of compounding entities are not publicly reported. However, a 2013 report of the Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) on outsourcing of sterile products by hospitals found that 25% used "high-risk" sterile products, those made from non-sterile ingredients, while 92 % of hospitals used compounded sterile products that were not "high-risk". The reasons hospitals provided for outsourcing sterile compounded products include drug shortages and their lack of capacity to produce products that remained stable over time and thus had a long shelf-life. Stability and extended shelf-life permit hospitals to store products for use as patient needs emerge. Shortages were cited as a reason for outsourcing by 62% of hospitals, as were stability (69%) and extended shelf-life (62%). Shortages of commercially-available drugs, especially shortages of generic sterile products, play a central role in the increased demand for CDs. The drug shortages may be temporary or permanent and are due to a variety of factors including voluntary discontinuation of products, supply chain problems, and production issues, including safety problems at commercial manufacturers. Certain compounders advertise their ability to fill certain back-ordered drugs or those in short supply on their websites. Shortages of commercially-manufactured drug are predicted to continue, leading to continued demand for certain compounded products. Physicians, hospitals, and other health care providers may turn to compounders to meet a time-sensitive need when specific drugs may be temporarily unavailable. A 2013 report by the Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) surveyed hospitals participating in Medicare and found that many hospitals turn to compounding pharmacies to provide drugs to maintain supply due to shortages of commercially-manufactured FDA-approved drugs. According to the OIG report, 68% of hospitals indicated that they sought a CD due to a drug shortage. The FDA and other safety advocates are concerned because reportedly 73% of drug shortages are for sterile injectable generic drugs, which are some of the most difficult drugs to compound safely. Several generic commercial manufacturers have struggled with manufacturing problems that have led to interruptions in supply of sterile generic drugs. For example, as of May 15, 2013, a major generic manufacturer in this business sector, Hospira, has recalled eight different sterile injectable drugs for 2012 and 2013. An alternative to sterile injectable CDs and generics are brand-name sterile injectables. These are less likely to be in short supply or suffer from quality problems; however, brand-name sterile drugs usually cost more than generic or compounded products. Recalls of products from compounding pharmacies may also exacerbate drug shortages. Ameridose and NECC ended production of certain sterile drugs in 2012-2013 due to problems with sterility, and these drugs were already in short supply. In 2013, compounders recalled certain products produced at these facilities; some of these products were drugs listed on the FDA shortages website. For example, drugs recalled by Med Prep in March 2013 include drugs on the FDA Current Drug Shortage Index. CD shortages heighten problems of patient access to commercially-manufactured generic drugs when there are shortages. Table 1 details the perceptions of hospitals about the effect of disruptions in supply of sterile products from compounding pharmacies. Almost 50% of respondents perceived that health care delivery would be seriously impacted, while 11.5% perceived that the effect on patient health would be life-threatening. A growth of interest in customized products, including allergen-free drugs, single administration of multiple drugs, and individualized formulations of drugs (such as liquids instead of tablets) may play a role in heightened demand for CDs. The sources of this demand include physician and patient demand as well as changing pharmacist business models. There appears to be an increase in marketing of CDs for treatment of common disorders, such as menopausal symptoms (e.g., "bio-identical" hormones), men's health, and weight loss, which may lead to an increase in demand for these CDs. Compounding may provide pharmacists alternatives to expand business growth. Pharmacy publications have emphasized how compounding pharmacists improve their own professional satisfaction through providing more individualized services and increased engagement with patients. This reflects an evolution to business models that expand pharmacist roles in areas of patient care beyond distributing commercially-manufactured products. A 2012 article in Business Week describes drug compounding as a growing business sector, and describes how focusing on compounding can provide a new market niche for community pharmacies. Some of these pharmacies may be exploring new business models due to increased competition with chain pharmacies and retailers to fill prescriptions for commercially-manufactured drugs. This account appears consistent with material on certain compounding pharmacies' websites that describe business development from community pharmacies into a market niche in compounded products (both prescription drugs and dietary supplements). Demand may be generated in part by off-label prescribing by physicians for a variety of reasons, including drug prices and shortages. As Table C-1 indicates, some of the incidents of contamination and adverse events are for CDs prescribed for off-label uses. Off-label prescribing allows physicians flexibility to prescribe medications they feel are necessary for patient health. Off-label use of a CD may present additional, but unknown risks. For example, two common off-label uses of sterile CD are a compounded version of a chemotherapy drug, Avastin, for use to treat macular degeneration, and preservative-free methylprednisolone for back pain. There have been recent adverse events with compounded Avastin, the main appeal of which is its lower price compared to FDA-approved drugs to treat macular degeneration (see Table C-1 , 2011). Preservative-free methylprednisolone is used to treat back pain (see Table C-1 , years 2013, 2012, 2002, 2001). Compounded versions of this drug by NECC were the cause of the 2012 fungal meningitis outbreak. The processes for creating sterile CDs require special equipment, facilities, and personnel training. When compounding exclusively with sterile ingredients, sterility must be maintained in all phases of production; when compounding with non-sterile ingredients, sterility must be achieved for the finished product requiring a sterilization process or related procedure that does not affect product stability. Regulators and industry agree that the highest risk to patient safety is from those sterile products made from non-sterile ingredients. Consumers, pharmacists, pharmacy compounders, hospitals, Congress, and state and federal regulators all have a stake in access to, and safety of, needed drugs. Increasing demand for CDs by patients and providers, drug shortages, consolidation of hospital services and other factors have led to changes in health delivery. The potential risks to public health of product failures have increased as non-traditional compounding has expanded. Given the expansion of sterile compounding, balancing patient access to CDs with patient safety has become more complex. Thus, some stakeholders believe that changes in business trends, such as drug shortages and outsourcing of compounding, must be taken into consideration in considering changes in professional standards and federal and state oversight and regulation of CD. Three issues have emerged in the congressional hearings about CDs and in legislation introduced in the 112 th and 113 th Congress (see Table A-1 ): (1) adverse event reporting, (2) labeling, and (3) modifying federal oversight of non-traditional compounding. These issues will be discussed in the following section. There is a lack of publically available information on the number and types of adverse events involving compounded drugs, as there is no requirement that compounders report adverse events to federal authorities, and state requirements vary. Adverse event reporting is not required by federal regulators for producers of CDs as it is for prescription, non-prescription drugs, and dietary supplements. Without knowing the total number of compounded products made, as well as the total number of adverse events, it is difficult to ascertain the overall safety of CDs or to understand the benefits and risks of using CDs. The publicly-available information on CDs is published by public health authorities, FDA inspections of facilities listed on websites, records of state licensing boards, and reports in professional journals documenting adverse events. Adverse events can be voluntarily reported to the FDA MedWatch database, but without mandatory reporting, the completeness of the information cannot be ascertained. Labeling specifying that a drug or another product is compounded is not a universal requirement. Due to the complexity of the supply chain and the growth of non-traditional compounding, patients and providers may not realize that a drug has been compounded. Unlike traditional compounding where a patient is given a prescription by a physician for a CD, non-traditional CDs are not necessarily identified as compounded. Given the potential benefits and risks of CDs, an argument could be made for providing patients this information as part of informed consent for medical treatment. Informed consent for treatment is an ethical and a legal requirement to ensure that a patient fully understands the potential risks and benefits of a medical procedure. CDs and other compounded solutions pose potential risks and benefits that may be different from commercially-manufactured products. Informed consent is based on a patient's knowledge and understanding of a medical procedure; as most patients assume that drugs are commercially-manufactured, this additional information could be seen as necessary to the ethical pursuit of informed patient consent. Policymakers have raised questions regarding how best to improve the safety of CDs while maintaining patient access to needed medications, including the need for new legislation and increased accountability. In testimony to Congress, FDA administrators have expressed reservations about non-traditional compounding activities that are akin to manufacturing (i.e., non-traditional compounding) and their potential risks to public safety. The FDA recommends increased federal oversight of sterile compounding and certain other high-risk activities. Attempts to clarify federal authority over non-traditional compounding is represented in certain elements of bipartisan legislation of the Senate Committee on Health, Education, Labor and Pensions (HELP) and in legislation introduced in the 112 th and 113 th Congress. These proposals all include increased clarity in the federal oversight role for compounding drugs. For example, a provision in the draft HELP legislation would create new authorities for FDA oversight of "compounding manufacturers" (i.e., non-traditional compounders) (see Table A-1 ). Some Members of Congress argue that new FDA authorities should await better implementation of existing authorities. For example, a House Committee on Energy and Commerce report questions whether a lack of enforcement by FDA and state authorities of certain vendors is an issue. The report cites safety violations at NECC in prior years, which do not appear to have been resolved despite FDA involvement. Some in the compounding pharmacy industry believe that the current safety issues are isolated to certain vendors and that compounding, in general, is not unsafe. Some compounding associations have reservations about the FDA having new authorities; others support increased FDA oversight. Many acknowledge that compounded health care products have become more complex and health delivery more complicated. In a recent report, the Association of Health-System Pharmacists (AHSP) and American Hospital Association (AHA) noted that there was general support from stakeholders in these associations for (1) FDA oversight of certain non-traditional compounding pharmacies (e.g., providing a CD without a prescription and shipped over state lines); (2) improved communication between state and federal regulators; (3) a list of "do-not-compound" CDs; and (4) improved access to USP compounding monographs that provide guidance to compounders on making certain CDs. Appendix A. Legislation Introduced in the 113 th Congress Affecting Drug Compounding The following table summarizes selected provisions of the two pieces of legislation on compounding introduced to date in the 113 th Congress. It includes provisions that address issues discussed in this report, but it does not provide a full summary of the legislation. Appendix B. Congressional Hearings on CDs 2012-2013 (in Reverse Chronological Order) "Examining Drug Compounding," hearing of the Subcommittee on Health of the Committee on Energy and Commerce, U.S. House of Representatives, May 23, 2013. Executive Session, S. 959 Pharmaceutical Compounding Quality and Accountability Act, hearing of the Committee on Health, Education, Labor, and Pensions, U.S. Senate, May 22, 2013. Ordered to be reported with an amendment in the nature of a substitute favorably. "Pharmaceutical Compounding: Proposed Legislative Solution," hearing of the Committee on Health, Education, Labor, and Pensions, U.S. Senate, May 9, 2013. "A Continuing Investigation into the Fungal Meningitis Outbreak and Whether It Could Have Been Prevented?", hearing of the Subcommittee on Oversight and Investigations, Committee on Energy and Commerce, U.S. House of Representatives, April 26, 2013. "Pharmacy Compounding: Implications of the 2012 Meningitis Outbreak," hearing of the Committee on Health, Education, Labor, and Pensions, U.S. Senate, November 15, 2012. "The Fungal Meningitis Outbreak: Could It Have Been Prevented?", hearing of the Subcommittee on Oversight and Investigations, Committee on Energy and Commerce, U.S. House of Representatives, November 14, 2012. Source : House Committee on Energy and Commerce: http://energycommerce.house.gov/hearings ; Senate Committee on Health, Education, Labor and Pensions: : http://www.help.senate.gov/hearings/ . Appendix C. Selected Adverse Events Involving Compounded Drugs and Solutions

Compounding has been traditionally defined as a process where a pharmacist or a physician combines, mixes, or alters ingredients to create a medication tailored to the needs of an individual patient. Traditionally compounded drugs (CDs) are made in response to an individual prescription from a licensed health provider in the context of a pharmacist's and health care professional's relationship with a specific patient. Some have suggested that certain activities not traditionally associated with compounding be considered compounding. Such activities include the large-scale production of drugs to ease certain drug shortages, to meet outsourcing needs of hospitals, and to supply physician-administered drugs. Non-traditional compounding may include (1) the production and shipping of large volume of drugs across state lines; (2) production of drugs that are copies of FDA-approved commercially available drugs; (3) provision of CD without a prescription for an individual patient to receive a compounded version and outside of a professional relationship; and (4) production of products to third parties, such as hospitals, clinics, physician offices, and home health providers. These activities could be considered more akin to manufacturing than traditional compounding, which is considered part of the traditional practice of pharmacy. Adverse events involving contaminated compounded drugs have drawn attention to the growing use of non-traditionally compounded drugs in health care delivery. Shortages of sterile generic drugs and hospital outsourcing are cited as causes of increased numbers of CDs produced by non-traditional compounders. Efforts to assess the risks and benefits of CDs on public health and safety are complicated by the lack of publicly available information, including the absence of a federal adverse event reporting requirement, and the lack of information about the number of drugs compounded, the types of drugs compounded, and the number of businesses in this market. Policymakers have raised questions regarding how best to improve the safety of CDs while maintaining patient access to needed medications. Drug compounding has historically been the focus of state governments through their regulation of pharmacies. Recently questions have arisen regarding the extent to which the federal government can regulate the practice of compounding through the Federal Food, Drug, and Cosmetic Act (FFDCA). Policy discussions include proposals to clarify federal oversight of high-risk activities and products, to improve federal and state coordination, and to increase use of existing federal authorities. This report provides background information on CDs and non-traditional compounding pharmacies relevant to policy discussions. This includes an overview of the 2012 fungal meningitis outbreak, recent safety alerts and recalls of compounded drugs, definitions of traditional compounding and non-traditional compounding, information on the CDs produced and by whom, information on the demand for non-traditional compounding, including the role of shortages of sterile injectable drugs, hospital out-sourcing, and patient and provider demand, and information on adverse events involving compounded drugs.

This statute provides, in part: "The Secretary of the military department concerned may make a military animal of such military department available for adoption ... under circumstances as follows: (1) At the end of the animal's useful life. (2) Before the end of the animal's useful life, if such Secretary ... determines that unusual or extraordinary circumstances justify [it]. (3) When the animal is otherwise excess to the needs of such military department." The statute defines "military animal" as "[a] military working dog" or "[a] horse owned by the Department of Defense." When this statute was first enacted in 2000, it applied only to military working dogs; prior to then, under Department of Defense policy, such dogs were caged, sometimes for as long as a year, and then euthanized. See 146 Cong. Rec. H 9599 (daily ed. October 10, 2000). The statute was amended to cover horses in 2006. This statute establishes an African Elephant Conservation Fund, from which the Secretary of the Interior may provide financial assistance "for approved projects for research, conservation, management, or protection of African elephants." It requires the Secretary to establish a moratorium on the importation of raw and worked ivory from an ivory producing country that does not meet specified criteria, including being a party to CITES and adhering to the CITES Ivory Control System. ("CITES" is the Convention on the International Trade in Endangered Species of Wild Fauna and Flora.) The act imposes civil and criminal penalties on any person who, among other things, imports raw ivory from any country other than an ivory producing country, or from a country for which a moratorium is in effect, or who exports raw ivory from the United States. A person who furnishes information that leads to a civil penalty or a criminal conviction under the act may be rewarded up to one-half of any criminal or civil penalty or fine, or $25,000, whichever is less. Section 794 of P.L. 109-97 (2005) provides: Effective 120 days after the date of enactment of this act, none of the funds made available by this act may be used to pay the salaries or expenses of personnel to inspect horses under section 3 of the Federal Meat Inspection Act (21 U.S.C. 603) or under guidelines issued under section 903 [of] the Federal Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 1901 note; P.L. 104-127 ). Because the Federal Meat Inspection Act, 21 U.S.C. § 603, requires horses (and specified other mammals) to be inspected before they may be slaughtered for human consumption, § 794 of P.L. 109-97 , by precluding appropriated funds from being used to pay inspectors' salaries and expenses to inspect horses, would have effectively prohibited the slaughter of horses for human consumption from March 10, 2006, until September 30, 2006. The Department of Agriculture, however, on February 8, 2006, issued a regulation allowing slaughter plants to pay for inspections by the Department of Agriculture's Food Safety and Inspection Service so that horses could continue to be slaughtered for human consumption. 9 C.F.R. § 352.19. The 110 th Congress prevented the Department of Agriculture from continuing to charge slaughter plants for inspections, and it thereby effectively prohibited the slaughter of horses for human consumption. It accomplished this by prohibiting appropriated funds from being used not only, as in P.L. 109-97 , to pay salaries and expenses under the Federal Meat Inspection Act and the Federal Agriculture Improvement and Reform Act of 1996, but also from being used to implement or enforce 9 C.F.R. § 352.19, under which the Department of Agriculture allowed slaughter plants to pay for inspections. P.L. 110-161 , § 741, 121 Stat. 1881 (2007); P.L. 110-329 , Div. A, § 101, 122 Stat. 3574-3575 (2008) (incorporating provisions of P.L. 110-161 ). This statute makes it a crime (1) while in an aircraft, to shoot any bird, fish, or other animal, or (2) to use an aircraft to harass any bird, fish, or other animal. These prohibitions do not apply to persons employed by or licensed by a state or the federal government to administer or protect "land, water, wildlife, domesticated animals, human life, or crops." Sections 1313-1314 of this act, 16 U.S.C. §§ 3201-3202, authorize the Secretary of the Interior to designate zones within national preserves in Alaska "where and when no hunting, fishing, trapping, or entry may be permitted," and prohibits "the taking of fish and wildlife" in national parks or national park system monuments in Alaska, except as specified in the act. Section 1005 of the act, as amended in 1990, 16 U.S.C. § 3145, provides that the Secretary of the Interior shall work closely with the State of Alaska and Native Village and Regional Corporations in evaluating the impact of oil and gas exploration, development, production, and transportation and other human activities on the wildlife resources of these lands, including impacts on the Arctic and Porcupine caribou herds, polar bears, muskox, grizzly bear, wolf, wolverine, seabirds, shorebirds, and migratory waterfowl. This statute (together with the Rehabilitation Act of 1973, 29 U.S.C. §§ 791-794) prohibits discrimination against people with disabilities in employment, public services, and public accommodations. Discrimination includes refusing to make reasonable accommodations for individuals with disabilities, and a reasonable accommodation generally includes permitting the use of service animals, such as seeing eye dogs. See, e.g., 28 C.F.R. § 36.302(c). See also, " Fair Housing Act, 42 U.S.C. § 3604 ," discussed below. This statute authorizes the Secretary of Commerce to take various actions for the protection of fishery resources. This statute directs the Secretary of Agriculture: to conduct investigations, experiments, and tests as he may deem necessary in order to determine, demonstrate, and promulgate the best methods of eradication, suppression, or bringing under control on national forests and other areas of the public domain as well as on State, Territory, or privately owned lands of mountain lions, wolves, bobcats, prairie dogs, gophers, ground squirrels, jack rabbits, brown tree snakes, and other animals injurious to agriculture, horticulture, forestry, animal husbandry, wild game animals, fur-bearing animals, and birds. This statute was enacted in 1931 (though "brown tree snakes" were added in 1991). The functions of the Secretary of Agriculture under it were transferred to the Secretary of Interior in 1939, and back to Agriculture in 1985. In 1987, P.L. 100 - 202 , 101 Stat. 1329-331, added the following provision to the act: The Secretary of Agriculture is authorized, except for urban rodent control, to conduct activities and enter into agreements with States, local jurisdictions, individuals, and public and private agencies, organizations, and institutions in the control of nuisance mammals and birds and those mammal and bird species that are reservoirs for zoonotic diseases, and to deposit any money collected under any such agreement into the appropriation accounts that incur the costs to be available immediately and to remain available until expended for Animal Damage Control activities. This statute requires the Department of Agriculture to submit to the House and Senate agriculture committees a preliminary report by June 23, 2001, and a final report by October 20, 2001, concerning foot-and-mouth disease, bovine spongiform encephalopathy, and related diseases. This statute, which replaced the Animal Enterprise Protection Act of 1992, makes it a crime to "travel[ ] in interstate or foreign commerce, or use[ ] ... the mail or any facility in interstate or foreign commerce—(1) for the purpose of damaging or interfering with the operations of an animal enterprise; and (2) in connection with such purpose—(A) intentionally damag[ing] or caus[ing] the loss of any real or personal property ... [or] (B) intentionally plac[ing] a person in reasonable fear of the death of, or serious bodily injury to that person, a member of the immediate family ... of that person, or a spouse or intimate partner of that person. ..." The statute defines "animal enterprise" as: (A) a commercial or academic enterprise that uses or sells animals or animal products for profit, food or fiber production, agriculture, education, research, or testing; (B) a zoo, aquarium, animal shelter, pet store, breeder, furrier, circus, rodeo, or other lawful competitive animal event; or (C) any fair or similar event intended to advance agricultural arts and sciences. This statute authorizes the Secretary of Agriculture, if he determines it to be necessary to prevent the introduction into or dissemination with the United States of any pest or disease of livestock, to prohibit or restrict, among other things, the importation or exportation of any animal into or from the United States, the movement in interstate commerce of any animal, or the use of any means of conveyance in connection with the importation or entry of livestock. The statute also authorizes the Secretary, if it is necessary for the above purpose, to order the destruction or removal from the United States of any animal, or to seize, quarantine, or dispose of any animal. The AWA authorizes the Secretary of Agriculture to "promulgate standards to govern the humane handling, care, treatment, and transportation of animals by dealers, research facilities, and exhibitors." 7 U.S.C. § 2143(a)(1). Such standards must include requirements "for animal care, treatment, and practices in experimental procedures to ensure that animal pain and distress are minimized. ..." 7 U.S.C. § 2143(a)(3)(A). The act also requires the Secretary to "promulgate standards to govern the transportation in commerce, and the handling, care, and treatment in connection therewith, by intermediate handlers, air carriers, or other carriers, of animals consigned by any ... person ... for transportation in commerce." 7 U.S.C. § 2143(a)(4). The AWA's definition of "animal" makes the act applicable to any warmblooded animal used "for research, testing, experimentation, or exhibition purposes, or as a pet; but such term excludes (1) birds, rats of the genus Rattus, and mice of the genus Mus, bred for use in research, (2) horses not used for research purposes, and (3) other farm animals. ..." 7 U.S.C. § 2132(g). Prior to this provision's amendment by P.L. 107 - 171 (2002), § 10301, it did not exclude birds, rats, or mice. Nevertheless, the Secretary had promulgated regulations that excluded birds, and rats and mice bred for use in research, from coverage under the act. A federal court found this exclusion to violate the act, but the decision was overturned on appeal on the ground that the plaintiffs lacked standing to bring the suit. Subsequently, in a case unrelated to the birds, rats, and mice question, the en banc D.C. Circuit held that a plaintiff who "suffered [injuries] to his aesthetic interest in observing animals living under humane conditions" had standing to sue the Secretary of Agriculture to enforce the act. Subsequently, another suit was brought to challenge the exclusion of birds, rats, and mice, and a federal district court, citing the D.C. Circuit case, denied the Department of Agriculture's motion to dismiss for lack of standing. As a result, the Department of Agriculture settled the case by agreeing to revise its regulations to include birds, rats, and mice. Then Congress intervened, and, in the Department of Agriculture appropriations for FY2001 ( P.L. 106 - 387 , § 772), prohibited FY2001 funds from being used to "modify the definition of 'animal' in existing regulations pursuant to the Animal Welfare Act." The FY2002 appropriations contained the same prohibition ( P.L. 107 - 76 , § 732), and then P.L. 107 - 171 , § 10301, amended the statute to exclude birds, rats, and mice bred for research. Section 10304 of the statute, however, directs the National Research Council, by May 13, 2003, to submit to the House and Senate Agriculture Committees "a report on the implications of including rats, mice, and birds within the definition of animal under the regulations promulgated under the Animal Welfare Act (7 U.S.C. 2131 et seq.)." No report appears to have been written. The AWA requires every research facility to establish an Institutional Animal Committee of at least three members, at least one of whom shall not be affiliated in any way with the facility and who is intended to represent "general community interests in the proper care and treatment of animals." The Committee's responsibilities include to review practices involving pain to animals and to file a report with the Secretary. 7 U.S.C. § 2143(b). The AWA also provides for the licensing of dealers and exhibitors (7 U.S.C. § 2133) and prohibits research facilities from purchasing dogs or cats from unlicensed dealers or exhibitors (7 U.S.C. § 2137). The act defines "dealer" in part as a person who, for compensation, transports, buys, or sells any animal "for research, teaching, exhibition, or use as a pet," but it excludes from the definition a retail pet store that does not sell "animals to a research facility, an exhibitor, or a dealer" (7 U.S.C. § 2132(f)). The act defines "exhibitor" to include carnivals, circuses, and zoos, but to exclude retail pet stores, state and country fairs, livestock shows, rodeos, and purebred dog and cat shows (7 U.S.C. § 2132(h)). The AWA also prohibits dealers and exhibitors from selling or otherwise disposing of any dog or cat within five business days after they acquire it, except that this requirement does not apply to operators of auction sales. 7 U.S.C. § 2135. A 1990 amendment requires public and private pounds and shelters, and research facilities licensed by the Department of Agriculture, to "hold and care for" any dog or cat they acquire "for a period of not less than five days to enable such dog or cat to be recovered by its original owner or adopted by other individuals before such entity sells such dog or cat to a dealer." 7 U.S.C. § 2158(a). Does this provision prohibit a pound, shelter, or research facility from euthanizing a dog or cat before five days? Perhaps not on its face, but that appears to be its intent, as to read it otherwise would seem to defeat its purpose. Another 1990 amendment authorized the Attorney General to seek, and federal courts to issue, injunctions against dealing in stolen animals or placing the health of an animal in serious danger in violation of the act. 7 U.S.C. § 2159. P.L. 110 - 234 , § 14210 (2008) added a new section to the AWA (7 U.S.C. § 2148) that prohibits any person from importing a dog into the United States for purposes of resale unless the Secretary determines that the dog is in good health, has received all necessary vaccinations, and is at least six months old. This section does not apply, however, if a dog is imported for research purposes or veterinary treatment, or if it is imported into Hawaii from the British Isles, Australia, Guam, or New Zealand, if the dog is not transported out of Hawaii for purposes of resale at less than six months of age. P.L. 110 - 234 , § 14214, also amended the AWA (7 U.S.C. § 2149(b)) to increase, from $2,500 to $10,000, the civil penalty that the Secretary of Agriculture may assess for any violation of any provision of the act, or of any rule, regulation, or standard promulgated by the Secretary. The Animal Welfare Act, as amended, most recently by P.L. 110 - 234 , § 14207 (2008) prohibits any person "to knowingly sponsor or exhibit an animal in an animal fighting venture," or "to knowingly sell, buy, possess, train, transport, deliver, or receive any animal for the purposes of having the animal participate in an animal fighting venture." However, [w]ith respect to fighting ventures involving live birds in a State where it would not be a violation of the law, it shall be unlawful under this subsection for a person to sponsor or exhibit a bird in a fighting venture only if the person knew that any bird in the fighting venture was knowingly bought, sold, delivered, transported, or received in interstate commerce for the purpose of participation in the fighting venture. On August 15, 2008, a Louisiana statute (14:102.23) took effect that made it the 50 th state (plus the District of Columbia) to outlaw cockfighting, thereby essentially rendering moot this exception in the AWA. P.L. 110 - 22 (2007) made it "unlawful for any person to knowingly sell, buy, transport, or deliver in interstate or foreign commerce a knife, a gaff, or any other sharp instrument attached, or designed or intended to be attached, to the leg of a bird for use in an animal fighting venture." P.L. 110 - 22 also increased the penalty for violations of the animal fighting ventures section from a misdemeanor to a felony, with a maximum penalty of a fine and three years' imprisonment per violation. P.L. 110-234 , § 14207(b) (2008) then increased the maximum penalty to a fine and five years' imprisonment per violation. The animal fighting section of the AWA also prohibits knowingly using the mail or any instrumentality of interstate commerce to advertise an animal, or a sharp instrument, for use in an animal fighting venture, or to promote or further an animal fighting venture, except that this prohibition applies "to fighting ventures involving live birds only if the fight is to take place in a State where it would be in violation of the laws thereof." This statute makes it unlawful for any United States citizen, unless authorized by the Director of the National Science Foundation, to engage in commerce in any native animal or native bird taken in Antarctica. This statute implements the Convention on the Conservation of Antarctic Marine Living Resources, and makes it unlawful to harvest, or knowingly to engage in commerce in any Antarctic marine living resource harvested in violation of the Convention. This statute establishes the Asian Elephant Conservation Fund and directs the Secretary of the Interior to use amounts in the Fund for projects for the conservation of Asian elephants. The statute requires the Secretary of Commerce, in cooperation with the Secretary of the Interior, to develop and implement a program to support the interstate fishery management efforts of the Atlantic States Marine Fisheries Commission. This statute limits salmon fishing pursuant to the Convention for the Conservation of Salmon in the North Atlantic Ocean. This statute directs the Secretary of Commerce and the Secretary of the Interior to jointly declare a moratorium on fishing for Atlantic striped bass within the coastal waters of any state that does not comply with the plan for managing Atlantic striped bass that is adopted by the Atlantic States Marine Fisheries Commission. This statute authorizes the Secretary of Commerce to promulgate regulations to "limit the size of the fish and the quantity of the catch which may be taken from each area ... [and] limit or prohibit the incidental catch of a regulated species. ..." This statute makes it a crime to possess, buy, sell, or transport any bald or golden eagle, alive or dead, or any part, nest, or egg thereof. The Secretary of the Interior may issue regulations authorizing exceptions "for the scientific or exhibition purposes of public museums, scientific societies, and zoological parks, or for the religious purposes of Indian tribes, or ... for the protection of wildlife or of agricultural or other interests in any particular locality. ..." The CHIMP Act, P.L. 106 - 551 (2000), as amended by P.L. 110 - 170 (2007), added § 481C to the Public Health Service Act. It requires the Secretary of Health and Human Services (HHS) to "provide for the establishment and operation ... of a [sanctuary] system to provide for the lifetime care of chimpanzees that have been used, or were bred or purchased for use, in research conducted or supported by the National Institutes of Health, the Food and Drug Administration, or other agencies of the Federal Government," when such "surplus chimpanzees" are not needed for such research. Non-federal chimpanzees may also be accepted into the system. Chimpanzees in the system may not be used in research except as specified in the statute, and must be cared for in accordance with the Animal Welfare Act. The sanctuary system shall be operated by a nonprofit private entity under a contract awarded by the Secretary of HHS. The nonprofit private entity shall have a board of directors composed of not more than 13 voting members, who shall include individuals with expertise and experience in various fields, including primate veterinary care, animal protection, behavioral primatology, management of nonprofit organizations, laboratory animal medicine, and biohazards. This statute, enacted as part of P.L. 104-127 , 110 Stat. 1184 (1996), provides that "the Secretary of Agriculture may issue guidelines for the regulation of the commercial transportation of equine for slaughter by persons regularly engaged in that activity within the United States." Specifically, "the Secretary of Agriculture shall review the food, water, and rest provided to equine for slaughter in transit, the segregation of stallions from other equine during transit, and such other issues as the Secretary considers appropriate." The Secretary's regulations implementing this statute were issued in 2001 and are published at 9 C.F.R. Part 88. P.L. 101 - 511 , § 8019 (1990) provides: None of the funds appropriated by this Act or hereafter shall be used to purchase dogs or cats or otherwise fund the use of dogs or cats for the purpose of training Department of Defense students or other personnel in surgical or other medical treatment of wounds produced by any type of weapon: Provided , That the standards of such training with respect to the treatment of animals shall adhere to the Federal Animal Welfare Law and to those prevailing in the civilian medical community. This provision, without the words "or hereafter," had been included in Department of Defense appropriations statutes since P.L. 98 - 212 , § 791 (1984). However, because of the words "or hereafter" in the language quoted above, this prohibition on the use of funds continues to operate unless it is repealed. Other Department of Defense appropriations statutes use the phrase "this Act or any other Act" instead of "this Act or hereafter." The Comptroller General has "held that the words 'or any other act' do not indicate futurity, but merely extend the effect of the provisions to other appropriations available in that fiscal year." 65 Comp. Gen. 588, 589 (1986). The following example of the use of this phrase in connection with the use of animals in research appeared in P.L. 103 - 139 , § 8044 (1993), and P.L. 104 - 61 , § 8034 (1995): None of the funds provided in this Act or any other Act shall be available to conduct bone trauma research at any Army Research Laboratory until the Secretary of the Army certifies that the synthetic compound to be used in the experiments is of such a type that its use will result in a significant medical finding, the research has military application, the research will be conducted in accordance with the standards set by an animal care and use committee, and the research does not duplicate research already conducted by a manufacturer or any other research organization. Finally, some limitations on the use of Department of Defense funds for animal research have applied only to a particular appropriations statute. For example, P.L. 103 - 139 § 8043 (1993), and P.L. 104 - 61 , § 8032 (1995), provide: None of the funds appropriated by this Act shall be available for payments under the Department of Defense contract with the Louisiana State University Medical Center involving the use of cats for Brain Missile Wound Research. ... P.L. 102 - 394 , § 213 (1992) provides: No funds appropriated under this Act or subsequent Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations Acts shall be used by the National Institutes of Health, or any other Federal agency, or recipient of Federal funds on any project that entails the capture or procurement of chimpanzees obtained from the wild. For purposes of this section, the term "recipient of Federal funds" includes private citizens, corporations, or other research institutions located outside the United States that are recipients of Federal funds. This provision had previously appeared, without the reference to subsequent acts, in P.L. 101 - 166 , § 214 (1989), P.L. 101 - 517 , § 211 (1990), and P.L. 102 - 170 , § 213 (1991). This statute, enacted as P.L. 106 - 152 (1999), makes it a crime knowingly to create, sell, or possess any visual or audio "depiction of animal cruelty with the intention of placing that depiction in interstate or foreign commerce for commercial gain." It provides an exception for "any depiction that has serious religious, political, scientific, educational, journalistic, historical, or artistic value." The statute was aimed at outlawing "crush video" films, in which small animals are crushed to death. A federal court of appeals has held that the statute violates the First Amendment's guarantee of freedom of speech, and the Supreme Court has agreed to review the case. United States v. Stevens , 533 F.3d 218 (3d Cir. 2008) (en banc), cert. granted , No. 08-769 (Apr. 20, 2009). This statute is also known as the "Federal Aid in Fish Restoration Act" and the "Fish Restoration and Management Projects Act." It directs the Secretary of the Interior "to cooperate with the States through their respective State fish and game departments in fish restoration and management projects." It includes the New England Fishery Resources Restoration Act of 1990, 16 U.S.C. § 777e-1. This statute was amended by the Wildlife and Sport Fish Restoration Programs Improvement Act of 2000, discussed below. This statute provides, in full: Subject to applicable regulations under this subtitle and title III of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 251 et seq.), horses and mules belonging to the Federal Government that have become unfit for service may be destroyed or put out to pasture, either on pastures belonging to the Government or those belonging to financially sound and reputable humane organizations whose facilities permit them to care for the horses and mules during the remainder of their natural lives, at no cost to the Government. This statute, P.L. 106 - 476 , §§ 1441-1443 (2000), makes it unlawful to import into, or export from, the United States any dog or cat fur product; or to engage in interstate commerce in any dog or cat fur product. This statute, as amended by § 5 of the International Dolphin Conservation Program Act, P.L. 105 - 42 (1997), makes it a violation of § 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, for any producer, importer, exporter, distributor, or seller of any tuna product that is exported from or offered for sale in the United States to include on the label of that product the term "dolphin safe" or any other term or symbol that falsely claims or suggests that the tuna contained in the product were harvested using a method of fishing that is not harmful to dolphins if the product contains tuna harvested— (A) on the high seas by a vessel engaged in driftnet fishing; or (B) outside the eastern tropical Pacific Ocean by a vessel using purse seine nets ... (C) in the eastern tropical Pacific Ocean by a vessel using a purse seine net unless the tuna meet the requirements for being considered dolphin safe under paragraph (2). ... Violators are subject to a civil penalty of up to $100,000. This statute finds that "the use of long plastic driftnets is a fishing technique that may result in the entanglement and death of enormous numbers of target and nontarget marine resources in the waters of the North Pacific Ocean, including the Bering Sea." It therefore provides that the Secretary of Commerce, through the Secretary of State, shall negotiate with foreign governments to monitor driftnet fishing, and shall evaluate the feasibility of various methods of reducing the number of driftnets discarded or lost at sea. The Driftnet Act Amendments of 1990, 16 U.S.C. § 1826, incorporate and expand upon provisions of the Driftnet Impact Monitoring, Assessment, and Control Act of 1987. This statute makes it unlawful to fish for designated species of tuna within the "Area Agreement" specified in the act without a license, or in contravention of regulations promulgated by the Secretary of Commerce. This statute authorizes the Secretary of the Interior (the Secretary of Commerce in the case of marine mammals) to promulgate lists of species which are endangered or threatened (defined as "likely to become ... endangered") and to designate critical habitats of such species. Among other things, the act prohibits any person or private or governmental entity from importing, exporting, taking, possessing, selling, or transporting any endangered species. 16 U.S.C. § 1538. It prohibits federal agencies, unless granted an exemption, from taking action "likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of [critical] habitat of such species." 16 U.S.C. § 1536(a)(2). (No similar prohibition applies to entities other than federal agencies.) The act also requires the Secretary to develop and implement recovery plans for the conservation and survival of endangered and threatened species. 16 U.S.C. § 1533(f). In 1988, P.L. 100 - 478 amended the act to require the Secretary to develop and implement recovery plans for the conservation and survival of endangered species and threatened species, and to implement a system in cooperation with the states to monitor the status of recovered species. It also directed the Secretary of Commerce to contract for an independent review, by the National Academy of Sciences, of scientific information pertaining to the conservation of sea turtles. This statute, as interpreted by the Department of Housing and Urban Development (HUD), requires that all public and private housing (except as exempted in 42 U.S.C. §§ 3603(b) and § 3607) allow seeing eye dogs, even if they otherwise have a "no pets" policy. 24 C.F.R. § 100.204. The act prohibits discrimination "in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection" with such a dwelling, because of a race, color, religion, sex, familial status (living with children), national origin, or handicap. One form of discrimination based on handicap is "a refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may to necessary to afford [a handicapped] person equal opportunity to use and enjoy a dwelling." HUD has determined that allowing seeing eye dogs is a reasonable accommodation. The Consumer Product Safety Commission, which administers this statute, adopted a policy statement on animal testing "intended to minimize the number of animals tested and to reduce the pain associated with such tests." The statement notes "that neither the FHSA nor the Commission's regulations require any firm to perform animal tests," although it adds that "animal testing may be necessary in some cases." 49 Fed. Reg. 22522 (May 30, 1984). This statute makes it a crime "willfully and maliciously" to harm a dog or horse used by a federal agency in law enforcement. This statute authorizes the Secretary of the Interior to approve state conservation plans for "nongame fish and wildlife," which are defined as "wild vertebrate animals that are in an unconfined state and that—(A) are not ordinarily taken for sport, fur, or food ...; (B) are not listed as endangered species or threatened species ... and (C) are not marine mammals. ..." A 1988 amendment (adding 16 U.S.C. § 2912) requires the Secretary to undertake research and conservation activities concerning population trends of, and the effects of environmental changes and human activities on, "migratory nongame birds." This statute authorizes the Secretary of the Interior: to provide assistance to, and cooperate with, Federal, State, and public or private agencies and organizations in the development, protection, rearing, and stocking of all species of wildlife, resources thereof, and their habitat, and in controlling losses of the same from disease or other causes, in minimizing damages from overabundant species, in providing public shooting and fishing areas. ... In addition to containing numerous amendments of the Magnuson Fishery Conservation and Management Act and the Atlantic Tunas Convention Act of 1975, this statute includes the Dolphin Protection Consumer Information Act, which this report summarizes separately. This statute funds "research designed to increase our knowledge concerning agricultural production systems that" serve six specified purposes, one of which is to "promote the well being of animals." This statute prohibits the "taking" (defined as to "harass, hunt, capture, or kill") of fur seals in the North Pacific Ocean or on any lands or waters under the jurisdiction of the United States, or to engage in commerce in fur seals' skins taken contrary to the act or the Interim Convention on the Conservation of North Pacific Fur Seals. The act contains an exception allowing taking by "Indians, Aleuts, and Eskimos who dwell on the coasts of the North Pacific Ocean," and authorizes the Secretary of Commerce to permit taking for "educational, scientific, or exhibition purposes." The act also directs the Secretary to administer the fur seal rookeries on the Pribilof Islands to "ensure that activities on such Islands are consistent with the purposes of conserving, managing, and protecting the North Pacific fur seals and other wildlife. ..." The 1983 amendments to the act repealed the Protection of Sea Otters on the High Seas Act, formerly 16 U.S.C. §§ 1171-1172, as unnecessary because of the enactment of the Marine Mammal Protection Act of 1972. This statute "established in the Multinational Species Conservation Fund a separate account to be known as the 'Great Ape Conservation Fund.'" The Secretary of the Interior shall use the fund for projects that he approves for the conservation of great apes. The purpose of this statute is "(1) to implement the Agreement to Promote Compliance with International Conservation and Management Measures by Fishing Vessels on the High Seas ... , and (2) to establish a system of permitting, reporting, and regulation for vessels of the United States fishing on the high seas." This statute makes it a crime to exhibit, or transport for the purpose of exhibition, any "sore" horse, which is a horse whose feet have been injured in order to alter the horse's gait. The Secretary of Agriculture is authorized to enforce the act. The Horse Protection Act also provides that "no horse may be exported by sea from the United States, or any of its territories or possessions, unless such horse is part of a consignment of horses with respect to which a waiver has been granted" by the Secretary of Commerce. Such waivers may be granted only "if the Secretary of Commerce, in consultation with the Secretary of Agriculture, determines that no horse in that consignment is being exported for purposes of slaughter." The central provision of the Humane Slaughter Act (HSA) reads: No method of slaughter or handling in connection with slaughtering shall be deemed to comply with the public policy of the United States unless it is humane. Either of the following two methods of slaughtering and handling are hereby found to be humane: (a) in the case of cattle, calves, horses, mules, sheep, swine, and other livestock, all animals are rendered insensible to pain by a single blow or gunshot or an electrical, chemical or other means that is rapid and effective, before being shackled, hoisted, thrown, cast, or cut; or (b) by slaughtering in accordance with the ritual requirements of the Jewish faith or any other religious faith that prescribes a method of slaughter whereby the animal suffers loss of consciousness by anemia of the brain caused by the simultaneous and instantaneous severance of the carotid arteries with a sharp instrument and handling in connection with such slaughtering. The Humane Slaughter Act is enforced by the Secretary of Agriculture under provisions of the Federal Meat Inspection Act, 21 U.S.C. §§ 603(b), 610(b), 620(a). The HSA does not apply to chickens or other birds. In 2002, P.L. 107-171 , § 10815, 7 U.S.C. § 1907, added a section to the HSA directing the Secretary of Agriculture to submit a report to Congress on practices involving nonambulatory livestock (commonly known as "downed animals"). It also authorized the Secretary, based on the findings of the report, to promulgate regulations to provide for the humane treatment of such animals. This statute provides that the Interagency Coordinating Committee on the Validation of Alternative Methods (ICCVAM) shall, among other things, "[r]eview and evaluate new or revised or alternative test methods," and "[f]acilitate appropriate interagency and international harmonization of acute or chronic toxicological test protocols that encourage the reduction, refinement, or replacement of animal test methods." The ICCVAM was established by the Director of the National Institute of Environmental Health Sciences pursuant to section 463A(b) of the Public Health Services Act (NIEHS), 42 U.S.C. § 285 l -1(b). The ICCVAM Authorization Act of 2000 requires the Director of the NIEHS to designate the ICCVAM "as a permanent interagency coordinating committee of the Institute [the NIEHS] under the National Toxicology Program Interagency Center for the Evaluation of Alternative Toxicological Methods." The new act also provides that the ICCVAM shall be composed of the heads (or their designees) of 15 named federal agencies plus "[a]ny other agency that develops, or employs tests or test data using animals, or regulates on the basis of the use of animals in toxicity testing." This statute amended the Marine Mammal Protection Act of 1972, the Tuna Conventions Act of 1950, and the South Pacific Tuna Act of 1988, all of which are discussed in this report. This statute amended the Marine Mammal Protection Act of 1972, the Dolphin Protection Consumer Information Act, and the Tuna Conventions Act of 1950, all of which are discussed in this report. This statute makes it a crime to (1) willfully disturb or kill any bird, fish, or wild animal, or take or destroy the eggs or nest of any bird or fish, on any lands or waters set apart or reserved under federal law as sanctuaries, refuges, or breeding grounds for such birds, fish, or animals (18 U.S.C. § 41); (2) import species of wild animals, wild birds, fish (including mollusks and crustacea), amphibians, reptiles, or the offspring or eggs or any of the foregoing which the Secretary of the Interior prescribes by regulation to be injurious to human beings or to the interests of agriculture, horticulture, forestry, or wildlife, except that the Secretary may permit importation for zoological, education, medical, or scientific purposes (18 U.S.C. § 42); or (3) use an aircraft or a motor vehicle to hunt, or to pollute a watering hole of, any wild unbranded horse, mare, colt, or burro running at large on any public land or ranges (18 U.S.C. § 47). P.L. 110-161 , § 109, 121 Stat. 2119 (2007), contains an exception to this last provision. It permits the Secretary of the Interior to use "helicopters or motor vehicles on the Sheldon and Hart National Wildlife Refuge for the purpose of capturing and transporting horses and burros," but "[s]uch use shall be in accordance with humane procedures prescribed by the Secretary." This statute, as amended in 1988, makes it unlawful to engage in commerce in any fish or wildlife or plant taken, possessed, transported, or sold in violation of any treaty, or any federal or state law or regulation, or any Indian tribal law. This statute was amended by the Captive Wildlife Safety Act, P.L. 108 - 191 (2003), to cover "prohibited wildlife species," which it defines as "any live species of lion, tiger, leopard, cheetah, jaguar, or cougar or any hybrid of such species." The Captive Wildlife Safety Act, however, "does not apply to any licensed, registered, and federally inspected exhibitor (zoos, circuses, etc.) or research facility. It also exempts sanctuaries, humane societies, animal shelters, or societies for the prevention of cruelty to animals that meet specified criteria." This statute, which was amended by the Magnuson-Stevens Fishery Conservation and Management Reauthorization Act of 2006, P.L. 109 - 479 , provides that, except with respect to highly migratory species of fish, "the United States claims, and will exercise in the manner provided for in this act, sovereign rights and exclusive fishery management authority over all fish, and all Continental Shelf fishery resources. ..." 16 U.S.C. § 1811(a). See also, "Shark Finning Prohibition Act." This statute imposes a moratorium on the taking ("take" means "harass, hunt, capture, or kill") and importation of all marine mammals or their products, except that the Secretary of Commerce or Interior (depending on the type of animal) may grant permits to allow taking and importation (1) for scientific research and public display, (2) incidentally, in the course of commercial fishing, and (3) "in accord with sound principles of resource protection and conservation." The act also makes it unlawful, except pursuant to a permit for scientific research, to import a marine mammal that is (1) pregnant, (2) nursing or less than eight months old, (3) taken from a species or population stock designated by the Secretary as depleted, or (4) taken in a manner deemed inhumane by the Secretary. The act also establishes a Marine Mammal Commission whose duties include undertaking studies and making recommendations as to the protection and conservation of marine mammals. 16 U.S.C. §§ 1401-1402. An exception to the Marine Mammal Protection Act of 1972 authorizes the Secretary of Defense to "authorize the taking of not more than 25 marine mammals [not a member of an endangered or threatened species] each year for national defense purposes. Any such authorization may be made only with the concurrence of the Secretary of Commerce after consultation with the Marine Mammal Commission. ..." 10 U.S.C. § 7524. In 1988, P.L. 100 - 711 added "a number of provisions to the act for the specific purpose of reducing the morality [sic] of porpoise in the course of fishing for yellowfin tuna in the ETP [Eastern Tropical Pacific]." In 1992, Congress added two new laws to the Marine Mammal Protection Act of 1972. P.L. 102 - 523 added the International Dolphin Conservation Act of 1992, "to prohibit certain tuna harvesting practices." P.L. 102 - 587 , Title III, added the Marine Mammal Health and Stranding Response Act, which directed the establishment of the Marine Mammal Health and Stranding Response Program, the purpose of which is to collect data on marine mammal health and to coordinate effective responses to unusual mortality events by establishing a process in the Department of Commerce. The Marine Mammal Protection Act Amendments of 1994, P.L. 103 - 238 , was intended "to improve the program to reduce the incidental taking of marine mammals during the course of commercial fishing operations, and for other purposes. ..." S.Rept. 103-220, 103 rd Cong., 2 nd sess. (1994). The 1994 statute, among other things, amended 16 U.S.C. § 1374 to authorize the Secretary of Commerce to issue permits "for the importation of polar bear parts (other than internal organs) taken in sport hunts in Canada," but required the Secretary to "undertake a scientific review of the impact of [such] permits ... on the polar bear population stocks in Canada within 2 years. ..." 108 Stat. 539 (1994). The 1994 statute also amended 16 U.S.C. § 1374 to provide that the Secretary of Commerce may issue permits "to take or import a marine mammal for the purpose of public display only to a person which the Secretary determines ... is registered or holds a license issued under" the Animal Welfare Act. The effect of this provision apparently is that the Department of Agriculture rather than the National Marine Fisheries Service is authorized to regulate such marine mammals once they are held in captivity. 108 Stat. 537 (1994). In 1997, the International Dolphin Conservation Program Act, P.L. 105 - 42 , amended various provisions of the Marine Mammal Protection Act of 1972. In 2007, title IX of the Magnuson-Stevens Fishery Conservation and Management Reauthorization Act of 2006, P.L. 109 - 479 , added the United States-Russia Polar Bear Conservation and Management Act of 2006 to the Marine Mammal Protection Act of 1972. This statute amended the act to Prevent Pollution from Ships, 33 U.S.C. §§ 1901-1915, to, among other things, direct the Environmental Protection Agency, in consultation with the Secretary of Commerce, to study "improper disposal practices and associated specific plastic articles that occur in the environment with sufficient frequency to cause death or injury to fish or wildlife." This statute authorizes the Secretary of Commerce to designate national marine sanctuaries. This statute states that its purpose "is to assist in the conservation of marine turtles and the nesting habitats of marine turtles in foreign countries by supporting and providing financial resources for projects to converse the nesting habitats, conserve marine turtles in those habitats, and address other threats to the survival of marine turtles." This statute authorizes the Secretary of the Interior to purchase or rent such areas as have been approved for purchase or rental by the Migratory Bird Conservation Commission "which he determines to be suitable for use as an inviolate sanctuary, or for any other management purpose, for migratory birds." This fund was created in 1998 to carry out the African Elephant Conservation Act, the Asian Elephant Conservation Act, and the Rhinoceros and Tiger Conservation Act. Separate accounts in the fund were established as the Neotropical Migratory Bird Conservation Account, and the Great Ape Conservation Fund. This statute is designed to promote "the improved health and productivity of domestic livestock, poultry, aquatic animals, and other income-producing animals that are essential to food supply of the United States and the welfare of producers and consumers of animal products." 7 U.S.C. § 3191, as amended by P.L. 104 - 127 (1996), § 810. It was amended in 1990 to require the Secretary of Agriculture to commission the National Academy of Sciences "to conduct a study of the delivery system utilized to provide farmers ... and ranchers with animal care and veterinary medical services, including animal drugs." The study shall assess opportunities to, among other things, "advance the well-being and treatment of farm animals." 7 U.S.C. § 3193. P.L. 104 - 127 (1996), § 812, amended 7 U.S.C. § 3196(c) to provide: In order to establish a rational allocation of funds appropriated under this section, the Secretary shall establish annual priority lists of animal health and disease, food safety, and animal well-being problems of national or regional significance. ... In establishing such priorities, the Secretary, the Joint Council, the Advisory Board, and the Board shall consider the following factors: ... (3) issues of animal well-being related to production methods that will improve the housing and management of animals to improve the well-being of livestock production species. This statute created the National Fish and Wildlife Foundation as a nonprofit corporation to, among other things, "encourage, accept and administer private gifts of property for the benefit of, or in connection with, the activities and services of the United States Fish and Wildlife Service. ..." A 1983 amendment to this statute prohibits owners or managers of federally assisted rental housing for the elderly or handicapped to (1) as a condition of tenancy or otherwise, prohibit, or prevent tenants from keeping "common household pets," or (2) restrict or discriminate against any person in connection with admission to, or continued occupancy of, such housing by reason of the presence of such pets. The Secretary of Housing and Urban Development and the Secretary of Agriculture are authorized to issue regulations establishing guidelines under which housing owners or managers may prescribe reasonable rules for the keeping of pets, including restricting pet size and types of pets. Owners or managers may require the removal of pets "duly determined" to constitute a nuisance or a threat to health or safety. P.L. 105 - 276 , § 526 (1998), added a new § 31 to the United States Housing Act of 1937, 42 U.S.C. § 1437z-3, which extended the right to keep common household pets to residents of all public housing, not only to residents of public housing designated for the elderly or handicapped. (The right to keep pets in federally assisted rental housing for the elderly or handicapped remains under the National Housing Act.) The new provision took effect August 9, 2000. 24 C.F.R. Part 960. This statute established the National Wildlife Refuge System, which is administered by the Secretary of the Interior through the United States Fish and Wildlife Service. The purpose of the System is to "consolidat[e] the authorities relating to the various categories of areas that are administered by the Secretary of the Interior for the conservation of fish and wildlife. ..." This statute "established in the Multinational Species Conservation Fund of the Treasury a separate account to be known as the 'Neotropical Migratory Bird Conservation Account.'" The fund is to be used for a program, established by the Secretary of the Interior, "to provide financial assistance for projects to promote the conservation of neotropical migratory birds." This statute is intended "to prevent unintentional introduction and dispersal of nonindigenous species into waters of the United States through ballast water management and other requirements." The statute finds that nonindigenous species, such as the zebra mussel, if left uncontrolled, would disrupt the economy and "the diversity and abundance of native fish." This statute authorizes the Secretary of Commerce to enforce the Convention for the Conservation of Anadromous Stocks in the North Pacific Ocean. This statute authorizes the Secretary of Commerce to enforce the Convention between the United States of America and Canada for the preservation of the Halibut Fishery of the Northern Pacific Ocean and Bering Sea. This statute implements the Northwest Atlantic Fisheries Convention. This statute implements a treaty between the United States and Canada, the purposes of which were to "prevent overfishing and provide for optimum production" and to "provide for each Party to receive benefits equivalent to the production of salmon originating in its waters." The act repealed the Sockeye Salmon or Pink Salmon Fishing Act of 1947, formerly 16 U.S.C. §§ 776-776f. This statute requires the Secretary of Commerce to establish the United States catch level for Pacific whiting according to the standards and procedures of the Agreement [between the Government of the United States and the Government of Canada on Pacific Hake/Whiting] and this [statute] ... rather than under the standards and procedures of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1801 et seq.), except to the extent necessary to address the rebuilding needs of other species. "The purposes of this title are to establish a partnership among the United States Fish and Wildlife Service, designated State agencies, and private organizations and individuals—(1) to carry out wildlife conservation and appreciation projects. ..." 16 U.S.C. § 3742. This statute ( P.L. 109 - 308 ) amended the Robert T. Stafford Disaster and Emergency Assistance Act to authorize federal disaster assistance in the "rescue, care, shelter, and essential needs" of "household pets and service animals"; to authorize the Director of the Federal Emergency Management Agency (FEMA) to develop "plans that take into account the needs of individuals with pets and service animals prior to, during, and following a major disaster or emergency"; to authorize the Director of FEMA to "make financial contributions ... to the States and local authorities for animal emergency preparedness purposes, including the procurement, construction, leasing, or renovating of emergency shelter facilities ..."; and to require the Director of FEMA, "[i]n approving standards for State and local emergency preparedness operational plans ... , [to] ensure that such plans take into account the needs of individuals with household pets and service animals prior to, during, and following a major disaster or emergency." Also known as the "Federal Aid in Wildlife Restoration Act," this statute authorizes the Secretary of the Interior to cooperate with the states, through their respective fish and game departments, in wildlife restoration projects, which are defined as the "selection, restoration, rehabilitation, and improvement of areas of land or water adaptable as feeding, resting, or breeding places for wildlife." This statute was amended by the Wildlife and Sport Fish Restoration Programs Improvement Act of 2000, discussed below. Section 404C of this statute, 42 U.S.C. § 283e, directs the Director of the National Institutes of Health (NIH), by October 1, 1993, to prepare a plan for the NIH to conduct or support research into methods of biomedical research and experimentation that do not require the use of animals, that reduce the number of animals used, that produce less pain and distress in animals used, and that involve the use of marine life other than marine mammals. Section 495 of this statute, 42 U.S.C. § 289d, directs the Secretary of Health and Human Services, acting through the Director of the NIH, to establish guidelines for research facilities as to the proper care and treatment of animals, including the appropriate use of tranquilizers, analgesics, and the like; but such guidelines may not prescribe methods of research. Entities that conduct biomedical and behavioral research with NIH funds must establish animal care committees which must conduct reviews at least semi-annually and report to the Director of NIH at least annually. If the Director determines that an entity has not been following the guidelines, he must give it an opportunity to take corrective action, and, if it does not, suspend or revoke its grant or contract. This statute makes it a violation, subject to a civil penalty of up to $10,000, "intentionally to engage in any physical conduct that significantly hinders a lawful hunt ... on Federal lands." The conference report states that, to be a violation, "the conduct must be intentional, and must be done with the intention of significantly hindering a lawful hunt." The statute also authorizes injunctive relief against violations. The conference report gives examples of violations of the statute, including "using visual, aural, olfactory, or physical stimuli to affect wildlife behavior." Ibid. This suggests the possibility that a court could construe mere words addressed to a hunter as "physical conduct," if such words affected wildlife behavior (or a hunter's concentration) so as significantly to hinder a hunt. This apparently would not violate the First Amendment's guarantee of freedom of speech, provided that the statute's civil penalty were imposed on the speaker for the effect of the sound of his words and not for their content. The statute states that "[t]he term 'conduct' does not include speech protected by the first article of amendment to the Constitution" (the statute does not otherwise define "conduct" or "physical conduct"), but this of course would go without saying, as Congress cannot punish speech that is protected by the First Amendment. This statute created the Rhinoceros and Tiger Conservation Fund "to provide financial assistance for projects for the conservation of rhinoceros and tigers." This statute authorizes the establishment of a cooperative program involving the United States, the States of Washington and Oregon, and Indian Tribes, to "encourage stability in and promote the economic well being" of commercial fishing through "coordinated research, enhancement, and management of salmon and steelhead resources and habitat." This statute amended the Magnuson-Stevens Fishery Conservation and Management Act by adding 16 U.S.C. § 1857(1)(P) to make it unlawful "to remove any of the fins of a shark (including the tail) and discard the carcass of the shark at sea." It also requires the Secretary of Commerce, acting through the Secretary of State, to, among other things, "initiate discussions as soon as possible for the purpose of developing bilateral or multilateral agreements with other nations for the prohibition of shark-finning." This statute authorizes the Secretary of Defense to carry out a program of planning for, and the development, maintenance and coordination of, wildlife, fish, and game conservation and rehabilitation in each military reservation in accordance with a cooperative plan mutually agreed upon by the Secretary of Defense, the Secretary of Interior, and the appropriate State agency designated by the State in which the reservation is located. This statute implements the Treaty on Fisheries Between the Governments of Certain Pacific Island States and the Government of the United States, signed April 2, 1987. This section of the Tariff Act of 1930 (also known as the "Hawley-Smoot Tariff Act" and the "Smoot-Hawley Act") prohibits the importation into the United States of any wild mammal or bird, alive or dead, or any part of product of any wild mammal or bird, if the laws or regulations of the country where the wild mammal or bird lives restrict its "taking, killing, possession, or exportation to the United States," unless the wild mammal or bird is accompanied by a certification of the U.S. consul that it "has not been acquired or exported in violation of the laws of regulations of such country. ..." Any mammal or bird, alive or dead, or any part of product thereof, imported into the U.S. in violation of the above shall be subject to seizure and forfeiture under the customs laws. The Tariff Act of 1930 does not apply in the case of (1) articles the importation of which is prohibited by any other law, including 18 U.S.C. § 42(a) (the Lacey Act), (2) articles imported for scientific or educational purposes, or are migratory, or (3) certain migratory game birds. This statute prohibits fishing in violation of any regulation adopted by the Secretary of Commerce pursuant to the Convention for the Establishment of an Inter-American Tropical Tuna Commission, and prohibits commerce in fish taken in violation of such regulations. Prior versions of this law were enacted in 1873 (Ch. 252, 42d Cong., 17 Stat. 584, R.S. §§ 4386-4389) and 1906 (Ch. 3594, 59 th Cong., 34 Stat. 607). The 1906 law was repealed and reenacted in amended form (but "without substantive change" ) in 1994 by P.L. 103 - 272 . (It was previously codified at 45 U.S.C. §§ 71-74.) It is also known as the "Cruelty to Animals Act," the "Live Stock Transportation Act," and the "Food and Rest Law." As amended in 1994, it provides that "a rail carrier, express carrier, or common carrier (except by air or water), a receiver, trustee, or lessee of one of those carriers, or an owner or master of a vessel transporting animals" across state lines, "may not confine animals in a vehicle or vessel for more than 28 consecutive hours without unloading the animals for feeding, water, and rest." It also provides that "[a]nimals being transported shall be unloaded in a humane way into pens equipped for feeding, water, and rest for at least 5 consecutive hours." The statute "does not apply when animals are transported in a vehicle or vessel in which the animals have food, water, space, and an opportunity for rest." The 28-hour period is subject to the following exceptions: Sheep may be confined for an additional 8 consecutive hours without being unloaded when the 28-hour period of confinement ends at night. Animals may be confined for—(A) more than 28 hours when the animals cannot be unloaded because of accidental or unavoidable causes that could not have been anticipated or avoided when being careful; and (B) 36 consecutive hours when the owner or person having custody of animals being transported requests, in writing and separate from a bill of lading or other rail form, that the 28-hour period be extended to 36 hours. The Twenty-Eight Hour Law is enforced by the Attorney General, who, "[o]n learning of a violation ... shall bring a civil action" to collect a penalty of at least $100 but not more than $500 for each violation. The statute does not provide for criminal penalties. The statute does not mention any federal agency or official besides the Attorney General, but its 1906 version provided, "It shall be the duty of all U.S. Attorneys to prosecute all violations of this Act reported by the Secretary of Agriculture," and, as noted above, the 1994 amendment was intended to be "without substantive change" to the 1906 version. In addition, in 1963, the USDA issued regulations under the act that remain in effect. 9 C.F.R. §§ 89.1-89.5. Therefore, it appears that the USDA continues to play a role in enforcing the act. In 2006, noting "that the plain meaning of the statutory term 'vehicle' in the Twenty-Eight Hour Law includes 'trucks' which operate as express carriers or common carriers," the USDA decided for the first time to interpret the act to include the transportation of animals by trucks. In the same document in which it announced this decision, the USDA noted: "The Twenty-Eight Hour Law was never construed as being applicable to poultry, and ... USDA does not intend to change this longstanding interpretation of the statute." This statute, which is part of the Marine Mammal Protection Act of 1972, makes it unlawful "to take any polar bear in violation of the Agreement [Between the Government of the United States of America and the Government of the Russian Federation on the Conservation and Management of the Alaska-Chukotka Polar Bear Population]." It also makes it unlawful "to import, export, possess, transport, sell, receive, acquire, or purchase, exchange, [or] barter ... any polar bear, or any part or product of a polar bear, that is taken in violation of" the agreement or other restriction that is adopted by the commission established under the agreement. The Secretary of the Interior is authorized to enforce the act. This statute, enacted April 5, 2000, requires air carriers that provide scheduled passenger air transportation to submit monthly reports to the Secretary of Transportation on any incidents involving the loss, injury, or death of an animal. The statute requires the Secretary to publish this data in a manner comparable to other consumer complaint and incident data. This statute provides for the representation of the United States on the Commission for the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean. This statute directs the Secretary of Commerce to "undertake comprehensive studies of all whales found in waters subject to the jurisdiction of the United States." This statute prohibits whaling and commerce in whale products in violation of the International Whaling Convention for the Regulation of Whaling or in violation of any regulation of the International Whaling Commission or the Secretary of Commerce. The purpose of this act is to promote the conservation of exotic birds by assisting wild bird conservation and management programs in the countries of origin of wild birds, and limiting the importation of exotic birds. This statute makes it a crime, with respect to any wild free-roaming horse or burro, to (1) remove it from the public lands without authority from the Secretary of the Interior or Agriculture (depending on the public land), (2) convert it to private use, without authority from the Secretary, (3) maliciously cause its death or harassment, (4) process its remains into commercial products, or (5) sell it if it is maintained on private or leased land. This statute amends the Pittman-Robertson Wildlife Restoration Act to authorize firearm and bow hunter education and safety program grants, and to establish a multistate conservation grant program. Grants under the latter may not be used "for an activity, project, or program that promotes or encourages opposition to the regulated hunting or trapping of wildlife" (§ 113). This statute also amends the Dingell-Johnson Sport Fish Restoration Act to establish a multistate conservation grant program, grants under which may not be used "for an activity, project, or program that promotes or encourages opposition to the regulated taking of fish" (§ 122). This statute implements "the interim agreement for the conservation of salmon stocks originating from the Yukon River in Canada. ..."

This report contains brief summaries of federal animal protection statutes, listed alphabetically. It includes statutes enacted to implement certain treaties, but it does not include treaties. Additionally, this report includes statutes that concern animals but that are not necessarily animal protection statutes. For example, it discusses a statute authorizing the eradication of predators, because one of the statute's purposes is to protect domestic and "game" animals; and it includes statutes to conserve fish even though the ultimate purpose of such statutes may not be for the benefit of the fish. This report also includes statutes that allow the disabled to use service animals and statutes aimed at acts of animal rights advocates—i.e., the Animal Enterprise Protection Act of 1992, and the Recreational Hunting Safety and Preservation Act of 1994.

Health care Flexible Spending Accounts (FSAs) are employer-established benefit plans to reimburse employees for specified health care expenses as they are incurred. They arose in the 1970s as a way to provide employees with a flexible benefit at a time when the cost of health care was a growing concern. In contrast to traditional insurance plans, FSAs generally allow employees to vary benefit amounts in accordance with their anticipated health care needs. FSAs can be used for unreimbursed medical expenses, and contributions to FSAs have tax advantages. However, FSA contributions are generally forfeited if not used by the end of the year, although employers may extend the deadline for using unspent balances up to 2½ months after the end of the plan year (i.e., March 15 for most plans). This report describes FSAs, the basis for their tax treatment, and data on their use. It also includes a discussion of the changes made to FSAs by the Patient Protection and Affordable Care Act (ACA). FSAs are employer-established benefit plans that reimburse employees for specified expenses as they are incurred. They usually are funded through salary reduction arrangements under which employees receive less take-home pay in exchange for contributions to their accounts. Employees each year choose how much to put in their accounts, which they may use for dependent care, adoption assistance, or for medical and dental expenses. However, there must be separate accounts for these three purposes, and amounts unused at the end of the year must be forfeited to the employer. If FSAs meet these and other rules, contributions are not subject to either income or employment taxes. The focus of this report is on the FSAs devoted to health care. To illustrate the tax savings, consider a health care FSA funded for an employee through a salary reduction arrangement. Before the start of the year, the employee elects to reduce his salary by $75 a month in exchange for contributions of that amount to the FSA. Other employees might choose to contribute more or less than $75. Throughout the year, as the employee incurs medical and dental expenses not covered by insurance or other payments, he may use funds in the account to pay them. His total draw, which must be available at the start of the year, is limited to $900 (the sum of his monthly contributions for the year). If all $900 is used the first nine months, for example, he cannot replenish the account until the next year. Any amount that remains unspent at the end of the year (or after the 2 ½ month extension, if available) is forfeited to the employer. If the FSA was funded by the employer, as sometimes is the case, the employee's draw must similarly be available at the start of the year. It is possible for FSAs to be funded both by salary reductions and employer contributions. If the employee were in the 25% tax bracket, the federal income tax savings from the $900 salary reduction used to fund the account generally would be $225 (i.e., $900 x 0.25); in addition, the employee could save $69 in Social Security and Medicare taxes (i.e., $900 x .0765). There could be state income tax savings as well. If the employee were in the 15% tax bracket, the federal income tax savings would be $135, three-fifths as large, while if he were in the top 35% bracket they would be commensurately greater, $315. The employer would also save $69 in employment taxes from the $900 salary reduction. Employers often use these savings to help pay the expenses of administering an FSA. Tax savings can exceed losses due to forfeiture of a remaining balance at the end of the year; thus, not all of an account must be used for employees to come out ahead financially. Since tax savings are greater in the higher tax brackets, higher income employees may be less concerned about forfeitures (assuming they recognize they could still be better off) than lower income employees. The tax savings associated with a health care FSA are not unlike those for traditional comprehensive health insurance, which also allows employer payments to be excluded from the income and employment taxes of the employees as well as from the employment taxes of the employer. FSAs are one way that employment benefits can be varied to meet the needs of individual employees without loss of favorable tax treatment. Flexible benefit arrangements generally qualify for tax advantages as "cafeteria plans," under which employees choose between cash (typically take-home pay) and certain nontaxable benefits (in this case, reimbursements for health care expenses) without paying taxes if they select the benefits. The general rule is that when taxpayers have an option of receiving cash or nontaxable benefits they are taxed even if they select the benefits; they are deemed to be in constructive receipt of the cash since it is made available to them. Section 125 of the Internal Revenue Code provides an express exception to this rule when certain nontaxable benefits are chosen under a cafeteria plan. FSAs and cafeteria plans are closely related, but not all cafeteria plans have FSAs and not all FSAs are part of cafeteria plans. FSAs are considered part of a cafeteria plan when they are funded through voluntary salary reductions ; this exempts the employee's choice between cash (the salary subject to reduction) and normally nontaxable benefits (such as health care) from the constructive receipt rule and permits the latter to be received free of tax. Thus, instead of receiving a full salary (for example, $30,000), the employee can receive a reduced salary of $29,100 with a $900 FSA contribution and will need to treat only $29,100 as taxable income. However, if FSAs are funded by nonelective employer contributions then their tax treatment is not governed by the cafeteria plan provisions in Section 125; in this situation, the employee does not have a choice between receiving cash and a normally nontaxable benefit. Instead, the benefits are nontaxable since they are directly excludable under some other provision of the Code. For example, nonelective employer-funded FSAs for dependent care are tax-exempt under Section 129, while nonelective employer-funded FSAs for health care are tax-exempt under Sections 105 and 106. Regardless of how they are funded, rules regarding FSAs are not spelled out in the Internal Revenue Code; rather, they were included in proposed regulations that the Internal Revenue Service (IRS) issued for cafeteria plans in 1984 and 1989. Final rules regarding circumstances in which employers may allow employees to change elections during a plan year were issued in March 2000 and January 2001. To be exempt from the constructive receipt rule, participants must not have cash or taxable benefits become "currently available"; they must elect specific benefits before the start of the plan year and be unable to change these elections except under specified circumstances. With respect to health care FSAs, the maximum amount of reimbursement (reduced by any benefits paid for covered expenses) must be available throughout the coverage period; coverage periods generally must be 12 months (to prevent employees from contributing just when they anticipate having expenses); reimbursements must be only for medical expenses allowable as deductions under Section 213 of the Code; claims must be substantiated by an independent third party; expenses must be incurred during the period of coverage; after year-end forfeitures, any "experience gains" (the excess of total plan contributions and earnings over total reimbursements and other costs) may at the employer's discretion be returned to participants or used to reduce future contributions, provided individual refunds are not based on participants' claims; and health care FSAs must exhibit the risk-shifting and risk-distribution characteristics of insurance. The effect of the IRS rules is to allow only forfeitable FSAs under which employees lose whatever they do not spend each year. The rules disallow three other types of FSAs that had started to spread before 1984: benefit banks , which refunded unused balances as taxable compensation at the end of each year; ZEBRAs , or zero-based reimbursement accounts, under which reimbursements were subtracted from salaries each month (thus reducing taxable compensation at the time it was paid); and ultimate ZEBRAs , under which salaries already paid were recharacterized at the end of the year into reimbursements and taxable compensation. Neither ZEBRAs nor ultimate ZEBRAs had accounts that were funded, and they were criticized as abusive arrangements. In August 2007, the IRS issued new proposed rules for cafeteria plans that have not been finalized. The proposed rules generally preserve rules set out in regulations from 1984 and 1989 that were also never finalized. The new rules also reflect changes in tax law from the past 20 years. One key area of the proposed rules is detailed requirements for nondiscrimination testing. Nondiscrimination testing measures whether a plan disproportionately favors highly compensated employees. All cafeteria plans will have to comply with these rules even those that currently do not undertake such testing. The August 2007 proposed rule, however, has not yet been finalized. The IRS rules lay out what is permissible with respect to FSA plans, but employers may add their own requirements. For example, prior to ACA, the IRS did not limit the amount that an employee can be reimbursed through a health care FSA, but employers established their own ceiling. (One reason they might do so is to limit the financial risk that employees might resign having received reimbursements that exceed their contributions.) Employers may exclude certain elective expenses from their plans. Beginning in 2013, however, ACA will limit contributions to FSAs to $2,500, which will be adjusted for inflation in subsequent years. FSAs can provide tax savings for the first dollars of health care expenditures that people have each year, similar to the tax savings associated with comprehensive insurance plans having negligible deductibles and copayments. However, taxpayers normally are allowed to deduct out-of-pocket medical expenses only to the extent they exceed 7.5% of adjusted gross income, and then only if the taxpayer itemizes deductions. The more favorable treatment for FSAs might be justified since participants generally assume additional financial risk for their health care. Some might question, however, whether the savings are proportional to the risk and whether they are equitable among people of similar incomes. Few surveys ask about FSAs, and those that do obtain only limited information. The two surveys that are available report different measures of access. The first survey from the Bureau of Labor Statistics (BLS) reports the percent of workers who have access to health care FSAs. According to the BLS survey, 39% of all workers in 2010 had access to a health care flexible spending account. When viewed by firm size, 56% of workers in firms with more than 100 workers had access to one. The accounts were not as common for workers in small businesses. In establishments with fewer than 100 employees, 20% of the workers had access to a health FSA. The second survey from Mercer reports the share of employers offering FSAs . According to the Mercer Employer Benefit Survey, more than four-fifths of large employers (85%) offered a health care FSA to their employees in 2009. Among small employers (those with less than 500 employees), 29% offered a health care FSA. The federal government began to offer FSAs to its employees in July 2003. As of September 2008, there were about 240,000 federal health care FSAs. Despite high percentage of employers offering FSAs, the average participation rate among employees has been much lower. According to the Mercer Survey, 37% of employees offered an FSA chose to participate in 2009. The average annual contribution was $1,420. Reasons for low FSA participation include employee perceptions of complexity, concerns about end-of-year forfeitures, and limited employer encouragement. Younger employees, particularly if single, may not have enough health care expenses to make participation worthwhile. For lower income employees, the tax savings may be inconsequential. Eligibility for FSAs is limited to employees whose employers offer plans; people who are self-employed or unemployed generally cannot participate. However, former employees can be eligible provided the plan is not established predominantly for their benefit. Employers may set additional conditions for eligibility. FSAs allow coverage of a spouse and dependents. FSAs do not have to be linked with any particular type of insurance, though it is said some employers establish FSAs in order to win employee acceptance of greater cost-sharing in plans with higher deductibles. FSA contributions may be made by employers (through nonelective payments), employees (through salary reduction plans), or both. FSA contributions occur during the plan year, which is usually a calendar year. Because most FSAs are funded through salary reductions, contributions typically occur pro-rata throughout the year. The IRS imposes no specific dollar limit on health care FSA contributions, though plans typically have a dollar or percentage maximum for elective contributions made through salary reductions. Employers set limits to reduce losses from employees who quit or die when their withdrawals (which might total the year's allowable draw) exceed their contributions from salary reductions. For 2008, each federal employee may contribute up to $5,000 to his or her health care FSA. Beginning in 2013, contributions to FSAs will be limited to $2,500, and adjusted for inflation in subsequent years. Under IRS guidelines, health care FSAs can be used for any unreimbursed (and unreimbursable) medical expense that is deductible under Section 213 of the Internal Revenue Code, with several important exceptions. One exception disallows their use for long-term care and for other health insurance coverage, including premiums for any employer plan. Prior to 2011, there was a second exception for FSAs to cover nonprescription drugs. However, beginning in 2011, over-the-counter medications (except those prescribed by a physician) are no longer considered a qualified medical expense. Employers may add their own limitations. The restriction against paying health insurance premiums can be circumvented if the employer offers a separate premium conversion plan. This arrangement allows employees to pay their premiums through what are deemed to be pre-tax salary reductions. For example, if employees pay $600 a year for health insurance (with their employer paying the balance), their payment can be considered to be made directly by their employer (and so exempt from income and employment taxes) instead of included in their wages (and so taxable). Premium conversion plans are common among businesses that offer health insurance, particularly among large companies. The federal government implemented a premium conversion plan in October 2000. FSA funds may be used only for qualifying expenses, as defined above; they generally cannot be withdrawn for other purposes. To ensure compliance, reimbursement claims must be accompanied by a written statement from an independent third party (e.g., a receipt from a health care provider). One exception to the rule prohibiting nonqualified withdrawals is that military reservists called to active duty for at least 179 days or for an indefinite period may receive some or all of the unused funds in their account. Employers are permitted but not required to allow these withdrawals. Historically, FSA balances unused at the end of the year were forfeited to the employer; they could not be carried over. On August 23, 2004, Senator Grassley, then chairman of the Senate Committee on Finance, requested the Treasury Department to assess whether it had the authority to modify the "use or lose it" rule without a directive from the legislative branch. On December 23, 2004, Treasury Secretary John W. Snow responded by letter that Congress had effectively ratified the rule and that changes would require legislative action. Nonetheless, on May 18, 2005, the IRS issued a notice that employers may extend the deadline for using unspent balances up to 2½ months after the end of the plan year (i.e., until March 15 for most plans). FSAs are still subject to the "use it or lose it" rule; however, the notice allows employers to offer access to the FSAs for up 14½ months instead of 12 months. The rationale for the new notice is based on other benefits covered under the section of the Code dealing with cafeteria plans, Section 125. Cafeteria plans may not include a benefit that defers compensation, which is the basis of the "use it or lose it" rule. However, according to the new notice, payment from a plan is not considered deferred compensation even if the payment occurs after the end of the plan year if that payment occurs within "a short, limited period" after the end of the plan year. The notice cites other regulations and rulings stating that benefits are not considered deferred if they "are received by the employee on or before the fifteenth day of the third calendar month after the end of the employer's taxable year [that is, March 15].... Consistent with these other areas of tax law, Treasury and the IRS believe it is appropriate to modify the current prohibition on deferred compensation in the proposed regulations under §125 to permit a grace period after the end of the plan year during which unused benefits or contributions may be used." The employer has the option to offer this 2½-month grace period but is not required to do so. For implementation, the cafeteria plan document must be amended to include a grace period, and the period must apply to all participants in the plan. The IRS notice does not alter other features of FSAs, so at the end of the applicable grace period, unused balances still must be forfeited to the employer. Employers' initial reaction to the rule change has been mixed, with some welcoming the added flexibility but others concerned about additional administrative burdens and exposure to increased financial risk. The Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ) provided that individuals may make limited, one-time rollovers from balances in their FSAs to Health Savings Accounts (HSAs). IRS guidance issued in February 2007 provides details about the conditions under which these transfers can occur. Among other things, employees must elect to make "qualified HSA distributions" by the last day of the plan year, no reimbursements can be made to employees after that last day, and the HSA distribution cannot exceed the lesser of the balance in the FSA on (1) September 21, 2006, or (2) the date of the distribution. It is possible for individuals to have a health care FSA along with other tax-advantaged health accounts—HSAs and Health Reimbursement Accounts (HRAs). However, employers must coordinate how multiple accounts are used so that the eligibility requirements are not violated. Health care FSAs cannot be used to pay the deductible of an HSA's qualifying high deductible health insurance. As a result, the FSA for those with an HSA must be either a "limited purpose FSA" or a "post-deductible FSA." A limited purpose FSA is one that pays only for preventive care and for medical care not covered by the HSA's qualifying health insurance (for example, vision and dental care). A post-deductible FSA is one that does not pay or reimburse any medical expense until the deductible of the HSA's qualifying health insurance has been met. For those enrolled in an HRA and FSA at the same time, the accounts cannot pay for the same expenditures. Amounts in the HRA must be exhausted before reimbursements may be made from the FSA, except for qualifying expenses not covered by the HRA. When a person is enrolled in an HRA and an FSA, there is no federal requirement that the FSA be limited in purpose or post-deductible. However, the employer has the authority to implement such policies, as well as to require that the FSA be exhausted if the HRA must also be exhausted before the arrangement's health insurance begins. HSAs and HRAs are offered to federal employees and annuitants through the Federal Employees Health Benefits Program (FEHBP). A federal health care FSA is also available to federal employees, though not to annuitants. For 2005, the U.S. Office of Personnel Management (OPM) prohibited enrollees in FEHBP's HSA or HRA options from enrolling in a health care FSA. Starting in 2006, however, a health care FSA limited to vision and dental care became available for enrollees with the HSA option. Starting in 2007, federal enrollees can purchase separate vision and dental insurance as well. Health care FSAs can conflict with the objectives of HSAs and HRAs. People with FSAs receive tax advantages for the first dollars of health care expenditures without assuming the additional risk associated with the high deductible insurance that is required of HSAs and that usually accompanies HRAs. While they cannot carry over FSA balances for use in later years, this might not make much difference to those who would not be building up HSA or HRA balances anyway. As a consequence, those who believe that enrollment in high deductible health insurance should be encouraged might oppose further incentives for FSAs. On June 7, 2012, the House passed H.R. 436 , the Health Care Cost Reduction Act of 2012, which would allow up to $500 of unused balances in health FSAs to be distributed back to the account holder after the plan year ends and to allow over-the-counter prescriptions to be a qualified medical expense (thus repealing the provision introduced in ACA). According to JCT, the FSA provisions of H.R. 436 would reduce revenues by about $8 billion over a 10-year period. The bill has been sent to the Senate for its consideration. In the Senate, two similar bills have been referred to the Senate Finance Committee. S. 1368 , Restoring Access to Medication Act, was read twice and referred to the Senate Committee on Finance on July 14, 2011. In addition, S. 1404 , Medical FSA Improvement Act of 2011, would allow all amounts that are not spent for qualified medical expenses to be distributed to the FSA participant in taxable income after the close of the plan year. This differs slightly from H.R. 1004 , which limits the amount refunded to $500.

Health care Flexible Spending Accounts (FSAs) are benefit plans established by employers to reimburse employees for health care expenses such as deductibles and copayments. FSAs are usually funded by employees through salary reduction agreements, although employers are permitted to contribute as well. The contributions to and withdrawals from FSAs are tax-exempt. Historically, health care FSA contributions were forfeited if not used by the end of the year. However, in 2005, the Internal Revenue Service (IRS) formally determined that employers may extend the deadline for using unspent balances up to 2½ months after the end of the plan year (i.e, until March 15 for most plans). The Tax Relief and Health Care Act of 2006 (P.L. 109-432) allows individuals to make limited, one-time rollovers from balances in their health care FSAs to Health Savings Accounts (HSAs). According to the Bureau of Labor Statistics National Compensation Survey, 39% of all workers in 2010 had access to a health care flexible spending account. When viewed by firm size, 56% of workers in firms with more than 100 workers had access to a health care FSA. The accounts were not as common for workers in small businesses. In establishments with fewer than 100 employees, 20% of the workers could choose to participate in an FSA. Not all employees offered an FSA chose to participate. According to a 2010 Mercer Survey, 37% of employees offered an FSA chose to participate and the average annual contribution was $1,420. In 2003, FSAs became available to federal employees for the first time. In September 2008, about 240,000 federal employees had health care FSAs. These other points might be noted about health care FSAs: FSAs are limited to employees and former employees. The IRS imposes no dollar limit on health care FSA contributions, but employers generally do. FSAs generally can be used only for unreimbursed medical expenses that would be deductible under the Internal Revenue Code, but not for health insurance or long-term care insurance premiums. Employers may impose additional restrictions. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148), some provisions of which are amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152), modified the definition of qualified medical expenses to exclude over-the-counter prescriptions (not prescribed by a physician) as a qualified expense effective 2011. In addition, ACA limits the annual FSA contributions to $2,500 beginning in 2013. On June 7, 2012, the House passed H.R. 436, the Health Care Cost Reduction Act of 2012, which would allow up to $500 of unused balances in health FSAs to be distributed back to the account holder after the plan year ends and to allow over-the-counter prescriptions to be a qualified medical expense (thus repealing the provision introduced in ACA). The bill has been sent to the Senate for its consideration. Similar bills in the Senate have been referred to the Senate Finance Committee (S. 1368 and S. 1404). This report discusses these bills in greater detail. This report will be updated for new data or as legislative activity occurs.

As directed by the House, the Select Committee on Homeland Security reported to the House Rules Committee September 30, 2004, its recommendations on "the operation and implementation of the rules of the House, including rule X, with respect to the issue of homeland security." The select committee recommended the creation of a permanent standing Committee on Homeland Security, with specified jurisdiction. A number of House committees currently have important roles in homeland security policymaking. The Appropriations Committee's role related to discretionary spending is clear cut, and the committee reorganized its subcommittees at the start of the 108 th Congress to create a Homeland Security Subcommittee aligned with the component parts of the Department of Homeland Security (DHS). Legislative authority over policy areas and federal agencies included in DHS are principally within the jurisdiction of several standing House committees: Agriculture, Armed Services, Energy and Commerce, Financial Services, Government Reform, International Relations, Judiciary, Science, Transportation and Infrastructure, and Ways and Means, and the Permanent Select Committee on Intelligence. Some of these committees also have jurisdiction over federal agencies and components of federal programs included in the department that have non-homeland-security-related purposes. In the 108 th Congress, the Select Committee on Homeland Security also had jurisdiction over legislation affecting DHS. In addition, some committees have key roles to play in overseeing homeland-security-related policy areas and federal agencies not incorporated in the department. These committees are Armed Services, Energy and Commerce, Financial Services, International Relations, and Judiciary Committees, and the Permanent Select Committee on Intelligence. On July 22, 2004, the 9/11 Commission became the latest of a number of commissions, think tanks, and other entities to weigh in on congressional oversight of the issue of homeland security. Some of these entities issued reports before the creation of DHS, some before the terrorist attacks of September 11, 2001, and some more recently. In addition, witnesses at House committee hearings in the 108 th Congress held by subcommittees of the Select Committee on Homeland Security and the Committee on Rules provided additional ideas related to House oversight of homeland security. These entities' and witnesses' recommendations varied, but their variety offers the House a wealth of perspectives to draw on related to congressional-executive relations, building knowledge of homeland security policy issues among Members, and other aspects of congressional handling of the issue of homeland security. A specific recommendation of the 9/11 Commission and other entities was creation of a homeland security committee in each chamber. In addition, a number of witnesses at the House subcommittee hearings recommended a homeland security committee in the House, and made recommendations related to jurisdiction, membership, and other factors. It is a complex question, however, to take the recommendations of the 9/11 Commission and other entities and of witnesses at the House subcommittee hearings and determine the potential meaning and scope of homeland security in considering committee jurisdictions. One difficulty lies in trying to narrow the term to focus solely on the homeland—within the United States—as reflected in this statement from the 9/11 Commission report: America [in the post-Cold War world] stood out as an object for admiration, envy, and blame. This created a kind of cultural asymmetry. To us Afghanistan seemed very far away. To members of al Qaeda, America seemed very close. In a sense, they were more globalized than we were. Homeland security begins with counterterrorism and other initiatives overseas, and it includes intelligence activities at home and abroad that can help prevent terrorist attacks. In the 9/11 Commission recommendations, those of other entities, and those of some hearings witnesses, homeland security is a continuum of international and domestic initiatives and activities, all of which are essential to reducing the likelihood and potential impact of terrorist attacks against the United States. Another difficulty lies is the connectedness of homeland security to other policy areas. For transportation policy, agricultural policy, public health policy, trade policy, and so on, homeland security is one component of the policy area. Even if homeland security is now recognized as a critical component, some policymakers see the need for homeland security policy to mesh with the specific policy area and to be made within the context of the specific policy area. This report presents and discusses the recommendations of the Select Committee on Homeland Security, the 9/11 Commission, and five other entities relevant to House committee organization and the issue of homeland security. (Related text from the select committee's, the 9/11 Commission's, and other entities' reports appear in the appendices.) The report also synthesizes hearings testimony on House committee organization related to homeland security before the select committee and a subcommittee of the House Rules Committee. Finally, it analyzes the options and implications of this body of recommendations for House committee organization. The report is intended to support the House in evaluating potential changes to its oversight of homeland security as it makes and implements decisions on committee organization in the 109 th Congress. Shortly after the convening of the 107 th Congress, Speaker Hastert initiated a Working Group on Terrorism and Homeland Security as a unit of the House Permanent Select Committee on Intelligence. Following the terrorist attacks of September 11, 2001, the Speaker and Minority Leader Gephardt announced the elevation of the working group to a subcommittee. The subcommittee was to "coordinate the efforts of various [House] committees" with a claim to jurisdiction over various aspects of terrorism and to "provide a clearinghouse for legislative proposals." Subsequently, the jurisdictional complexity of the subject matter of homeland security was demonstrated by the referral of the House measure to create DHS. That bill, H.R. 5005 , was referred to 12 committees. A thirteenth committee, the Select Committee on Homeland Security, was created for the 107 th Congress to receive these committees' recommendations and to mark up and report a bill. Additional committees had narrower jurisdictional claims to H.R. 5005 , but the bill was not referred to them. Congress also included the following provision related to House and Senate committee organization in the Homeland Security Act: It is the sense of Congress that each House of Congress should review its committee structure in light of the reorganization of responsibilities within the executive branch by the establishment of the Department. The sense-of-the-Congress provision on review of committee structure included in the Homeland Security Act did not require either chamber to take action related to committee organization. The House, however, responded in adopting its rules for the 108 th Congress by creating a Select Committee on Homeland Security for the duration of the 108 th Congress. The House vested the select committee with the following jurisdiction: (1) LEGISLATIVE JURISDICTION—The select committee may develop recommendations and report to the House by bill or otherwise on such matters that relate to the Homeland Security Act of 2002 (Public Law 107-296) as may be referred to it by the Speaker. (2) OVERSIGHT FUNCTION—The select committee shall review and study on a continuing basis laws, programs, and Government activities relating to homeland security. Speaker Hastert explained the purpose of the select committee in remarks to the House following his reelection as Speaker: Later on today, we will vote to create a Select Committee on Homeland Security. Members of this select committee will oversee the creation of the Department of Homeland Security to make certain that the executive branch is carrying out the will of the Congress. This select committee will be our eyes and our ears as this critical department is organized. The standing committees of the House will maintain their jurisdictions and will still have authorization and oversight responsibilities. This House needs to adapt to the largest reorganization of our executive branch in 50 years, and this select committee will help us make this transition. In its 108 th Congress rules changes, the House also amended Rule XII, cl. 2(c)(1) to add the phrase shown here in italic: (c) In carrying out paragraphs (a) and (b) with respect to the referral of a matter, the Speaker— (1) shall designate a committee of primary jurisdiction (except where he determines that extraordinary circumstances justify review by more than one committee as though primary) ; The jurisdiction of the select committee provided the House with a focus for homeland security legislation and oversight, without immediately changing the jurisdictions of the standing committees that held jurisdiction over aspects of homeland security. The addition to the Speaker's referral authority provided him with increased flexibility in referring homeland security legislation in this context, if needed, and with increased flexibility in referring other legislation where he deemed it an appropriate form of referral. In the 108 th Congress, measures related to homeland security were referred to the Select Committee on Homeland Security and in addition to other committees, with the select committee designated by the Speaker as the primary committee. Other measures related to homeland security were referred in addition to the select committee and other committees, with a committee other than the select committee designated by the Speaker as the primary committee. Some measures related to homeland security were not referred to the select committee. The House Appropriations Committee responded to the creation of DHS with a reorganization of its subcommittees. On January 29, 2003, House Appropriations Committee Chairman Bill Young announced the creation of the Homeland Security Subcommittee to correspond to the agencies and programs incorporated in the new Department of Homeland Security. The jurisdictions of the other subcommittees were realigned in order to retain 13 appropriations subcommittees, including the new subcommittee. In addition, five House authorizing committees renamed or reorganized subcommittees to create homeland security or terrorism subcommittees: Subcommittee on Terrorism, Unconventional Threats, and Capabilities, Committee on Armed Services; Subcommittee on National Security, Emerging Threats, and International Relations, Committee on Government Reform; Subcommittee on International Terrorism, Nonproliferation, and Human Rights, Committee on International Relations; Subcommittee on Crime, Terrorism, and Homeland Security, Committee on the Judiciary (created in 107 th Congress); and as mentioned above concerning the 107 th Congress, Subcommittee on Terrorism and Homeland Security, Permanent Select Committee on Intelligence. Finally, the Select Committee on Homeland Security was given another function in the House rules resolution—to assist the House in determining how it might organize itself in the future vis-à-vis the issue of homeland security: (3) RULES STUDY—The select committee is authorized and directed to conduct a thorough and complete study of the operation and implementation of the rules of the House, including rule X, with respect to the issue of homeland security. The select committee shall submit its recommendations regarding any changes in the rules of the House to the Committee on Rules not later than September 30, 2004. The next section synthesizes testimony received at hearings conducted by a subcommittee of the select committee on the operation and implementation of the rules of the House, including Rule X. The section following it explains the recommendation of the select committee to the Rules Committee, and lists developments in the 108 th Congress after the release of the select committee's recommendations. When the Select Committee on Homeland Security organized, it created a Subcommittee on Rules under the chairmanship of Representative Lincoln Diaz-Balart to carry out the study of House rules. The subcommittee conducted four hearings to support the select committee in fulfilling the House's mandate. Witnesses at three of the Rules Subcommittee hearings in 2003 unanimously endorsed the existence of a House committee with legislative and oversight jurisdiction over DHS and the policy area of homeland security, although there were variations in specific recommendations in these witnesses' testimony and responses to subcommittee members' questions. These public witnesses—academic experts on Congress, former Speakers Foley and Gingrich, former Members Robert Walker and Lee Hamilton, and former Departments of Defense and Energy Secretary James Schlesinger—testified on the importance and uniqueness of homeland security in explaining their support for a separate legislative committee. The then-House parliamentarian also testified on May 19, 2003, providing a context for previous House committee reorganizations and attempted reorganizations. Witnesses at the Rules Subcommittee's fourth hearing on March 24, 2004, and at a hearing held by another subcommittee, the Subcommittee on Technology and the House, on June 16-17, 2004, comprised almost exclusively chairs and ranking members of House committees. The Members made a variety of suggestions regarding creation of a House committee on homeland security with legislative and oversight jurisdiction, and raised a number of issues to be considered by the House in deciding whether to create a committee and what kind of committee to create, including the impact on existing committees. The remainder of this section categorizes key considerations developed in the four Rules Subcommittee hearings, and synthesizes the testimony from witnesses at those hearings. Committee chairs and ranking members who testified at the hearing held by the Subcommittee on Technology and the House presented similar considerations. Cross references to the hearing of the Subcommittee on Technology and the House are provided in the footnotes in the balance of this section. Most quotations in this section are from oral testimony at the Rules Subcommittee hearings. In those instances where an excerpt from a prepared statement is used, that is noted. In his oral and written statements, former Speaker Gingrich explained the depth and breadth of the terrorist threat and the potential loss of life that could result from some forms of terrorist attack. In his prepared statement, Speaker Gingrich introduced this explanation by stating: The risk of potentially losing millions of Americans and even having the very fabric of our society torn apart is why there is no issue or problem for which Congress must organize and allocate time and resources which is more important than creating an effective system of Homeland Security. Former Secretary Schlesinger also addressed the threat of terrorist attacks to American democracy and society. Witnesses such as Donald Wolfensberger testified on the duration and seriousness of the terrorist threat as reasons for a "concentrated effort by both the executive and Congress." Aviation Subcommittee Chairman Mica explained the congressional environment: The problem has never been a lack of focus or interest by the standing committees. Rather, the missing ingredient was a national consensus that terrorism should be a top priority. Congress as a whole reflected the national will and has been unable to make the tough choices terrorism required. And that, we know, is a part of our history, unfortunately, today. 9/11 changed that, and within days or a few weeks the standing committees had legislation ready. Witnesses testified on the importance of the new Department of Homeland Security developing organizationally so that it could successfully carry out its mission. This point was often coupled with a witness's perspective on whether a single House homeland security committee was needed. For example, at the Rules Subcommittee's July 10 hearing, former Secretary Schlesinger was asked to summarize the points he had made on why it was important for the House to have a permanent committee on homeland security: It is quite simple: It means that you will not be helping this new department to become more unified on the mission of homeland security, that the agencies that go into that department will continue more than is necessary to focus on their historic function, and it will tend to preserve the existing cultures of those agencies. And on the other hand, all of us have a responsibility for homeland security. Any failure on the part of the United States to bring these agencies into an effective whole [is] going to be noticed and exploited by those who wish the country harm. Secretary Schlesinger and congressional scholar Norman Ornstein testified that fragmentation of committee jurisdiction over homeland security harmed development of the department. Dr. Ornstein suggested a cause and effect relationship: The problem with fragmentation otherwise is, once again, just exactly what we had before we ended up with a Department of Homeland Security, which is all these other committees have a longtime interest in their own cultures built around the old functions of these agencies, and they are going to use their resources and their pressure to push those functions, which are appropriate functions. But if we don't have a counterweight to make sure that the Homeland Security culture takes over, then they are going to have even greater problems inside the Department making things work. Government Reform Committee Chairman Tom Davis testified on the importance of Congress's work related to DHS: Because the success of the Department is vital to the continuing economic recovery and winning the war on terrorism, we all want it to succeed. Congress must provide the Department with the proper resources while at the same time maintaining aggressive oversight to ensure that this massive reorganization and commitment of resources succeeds. Public witnesses regularly mentioned the number of committees and subcommittees with legislative and oversight jurisdiction over DHS and the policy area of homeland security as a challenge to the development of a coherent homeland security policy. The chairs and ranking members drew on their experience in Congress to speak favorably about the work that had been done on homeland security by the existing committees. Former Secretary Schlesinger, drawing on his time as the secretary of the then-new Department of Energy as well as his time as the top official in other government agencies, pointed out the problems of duplication by House committees while acknowledging the proper role of oversight. Former Speaker Foley pointed out the inclination of committees and subcommittees to use the dispersed jurisdiction they have when focused oversight is what the new department needs. Former Representative Lee Hamilton addressed the blurring of priorities that occurs with many committees engaged in oversight. Former Representative Robert Walker discussed one committee's priorities pushing aside another committee's. A number of committee chairs and ranking members addressed the effectiveness of oversight under the current House committee system. Ranking Member Dingell of the Energy and Commerce Committee indicated that his experience with committees sharing oversight from their individual perspectives was positive and that agreements were able to be worked out when several committees had jurisdiction over a piece of legislation. He also expressed his concern over having a single committee conduct oversight over DHS, where the relationship might become comfortable rather than disinterested. Judiciary Committee Chairman Sensenbrenner testified that agencies report to more than one committee and function effectively. Like Representative Dingell, Ranking Member Waxman of the Government Reform Committee expressed the view that oversight by multiple committees with different perspectives is effective. Public witnesses also expressed their concern with the amount of time that DHS officials might spend in responding to hearings and requests from the numerous committees and subcommittees with jurisdiction over the department and the policy area of homeland security. Some committee chairs and ranking members addressed this concern in different ways. Former Secretary Schlesinger reported spending half of his time as secretary of energy on Capitol Hill, "dealing with one problem or another." He indicated the number of committees and subcommittees with jurisdiction over DHS would be a burden to a new department, and that staffs of those committees would add to the department's workload by requesting individual briefings. Congressional scholar James Thurber commented on the lack of effectiveness for both Members and departmental officials in having multiple hearings scheduled at the same time. Former Representative Hamilton noted: "Congress can make a significant contribution to the implementation of the Department of Homeland Security simply by simplifying these overlapping committee structures." Representative Dingell drew on his experience as a Member during the energy shortages of the 1970s to present another perspective: I went through the energy crisis, in the 1970s, and I have gone through a number of other problems of similar character, and I never found that there was anything other than benefit to be achieved by having a large number of committees viewing these questions from the standpoint of their own experience and expertise. And I would say that this happened very much during the time of the 1970s when the Energy Administrator or the chairmen of the regulatory bodies or later the head of the Department of Energy would come up to report to different committees about how they were conducting their business. Several public witnesses discussed a standing homeland security committee in terms of Congress being able to perform its legislative and oversight role effectively following the reorganization of the executive branch to create DHS. For example, congressional scholar David King testified: [N]ow it is a fact that we have [DHS], and it is a fact that there is now a tremendous imbalance between the executive branch and the legislative branch. And the Congress must catch up. I am afraid that some of the people who will oppose the single standing committee of jurisdiction here are still in their minds back in the days before there was a Department of Homeland Security, trying to keep those clientalistic relationships that existed before. The fragmentation is tremendously debilitating. And Congress, as an institution must step up to the plate.... And far too many [M]embers of Congress, and certainly people in the executive branch, forget that Article I is about Congress, the most important branch as far as I am concerned, in the government. And it needs to be on equal footing with the Department of Homeland Security through a single permanent committee. Energy and Commerce Committee Chairman Barton explained a different perspective on committee organization that was also expressed by several other committee chairs and ranking members: Health and Human Services, whose Cabinet Secretary has already testified before my committee on budget priorities and policy issues, also is subject to the Budget Committee, the Ways and Means Committee, obviously the Appropriations Committee, the Government Reform Committee. So they are going to multiple committees. The Environmental Protection Agency, which is one of the major agencies that we have jurisdiction over, they also have to report to the Transportation Committee, again the Appropriations Committee, [Agriculture] Committee, the Government Reform Committee, and the Science Committee. [The] Department of Energy, in addition to being responsible to the Energy and Commerce Committee[,] has issues for Armed Services, Government Reform, Science, [Appropriations], Resources. So most of the Cabinet agencies do report to multiple congressional committees, and I don't see why Homeland Security should be any different, especially if we are doing our job. In indicating his support for a new homeland security committee, former Speaker Foley expressed a view that was made by the public witnesses: I think there is the problem that otherwise [than having a new committee], with this diverse universe of subcommittees and committees, 13 committees, 88 subcommittees, a majority of the committees of the House, a majority of the subcommittees of the House, I am told almost rather clear the majority of the Members of the House have some connection with one of these subcommittees or committees that would otherwise have jurisdiction. So there is not only a need to bring some focus and scope to the oversight function, but there is a critical need to avoid the [distraction] of members of this new Department from having to respond day by day to dozens and dozens of different requests for testimony, and that is predictable. Former Representative Walker provided an example from his experience as a member and chair of the Science Committee, where jurisdiction over the energy policy area was shared with the Energy and Commerce Committee. He stated: "Those jurisdictional arguments often ended up with a nonaction in that area...." Former Secretary Schlesinger commented: "My problem is that there is so much duplication when a senior official comes to Capitol Hill and has to deal with five, six or eight committees. That does not help the House. That does not help the process." In contrast, Agriculture Chairman Goodlatte and Ranking Member Stenholm asked how such a large department as Homeland Security, with such a diverse portfolio in support of its mission, could be overseen by one committee. They stated that the Agriculture Committee was concerned with "both intentional and unintentional threats" to U.S. agriculture, and provided an example of oversight in working with DHS to overturn a decision to eliminate agricultural inspectors and assign their duties to Customs and Border Protection officers, who would lack needed expertise to protect against agricultural threats. Aviation Subcommittee Chairman Mica and Transportation and Infrastructure Committee Ranking Member Oberstar discussed the importance of the expertise resident in their committee in policymaking. For example, Representative Mica stated: It should be no surprise that a thorough understanding of the aviation system is required to produce effective aviation security legislation. The aviation system is based on a careful balance of highly complex regulations, procedures, infrastructure, engineering. And this system in fact has produced the world's safest aviation industry. Preserving that balance is impossible without the expertise that comes from working on these issues for years. Congressional scholar Norman Ornstein and former Representative Hamilton supported their recommendations for a homeland security committee by pointing out the need for congressional leadership in helping a culture of homeland security to take root in the new department. Representative Hamilton's prepared statement explained: DHS was created so that 22 agencies of the Federal Government would reorient their purpose and organization towards the mission of protecting the homeland. DHS is intended to embody a common mission and culture—indeed, the vital goal of implementation is to overcome bureaucratic resistance to forging that common culture. Former Secretary Schlesinger also discussed cultural change inside the department in stating his support for a homeland security committee: We talk about the cultural problems of bringing together agencies that have had a disparate past and integrating them into a new department. There are the cultural problems up here on the Hill of these different standing committees that have their traditions and their powers. And unless we effectively deal with that, the components of the department will not be able to focus on the newer problems of homeland security[;] those components will continue to respond to the older standing committees and their interests. In their testimony, committee chairs and ranking members identified their concerns with changes to the committee system that might sever components of existing jurisdiction. For example, Judiciary Committee Chairman Sensenbrenner discussed law enforcement and civil liberties as related policy concerns in his committee: There is more to law enforcement and training than just security. There is an important balancing to be done between security and civil liberties. It is dangerous to put that balancing task in a committee, the primary focus of which is security. I fear that civil liberties interest will be sacrificed. With regard to the committee's jurisdiction over immigration, Chairman Sensenbrenner pointed out that immigration is within the jurisdiction of four departments, and stated: Although countering the terrorist threat is of significant importance in implementing our immigration laws, it is certainly not the only issue. Rather, immigration involves much more than homeland security[:] reuniting families, providing needed workers for American businesses, offering havens to refugees, and deporting those aliens who have broken our laws. Ways and Means Committee Chairman Bill Thomas discussed the conflict between security and commerce: What has occurred in terms of the coordination of activities at the border I think was overdue, and it probably took a crisis such as this to require the rethinking and the integration of those border duties. I just have to tell you that the period in which we have negotiated with the homeland security structure has been one that I fully anticipated. That is, when your primary title is security, you make decisions differently than beings who are in the process of attempting to facilitate commercial intercourse and have been doing it for several hundred years. The question of whether or not a potential threat to, say, a port or an airport would require it to be shut down oftentimes is on the teeter-totter between public security and freedom. Those people who have security in their title hastily move to make sure that the place is secure. Several committee chairs and ranking members discussed the records of their committees in holding hearings and reporting legislation related to homeland security. For example, Energy and Commerce Committee Chairman Barton submitted a list of "homeland security accomplishments" with his prepared statement. In oral testimony, he gave examples of the committee's work, for example: The Energy and Commerce Committee has jurisdiction for security at commercial nuclear power plants. Everybody, regardless of where your committee is, agrees that securing these facilities from a terrorist attack or any kind of attack is a very good idea. The conference report on H.R. 6 , the comprehensive energy bill, contains very strong new requirements in that respect. These requirements were developed in our committee on a bipartisan basis. Representative Mica, chairman of the Aviation Subcommittee, provided the Rules Subcommittee with a statement by Transportation and Infrastructure Committee Chairman Young, which listed that committee's counterterrorism and homeland security legislation beginning in 1989. Representative Mica testified: Back in 1990, we mandated background checks for aviation personnel, began deploying bomb detection devices at our [airports]; we built FEMA, which helped New York and Washington respond to 9/11 and much of the rest of the country. We created TSA, fortified cockpit doors, armed pilots, put marshals back in the sky, developed a whole host of comprehensive approaches not only to aviation, but also to transportation security. We established the aviation industry, passed the Maritime Security Act, and created port security grants. Government Reform Committee Chairman Davis stated his committee "maintain[ed] an aggressive posture when it comes to overseeing DHS." He testified: For example, the committee held oversight hearings on topics related to FEMA, TSA, first responders, critical infrastructure, visa policy, preparedness standards, DHS financial accountability, border management, port security and product litigation management, to name just a few. We held markups on Project BioShield, the Presidential Vacancy Act and the DHS Financial Accountability Act. In his opening remarks at the same hearing, Rules Subcommittee member Representative Curt Weldon listed three examples of homeland security legislation that seemed to be stalled at the committee stage after being referred to several committees. Later in the hearing, select committee Chairman Cox, sitting as a member of the subcommittee, observed that there was little overlap in the work of the select committee and that of Energy and Commerce Committee, on which he also served. Several witnesses made statements that suggested definitions of homeland security , speaking either specifically of DHS or broadly of the policy area. Former Secretary Schlesinger responded as follows to a question about a mission for the department that might be selected from a continuum of possibilities: Well, I think the department has, in the President's message [on a national strategy], indicated that what we must do is to anticipate through intelligence possible attacks on the United States, to respond to such attacks as quickly as we can and to mitigate the consequences of those attacks. And that is why we have responded. It is at the one pole [of the continuum] that you mentioned at the outset, which was, you know, to inform local governments. Those local governments will need help, and only the United States, the Federal Government, can provide that help. If we have nuclear detonation in some place in the United States, the local authorities will be overwhelmed, and we must have an entity that has thought through that problem and will bring to bear the resources of the Federal Government to help those local governments. It is not just warning. In a later hearing, former Speaker Gingrich responded to a question about the role of the department: It is, first, intelligence and prevention. I think you put your finger on the key part: Can we block something bad from happening defensively inside our own country? Second, ensuring that the capability exists for response, recovery, and rehabilitation; setting the standards and monitoring to make sure that those capabilities exist. But it is, third, whenever possible, contracting out and coordinating those capabilities. For example, the Northern Command in the Department of Defense is a significant piece of this. The National Guard component of that is a significant piece. Health and Human Services and the Centers for Disease Control and the Public Health Service have a significant piece of this. The U.S. Department of Agriculture in terms of its food inspection.... And then, finally, the cities and States who are going to have an ongoing everyday first responder.... Later in the same hearing, Speaker Gingrich responded to a question on committee organization: ...I think the jurisdiction issue is actually fairly easy in principle. The principle ought to be that this is a mission-driven jurisdiction; that is, when there are questions of activities that are uniquely homeland security, protection, response, recovery, rehabilitation, this committee ought to have either sole or lead jurisdiction. But it ought to have the right to claim concurrent jurisdiction over problems as they impinge on homeland security. And the reason I say that is, this year the problem may be an issue of how do you change spectrum, the next year the issue may be one dealing with agriculture. We can't tell in advance where the intelligence trail and where the threat is going to take us. Sitting as an ex officio member of the Rules Subcommittee, Select Committee on Homeland Security Chairman Cox expressed his concern over keeping DHS focused on its mission, which he summarized as follows: "First, to protect; second, to prevent; and third, to respond. Those three must, it seems to me, define the Department and thus the jurisdiction of any committee that oversees it to the exclusion of all else." Witnesses suggested a number of options for a new committee on homeland security. Some witnesses opposed some possible jurisdictional arrangements for such a committee. Homeland Security Committee Built Incrementally . Congressional scholars Ornstein and Thomas Mann testified jointly. They suggested moving "gradually," or "incrementally," and "strategically" in creating a permanent standing committee with "several areas of jurisdiction." They warned that a new committee "with substantial jurisdiction that takes away from other committees at once" would "fail." In addition, there would need to be coordination and shared jurisdiction since there were non-homeland security functions included in DHS and functions that were closely related to homeland security outside of the department. They suggested "creative use of the referral process," including in the designation of "lead actors" for important legislation, and the Speaker's involvement in creating a "process of prioritizing" requests for the testimony of executive officials. Dr. Ornstein added that Members would want to retain assignments in addition to service on a new committee "and we will end up with bigger institutional problems." Former Secretary Schlesinger recommended consolidating committee jurisdiction over DHS as helpful to the new department, commenting favorably on creating a standing committee. He also called it "useful" to give the committee both oversight and legislative authority. No Homeland Security Committee . In response to a question regarding possible "benefits" to not having a homeland security committee, Dr. Mann responded: I think there are arguments. One of them is that the House since 1974 has figured out a way to live with and cope with jurisdictional sprawl, that the leadership working through the Parliamentarian's office has developed strategies of joint and sequential referral, of special rules, of scheduling, in ways that allow them, the leadership, to pull the expertise from various committees and subcommittees together in coherent pieces of legislation. In doing so, you don't disrupt existing patterns of expertise, of historical memory, of staffing, that you retain some capacity for alternative perspectives on similar problems, that you set up some competition between teams of members who might see things differently. All those are advantages in letting the current system go forward as it is. Transfer Jurisdiction over DHS to Homeland Security Committee . Dr. Thurber was specific in his recommendation to create a permanent standing committee on homeland security in House Rule X, with "jurisdiction directly related to the agencies of DHS and generally to the mission of reducing the threat [to] homeland security." He noted that there are agencies outside of DHS that deal with homeland security, that the new committee needed an "oversight and coordination relationship" with those activities, and that coordination would be needed with other committees in order to develop a "comprehensive policy making approach to homeland security." Dr. Thurber favored "shared [committee] jurisdiction with primary and secondary responsibilities for the functions of the entities in DHS" that are not related to homeland security. He recommended the jurisdictions of other committees over DHS agencies be transferred to the new committee. Finally, Dr. Thurber recommended that the membership of the new committee include members from committees losing jurisdiction in order to bring to the new committee "knowledge, expertise, institutional history," and that there be "transition rules" to facilitate this service. Mr. Wolfensberger also favored creation of a permanent standing committee on homeland security similar to that described by Dr. Thurber. Mr. Wolfensberger added that the committee should be a "major committee for assignment purposes, if not an exclusive committee." He stated that the new committee should work closely with the leadership in "coordinating its oversight activities with that of other committees," with oversight agendas "superintended by the bipartisan leadership." Finally, he suggested coupling the creation of a new homeland security committee with an increase in committee chairs' term limits to four consecutive terms from three consecutive terms. The increase would serve as an incentive to support change as well as allow more time for a chair to build expertise. Both former Representative Walker and former Representative Hamilton also favored creation of a permanent standing committee on homeland security. Mr. Walker addressed the need to get rid of "silos" in order to make policy decisions on homeland security issues in support of a "common goal." Mr. Hamilton spoke of the value of informed congressional oversight based on "acquired expertise." A number of committee leaders expressed reservations about or opposition to the transfer of jurisdiction from committees with long expertise and with perspectives in addition to that of counter-terrorism security. Agriculture Committee Chairman Goodlatte urged the Rules Subcommittee to be "cautious in considering [jurisdictional] changes," citing his committee's expertise in agriculture compared to the breadth of expertise that a single committee would need to cumulate to oversee DHS's wide and varied scope of responsibilities. Energy and Commerce Committee Chairman Barton pointed out the difficulty of distinguishing the relationship of his committee's jurisdiction to homeland security from the homeland security jurisdiction of a new committee, explaining that the "consequences" of terrorist attacks or of other actions or events may be the same. Aviation Subcommittee Chairman Mica and Transportation and Infrastructure Committee Ranking Member Oberstar explained the expertise that existed in standing committees and that was needed to legislate on homeland security within complex systems such as aviation or emergency management. Judiciary Committee Chairman Sensenbrenner, as mentioned above, explained the balance within law enforcement and immigration between security and civil liberties in the case of law enforcement and between security and the several purposes of immigration in the case of legal immigration. He stated the Judiciary Committee should retain its jurisdiction, should the House create a homeland security committee, since the Judiciary Committee had "experience and expertise" and had demonstrated a "unified, balanced approach" to the work within its jurisdiction. Ways and Means Committee Chairman Thomas explained that his committee's jurisdiction over customs functions is essential to U.S. international trade: "The point at which those [export and import] activities occur have to be allowed to go forward in a very smooth and efficient manner, with the full understanding of the concerns of security today different than previously...." Split Transportation and Infrastructure Committee . Mr. Wolfensberger suggested creating the new committee by splitting the existing Transportation and Infrastructure Committee, assigning about a third of its members to the new committee and adding members from the other committees that currently have jurisdiction over homeland security. The other members of the existing Transportation and Infrastructure Committee would be assigned to a new transportation committee. Mr. Wolfensberger made an analogy to the reorganization of the Appropriations Committees. Assign Homeland Security to the Government Reform Committee . Stating that a new homeland security committee would cause "new jurisdictional overlaps and conflicts," Government Reform Committee Chairman Tom Davis and Ranking Member Waxman proposed that the Government Reform Committee would "oversee the administration of the Department's headquarters and departmentwide policies as well as White House efforts to coordinate homeland security policy" and "current committees would continue to oversee their legacy agencies" that had been transferred to DHS. They made an analogy to the Senate Governmental Affairs Committee as it exercised jurisdiction over DHS in the 108 th Congress. Chairman Davis noted that the Government Reform Committee has jurisdiction over "agency reorganization, human capital, IT security, Federal-State relations, procurement, and the management and efficiency of government organizations." He also noted that the committee had experience in working on legislation with other committees, that the proposal "strengthens the parallel structures of House-Senate relations," and that the arrangement ensured coordination among committees "when no other committee could naturally receive the primary referral" of "cross-agency proposals." In a statement submitted for the hearing record, Science Committee Chairman Boehlert suggested: ...giving primary legislative jurisdiction over each directorate of DHS to the appropriate standing Committee and having the Committee on Government Reform exercise its traditional jurisdiction across the agency. Select Committee . Congressional scholar David King recommended a permanent select committee on homeland security, with primary jurisdiction over homeland security generally and over DHS, and with jurisdiction over DHS agencies transferred from existing committees. In a departure from this recommendation of consolidation, he suggested transferring jurisdiction over the Coast Guard to the Armed Services Committee. Dr. King recommended that the Speaker direct the parliamentarian to draft a memorandum of understanding to govern "multiple referrals for homeland security issues," and that, on referrals, the Speaker give "primary jurisdiction over homeland security" to the new committee and "secondary time-limited referrals" to other committees. Dr. King recommended that the new committee's members be drawn from committees losing jurisdiction, with the distribution of committee seats specified; he added that seniority on the new committee should be "based on time served on the committees contributing their members." Dr. King also recommended limiting the committee's size. Intelligence Committee Chairman Goss pointed out the advantages of a permanent select committee on homeland security, specifically identifying the advantages of leadership selection of committee members. Ways and Means Committee Chairman Thomas made an analogy to the former Select Committee on Aging as a potential model, with a distinct focus, for an oversight committee on homeland security. He said such a homeland security committee would have the function "of coordination, of concern, of observation, of assistance." He stated that a homeland security committee should not be vested with jurisdiction in a manner that would "interfere with a [committee] structure that has been successful through a number of other threats to our security...." Ad Hoc Committees . Several witnesses commented on the past use of ad hoc committees, including creation of the Select Committee on Homeland Security in the 107 th Congress to report legislation establishing DHS. Agriculture Committee Ranking Member Stenholm urged the Rules Subcommittee to "give more life" to the Speaker's authority under House Rule XII to refer matters to ad hoc committees. He also suggested that the House work toward achievement of its rule of limiting each Member to two committee assignments. Coordination. A number of public witnesses and committee leaders addressed the need or the perceived need for coordination of legislation affecting DHS or of requests for hearings testimony by DHS officials. As mentioned above, former Secretary Schlesinger indicated the number of committees and subcommittees with jurisdiction over DHS would be a burden to the new department. Congressional scholar James Thurber commented on the lack of effectiveness for both Members and departmental officials in having multiple hearings scheduled at the same time. Former Representative Hamilton noted the contribution Congress could make to DHS's implementation by simplifying its committee structures. Energy and Commerce Committee Chairman Barton observed that a response to the concern over numerous committees and subcommittees with jurisdiction over DHS would be coordination rather than the creation of a new committee. He suggested a liaison staff member in the Speaker's office as an option. He also suggested the possibility of extending the life of the Select Committee on Homeland Security for one more Congress. Energy and Commerce Committee Ranking Member Dingell stated that the existing committees of jurisdiction could coordinate, as they have in the past, with the "assistance" of the House leadership. He also noted that House rules could be amended to assign specified homeland-security functions to the standing committees. Intelligence Ranking Member Harman explained the value of a permanent standing committee on homeland security as a "mechanism for coordinated review of terrorism" and as a means for effective oversight of DHS. Aviation Subcommittee Chairman Mica noted that a homeland security committee could have a role in coordination over homeland-security activities of executive entities that were included in DHS and those outside DHS and in marshaling expertise in the House from among the committees of jurisdiction. Budget Subcommittee on Homeland Security. Speaker Gingrich recommended the creation of a homeland security subcommittee of the Budget Committee to ensure "adequate resources for Homeland Security before considering any other budgetary matters." He endorsed the creation of a permanent standing committee on homeland security, "with the right to claim concurrent jurisdiction over problems as they impinge on homeland security." Speaker Gingrich also recommended adoption of a resolution at the beginning of each Congress that "instructs the executive branch on who has to report where," and monitoring interactions by the House with DHS to prevent "diversions." Homeland Security Subcommittees. As mentioned earlier, six standing committees reorganized to create subcommittees with jurisdiction over homeland security. In his testimony, Energy and Commerce Committee Chairman Barton suggested that House rules might be changed to allow standing committees to create an additional subcommittee, to which a committee could assign jurisdiction over homeland security. On September 30, 2004, the Select Committee on Homeland Security transmitted its recommendations to the Rules Committee. It recommended that a standing and therefore permanent Committee on Homeland Security be established, with the addition of a new clause 12 to House Rule X. Key aspects of the select committee's recommendations included: a standing committee is to be created, composed of not more than 29 members and not more than 16 from one party; the Speaker and minority leader to serve ex officio, without voting privileges; jurisdiction is to be granted over "homeland security generally" and over DHS, except, generally, for non-homeland security matters within the authority of the department; "exclusive authorizing and primary oversight jurisdiction" is to be granted with respect to the department's authorities related to the "prevention of, preparation for, and response to acts of terrorism within the United States"; authorizations for the department to prevent, prepare for, or respond to acts of terrorism must precede appropriations; and referrals of legislation and other matters to the Select Committee on Homeland Security in the 108 th Congress would not be considered precedent for referrals to the new committee. In addition to jurisdiction over homeland security generally and the department (numbered (1) and (2) in the proposed standing committee's jurisdiction), the select committee's recommendations enumerated eight other specific components of the proposed committee's jurisdiction: (3) The integration, analysis, and sharing of homeland security information related to the risk of terrorism within the United States. (4) The dissemination of terrorism threat warnings, advisories, and other homeland security-related communications to State and local governments, the private sector, and the public. (5) Department of Homeland Security responsibility for research and development in support of homeland security, including technological applications of such research. (6) Department of Homeland Security responsibility for security of United States borders and ports of entry, including the Department's responsibilities related to visas and other forms of permission to enter the United States. (7) Enforcement of Federal immigration laws (except for responsibilities of the Department of Justice). (8) Security of United States air, land, and maritime transportation systems. (9) Non-revenue aspects of customs enforcement. (10) Department of Homeland Security responsibility for Federal, state, and local level preparation to respond to acts of terrorism. These statements provided specificity to discussion in the House of what might constitute homeland security jurisdiction. The select committee observed in its report: "The Homeland Security Act of 2002 offers a congressionally-created road map to jurisdictional reform that focuses on the structure, organization, capabilities, and mission of the Department itself." In addition, the recommendations included proposed changes to the Rule X jurisdictional statements of other committees to reduce or eliminate overlap of homeland security jurisdiction with the new committee. The committees that would be affected by the proposed changes were: Committee on Energy and Commerce, where there was an addition at the end of its jurisdictional statement: "In the case of each of the foregoing, the committee's jurisdiction shall not include responsibilities of the Department of Homeland Security." Committee on Financial Services, where there was an addition at the end of its jurisdictional statement: "In the case of each of the foregoing, the committee's jurisdiction shall not include responsibilities of the Department of Homeland Security." Committee on International Relations, where there was an addition at the end of its jurisdictional statement: "In the case of each of the foregoing, the committee's jurisdiction shall not include responsibilities of the Department of Homeland Security." Committee on the Judiciary, where its jurisdiction over immigration and naturalization was amended to contain an exception—"(except for Department of Homeland Security responsibility for security of United States borders and ports of entry, including the Department's responsibilities for visas and other forms of permission to enter the United States, and immigration enforcement)"—and its jurisdiction over subversive activities was also amended to contain an exception—"(except for responsibilities of the Department of Homeland Security)." Committee on Transportation and Infrastructure, where its jurisdiction was amended at five points— the non-homeland security-related missions of the Coast Guard remained within the jurisdiction of the committee, federal management of natural disasters remained within the committee's jurisdiction, although federal management of "emergencies" was not listed, jurisdiction over related transportation regulatory agencies was amended to contain an exception—"(except for responsibilities of the Department of Homeland Security)," jurisdiction over various forms of transportation and related matters was amended to contain an exception—"in each case exclusive of the responsibilities of the Department of Homeland Security," jurisdiction over civil aviation was removed from the list of various forms of transportation, listed separately in a new subparagraph, and stated as follows—"Civil aviation, including safety and commercial impact of security measures." Committee on Ways and Means, where the phrase "Revenue from" was added at the beginning of the jurisdictional statement "Customs, collection districts, and ports of entry and delivery." Finally, the membership of the Permanent Select Committee on Intelligence was proposed to include at least one member of the new Committee on Homeland Security; the membership of the Intelligence Committee already includes members of other committees. In a news release announcing the issuance of the select committee's recommendations, Chairman Cox stated: We must give the new committee meaningful jurisdiction to legislate and to conduct congressional oversight of the Department of Homeland Security and related homeland security programs and activities. I think all of us would agree that it would be better to have no committee than a committee with jurisdictionally clipped wings, condemned never to take flight. In the same news release, the ranking member of the select committee's Rules Subcommittee, Representative Slaughter, stated: Congress ordered the largest reorganization of government when it created the Department of Homeland Security. Now, Congress must act decisively and create a permanent standing committee to ensure that DHS becomes the agency that Congress envisioned. Anything less than that, and Congress will not be fulfilling its duty to the American people. These comments echoed the explanation the select committee gave for its recommendation: The current diffused and unfocused congressional jurisdiction over the Department of Homeland Security, and homeland security in general, not only imposes extraordinary burdens on the Department, but makes it far more difficult for the Congress to guide the Department's activities in a consistent and focused way that promotes integration and eliminates programmatic redundancies, and advances implementation of a coherent national homeland security strategy. Following the release of the select committee's recommendations, Chairman Linder of the Rules Committee's Subcommittee on Technology and the House issued a "Dear Colleague" letter soliciting Members' "opinions on matters relating to homeland security and Rule X, including the formal recommendations of the Select Committee on Homeland Security." In addition, following past practice near the end of a Congress, the Rules Committee solicited Members' proposals for House rules changes for the 109 th Congress. The House also passed H.R. 10 , the 9/11 Recommendations Implementation Act, containing a sense of the House provision: It is the sense of the House of Representatives that the Committee on Rules should act upon the recommendations provided by the Select Committee on Homeland Security, and other committees of existing jurisdiction, regarding the jurisdiction over proposed legislation, messages, petitions, memorials and other matters relating to homeland security prior to or at the start of the 109 th Congress. And, on November 16, 2004, following his renomination to the Speakership by the House Republican Conference, Speaker Hastert addressed the conference and said this about a House homeland security committee: In the last Congress, we created a Select Committee on Homeland Security to help us coordinate our legislative response to the new Department of Homeland Security. This year, it is my intention that we make that Committee permanent. To this point, this report has recounted and synthesized actions in the 107 th and 108 th Congresses related to committee organization and the issue of homeland security. Key actions on committee organization in the 107 th Congress were the creation of the Working Group on Terrorism and Homeland Security within the Permanent Select Committee on Intelligence and its elevation to a subcommittee, and the creation of the Select Committee on Homeland Security to mark up and report the bill establishing the Department of Homeland Security. Key actions on committee organization in the 108 th Congress were the creation of the Select Committee on Homeland Security, with jurisdiction over the Homeland Security Act and responsibility for a study of House rules, including Rule X, with respect to the issue of homeland security; hearings on committee organization held by a subcommittee of the select committee and, separately, by a subcommittee of the Rules Committee; recommendations from the select committee for a standing committee of the House on homeland security; and support voiced by the Speaker for a permanent homeland security committee in the 109 th Congress. The next two sections of this report distill the provisions of the Homeland Security Act of 2002 and the recommendations of four national commissions and two think tanks relevant to House committee organization and the issue of homeland security. The section on the Homeland Security Act focuses on the definitions of homeland security contained in the act. The section on commission and think tank recommendations captures the specific recommendations related to committee organization and the context in which the recommendations were made. These two sections are followed by a brief history of committee reorganization related to departmental creation, bringing together this record in one place. As noted above, the Select Committee on Homeland Security stated in the report on its recommendations to the House: "The Homeland Security Act of 2002 offers a congressionally-created road map to jurisdictional reform that focuses on the structure, organization, capabilities, and mission of the Department itself." Some of these directions are reflected in definitions of homeland security that appear in the Homeland Security Act as well as in the President's national strategy, which served as a basis for the Homeland Security Act. In the National Strategy for Homeland Security that President Bush issued in June 2002, the strategy contained the following: Definition: Homeland security is a concerted national effort to prevent terrorist attacks within the United States, reduce America's vulnerability to terrorism, and minimize the damage and recover from attacks that do occur. The Homeland Security Act of 2002, as enacted, contained three definitions of homeland security for three different purposes under the law. First, in the mission of DHS, Congress restated the definition from the President's national strategy: In general.—The primary mission of the Department is to—(A) prevent terrorist attacks within the United States; (B) reduce the vulnerability of the United States to terrorism; (C) minimize the damage, and assist in the recovery, from terrorist attacks that do occur within the United States.... Second, in establishing the Homeland Security Advanced Research Projects Agency, Congress defined homeland security research to explain the purpose of such research: Homeland security research.—The term "homeland security research" means research relevant to the detection of, prevention of, protection against, response to, attribution of, and recovery from homeland security threats, particularly acts of terrorism. Third, in directing the President to include in his annual budget submission an analysis of homeland security spending, Congress provided the following definition for determining what activities and accounts to include in the analysis: In this paragraph, consistent with the Office of Management and Budget's June 2002 'Annual Report to Congress on Combatting Terrorism', the term 'homeland security' refers to those activities that detect, deter, protect against, and respond to terrorist attacks occurring within the United States and its territories. These definitions are explicit in stating that homeland refers to "within the United States." A substantial part of homeland security—American military, intelligence, and diplomatic activities—relate to actions that occur outside of the United States. As noted at the beginning of this report, the 9/11 commission and other commissions and think tanks recommended a reorganization of congressional committees, specifically recommending the creation of a homeland security committee in each chamber. These recommendations were not specific about key aspects of such committees, such as jurisdiction. However, each entity set out one or more principles that might guide House and Senate reorganization of its committees vis-à-vis the policy area of homeland security. The commissions and think tanks made their recommendations on committee reorganization in the context of a larger set of recommendations for combating terrorism and securing the homeland. This context is helpful in understanding how these entities defined homeland security and how they arrived at a recommendation for committee reorganization. This section examines the reports of four commissions and two think tanks. It analyzes the context for each entity's recommendations for committee reorganization and provides the specific recommendation. Citations to additional studies related to committee reorganization are provided in the footnotes of this section. Former New Jersey Governor Thomas Kean (R) chaired the 9/11 Commission; former Representative Lee Hamilton (D-IN) served as vice chair. The commission's official name was the National Commission on Terrorist Attacks Upon the United States. The 9/11 Commission reported to the President and Congress on July 22, 2004. In explaining the potential meaning and scope of homeland security, the 9/11 Commission summarized its proposed strategy as follows: The present transnational danger is Islamist terrorism. What is needed is a broad political-military strategy that rests on a firm tripod of policies to attack terrorists and their organizations; prevent the continued growth of Islamist terrorism; and protect against and prepare for terrorist attacks. The commission made numerous recommendations in the final two chapters of its report. It stated the purpose of these two chapters as follows: The United States should consider what to do —the shape and objectives of a strategy. Americans should also consider how to do it —organizing their government in a different way. (Emphasis in original.) The commission's recommendations related to congressional organization were made in the context of its recommendations for governmentwide organization. In introducing the chapter on "how to do it," the commission summarized its recommendations for government organization: The United States has the resources and the people. The government should combine them more effectively, achieving unity of effort. We offer five major recommendations to do that: unifying strategic intelligence and operational planning against Islamist terrorists across the foreign-domestic divide with a National Counterterrorism Center; unifying the intelligence community with a new National Intelligence Director; unifying the many participants in the counterterrorism effort and their knowledge in a network-based information-sharing system that transcends traditional governmental boundaries; unifying and strengthening congressional oversight to improve quality and accountability; strengthening the FBI and homeland defenders. With regard to intelligence, counterterrorism, and homeland security, the 9/11 Commission stated in its report to the President and Congress that congressional committee reorganization was critical to a "unity of effort" across the federal government. For intelligence oversight, it recommended a joint committee of the two houses of Congress, or a single committee in each chamber with authorizing and appropriating authority. With regard to homeland security, the commission stated: The leaders of the Department of Homeland Security now appear before 88 committees and subcommittees of Congress. One expert witness (not a member of the administration) told us that this is perhaps the single largest obstacle impeding the department's successful development. The one attempt to consolidate such committee authority, the House Select Committee on Homeland Security, may be eliminated. The Senate does not have even this. Congress needs to establish for the Department of Homeland Security the kind of clear authority and responsibility that exist to enable the Justice Department to deal with crime and the Defense Department to deal with threats to national security. Through not more than one authorizing committee and one appropriating subcommittee in each house, Congress should be able to ask the secretary of homeland security whether he or she has the resources to provide reasonable security against major terrorist acts within the United States and to hold the secretary accountable for the department's performance. Recommendation: Congress should create a single, principal point of oversight and review for homeland security. Congressional leaders are best able to judge what committee should have jurisdiction over this department and its duties. But we believe that Congress does have the obligation to choose one in the House and one in the Senate, and that this committee should be a permanent standing committee with a nonpartisan staff. The Bremer Commission took its name from its chair, then-managing director of Kissinger Associates and former U.S. ambassador-at-large for counterterrorism L. Paul Bremer III. Its official name was the National Commission on Terrorism. The commission reported to the President and Congress on June 7, 2000. The commission's recommendation on congressional organization was part of a report that warned of an increasing and changing terrorist threat. The Bremer Commission focused its attention particularly on the intelligence and international components of counterterrorism and protection of the homeland, stating: International terrorism poses an increasingly dangerous and difficult threat to America. Countering the growing danger of the terrorist threat requires significantly stepping up U.S. efforts. Priority one is to prevent terrorist attacks. U.S. intelligence and law enforcement communities must use the full scope of their authority to collect intelligence regarding terrorist plans and methods. U.S. policies must firmly target all states that support terrorists. Private sources of financial and logistical support for terrorists must be subjected to the full force and sweep of U.S. and international laws. A terrorist attack involving a biological agent, deadly chemicals, or nuclear or radiological material, even if it succeeds only partially, could profoundly affect the entire nation. The government must do more to prepare for such an event. The President and Congress should reform the system for reviewing and funding departmental counterterrorism programs to ensure that the activities and programs of various agencies are part of a comprehensive plan. The report contained a series of recommendations related to laws, an unratified treaty, policies, and guidelines. In some instances the commission recommended ratification or implementation; in others it recommended change or repeal. These recommendations outlined specific actions that could help the U.S. government prevent terrorist acts, reduce their likelihood, and prepare for their possibility. In its report to the President and Congress, the Bremer Commission recommended that Congress "should develop mechanisms for coordinated review of the President's counterterrorism policy and budget, rather than having each of the many relevant committees moving in different directions without regard to the overall strategy." The Gilmore Commission took its name from its chair, then-Virginia Governor James S. Gilmore III (R). Its official name was the Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction. The Gilmore Commission made five reports annually in December to the President and Congress, from December 1999 through December 2003. The Gilmore Commission's principal recommendation, which it examined in each of its five annual reports, was the promulgation of a national strategy to combat terrorism, "impelled by a stark realization that a terrorist attack on some level inside our borders is inevitable and the United States must be ready." In the commission's view, a federal strategy would be a component of the national strategy. And, by addressing its own organization, Congress would be able to address the national strategy for counterterrorism and homeland security in a "cohesive way." The Gilmore Commission made numerous other recommendations. The Gilmore Commission chose to establish a strategic vision that in five years—by 2009—would describe "in both appearance and reality an acceptable level of awareness, prevention, preparedness, response, and recovery capabilities to cope with the uncertain and ambiguous threat of terrorism as part of dealing with all hazards." The commission called its strategic vision "America's New Normalcy," and stated that it presented a "carefully balanced approach to the difficult question of whether to place more or less emphasis on reducing the terrorist threat versus lessening American vulnerabilities to terrorist attacks." (Emphasis in original.) The commission said the following about the strategic vision: America's New Normalcy in January of 2009 should reflect: Both the sustainment and further empowerment of individual freedoms in the context of measurable advances that secure the homeland. Consistent commitment of resources that improve the ability of all levels of government, the private sector, and our citizens to prevent terrorist attacks and, if warranted, to respond and recover effectively to the full range of threats faced by the nation. A standardized and effective process for sharing information and intelligence among all stakeholders—one built on moving actionable information to the broadest possible audience rapidly, and allowing for heightened security with minimal undesirable economic and societal consequences. Strong preparedness and readiness across State and local government and the private sector with corresponding processes that provide an enterprise-wide national capacity to plan, equip, train, and exercise against measurable standards. Clear definition about the roles, responsibilities, and acceptable uses of the military domestically—that strengthens the role of the National Guard and Federal Reserve Components for any domestic mission and ensures that America's leaders will never be confronted with competing choices of using the military to respond to a domestic emergency versus the need to project our strength globally to defeat those who would seek to do us harm. Clear processes for engaging academia, business, all levels of government, and others in rapidly developing and implementing research, development, and standards across technology, public policy, and other areas needed to secure the homeland—a process that focuses efforts on real versus perceived needs. Well-understood and shared process, plans, and incentives for protecting the nation's critical infrastructures of government and in the private sector—a unified approach to managing our risks. (Emphasis in original.) The Gilmore Commission put its strategic vision in a context somewhat different from that of other commissions, perhaps reflecting the significant representation of state and local officials, including officials with first-responder duties. The commission emphasized that the strategic vision was "fully consistent with an all-hazards approach," stating: As our experience with SARS, West Nile Virus, monkeypox, the recent fires in California, and the current influenza epidemic have demonstrated vividly, we must be able to handle a wide variety of threats. In each of its reports the Gilmore Commission, among several commissions and other entities, addressed two additional major topics enmeshed in homeland security. The topics were "protecting civil liberties" and "empowering state and local government." With regard to civil liberties, the commission's report stated: Rather than the traditional portrayal of security and civil liberties as competing values that must be weighed on opposite ends of a balance, these values should be recognized as mutually reinforcing. Under this framework, counterterrorism initiatives would be evaluated in terms of how well they preserve all of the unalienable rights that are essential to the strength and security of our nation: life, liberty, and the pursuit of happiness. While these fundamental rights are cited in our Declaration of Independence and imbedded in our Constitution, they should not be confused with privileges, which may be imposed upon to protect national security. However, even privileges should not be imposed upon lightly; they are fundamental to our quality of life. For example, the opportunity to fly may be viewed as a privilege rather than a right, but overly stringent and arbitrary security measures not only have an economic impact but could also increase public skepticism about security measures generally. Regarding the states and localities, the commission stated: To achieve a truly national strategy, the Federal government must empower States and local governments by providing a clear definition of preparedness and a strategic plan and process to implement the objectives of a longer-term vision across the entire spectrum from awareness through recovery.... Officials at the Federal level should lead the development of an enterprise architecture to institutionalize intelligence and information sharing, risk assessments, better integrated planning and training, and effective requirements generation in close coordination with State and local governments and the private sector. Only through true cooperation will we achieve some sustainable measure of preparedness for the uncertain threat of terrorism. (Emphasis in original.) In the first two of its five annual reports, the Gilmore Commission recommended creating a committee in each chamber or a joint committee of the House and Senate that would have jurisdiction over counterterrorism and homeland security. It recommended that these committees comprise representatives of the principal authorizing committees and the Appropriations Committees, but that the new committees have their own expert staff. The commission explained the purpose of these committees: First, it would constitute a forum for reviewing all aspects of a national strategy and supporting implementation plans for combating terrorism, developed and submitted by the National Office for Combating Terrorism. [The office was proposed earlier in the commission's second annual report.] As part of that process, the joint or each separate committee should develop a consolidated legislative plan, including authorizing language and corresponding budget and appropriations 'benchmarks' in response to the national strategy to combat terrorism and accompanying program and budget proposals. Second, it would serve as the 'clearinghouse' for all legislative proposals for combating terrorism. For separate bills (unrelated to the omnibus package related to the strategy), the committee should have first referral of such legislation, prior to the referral to the appropriate standing committee. In its fourth report, the Gilmore Commission's recommendation evolved further: Recommendation: That each House of the Congress establish a separate authorizing committee and related appropriation subcommittee with jurisdiction over Federal programs and authority for Combating Terrorism/Homeland Security. The Hart-Rudman Commission took its name from its co-chairs, former Senators Gary Hart (D-CO) and Warren B. Rudman (R-NH). Its official name was the United States Commission on National Security/21 st Century. The Hart-Rudman Commission issued three reports, in September 1999, April 2000, and February 2001. Over the course of two years, the Hart-Rudman Commission published three reports: one assessing the global security environment over the next 25 years, one detailing a strategy of national security/homeland security in that time frame, and a final report on institutional change to support the recommended strategy. The commission envisioned an era of rapid, profound change driven by scientific and technological development and other change. It proposed a strategy wherein the United States would "lead in the construction of a world balanced between the expansion of freedom, and the maintenance of underlying stability." Finally, the commission recommended extensive changes in institutional arrangements and policies in the executive and legislative branches. It found: "The problem is that the current structures and processes of U.S. national security policymaking are incapable of such management [of the opportunities and dangers in implementing the recommended strategy]." The Hart-Rudman Commission summarized its proposal for U.S. national security strategy as follows: We believe that American strategy must compose a balance between two key aims. The first is to reap the benefits of a more integrated world in order to expand freedom, security, and prosperity for Americans and for others. But second, American strategy must also strive to dampen the forces of global instability so that those benefits can endure and spread. The commission stated six objectives that underlie this strategy: First, to defend the United States and ensure that it is safe from the dangers of a new era. Second, to maintain America's social cohesion, economic competitiveness, technological ingenuity, and military strength. Third, to assist the integration of key major powers, especially China, Russia, and India, into the mainstream of the emerging international system. Fourth, to promote, with others, the dynamism of the new global economy and improve the effectiveness of international institutions and international law. Fifth, to adapt U.S. alliances and other regional mechanisms to a new era in which America's partners seek greater autonomy and responsibility. Sixth, to help the international community tame the disintegrative forces spawned by an era of change. The commission summarized the reasoning behind its objectives and the strategy the objectives support: These six objectives, and the Commission's strategy itself, rest on a premise so basic that it often goes unstated: democracy conduces generally to domestic and international peace, and peace conduces to, or at least allows, democratic politics. While this premise is not a 'law,' and while scholars continue to study and debate these matters, we believe they are strong tendencies, and that they can be strengthened further by a consistent and determined national policy. Finally, the Hart-Rudman Commission encapsulated its recommendations for organizational change into five components, which it listed as: ensuring the security of the American homeland; recapitalizing America's strengths in science and education; redesigning key institutions of the Executive Branch; overhauling the U.S. government's military and civilian personnel systems; and reorganizing Congress's role in national security affairs. The Hart-Rudman Commission detailed several recommendations regarding congressional organization, including: The President should ask Congress to appropriate funds to the State Department in a single integrated Foreign Operations budget, which would include all foreign assistance programs and activities as well as all expenses for personnel and operations. Congress should rationalize its current committee structure so that it best serves U.S. national security objectives; specifically, it should merge the current authorizing committees with the relevant appropriations subcommittees. The Executive Branch must ensure a sustained focus on foreign policy and national security consultation with Congress and devote resources to it. For its part, Congress must make consultation a higher priority and form a permanent consultative groups of Congressional leaders as part of this effort. The Congressional leadership should conduct a thorough bicameral, bipartisan review of the Legislative Branch relationship to national security and foreign policy. Brookings Institution scholars prepared a report in 2002 and, in 2003, updated it with a lengthy preface. The 2003 preface added to the report summarized the accomplishments in homeland security in the intervening year and laid out an "unmet agenda." The Brookings recommendations were made within the context of a homeland security strategy involving "border protection, domestic prevention, domestic protection, and consequence management." The update focused on an "unmet agenda" broader than the creation of DHS and the other steps taken after the terrorist attacks of September 11, 2001. The 2003 preface concluded with a summary of the unmet homeland security needs that suggested the scope of homeland security as the Brookings scholars perceived it: The first priority relates to resources. Congress and the president enacted an inadequate level of funding in 2003 for homeland security. In addition to rectifying that problem, they need to turn promptly to the 2004 budget and redress vulnerabilities not yet given sufficient priority. These include the use of information technology, where federal funding to date has been a pittance of what is required. They also include public-private cooperation on protecting assets such as chemical facilities, hazardous materials trucking, and the air intakes of skyscrapers. Finally, a number of existing capabilities and capacities need dramatic and rapid augmentation. Such strengthening has already occurred in areas such as airport security and airplane marshals; it now is needed for the Coast Guard, the Customs Service, train travel, airliner protection against surface-to-air missiles, and many state and local capacities (such as first responder teams and hospitals) as well. Another major part of the challenge is making real what Congress and President Bush have created on paper, but not yet in reality—a new and huge federal Department of Homeland Security. Tom Ridge and his management team face a mammoth reorganization task—larger in many ways than anything ever attempted in government. And they must undertake that task without in any way reducing their attention to the demanding effort of securing America against a future terrorist attack. It is therefore crucial that Ridge sets clear reorganization priorities—focusing on those areas that need the most immediate attention such border security and information analysis (and leaving others, such as federal emergency response, until later). Ridge's undersecretary candidates will need to display strong organizational and managerial abilities, particularly in areas such as infrastructure protection, where whole new capacities need to be created and where little has been accomplished to date, despite the heightened attention given to homeland security since 9/11. Finally, the government needs to organize itself much more effectively to monitor terrorists and try to determine where their next attacks may come. A stronger domestic counterterrorism entity is needed, including a new agency independent from the FBI. At present, we are hoping to get lucky by identifying and apprehending individual terrorists before they can strike. We also need to develop an alternative approach that allows us to address the "unknown unknowns," using "red teams" to prepare for what terrorists might do next even if they have shown no proclivity for such attacks to date. In 2002, the Brookings scholars recommended that Congress create homeland-security appropriations subcommittees in each chamber and, as a interim step until homeland-security authorizing committees were established, a joint study and oversight committee for homeland security policy. In updating their report a year later, after the creation of DHS, these scholars specifically recommended that Congress create homeland security authorizing committees in each chamber to "maximize the efficacy of congressional oversight." They explained the recommendation: Much of the benefit of consolidating the homeland security mission within the executive branch will be lost if our national legislature fails to reflect that reorganization in its own structure. Scholars at the Center for Strategic and International Studies issued a white paper in 2002. A task force organized by CSIS issued a subsequent white paper in December 2004. The CSIS scholars' recommendations were part of an agenda of recommendations that included the need to state a "national strategy for homeland security that defines the mission as well as the capabilities and processes necessary to perform that mission" as well as numerous specific actions. Scholars at CSIS sounded a theme similar to that contained in the Brookings report: Although creating a Department of Homeland Security is an important step, it must be viewed as only one part of the answer to the management challenges of the homeland security mission. No single structural fix can resolve what is a massive, long-term strategic problem. Six broad considerations should inform the efforts of homeland security decision makers: Articulate a Homeland Security Strategy... Conduct a Comprehensive Threat and Vulnerability Assessment... Strengthen White House Coordination... Craft an Effective Implementation Strategy... Balance Other Critical Concerns... Seize an Historic Opportunity to Reform Government.... Scholars at CSIS recommended Congress create select committees on homeland security in each chamber comprising the chairs and ranking members of committees and subcommittees that exercised jurisdiction over agencies included in DHS. They also recommended new "subcommittees of oversight" in each chamber's Appropriations Committee. In a subsequent white paper issued in December 2004, a CSIS task force observed: We believe that partial reform or piecemeal efforts will be ineffective. The Department of Homeland Security will be insufficiently accountable unless true reforms are made to place the majority of oversight responsibility in one committee in each chamber of Congress. The current situation poses a clear and demonstrable risk to our national security. The task force followed this observation with a recommendation: We recommend that both the House and the Senate create strong standing committees for homeland security, with jurisdiction over all components of the Department of Homeland Security. We recommend that these committees have a subcommittee structure that maps closely to the core mission areas outlined in the National Strategy for Homeland Security, not simply to the individual directorates of DHS. Further, we recommend that these committees be established pursuant to developing a small, expert cadre of members who can exercise oversight and craft legislation taking into account the full spectrum of homeland security requirements—not simply one narrow element of the domestic war against terrorism. [The core mission areas were listed as 'Intelligence and Warning, Border and Transportation Security, Domestic Counterterrorism, Protecting Critical Infrastructures and Key Assets, Defending Against Catastrophic Threats, Emergency Preparedness and Response.'] Since World War II, when confronted with an opportunity to create or reorganize its committees to correspond to new Cabinet departments, the House has responded differently to the creation of various departments. This section of this report chronicles the response of the House in its committee organization following creation of new departments, collecting this information in one place. The House's creation of the Armed Services Committee occurred by merger of the separate Military Affairs and Naval Affairs Committees, pursuant to the Legislative Reorganization Act of 1946, and preceded by one Congress the creation of the National Military Establishment, later redesignated the Department of Defense. The Armed Services Committee's jurisdiction was updated in 1953 to reflect the existence of the department. When Congress in 1953 approved President Eisenhower's reorganization plan creating the Department of Health, Education, and Welfare, the House did not make changes in its committee organization to parallel the department. The then-House Committees on Banking, Public Works, Education and Labor, and Veterans' Affairs were created or reorganized long before the creation of the Departments of Housing and Urban Development, Transportation, Education, and Veterans Affairs, respectively. The reorganization of House committee jurisdictions to reflect the 1977 creation of the Department of Energy followed the department's organization by three years. On March 25, 1980, the House agreed to H.Res. 549 , to be effective with the next Congress, redesignating the Interstate and Foreign Commerce Committee as the Energy and Commerce Committee and giving it jurisdiction over national energy policy generally and over many components of energy policy. Still, the jurisdiction of the now-Science Committee over such related matters as energy research and development was expanded by H.Res. 549 . The Ways and Means Committee continued to have jurisdiction over tax and trade laws, even as they affected energy policy. The now-Transportation Committee had jurisdiction over oil and other pollution of navigable waters, and the now-Resources Committee had jurisdiction over mineral resources on public lands. Appropriations for the Energy Department were generally contained in an energy and water appropriations bill, which through 1978 had been called a public works appropriations bill, and in an interior appropriations bill. Other committees retained other energy-related jurisdiction. This arrangement was in part due to the retention of energy programs in other departments after the creation of the Department of Energy. The House has tended to continue its committee organization following congressional creation of a new department or a major reorganization in the executive branch. In action after creation of the Department of Energy, the House established the Energy and Commerce Committee as the lead energy policy committee, but it also continued a jurisdictional structure that gave other committees a role in energy policymaking. The merger of the Military Affairs Committee and the Naval Affairs Committee into the Armed Services Committee was the exception to the House's pattern, but it took place within a wholesale and fundamental consolidation of House and Senate committees. The 9/11 Commission and other commissions and think tanks define homeland security to be a continuum of international and domestic initiatives and activities, all of which have a role reducing the likelihood and potential impact of a terrorist attack against the United States. The themes behind these initiatives and activities include: disabling terrorists overseas, winning friends in Islamic and other countries, counterterrorism and homeland security as the principle and purpose of American diplomatic and military strategy, good intelligence abroad and at home, shared appropriately within the federal government and between the federal government and state and local governments and the private sector, commitment abroad and at home to freedom and civil liberties, maintaining a national strategy for homeland security, organizing the federal executive to carry out the strategy, defining the military's domestic role in homeland security, organizing Congress to contribute to and oversee the strategy and its implementation, particularly the ongoing development of DHS to prevent attacks, reduce vulnerability, and respond to and recover from attacks, including state and local governments and the private sector in carrying out the strategy, federal funding of components of the strategy, and preparing the American citizenry for possible additional terrorist attacks. The Select Committee on Homeland Security recommended the creation of a permanent Homeland Security Committee that would have jurisdiction over domestic components of homeland security, reporting to the House Rules Committee on September 30, 2004, as required by H.Res. 5 . That jurisdiction in itself is wide ranging and requires expertise in a large number of policy areas, including intelligence analysis, public health, border control, transportation security, first responders, information technology, protection of critical infrastructure, and homeland security-related research, among other policy areas. The recommended jurisdiction includes DHS and, presumably, the national strategy issued by the President in 2002 and any changes to that strategy. Among many policy areas, the select committee's recommendation would leave jurisdiction over the intelligence community principally in the jurisdiction of the Permanent Select Committee on Intelligence, the Federal Bureau of Investigation (FBI) in the jurisdiction of the Judiciary Committee, the armed forces in the jurisdiction of the Armed Services Committee, relations with foreign nations in the jurisdiction of the International Relations Committee, and money laundering and other financial arrangements in the jurisdiction of the Financial Services Committee. In addition, the policy-area jurisdiction of the proposed committee could overlap with the policy-area jurisdictions of other committees; so, for example, legislation dealing with information technology or public health might be within the jurisdiction of the Homeland Security Committee, the Energy and Commerce Committee, and possibly other committees. Overlaps in some areas, such as with the Agriculture Committee on border issues and with the Science Committee on research and development, were not addressed in the select committee's recommendations. Under the select committee's recommendations, activities within DHS that are not homeland-security-related would remain within the jurisdiction of standing committees already having jurisdiction. For example, the non-homeland-security missions of the Coast Guard and natural disaster preparedness and response would remain under the jurisdiction of the Transportation and Infrastructure Committee; the revenue functions of the Customs Service would remain under the jurisdiction of the Ways and Means Committee; and immigration and naturalization policy that is not related to homeland security would remain under the jurisdiction of the Judiciary Committee. The select committee's recommendations would also leave jurisdiction over appropriations in the Appropriations Committee. As mentioned above, the Appropriations Committees in each chamber realigned their subcommittees to create one subcommittee that parallels the programs and entities of DHS, which leaves funding decisions for other homeland security-related programs and agencies in the jurisdiction of other appropriations subcommittees. (However, discussion of subcommittee jurisdiction over intelligence appropriations could lead to further realignment.) The 9/11 Commission and the other commissions and think tanks recommended alternative committee arrangements: a joint committee, an authorizing committee in each chamber of Congress, or a combined authorization-appropriation committee in each chamber that would have jurisdiction over homeland security, as the 9/11 Commission explained its recommendation, in order to achieve a "unity of effort." The recommendations for a consolidation of jurisdiction in Congress were based on a desire for coherent congressional policymaking vis-à-vis the new Department of Homeland Security or a national homeland-security strategy or both. The commissions and think tanks that made recommendations after the President proposed the creation of DHS, including the select committee, argued that the department would have the best chance of developing with clear lines of authority in Congress. As the 9/11 Commission stated: Through not more than one authorizing committee and one appropriating subcommittee in each house, Congress should be able to ask the secretary of homeland security whether he or she has the resources to provide reasonable security against major terrorist acts within the United States and to hold the secretary accountable for the department's performance. Or, as the select committee stated in its recommendations: The current diffused and unfocused congressional jurisdiction over the Department of Homeland Security, and homeland security in general, not only imposes extraordinary burdens on the Department, but makes it far more difficult for the Congress to guide the Department's activities in a consistent and focused way that promotes integration and eliminates programmatic redundancies, and advances implementation of a coherent national homeland security strategy. The commissions that made recommendations prior to the President's proposal to create DHS recommended a consolidation of committee jurisdictions so that the House and Senate could oversee a national strategy, rather than have separate committees pursue separate interests. Some of the commissions and think tanks were explicit in their desire to ensure that the executive was accountable to Congress for its management of homeland security. As the Hart-Rudman Commission stated: Solving the homeland security challenge is not just an Executive Branch problem. Congress should be an active participant in the development of homeland security programs as well. Its hearings can help develop the best ideas and solutions. Individual members should develop expertise in homeland security policy and its implementation so that they can fill in policy gaps and provide needed oversight and advice in times of crisis. Most important, using its power of the purse, Congress should ensure that government agencies have sufficient resources and that their programs are coordinated, efficient, and effective. The select committee took this perspective a step further in arguing that it was essential for Congress to reorganize its committees in order to exercise its role in homeland security policymaking, stating: Terrorism is now a first-order priority in Congress, the Executive branch, and among the American people. Global terrorism is recognized as a fundamental threat to our people, territory, and way of life for the foreseeable future. The Executive branch has been reconfigured in light of that reality. Congress, however, has not. The result has been uncoordinated oversight and conflicting legislative guidance—effecting a tacit enhancement of Executive branch authority over homeland security policy, programs, and activities. Congress must, in short, fundamentally reform itself or become largely irrelevant where homeland security matters are concerned. In testimony before the select committee's Rules Subcommittee, several witnesses explained in concrete terms what they believed Congress would gain from committee reorganization, enabling it in turn to better exercise its policymaking role. For example, for Representative Hamilton testified: [R]eal congressional expertise on homeland security will come about better I think if you have a permanent committee. My guess is that everybody on [the select] committee has learned an awful lot about homeland security in the last few months, a lot more than they knew when they began work on that committee. That is the strength of the Congress, developing expertise on a difficult subject, and this is one of the key reasons why you should have a permanent committee. There is no substitute for expertise focused on the task at hand; and I think then expertise has to be cultivated, it has to be developed. You have got so many other things that demand your attention, and serving on the committee will make you focus on it and make you do the job of oversight and will develop expertise that the Congress badly needs. But, more important, it will develop the expertise that is critical for the operation of the department itself, the executive branch. On this same point, congressional scholar Wolfensberger testified about an obstacle to developing new expertise in the current committee alignment: Both branches are still wedded to traditional, pre-9/11 arrangements and relationships internally, and with their counterparts in the other branch, what some have referred to in the past as the iron triangle of subcommittees, agencies and their private and public sector clienteles. You need a separate committee that is willing to set a new course and way of doing things; exercise tough oversight, employ innovative thinking and exert constant pressure on the new department to set the right priorities and pursue them rigorously. However, the House has made different decisions in different situations regarding the organization of its committees to oversee a policy area or even a Cabinet department. If the House were to organize a permanent homeland security committee, it could do so in a way that allowed more committee and Member participation in the formulation of homeland security policy, or that allowed integration of homeland-security-related and non-homeland-security-related components of a policy area. The House might choose an alternative to the recommendations of the various commissions and think tanks and its own select committee. Such a choice would be consistent with a number of past decisions on committee jurisdiction over a department or agency or policy area or components of a policy area. As described in a previous section, the House has tended not to follow reorganization in the executive branch with reorganization of House committees. Creation of the Armed Services Committee occurred from merger of two committees and preceded reorganization of what became the Department of Defense by one Congress. While the Armed Services Committee seems to represent the kind of "unity of effort" in committee organization sought by the 9/11 Commission, the committee's creation occurred within the context of the Legislative Reorganization Act of 1946, under which virtually the whole House and Senate committee structure was reorganized. The new committee's jurisdiction was also distinct from the jurisdictions of the other committees organized under the act. The House's renaming of the Interstate and Foreign Committee as the Energy and Commerce Committee and the designation of that committee as the House's lead committee on energy occurred three years after the creation of the Department of Energy, following a review of committee jurisdiction. (This review is described further below.) The designation was accomplished in the same House resolution that enhanced the energy research jurisdiction of what is now the Science Committee. And, the jurisdiction of what is now the Transportation and Infrastructure Committee evolved only incrementally over a number of years after the creation of the Department of Transportation. The House has also chosen not to concentrate all aspects of a policy area in a single committee, choosing instead openness and differing policy perspectives. For example, the Education and the Workforce Committee has jurisdiction over "education or labor generally," but jurisdiction over the education of veterans is vested in the Veterans' Affairs Committee, over mining schools in the Resources Committee, over international education in the International Relations Committee, and over agricultural colleges in the Agriculture Committee. Jurisdiction over the federal civil service is vested in the Government Reform Committee, and over transportation labor in the Transportation and Infrastructure Committee. Although the Government Reform Committee has jurisdiction over the federal civil service, the Armed Services Committee has jurisdiction over "pay, promotion, retirement, and other benefits and privileges of members of the armed forces," and the House Administration Committee has jurisdiction over "Employment of persons by the House, including staff for Members, Delegates, the Resident Commissioner, and committees; and reporters of debates...." The House has also tended to choose dispersal of at least components of a policy area rather than a concentration in one committee, with very large exceptions such as Appropriations and, with regard to taxation, Ways and Means. The House might choose such an arrangement to overcome a committee's bias in favor of a department or agency and too much deference to it; too close an alignment of a committee, a department or agency, and interest groups; or too concentrated power over a policy area. Due in part to dissatisfaction in the 1970s with the Armed Services Committee's and other committees' conduct of intelligence oversight, the House created what ultimately became the Permanent Select Committee on Intelligence. The House abolished the Joint Committee on Atomic Energy in 1977, dispersing its jurisdiction to several committees. By the 1970s, public health and environmental concerns were part of the policy debate over nuclear energy's future, and the joint committee was criticized for its closeness to the nuclear power industry. The House has also chosen to redistribute a committee's jurisdiction when it has perceived that the jurisdiction is too broad, that components of the jurisdiction are closely related to the jurisdiction of another committee, or that a redistribution of jurisdiction would better distribute House committees' workload. For example, in adopting rules for the 104 th Congress, the House redistributed specific parts of the Energy and Commerce Committee's jurisdiction to three other standing committees. Nonetheless, the House cleared up what might have been perceived as duplication of the work of the standing committees by abolishing four select committees in the 103 rd Congress and what might have been perceived as committees with redundant or too narrow jurisdiction by abolishing three standing committees in the 104 th Congress. It also over the course of four Congresses transferred jurisdiction over several financial services policy areas to what is now the Financial Services Committee from the Energy and Commerce Committee, in recognition of changes in the financial services sector of the domestic and global economy. Since World War II, however, the House has not done what the select committee has recommended with regard to homeland security jurisdiction: create a new committee and curtail the jurisdiction of existing standing committees. If the House were to create a permanent homeland security committee, considerations in addition to the importance of homeland security might affect the design of the committee in its creation or in implementation of the House's decision. If selected jurisdictions of existing standing committee were to be curtailed or taken away, the House could lose the expertise of Members and staff serving or working on those committees, and the House might value shared jurisdiction allowing a broader range of expertise among its committees rather than expertise largely residing in one committee. Shared jurisdiction could arguably enhance the integration of homeland-security-related initiatives into the broader policy areas of which they are a part, such as immigration, transportation modes and systems, federally supported R&D, or international commerce. While possibly creating a lead committee on homeland security, the House might desire having more than one committee serve as a watchdog of the new department and bring different perspectives of committees and the Members who serve on them to bear on homeland security policymaking. For example, even in designating the Energy and Commerce Committee as the House's lead committee on energy policy, important components of energy policy were left or placed in the jurisdiction of other committees. While such an arrangement might arguably make it more difficult to legislate in a policy area at the committee level, the arrangement can provide an incentive for a larger number of Members to become knowledgeable about policymaking related to that area. Indeed, one consequence of a number of Members having waivers from the House rule limiting Members to service on two standing committees is to give many Members a broader role in policymaking at the committee level. A more dispersed jurisdiction could also provide additional access to Congress for whistleblowers, alternative forums that might be more receptive to critical reviews or the conduct of oversight, or alternative forums for competing views contributing to more robust policymaking. Despite the House's predilection for multiple perspectives being brought to bear on policy problems and the desire it manifested in the 103 rd and 104 th Congresses to reduce the number of House committees, the policy area of homeland security seems to be something new. Remarkably, the Legislative Reorganization Act of 1946, perhaps due to the broadness and flexibility of the subject terms employed, anticipated many policy problems and the role the federal government would come to play in policy setting and funding through congressional authorization. Cabinet departments could be created and policy problems acted on, and the House could make incremental adjustments over the years to committee jurisdiction and the referral of legislation to accommodate change. Possibly the closest analogy to the perception of homeland security as a new policy problem is the energy crises of the 1970s. Some Members then perceived a need for jurisdictional changes in House committees following the creation of the Department of Energy, and the House eventually created a select committee to study committee jurisdiction and other matters, including jurisdiction over energy policy, and to develop recommendations. In addition, subcommittees had proliferated in the 1970s, and some 83 House committees and subcommittees were believed to have a jurisdictional claim over energy policy. The select committee recommended the creation of an energy committee. However, the House instead by vote affirmed the Interstate and Foreign Commerce Committee's lead role in energy policy and then agreed to the changes that were described above. Are the energy crises analogous to the terrorist attacks of 9/11 that brought homeland security into focus? Some have at least tacitly said no. In distinguishing the House's decision to reduce the number of standing committees in 1994 from his favoring a new permanent homeland security committee, former Speaker Gingrich testified as follows: [T]his is the only potential standing committee which really has the defensive obligation that could involve millions of lives. And for the House to have not some centralized authority monitoring the Department of Homeland Security and creating an effective, secure relationship[,] I think would be an enormous mistake and one which literally could over the next decade result in us having a tragic loss dramatically greater than September 11. This is an unusual case. I don't think you are going to see me come up here and testify about new standing committees, but this is a very unusual moment in our history. In distinguishing the long-term problem of terrorism from previous challenges the United States has faced, former Secretary Schlesinger testified as follows: We now face a different kind of crisis. It is not a question of responding to Pearl Harbor, and four years later accepting the surrender of Japan in Tokyo Bay. Terrorism is the tool of the weak and the terrorists are likely always to be with us. We must lower their capacity to inflict damage. If we fail to lower that capacity to inflict damage, this society will begin to change. It is a democracy, but if you begin to contemplate the psychological reaction of the public seeing a biological attack in Cincinnati, followed by a nuclear attack in Houston, what have you, you are going to see this society change. If we value what has been the wellspring of this constitutional democracy, which continues to be a dispersion of power, then we must as effectively as we can lower the capacity of those hostile to the United States to commit terrorist acts. And that is what the Department of Homeland Security is about. That is the legislation that you passed, and now you are called upon to make it effective. The commissions and think tanks also described the gravity of the terrorist threat and its long-term nature, and the critical importance of a national strategy in response and its implementation. Former Secretary Schlesinger also contrasted the Department of Energy with the Department of Homeland Security and the needs of a diverse new department, stating: [C]reating the Department of Energy was child's play compared to creating this new department simply because the bulk of the resources came from one previously existing agency. Some of the responsibilities, particularly in [the] area of price controls, were shed over the course of the next three years. And as a result, we have a compact, relatively compact, department. What we have here is [a] set of agencies brought together that have a long tradition, Customs Service, the Coast Guard, and newly formed agencies that have not completely jelled, like the Transportation Security [Administration]. These must be helped along so that the disparate cultures of these agencies can be brought together. Later, Secretary Schlesinger stated his concerns about the impact on DHS's future of "fragmentation" among congressional committees: [Y]ou [a subcommittee member] talked about what essentially was fragmentation. If the 88 committees of some jurisdiction in the Congress are dealing with the Department of Homeland Security, they cannot successfully achieve that common mission of protecting the homeland. Thus, it will wind up that some committees, some committee members, some staffs will say to that Department of Homeland Security, unless you do X, unless you give us this response, we are going to take it out on the department. And you will have fragmentation that will be pulling the department apart. It will be responding to the fragmentation that would continue to exist on Capitol Hill. And as a consequence, I think that if you are going to achieve the results that everybody wants, they may disagree in retrospect about what should have been put in the department, but the result that everybody wants, that this department be successful because it is the umbrella that protects the society, then we must have a greater degree of unity on the Hill, as well as in the executive branch. The executive branch will continue to fragment if the Hill remains fragmented. Congressional scholar King made a similar point: "The fragmentation is tremendously debilitating [to DHS]." The question for many committee leaders and presumably some number of House Members is how to reconcile the new and perhaps overriding national security purpose of homeland security with existing programs and policies. Can the House disambiguate the homeland security components of threats to agriculture, nuclear plants, transportation modes, ports, information technology, or public health, or of management of immigration, emergency response, or the Coast Guard, from the individual policy systems governing animal and plant health, nuclear plant safety and security, transportation regulation, and so on? Ways and Means Committee Chairman Bill Thomas explained this concern in relation to traditional Customs functions and international trade, stating: I am very concerned about losing the knowledge and the ability in a continually growing, complicated area of intercourse. It is not bright-lighted. It is not a big area, but, boy, is it necessary to function smoothly as the world's largest importer and the world's largest exporter. The point at which those activities occur have to be allowed to go forward in a very smooth and efficient manner, with the full understanding of the concerns of security today different than previously, that we are more than willing to take into consideration on a negotiated basis[,] with Treasury retraining the structure that it has, with the ability to consult and make adjustments. That is where we are today. That arrangement seems reasonable to me. But if the option of a permanent committee on homeland security is to take jurisdiction from other committees and put it together under the rubric of security and expect, for example, the Customs fees and duty collection function to continue[,] would be rather naive. They would be submitted to security restrictions which I think would make it virtually impossible for them to do their historic job. As noted in the section above related to the select committee's Rules Subcommittee's hearings, other committee leaders also discussed this problem. For example, Energy and Commerce Committee Chairman Barton mentioned the nuclear plant safety provisions in the energy bill and asked in his testimony: "How do you distinguish the need to keep our nuclear plants secure from terrorism versus the need to secure them against sabotage or something done by a former disgruntled employee?" A number of committee leaders also pointed to the legislative and oversight accomplishments of their committees related to homeland security, some pre-dating 9/11 and many in response to the terrorist attacks. Aviation Subcommittee Chairman Mica and Transportation and Infrastructure Committee Ranking Member Oberstar discussed aviation security; a list was included in the statement submitted by committee Chairman Don Young. Energy and Commerce Committee Chairman Barton listed the committee's accomplishments in both his oral and written testimony. Judiciary Committee Chairman Sensenbrenner and Government Reform Committee Chairman Tom Davis and Ranking Member Waxman also detailed the work of their committees. Energy and Commerce Committee Ranking Member Dingell explained this perspective: I would note that the standing committees have taken their responsibilities as seriously as have you ladies and gentlemen here [members of the select committee], and we have moved cooperatively with you and with the others who are concerned with these matters [of homeland security] and with each other to see to it that we have accomplished the legislative purposes that were needed. The committee leaders also noted the expertise of their committee members and staff, and expressed the value of different perspectives being brought to bear on policy problems. Agriculture Committee Chairman Goodlatte and Ranking Member Stenholm asked how one committee could gain the expertise to oversee an enterprise as large and diverse as DHS. Chairman Goodlatte stated: Mr. Chairman, with nearly 170,000 employees and countless missions and responsibilities, the function of the Department of Homeland Security lends itself to a functionally diverse oversight mechanism. I cannot see how a single standing committee with a normal staff can ever amass the expertise necessary to completely[,] properly oversee this new Department. The Congress has a constitutional responsibility to ensure that sufficient resources are provided to review and analyze each of our Federal programs. A single standing [C]ommittee on Homeland Security would have great difficulty in fulfilling this responsibility.... Transportation and Infrastructure Committee Ranking Member Oberstar spoke about his committee's expertise in aviation and asked that that expertise be used to deal with policy problems and their oversight: Secretary Mineta has said he wants world class security with world class service. How to get there? I think our committee understands how to do that. We have contributed a great deal of time to the deliberation [of] these issues. And while we might start out with differing viewpoints, we generally come to a consensus position on the underlying legislation and then work to ensure that it is well carried out. So I urge this committee (the select committee's Rules Subcommittee) to keep in mind this body of expertise, that not only ours but other authorizing committees, standing committees[,] have in matters such as the one you are considering and, more importantly, the interrelationship with other functions of these departments and agencies that are not security but may have [a] relationship to security, and let us continue to attend to the needs and craft the legislation and shape the future missions of these agencies in a way that will be supportive of security but also respectful of the historic functions of say, Coast Guard, aviation, FEMA, and our maritime system. At several points during the hearings, select committee Chairman Cox, sitting as a member of the Rules Subcommittee, provided a perspective on the mission of DHS and a homeland security committee overseeing it that distinguished the department's homeland security mission and the committee's potential jurisdiction from the work and jurisdiction of other standing committees. His perspective reflected the definitions of homeland security contained in the Homeland Security Act. In an exchange involving jurisdiction over aviation security, Chairman Cox explained: [Y]ou have got a Department of Homeland Security that is focused on prevention, protection, and response, and is not going to become the regulator of every aspect of American life; it is not going to become the regulator of every aspect of American commerce. But, as I have said, before other panels have testified today, I think there is a risk the Department could morph into those things. And that is one of the reasons that we want very, very strenuous oversight from the Congress that created it so recently, because if the department, which surely is going to exist indefinitely, the new cabinet department[,] history suggests they don't go away, is going to grow. And if it is going to grow and last indefinitely, then it needs to stay focused, and it needs to stay focused on protecting Americans and our security and not get into all these other areas. And we will lost our competitiveness in all these industries if we regulate them not with a view to the big picture, which includes competition of global commerce, job creation, investment, in the case of transportation safety and all these other things. If we have on the blinders of security and that is all, and then we become—we, the Department of Homeland Security in this case, become the regulators of all these industries, then the regulation will suffer, the industries will suffer, the country will suffer, and it won't work. So I think that dichotomy [between the traditional functional responsibilities of the standing committees and the role of DHS in prevention, protection, and response] makes a great deal of sense. And its is just as important that we circumscribe the mission of the Department of Homeland Security as it is that we respect the traditional jurisdictions of the committees. Former Speaker Gingrich, as cited earlier, responded similarly when asked a question about committee organization: ...I think the jurisdiction issue is actually fairly easy in principle. The principle ought to be that this is a mission-driven jurisdiction; that is, when there are questions of activities that are uniquely homeland security, protection, response, recovery, rehabilitation, this committee ought to have either sole or lead jurisdiction. And, a statement of the Gilmore Commission, cited previously, could be read as consistent with Chairman Cox's explanation. The commission emphasized that its strategic vision for homeland security was "fully consistent with an all-hazards approach," in other words a component of the larger and prevailing emergency management system. The commission noted: As our experience with SARS, West Nile Virus, monkeypox, the recent fires in California, and the current influenza epidemic have demonstrated vividly, we must be able to handle a wide variety of threats. A former senior analyst at the Congressional Research Service, Walter Kravitz, described the legislative process in Congress as a "procedural obstacle course." Under the Constitution, both houses of Congress and the President must agree to the same legislation. Under the rules and practices of each chamber, leaders' support must be garnered and majorities assembled at each stage of the legislative process—subcommittee, committee, floor—to advance legislation or prevent its derailment. Referral of a measure in the House to one committee or to more than one committee, based on jurisdiction, can be looked at from different perspectives. If a measure is referred to just one committee, a majority on that committee can control the committee phase. If a measure is referred to more than one committee, the control of a single committee is lost, but the support of members from multiple committees is gained if each committee reports the legislation. Whether one committee or several committees report a measure, a majority must still be assembled on the floor. The rules and practices of the House and Senate and the requirements of the Constitution make it difficult to pass a measure and enact it into law. If the House were to organize a permanent homeland security committee, would a homeland security committee created in a way that curtails or takes away jurisdiction from existing standing committees shift inter-committee negotiations from the committee phase to the post-reporting/pre-floor phase? Might the leadership or the House Rules Committee or party entities, or a combination of these groups, be called on to negotiate base text or substitute amendments or other changes to any measure reported from the new committee? The existing standing committees have expertise and decades of experience with the policy problems of which security is now a component, and their continued involvement in the development of legislation that affects their traditional jurisdiction is a possibility. Their leverage lies in the legislative process. Witnesses at the select committee's subcommittee hearings offered a variety of options that the House could consider at the time of the creation of a homeland security committee or over the course of one or more Congresses after its creation. For example, several witnesses mentioned the tools at the Speaker's disposal to facilitate committee processing of homeland security legislation—making referrals, designating a primary committee, not designating a primary committee, making sequential referrals, and setting time limits for action under a referral are some of these tools. These tools can be particularly effective where there is shared jurisdiction or a measure's provisions trigger the jurisdiction of more than one committee. Congressional scholars Ornstein and Mann suggested going slowly in building a new committee's jurisdiction, adding to it over time. They, as well as others, also commented on the use of committee assignments, including members from existing standing committees of jurisdiction, as a way to build support for a new committee. Congressional scholar King noted that committees build jurisdiction through such actions as "bill referrals over jurisdictionally ambiguous issues," and that that jurisdiction is later validated in rules changes. Former Speaker Gingrich discussed the concept of "concurrent jurisdiction" to allow the new committee to assert jurisdiction when future problems "impinge on homeland security." Some witnesses discussed oversight jurisdiction, by which a committee can be granted under House rules a broader or different jurisdiction from the committee's legislative jurisdiction. Even in a system of shared jurisdiction, jurisdictional changes could be effected that limit the number of committees with jurisdiction over a function or directorate of DHS. The select committee's recommendations related to jurisdiction cover many domestic components of homeland security, those specifically a part of DHS. Other domestic components and international components, such as combating terrorism overseas, are not specifically listed. This fact was summarized at the beginning of this section. In recognition of the importance of counterterrorism and homeland security, a number of witnesses at the select committee's subcommittee hearings made suggestions for coordination among congressional committees. In addition, a common element among all commission and think tank reports was the need for coordination among congressional committees. One matter cited in the hearings, in the 9/11 Commission report, and in the select committee's recommendations is a perceived need for coordinating or reducing hearings appearances by DHS officials and perhaps other requests to DHS. While some witnesses de-emphasized this concern, many witnesses deplored the number of requests from congressional committees for DHS hearings witnesses and other responses. Former Speaker Gingrich suggested that the House agree to a resolution at the beginning of a Congress "which instructs the executive branch on who has to report where." He also suggested that the leadership monitor DHS "interactions with the House" to prevent diversion of DHS's leadership. Some witnesses called for coordination of requests to DHS by the leadership or by a successor to the select committee. Congressional scholar Wolfensberger suggested that, with regard to homeland security, the "oversight agendas adopted by the committees at the beginning of a Congress should be superintended by the bipartisan leadership." Another matter cited in several of the commission and think tank reports and by former Speaker Gingrich that would benefit from coordination is review of the budget for counterterrorism and homeland security. The reorganization of the Appropriations Committees' subcommittees seemed to answer at least some of the concerns raised by the commissions and think tanks. However, Speaker Gingrich, as noted earlier, suggested the creation of a homeland security subcommittee of the Budget Committee to ensure "adequate resources for Homeland Security before considering any other budgetary matters." Finally, creation of a permanent homeland security committee with jurisdiction over DHS, homeland security generally, and related, enumerated policy areas, as the select committee recommended, might not alone guarantee the policy coordination in Congress over counterterrorism and homeland security that the various commissions, think tanks, and witnesses recommended. The Brookings Institution scholars explained this concern as follows: Congress would be wise then to take to heart its message in the Department of Homeland Security Act and reorganize its jurisdictions to create authorizing committees for homeland security. Such a reorganization would not produce a unified decisionmaking process. Some fragmentation would remain as a result of bicameralism and the twin-track authorization and appropriations process. The task of coordinating the authorizers and appropriators on homeland security with those responsible for related activities by the intelligence agencies, the FBI, and the Pentagon (to name just a few) would also remain. But establishing dedicated homeland security committees to complement the homeland security appropriations subcommittees would likely maximize the efficacy of congressional oversight. (Emphasis added.) Congressional scholar Thurber addressed this concern in a concrete manner in his testimony before the select committee's subcommittee, explaining: The jurisdiction of the new committee should also, though, take into account that most agencies dealing with homeland security are outside the DHS. These agencies include the Northern Command. And I am not recommending that they be in your committee [a homeland security committee that the select committee might ultimately recommend creating], but I just want to point out that there should be some relationship with these things. The Northern Command, the National Guard, the Federal Bureau of Investigation, the Central Intelligence Agency, the NSA [National Security Agency], the National Imagery and Mapping Agency, the Centers for Disease Control. We talked about the NRC [Nuclear Regulatory Commission] before. I have done a lot of work with NRC. And there is a division there that deals with security. There should be some relationship to that. And the elements of the Drug Enforcement [Administration] that deal with borders, and many parts of the Department of Energy. There should be some kind of oversight and coordination relationship with those activities, in my opinion. The new committee will need to strengthen coordination with other committees, such as Armed Services, Judiciary and the Permanent Select Committee on Intelligence, in order to develop, in my opinion, a comprehensive policy making approach to homeland security. One indication of the need for coordination arises from various assessments of what is important or critical to homeland security. For example, the Hart-Rudman Commission stated: "Non-proliferation of weapons of mass destruction is of the highest priority in U.S. national security policy in the next quarter century." The Armed Services and International Relations Committees would be the forums for work on such an issue, but a homeland security committee would have a policy interest in the issue. If the House desired to increase coordination over homeland security within the United States, or over homeland security and combating terrorism overseas, the commissions, thinks tanks, and hearings witnesses suggested options. An option related to the design of permanent homeland security committee is assignment to the committee of members from other committees with related jurisdiction. This option is a variation on the assignments to the select committee in the 108 th Congress. Or, the new committee itself could be assigned a coordinating role. The Select Committee on Homeland Security in the 107 th Congress had, and the Budget Committee has, a coordinating role; these and other coordinating roles could be examined. Several of the commissions suggested ad hoc committees of chairs and ranking members or other arrangements to bring together the principal Members whose committees would have jurisdiction over components of homeland security policy. Such an arrangement could be organized or led by the leadership, and be formally or informally instituted, including being formally constituted under the Speaker's authority in Rule XII. And, as mentioned above, congressional scholar Wolfensberger suggested a new use and increased management of committee oversight plans. Relatedly, the role of the Government Reform Committee, to which committees submit their oversight plans, could be enhanced with regard to plans related to homeland security. If the House were to create a permanent homeland security committee in the 109 th Congress, the time after creation of the committee, in the 109 th Congress and beyond, would provide an opportunity for adjustments within the House's committee structure. Would a homeland security committee better be able to guide development of the Department of Homeland Security, hold its officials accountable, and keep it focused on its mission? What could other committees contribute to the department's development, and how could they contribute? Would a new committee help make Congress a stronger institutional player in setting homeland security policy? Experience will help generate answers to these questions and better inform the House whether a concentration of jurisdiction over the issue of homeland security is preferable to a more dispersed jurisdictional structure. A particular challenge for a new committee, the existing standing committees, and the House leadership is the relationship of homeland security policy to non-homeland-security policy. Can homeland security concerns be addressed separately from the existing policies and programs related to sectors of the economy like air transportation, types of activities like trade, or agencies with large non-homeland-security responsibilities like the Coast Guard or FEMA? Would the existing standing committees work with a new committee, in parallel to it, or separately from it? Again, experience could help answer questions raised about what a homeland security committee could contribute to policymaking and how best to ensure that both homeland security and non-homeland-security missions and purposes are achieved. Finally, a homeland security committee has not been envisioned or proposed that would displace committees with jurisdiction over the intelligence community, foreign relations, the armed forces, or other activities and entities that are important to realizing homeland security. How could the legislative committees reduce further the "fragmentation" that is expected to be reduced with the creation of a homeland security committee? The period following the creation of a homeland security committee would provide an opportunity to try different coordinating mechanisms. On January 4, 2005, the House created a standing Committee on Homeland Security in agreeing to H.Res. 5 , providing for the adoption of the House's rules for the 109 th Congress. New House Rule X, cl. 1(i) granted the jurisdiction of the new committee: (1) Overall homeland security policy. (2) Organization and administration of the Department of Homeland Security. (3) Functions of the Department of Homeland Security relating to the following: (A) Border and port security (except immigration policy and non-border enforcement). (B) Customs (except customs revenue). (C) Integration, analysis, and dissemination of homeland security information. (D) Domestic preparedness for and collective response to terrorism. (E) Research and development. (F) Transportation security. The new committee was also given "special oversight functions," like those of other committees, in new Rule X, cl. 3(f), which stated: The Committee on Homeland security shall review and study on a continuing basis all Government activities relating to homeland security, including the interaction of all departments and agencies with the Department Homeland Security. To differentiate the jurisdiction of the new committee from that of existing committees, the homeland-security-related jurisdiction of three standing committees was amended in H.Res. 5 . An addition was made to the Judiciary Committee's jurisdiction—"criminal law enforcement" —and the committee's jurisdiction over "immigration and naturalization" was amended to "immigration policy and non-border enforcement." The Transportation and Infrastructure's jurisdiction over "related transportation regulatory agencies" was amended to add an exception—"except the Transportation Security Administration." The committee's general jurisdiction over transportation was amended to add an exception—"transportation security functions of the Department of Homeland Security." This paragraph then read: Transportation, including civil aviation, railroads, water transportation, transportation safety (except automobile safety and transportation security functions of the Department of Homeland Security), transportation infrastructure, transportation labor, and railroad retirement and unemployment (except revenue measures related thereto). The Ways and Means Committee's jurisdiction over "customs" was amended to state "customs revenue." This paragraph then read: Customs revenue, collection districts, and ports of entry and delivery. Legislative History. Rules Committee Chair David Dreier inserted in the Congressional Record a "legislative history" concerning the changes to Rule X. The legislative history first explained that the new committee's legislative jurisdiction over "overall homeland security policy" was to be interpreted "on a government-wide or multi-agency basis similar to the Committee on Government Reform's jurisdiction over 'overall economy, efficiency, and management of government operations and activities....'" The legislative history stated further: "Surgical addresses of homeland security policy in sundry areas of jurisdiction occupied by other committees would not be referred to the Committee on Homeland Security on the basis of 'overall' homeland security policy jurisdiction." Second, the legislative history interpreted the new committee's legislative jurisdiction over DHS's "organization and administration" to be "confined to organizational and administrative efforts and would not apply to programmatic efforts within the Department of Homeland Security within the jurisdiction of other committees." Third, the legislative history explained the new committee's homeland security oversight jurisdiction . The new committee would have oversight jurisdiction over the "homeland security community of the United States." However, as noted in the legislative history, this jurisdiction would not necessarily circumscribe the oversight jurisdiction of other committees: Nothing in this clause shall be construed as prohibiting or otherwise restricting the authority of any other committee to study and review homeland security activities to the extent that such activity directly affects a matter otherwise within the jurisdiction of that committee. Fourth, the legislative history interpreted the "individual committee concerns" between the new committee on the one hand and nine standing committees and the Permanent Select Committee on Intelligence on the other. This section of the legislative history detailed jurisdictional relationships covering a number of specific policy and programmatic areas. In addition, in further explanation of the relationship between the new committee and the Ways and Means Committee, the legislative history contained a copy of the "Delegation from the Secretary of the Treasury to the Secretary of Homeland Security of general authority overs Customs revenue functions vested in the Secretary of the Treasury as set forth in the Homeland Security Act of 2002." Referral Precedents. In the "Speaker's Announcements" for the 109 th Congress, the Speaker included a statement about the referral of legislation to the new committee: The 109 th Congress established the Committee on Homeland Security. The Chair would announce that the Speaker's referrals of measures to the Select Committee on Homeland Security of the 108 th Congress will not constitute precedent for referrals to the new committee. H.Res. 5 Summary. Chairman Dreier also inserted a section-by-section summary of H.Res. 5 in the Congressional Record, which included a summary of the jurisdiction granted to the Homeland Security Committee. In remarks to the House, Chairman Dreier commented on the creation of the new committee: ...This change in House rule X, which governs the committees and their legislative jurisdictions, is a delicately crafted architecture. It creates a primary committee while recognizing the other legitimate oversight roles of existing committees. We envision a system of purposeful redundancy. By that, we mean more than one level of oversight and an atmosphere in which the competition of ideas is encouraged. With this jurisdiction and the legislative history that I will be placing in the Record, the Department of Homeland Security will have more certainty as to which committee has the primary responsibility for homeland security. At the same time, the American people will live with the assurance that we are working to prevent anything from falling through the cracks. Committee Funding. The House on January 4, 2005, also agreed to H.Res. 10 , providing interim funding for the Homeland Security Committee through March 31, 2005. Funding for the 109 th Congress for the Homeland Security Committee and other committees was contained in an omnibus committee funding resolution ( H.Res. 224 ). Committee Assignments. Representative Christopher Cox was elected as committee chair and Representative Bennie G. Thompson as ranking minority member in H.Res. 32 and H.Res. 33 , respectively, on January 6, 2005. Chairman Cox had also chaired the Select Committee on Homeland Security in the 108 th Congress. Representative Thompson had served on the select committee in the 108 th Congress, and was the ranking minority member on its Subcommittee on Emergency Preparedness and Response. Representative Jim Turner, who served as ranking minority member of the select committee, did not seek reelection to the 109 th Congress. Freshman Republican Members Charlie Dent, Bobby Jindal, Daniel E. Lungren, Michael T. McCaul, and David G. Reichert were elected to the committee in H.Res. 48 on January 26, 2005. Thirteen Republican Members and 14 Democratic Members were elected to the committee in H.Res. 73 and H.Res. 74 , respectively, on February 9, 2005. On February 10, Chairman Cox announced his appointment of Representative Curt Weldon as the committee's vice chair. There were 19 Republican committee members and 15 Democratic committee members. Two Republican Members chaired other committees: Representative Don Young chaired the Transportation and Infrastructure Committee and Representative Tom Davis chaired the Government Reform Committee. One Democratic Member, Representative Jane Harman, was the ranking member on the Permanent Select Committee on Intelligence. The committee membership in order of seniority as of February 9 was as follows: Committee Organization. The new committee met February 9, 2005, to organize. It adopted its rules for the 109 th Congress, which were printed in the Congressional Record. The following subcommittees were created: Economic Security, Infrastructure Protection, and Cybersecurity Chair: Daniel E. Lungren; Ranking Member: Loretta Sanchez Emergency Preparedness, Science, and Technology Chair: Peter T. King; Ranking Member: Bill Pascrell Jr. Intelligence, Information Sharing, and Terrorism Risk Assessment Chair: Rob Simmons; Ranking Member: Zoe Lofgren Management, Integration, and Oversight Chair: Mike Rogers; Ranking Member: Kendrick B. Meek Prevention of Nuclear and Biological Attack Chair: John Linder; Ranking Member: James R. Langevin On March 3, 2005, the committee released its subcommittee rosters. The committee's rules provided that the committee chair and ranking minority member were ex officio members of all subcommittees. They were allowed to vote in subcommittee and to be counted for purposes of establishing a quorum. At its organization meeting, the committee also adopted its oversight plan for the 109 th Congress. Later in the 109 th Congress, Chairman Cox was nominated by the President to become a member of the Securities and Exchange Commission. The Senate confirmed his nomination July 29, 2005, and he resigned from the House August 2. On September 15, 2005, Representative Peter L. King was elected as the committee's new chair, and Representative Ginny Brown-Waite, FL, was elected to fill the Republican vacancy on the committee ( H.Res. 445 ). To fill the then-vacant chairmanship of the Subcommittee on Emergency Preparedness, Science and Technology, committee Chairman King on September 22, 2005, named Representative David G. Reichert. In addition, as a consequence of Hurricane Katrina's devastation of the Gulf Coast and for other reasons, Chairman King created a new Subcommittee on Investigations on October 7. Representative Michael T. McCaul was named chair and Representative Bob Etheridge was named ranking minority member. Organization. In the 2006 general election, Democrats won a majority of the House and organized it and its committees in the 110 th Congress. The ratio of Democrats to Republicans on the Homeland Security Committee was 20-to-15. The members elected to the committee were: The Committee on Homeland Security organized and adopted its oversight plan on January 23, 2007. The six subcommittees created had been previously announced: Border, Maritime, and Global Counterterrorism Chair: Loretta Sanchez; Ranking Member: Mark E. Souder Emergency Communications, Preparedness, and Response Chair: Henry Cuellar; Ranking Member: Charlie Dent Emerging Threats, Cybersecurity, and Science and Technology Chair: James R Langevin; Ranking Member: Michael T. McCaul Intelligence, Information Sharing, and Terrorism Risk Assessment Chair: Jane Harman; Ranking Member: David G. Reichert Management, Investigations, and Oversight Chair: Christopher P. Carney; Ranking Member: Mike Rogers Transportation Security and Infrastructure Protection Chair: Sheila Jackson-Lee; Ranking Member: Daniel E. Lungren Jurisdictional Memorandum. With the convening of the 110 th Congress, Rules Committee Chair Louise McIntosh Slaughter inserted in the Congressional Record a memorandum of understanding arrived at by the chairs of the Homeland Security Committee and Transportation and Infrastructure Committee, Messrs. Bennie G. Thompson and James L. Oberstar, respectively. The memorandum of understanding began by acknowledging that the legislative history that had been inserted in the Congressional Record in the 109 th Congress was the authoritative source of legislative history, and then stated that the memorandum's purpose was to provide "two clarifications." First, with regard to the Federal Emergency Management Agency (FEMA), the Homeland Security Committee had jurisdiction over the Homeland Security Department's "responsibilities with regard to emergency preparedness and collective response only as they relate to terrorism." Referring then to the enactment of the Department of Homeland Security Appropriations Act, 2007 ( P.L. 109-295 ) and its title VI, the Post-Katrina Emergency Management Reform Act of 2006, the memorandum of understanding next stated that a bill to amend FEMA's "all-hazards emergency preparedness programs that necessarily addresses FEMA's terrorism preparedness programs" would be referred to the Transportation and Infrastructure Committee and that, in addition, the Homeland Security Committee would have a "jurisdictional interest" in the bill. This part of the memorandum of understanding also stated that the memorandum did not affect the Transportation and Infrastructure Committee's jurisdiction over the Stafford Disaster Relief and Emergency Assistance Act or the Federal Fire Prevention and Control Act. Second, with regard to port security, the memorandum of understanding stated that the Homeland Security Committee had jurisdiction over port security, and that some responsibilities of the Coast Guard fell within the jurisdiction of both committees. The memorandum next stated that a bill that addressed the "activities, programs, assets, and personnel of the Coast Guard as they relate to port security and non-port security missions" would be referred to the Transportation and Infrastructure Committee and that, in addition, the Homeland Security Committee would have a "jurisdictional interest" in the bill. The memorandum of understanding concluded with a disclaimer that the memorandum clarified jurisdiction only with respect to these two specific issues and did not address other issues or the jurisdiction of other committees. Appendix A. Recommendations of the Select Committee on Homeland Security on Changes to the Rules of the House of Representatives with Respect to Homeland Security Issues In this appendix, the reader will find the text of the report of the Select Committee on Homeland Security, which was directed by the House, as explained above, to "conduct a thorough and complete study of the operation and implementation of the rules of the House, including rule X, with respect to the issue of homeland security. The select committee shall submit its recommendations regarding any changes in the rules of the House to the Committee on Rules not later than September 30, 2004." Different type styles and formats reflect those used in the original text. House Select Committee on Homeland Security, Recommendations of the Select Committee on Homeland Security on Changes to the Rules of the House of Representatives with Respect to Homeland Security Issues, 108 th Cong., 2 nd sess., September 30, 2004. (Available online at http://hsc.house.gov/files/mini_report_sigs.pdf , visited December 10, 2004. ) "The Need for a Permanent Standing Committee on Homeland Security "The 9/11 terrorists exploited longstanding policy, structural, and programmatic gaps in America's homeland security caused by the separation of foreign from domestic intelligence, the division of 'national security' and 'law enforcement' information and activities, and the stove-piped and uncoordinated nature of our multi-agency border and transportation security systems. Since then, Congress and the President have collaborated in a fundamental re-focusing of executive branch agencies to close those gaps, particularly by creating the Department of Homeland Security (DHS), but also through a wide variety of other initiatives, such as the Terrorist Threat Integration Center (TTIC), the Terrorist Screening Center (TSC), and the proposed National Intelligence Director (NID) and National Counterterrorism Center (NCTC). "Despite this significant Executive Branch reorganization, Congressional structures remain almost the same as they were before the 9/11 attacks. Scores of committees and subcommittees of the Congress have some claim to jurisdiction over various elements of the Department of Homeland Security (DHS), with six standing committees claiming some jurisdiction over critical border security functions of the Department. This creates chaos for the Department. Since January 2004, senior officials from the Department have had to testify at more than 160 Congressional hearings—an average of 20 each month. "Creating a permanent standing Committee on Homeland Security, commencing in the 109 th Congress, is necessary if the House of Representatives is effectively to meet its legislative and oversight responsibilities with respect to homeland security programs and activities, particularly those of DHS. The current diffused and unfocused congressional jurisdiction over the Department of Homeland Security, and homeland security in general, not only imposes extraordinary burdens on the Department, but makes it far more difficult for the Congress to guide the Department's activities in a consistent and focused way that promotes integration and eliminates programmatic redundancies, and advances implementation of a coherent national homeland security strategy. Current legislative "silos" foster—and, if left unchanged, will continue to foster—fragmentation within DHS as it struggles to build a new common culture focused squarely on the homeland security mission. "For these reasons, not only the 9/11 Commission, but virtually every other commission and outside expert has recognized that effective and efficient legislation and oversight with respect to homeland security requires congressional reorganization that vests in a single standing committee in each chamber jurisdiction that parallels the homeland security mission of preventing, preparing for, and responding to acts of terrorism in the United States. A select committee, while appropriate in certain situations, would not be conducive to fostering the clear lines of accountability and responsibility that are necessary when dealing with the variety and cross-cutting nature of homeland security programs and activities situated largely in a single Department. "The success of this endeavor requires that the new standing committee have legislative and oversight jurisdiction broad enough to ensure that it can take a holistic approach toward homeland security issues, and that the unnecessarily heavy burden the Department of Homeland Security now bears in interacting with a vast array of committees and subcommittees in both houses of the Congress is drastically reduced. "In carrying out this consolidation, it is important to craft the right balance between the jurisdiction of the new standing Committee on Homeland Security and that of existing committees. The Homeland Security Act of 2002 offers a congressionally-created road map to jurisdictional reform that focuses on the structure, organization, capabilities, and mission of the Department itself. The House must reorganize the committee structure so that the new homeland security mission is provided sustained and consistent attention. "Recommendations on Changes to Rule X with Respect to Homeland Security "Pursuant to House Resolution 5, the Select Committee on Homeland Security makes the following recommendations for changes to Rule X regarding the reorganization of jurisdiction within the House with respect to homeland security matters: "Rule X " Organization of Committees "Committees and Their Legislative Jurisdictions "i. There shall be in the House the following standing committees, each of which shall have the jurisdiction and related functions assigned by this clause and clauses 2, 3, and 4. All bills, resolutions, and other matters relating to subjects within the jurisdiction of the standing committees listed in this clause shall be referred to those committees, in accordance with clause 2 of rule XII, as follows: "(a) Committee on Agriculture. ... [no changes] "(b) Committee on Appropriations. ... [no changes] "(c) Committee on Armed Services. ... [no changes] "(d) Committee on the Budget. ... [no changes] "(e) Committee on Education and the Workforce. ... [no changes] "(f) Committee on Energy and Commerce. ... Add at end: "In the case of each of the foregoing, the committee's jurisdiction shall not include responsibilities of the Department of Homeland Security." "(g) Committee on Financial Services. ... Add at end: "In the case of each of the foregoing, the committee's jurisdiction shall not include responsibilities of the Department of Homeland Security." "(h) Committee on Government Reform. ... [no changes] "(i) Committee on House Administration. ... [no changes] "(j) Committee on International Relations. ... Add at end: "In the case of each of the foregoing, the committee's jurisdiction shall not include responsibilities of the Department of Homeland Security." "(k) Committee on the Judiciary. ... "(8) Immigration and naturalization (except for Department of Homeland Security responsibility for security of United States borders and ports of entry, including the Department's responsibilities for visas and other forms of permission to enter the United States, and immigration enforcement) . "(18) Subversive activities affecting the internal security of the United States (except for responsibilities of the Department of Homeland Security) . "(l) Committee on Resources. ... [no changes] "(m) Committee on Rules. ... [no changes] "(n) Committee on Science. ... [no changes] "(o) Committee on Small Business. ... [no changes] "(p) Committee on Standards of Official Conduct. ... [no changes] "(q) Committee on Transportation and Infrastructure. "(i) Non-homeland security missions of the Coast Guard, including lifesaving service, lighthouses, lightships, ocean derelicts, and the Coast Guard Academy. "(2) Federal management of natural disasters. "(18) Related transportation regulatory agencies (except for responsibilities of the Department of Homeland Security). "(20) Transportation, including railroads, water transportation, transportation safety (except automobile safety), transportation infrastructure, transportation labor, and railroad retirement and unemployment (except revenue measures related thereto); in each case exclusive of the responsibilities of the Department of Homeland Security. "(22) Civil aviation, including safety and commercial impact of security measures. "(r) Committee on Veterans ' Affairs. ... [no changes] "(s) Committee on Ways and Means. ... "(i) Revenue from customs, collection districts and ports of entry and delivery. ... "General Oversight Responsibilities "[no changes] "Special Oversight Functions... "[no changes] * * * * * "Permanent Select Committee on Intelligence "... " i i.(a)(i) There is established a Permanent Select Committee on Intelligence (hereafter in this clause referred to as the "select committee"). The select committee shall be composed of not more than 18 Members, Delegates, or the Resident Commissioner, of whom not more than 10 may be from the same party. The select committee shall include at least one Member, Delegate, or the Resident Commissioner from each of the following committees: "(A) the Committee on Appropriations; "(B) the Committee on Armed Services; "(C) the Committee on Homeland Security; "(D) the Committee on International Relations; and "(E) the Committee on the Judiciary. ... * * * * * "Committee on Homeland Security "12. (a)(i) There is here by established a permanent standing Committee on Homeland Security (hereafter in this clause referred to as the "committee"'), which shall be composed of not more than 29 Members, Delegates, or the Resident Commissioner, of whom not more than 16 may be from the same party. "(2) The Speaker and the Minority Leader shall be ex officio members of the committee but shall have no vote in the committee and may not be counted for purposes of determining a quorum thereof. "(3) The Speaker and Minority Leader each may designate a member of his leadership staff to assist him in his capacity as ex officio member, with the same access to committee meetings, hearings, briefings, and materials as employees of the committee and subject to the same security clearance and confidentiality requirements as employees of the committee under applicable rules of the House. "(b) There shall be referred to the committee proposed legislation, messages, petitions, memorials, and other matters related to— "(i) Homeland security generally. "(2) The Department of Homeland Security (except with respect to Federal management of natural disasters, the non-homeland security missions of the Coast Guard, and immigration and naturalization matters unrelated to homeland security) . "(3) The integration, analysis, and sharing of homeland security information related to the risk of terrorism within the United States . "(4) The dissemination of terrorism threat warnings, advisories, and other homeland security related communications to State and local governments, the private sector, and the public. "(5) Department of Homeland Security responsibility for research and development in support of homeland security, including technological applications of such research. "(6) Department of Homeland Security responsibility for security of United States borders and ports of entry (unrelated to customs revenue functions), including the Department ' s responsibilities related to visas and other forms of permission to enter the United States . "(7) Enforcement of Federal immigration laws (except for responsibilities of the Department of Justice). "(8) Security of United States air, land, and maritime transportation systems. "(9) Customs functions, other than customs revenue functions. "(10) Department of Homeland Security responsibility for Federal, state, and local level preparation to respond to acts of terrorism. "(c) In addition to the general oversight responsibilities described in clause 2, the committee shall review, study, and coordinate on a continuing basis laws, programs, and Government activities related to all aspects of homeland security. "(d) The committee shall have exclusive authorizing and primary oversight jurisdiction with respect to the Department of Homeland Security's responsibilities and activities related to the prevention of, preparation for, and response to acts of terrorism within the United States. The committee also shall have jurisdiction over the other responsibilities and activities of the Department of Homeland Security, except as specified in subsection (b) (2). "(e) Subject to the Rules of the House, funds may not be appropriated for a fiscal year, with the exception of a bill or joint resolution continuing appropriations, or an amendment thereto, or a conference report thereon, to, or for use of, the Department of Homeland Security to prevent, prepare for, or respond to acts of terrorism in the United States, unless the funds shall previously have been authorized by a bill or joint resolution passed by the House during the same or preceding fiscal year to carry out such activity for such fiscal year. "(f) No referrals of legislation, executive communication, or any other action taken in the 108 th Congress with regard to the Select Committee on Homeland Security or any other committee of the House shall be considered to be a precedent for referrals of any homeland security-related measures in the current Congress." Appendix B. Recommendations on Congressional Organization Made by the 9/11 Commission In this appendix, the reader will find excerpts from the report of the 9/11 Commission. The excerpts are the verbatim recommendations related to congressional organization that are contained in this report. Different type styles and formats reflect those used in the original text. 1) National Commission on Terrorist Attacks Upon the United States, The 9/11 Report: Final Report of the National Commission on Terrorist Attacks Upon the United States (Washington: GPO, July 22, 2004), p. 416. (Available online at http://www.gpoaccess.gov/911/index.html , visited December 10, 2004.) " Recommendation: Finally, to combat the secrecy and complexity we have described [in accomplishing unity of effort in the intelligence community], the overall amounts of money being appropriated for national intelligence and to its component agencies should no longer be kept secret. Congress should pass a separate appropriations act for intelligence, defending the broad allocation of how these tens of billions of dollars have been assigned among the varieties of intelligence work. "The specifics of the intelligence appropriation would remain classified, as they are today. Opponents of declassification argue that America's enemies could learn about intelligence capabilities by tracking the top-line appropriations figure. Yet the top-line figure by itself provides little insight into U.S. intelligence sources and methods. The U.S. government readily provides copious information about spending on its military forces, including military intelligence The intelligence community should not be subject to that much disclosure. But when even aggregate categorical numbers remain hidden, it is hard to judge priorities and foster accountability." ↔↔↔ 2) The 9/11 Report: Final Report of the National Commission on Terrorist Attacks Upon the United States , pp. 419-423. "13.4 UNITY OF EFFORT IN THE CONGRESS " Strengthen Congressional Oversight of Intelligence and Homeland Security "Of all our recommendations, strengthening congressional oversight may be among the most difficult and important. So long as oversight is governed by current congressional rules and resolutions, we believe the American people will not get the security they want and need. The United States needs a strong, stable, and capable congressional committee structure to give America's national intelligence agencies oversight, support, and leadership. "Few things are more difficult to change in Washington than congressional committee jurisdiction and prerogatives. To a member, these assignments are almost as important as the map of his or her congressional district. The American people may have to insist that these changes occur, or they may well not happen. Having interviewed numerous members of Congress from both parties, as well as congressional staff members, we found that dissatisfaction with congressional oversight remains widespread. "The future challenges of America's intelligence agencies are daunting. They include the need to develop leading-edge technologies that give our policy-makers and warfighters a decisive edge in any conflict where the interests of the United States are vital. Not only does good intelligence win wars, but the best intelligence enables us to prevent them from happening altogether. "Under the terms of existing rules and resolutions the House and Senate intelligence committees lack the power, influence, and sustained capability to meet this challenge. While few members of Congress have the broad knowledge of intelligence activities or the know-how about the technologies employed, all members need to feel assured that good oversight is happenings. When their unfamiliarity with the subject is combined with the need to preserve security, a mandate emerges for substantial change. "Tinkering with the existing structure is not sufficient. Either Congress should create a joint committee for intelligence, using the Joint Atomic Energy Committee as its model, or it should create House and Senate committees with combined authorizing and appropriations powers. "Whichever of these two forms are chosen, the goal should be a structure—codified by resolution with powers expressly granted and carefully limited—allowing a relatively small group of members of Congress, given time and reason to master the subject and the agencies, to conduct oversight of the intelligence establishment and be clearly accountable for their work. The staff of this committee should be nonpartisan and work for the entire committee and not for individual members. "The other reforms we have suggested—for a National Counterterrorism Center and a National Intelligence Director—will not work if congressional oversight does not change too. Unity of effort in executive management can be lost if it is fractured by divided congressional oversight. " Recommendation: Congressional oversight for intelligence—and counterterrorism—is now dysfunctional. Congress should address this problem. We have considered various alternatives: A joint committee on the old model of the Joint Committee on Atomic Energy is one. A single committee in each house of Congress, combining authorizing and appropriating authorities, is another. "●The new committee or committees should conduct continuing studies of the activities of the intelligence agencies and report problems relating to the development and use of intelligence to all members of the House and Senate. "●We have already recommended that the total level of funding for intelligence be made public, and that the national intelligence program be appropriated to the National Intelligence Director, not to the secretary of defense. "●We also recommend that the intelligence committee should have a subcommittee specifically dedicated to oversight, freed from the consuming responsibility of working on the budget. "●The resolution creating the new intelligence committee structure should grant subpoena authority to the committee or committees. The majority party's representation on this committee should never exceed the minority's representation by more than one. "●Four of the members appointed to this committee or committees should be a member who also serves on each of the following additional committees: Armed Services, Judiciary, Foreign Affairs, and the Defense Appropriations subcommittee. In this way the other major congressional interests can be brought together in the new committee's work. "●Members should serve indefinitely on the intelligence committees, without set terms, thereby letting them accumulate expertise. "●The committees should be smaller—perhaps seven or nine members in each house—so that each member feels a greater sense of responsibility, and accountability, for the quality of the committee's work. "The leaders of the Department of Homeland Security now appear before 88 committees and subcommittees of Congress. One expert witness (not a member of the administration) told us that this is perhaps the single largest obstacle impeding the department's successful development. The one attempt to consolidate such committee authority, the House Select Committee on Homeland Security, may be eliminated. The Senate does not have even this. "Congress needs to establish for the Department of Homeland Security the kind of clear authority and responsibility that exist to enable the Justice Department to deal with crime and the Defense Department to deal with threats to national security. Through not more than one authorizing committee and one appropriating subcommittee in each house, Congress should be able to ask the secretary of homeland security whether he or she has the resources to provide reasonable security against major terrorists acts within the United States and to hold the secretary accountable for the department's performance. " Recommendation: Congress should create a single, principal point of oversight and review for homeland security. Congressional leaders are best able to judge what committee should have jurisdiction over this department and its duties. But we believe that Congress does not have the obligation to choose one in the House and one in the Senate, and that this committee should be a permanent standing committee with a nonpartisan staff. " Improve the Transitions between Administrations "In chapter 6, we described the transition of 2000-2001. Beyond the policy issues we described, the new administration did not have deputy cabinet officers in place until the spring of 2001, and the critical subcabinet officials were not confirmed until the summer—if then. In other words, the new administration—like others before it—did not have its team on the job until at least six months after it took office. " Recommendation: Since a catastrophic attack could occur with little or no notice, we should minimize as much as possible the disruption of national security policymaking during the change of administrations by accelerating the process for national security appointments. We think the process could be improved significantly so transitions can work more effectively and allow new officials to assume their new responsibilities as quickly as possible. "●Before the election, candidates should submit the names of selected members of their prospective transition teams to the FBI so that, if necessary, those team members can obtain security clearances immediately after the election is over. "●A president-elect should submit lists of possible candidates for national security positions to begin obtaining security clearances immediately after the election, so that their background investigations can be complete before January 20. "●A single federal agency should be responsible for providing and maintaining security clearances, ensuring uniform standards—including uniform security questionnaires and financial report requirements, and maintaining a single database. This agency can also be responsible for administering polygraph tests on behalf of organizations that require them. "●A president-elect should submit the nominations of the entire new national security team, through the level of under secretary of cabinet departments, not later than January 20. The Senate, in return, should adopt special rules requiring hearings and votes to confirm or reject national security nominees within 30 days of their submission. The Senate should not require confirmation of such executive appointees below Executive Level 3. "●The outgoing administration should provide the president-elect, as soon as possible after election day, with a classified, compartmented list that catalogues specific, operational threats to national security; major military or covert operations; and pending decisions on the possible use of force. Such a document could provide both notice and a checklist, inviting a president-elect to inquire and learn more." Appendix C. Recommendations on Congressional Organization Made by the Bremer Commission In this appendix, the reader will find excerpts from the report of the Bremer Commission. The excerpts are the verbatim recommendations related to congressional organization that are contained in this report. Different type styles and formats reflect those used in the original text. National Commission on Terrorism, Countering the Changing Threat of International Terrorism, transmitted to the President and Congress June 7, 2000, pp. 33, 35-36. (Available online at http://www.gpo.gov/nct , visited December 10, 2004.) " Improve Executive and Legislative Branch Review of Counterterrorism Activities " Congressional responsibility for reviewing the President ' s counterterrorism budget is divided among several committees and sub-committees, making coordinated review more difficult. "One of the essential tasks for the national counterterrorism coordinator [on the President's staff] is to prepare a comprehensive counterterrorism plan and budget. Similarly, Congress should develop mechanisms for coordinated review of the President's counterterrorism policy and budget, rather than having each of the many relevant committees moving in different directions without regard to the overall strategy. "As a first step, the Commission urges Congress to consider holding joint hearings of two or more committees on counterterrorism matters. In addition, to facilitate executive-legislative discussion of terrorism budget issues, the House and Senate Appropriations committees should each assign to senior staff responsibility for cross-appropriations review of counterterrorism programs. "Finally, the Commission notes the importance of bipartisanship both in Congress and in the executive branch when considering counterterrorism policy and funding issues. " Recommendations: "• Congress should develop a mechanism for reviewing the President's counterterrorism policy and budget as a whole. The executive branch should commit to full consultation with Congress on counterterrorism issues. "• House and Senate Appropriations Committees should immediately direct full-committee staff to conduct a cross-subcommittee review of counterterrorism budgets." Appendix D. Recommendations on Congressional Organization Made by the Gilmore Commission In this appendix, the reader will find excerpts from the report of the Gilmore Commission. The excerpts are the verbatim recommendations related to congressional organization that are contained in this report. Different type styles and formats reflect those used in the original text. 1) Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction, I. Assessing the Threat, First Annual Report to the President and the Congress, December 15, 1999, p. 57. (Available online at http://www.rand.org/nsrd/terrpanel , visited December 10, 2004.) " Congressional Responsibilities "In much the same way that the complexity of the Federal bureaucratic structure is an obstacle—from a state and local perspective—to the provision of effective and efficient Federal assistance, it appears that the Congress has made most of its decisions for authority and funding to address domestic preparedness and response issues with little or no coordination. The various committees of the Congress continue to provide authority and money within the confines of each committee's jurisdiction over one or a limited number of Federal agencies and programs. The Panel recommends, therefore, that the Congress consider forming an ad hoc Joint Special or Select Committee, composed of representatives of the various committees with oversight and funding responsibilities for these issues, and give such an entity the authority to make determinations that will result in more coherent efforts at the Federal level." ↔↔↔ 2) Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction, II. Toward a National Strategy for Combating Terrorism, Second Annual Report to the President and the Congress, December 15, 2000, pp. 16-18. (Available online at http://www.rand.org/nsrd/terrpanel , visited December 10, 2004.) " Improving Coordination in the Congress "In our first report, we were critical of the Congress for its propensity to make 'decisions for authority and funding to address domestic preparedness and response issues with little or no coordination.' We noted that the 'various committees of the Congress continue to provide authority and money within the confines of each committee's jurisdiction over one or a limited number of Federal agencies and programs.' Those observations still pertain. "The Congress has been active in proposing legislative "fixes" to the problem of Interagency coordination. Two recent examples are the unanimous passage by the House of Representatives of a bill to create the 'Office of Terrorism Preparedness" in the Executive Office of the President, and of a provision to create a new 'Deputy Attorney General for Combating Domestic Terrorism.' Numerous Congressional panels on both sides of Capitol Hill have held hearings on the subject of terrorism. The Congress has also commissioned various studies and reports on combating terrorism by the General Accounting Office (GAO). One Act noted that Members 'continue to be concerned about the threat of domestic terrorism, particularly involving the use of weapons of mass destruction (WMD) and the ability of the Federal Government to counter this threat.' As a consequence the Congress directed a comprehensive report from the GAO: "'The conferees agree to a provision that would require the Comptroller General to provide an updated report to Congress, not later than 180 days after the enactment of this Act, on federal strategy, policy and programs to combat domestic terrorism. The conferees direct the Comptroller General to include in the report on combating domestic terrorism a discussion of the following issues: lead agency responsibility for crisis and consequence management; adequacy of exiting plans formulated by the various federal agencies; threat and risk assessments; command and control structures; exercises, including a thorough assessment of the recent Top Official Exercise 2000; cyberterrorism; and research and development efforts of new technologies.' "The Congress continues to direct the creation and funding of specific programs with little coordination among the various committees. Some programs are funded with little apparent consideration for the impact of those decisions on a comprehensive national effort. "Moreover, appropriations committees, through their various agency appropriations bills, occasionally create and fund programs that were not subject to the normal authorization processes. The result of such action is often lack of detail and clarity in the structure and execution of programs, as well as a lack of continuity and sustainability, as most such programs are only funded year by year. Examples of major programs created and funded in appropriations bills, which have no parallel authorizing language, include most of the programs for combating terrorism administered by the Office of State and Local Domestic Preparedness Support in the Department of Justice: equipment grant programs totaling $75 million; and training programs, including grants to the national training consortium and the Center for Domestic Preparedness totaling $37 million; and earmarks to two institutes totaling $30 million. "The Congress may, however, be foundering on the issue in large measure because of the absence of a comprehensive 'national strategy' for combating terrorism. We do not suggest that Congress has or should have the responsibility for creating such a national strategy. That is, in our view, clearly the responsibility for the Executive Branch. (Footnote citations to previous commission report, congressional bills and reports, GAO, and programs are not included.) " Special Committee for Combating Terrorism " We recommend the establishment of a Special Committee for Combating Terrorism—either a joint committee between the Houses or separate committees in each House —to address authority and funding, and to provide Congressional oversight, for Federal programs and authority for combating terrorism . "We do not make this proposal lightly, and do so with the full recognition that such change may be difficult but is no less meritorious. " Committee Functions and Structure "The joint or separate committee of each House should consist of bipartisan representation from Members of all relevant authorization, oversight, budget, and appropriations committees and subcommittees that currently have cognizance over Federal programs and activities to combat terrorism. It should have a full-time staff either detailed from those relevant committees and subcommittees or new employees who have the requisite experience and expertise. "The joint or separate panel should perform several critical functions. First , it would constitute a forum for reviewing all aspects of a national strategy and supporting implementation plans for combating terrorism, developed and submitted by the National Office for Combating Terrorism. [The office is proposed earlier in the second annual report.] As part of that process, the joint or each separate committee should develop a consolidated legislative plan, including authorizing language and corresponding budget and appropriations 'benchmarks' in response to the national strategy to combat terrorism and accompanying program and budget proposals. " Second , it would serve as the 'clearinghouse' for all legislative proposals for combating terrorism. For separate bills (unrelated to the omnibus package related to the strategy), the committee should have first referral of such legislation, prior to the referral to the appropriate standing committee. "Such a structure, with the direct testimony from Executive Branch representatives, State and local officials, private industry, and terrorism experts, could help to eliminate duplication in programs and funding, and to promote an effective national program. ↔↔↔ 3) Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction, IV. Implementing the National Strategy, Fourth Annual Report to the President and the Congress, December 15, 2002, pp. 44-45. (Available online at http://www.rand.org/nsrd/terrpanel , visited December 10, 2004.) "In addition [to the proposed creation of a National Counter Terrorism Center (NCTC) that would replace the FBI in collecting intelligence and other information on international terrorist activities inside the United States], there could be more focused and effective Congressional oversight of the domestic collection and analysis functions. Currently, the oversight of the FBI's FISA [Foreign Intelligence Surveillance Act] and other domestic intelligence activities is split between the Judiciary and Intelligence committees of each House of Congress. Creation of the NCTC would clearly place the primary responsibility for oversight of that agency under the Senate Select Committee on Intelligence and the House Permanent Select Committee on Intelligence. Such a structure and improved oversight would likely provide an even better mechanism for protecting civil liberties than do current structure and processes. For that reasons, the panel makes the following, related " Recommendation: That the Congress ensure that oversight of the NCTC be concentrated in the intelligence committees of each House. " ↔↔↔ 4) IV. Implementing the National Strategy, Fourth Annual Report to the President and the Congress, p. 50. " The Congress "The Congress is still not well organized to address issues involving homeland security in a cohesive way. The House recently took the bold, necessary, but unfortunately only temporary step of creating a special committee just to consider the proposal to create the Department of Homeland Security. Structures of that nature are required on a longer-term basis. Jurisdiction for various aspects of this issue continues to be scattered over dozens of committees and subcommittees. We therefore restate our prior recommendation with a modification. " Recommendation: That each House of the Congress establish a separate authorizing committee and related appropriation subcommittee with jurisdiction over Federal programs and authority for Combating Terrorism/Homeland Security. " ↔↔↔ 5) Advisory Panel to Assess Domestic Response Capabilities for Terrorism Involving Weapons of Mass Destruction, V. Forging America ' s New Normalcy: Securing Our Homeland, Preserving Our Liberty, Fifth Annual Report to the President and the Congress, December 15, 2003, p. 16. (Available online at http://www.rand.org/nsrd/terrpanel , visited December 10, 2004.) [As an achievement of the strategic vision—] "Executive Branch and Congressional oversight mechanisms have proven highly effective in preventing any abuses [by the Terrorist Threat Integration Center that the commission recommended be created and charged with certain domestic intelligence collection responsibilities]." ↔↔↔ 6) In Appendix K , "Status of Previous Advisory Panel Recommendations," of the fifth annual report, the following information, in a similar format, is provided on recommendations related to congressional organization: Appendix E. Recommendations on Congressional Organization Made by the Hart-Rudman Commission In this appendix, the reader will find excerpts from the report of the Hart-Rudman Commission. The excerpts are the verbatim recommendations related to congressional organization that are contained in this report. Different type styles and formats reflect those used in the original text. 1) United States Commission on National Security/21 st Century, Road Map for National Security: Imperative for Change, The Phase III Report of the United States Commission on National Security/21 st Century, February 15, 2001, pp. 26-28. (Available online at http://govinfo.library.unt.edu/nssg/index.html , visited December 10, 2004.) " C. Executive-Legislative Cooperation "Solving the homeland security challenge is not just an Executive Branch problem. Congress should be an active participant in the development of homeland security programs as well. Its hearings can help develop the best ideas and solutions. Individual members should develop expertise in homeland security policy and its implementation so that they can fill in policy gaps and provide needed oversight and advice in times of crisis. Most important, using its power of the purse, Congress should ensure that government agencies have sufficient resources and that their programs are coordinated, efficient, and effective. "Congress has already taken important steps. A bipartisan Congressional initiative produced the U.S. effort to deal with the possibility that weapons of mass destruction could 'leak' out of a disintegration Soviet Union. It was also a Congressional initiative that established the Domestic Preparedness Program and launched a 120-city program to enhance the capability of federal, state, and local first responders to react effectively in a WMD emergency. Members of Congress from both parties have pushed the Executive Branch to identify and manage the problem more effectively. Congress has also proposed and funded studies and commissions on various aspects of the homeland security problem. But it must do more. "A sound homeland security strategy requires the overhaul of much of the legislative framework for preparedness, response, and national defense programs. Congress designed many of the authorities that support national security and emergency preparedness programs principally for a Cold War environment. The new threat environment—from biological and terrorist attacks to cyber attacks on critical systems—poses vastly different challenges. We therefore recommend that Congress refurbish the legal foundation for homeland security in response to the new threat environment . "In particular, Congress should amend, as necessary, key legislative authorities such as the Defense Production Act of 1950 and the Communications Act of 1934, which facilitate homeland security functions and activities. Congress should also encourage the sharing of threat, vulnerability, and incident data between the public and private sectors—including federal agencies, state governments, first responders, and industry. In addition, Congress should monitor and support current efforts to update the international legal framework for communications security issues. (Footnote citations to laws and other reports are not included.) "Beyond that, Congress has some organizational work of its own to do. As things stand today, so many federal agencies are involved with homeland security that it is exceedingly difficult to present federal programs and their resource requirements to the Congress in a coherent way. It is largely because the budget is broken up into so many pieces, for example, that counterterrorism and information security issues involve nearly two dozen Congressional committees and subcommittees. The creation of the National Security Homeland Agency will redress this problem to some extent, but because of its growing urgency and complexity, homeland security will still require a stronger working relationship between the Executive and Legislative Branches. Congress should therefore find ways to address homeland security issues that bridge current jurisdictional boundaries and that create more innovative oversight mechanisms. "There are several ways of achieving this. The Senate's Arms Control Observer Group and its more recent NATO Enlargement Group were two successful examples of more informal Executive-Legislative cooperation on key multi-dimensional issues. Specifically, in the near term, this Commission recommends the following: "This body should develop a comprehensive understanding of the problem of homeland security, exchange information and viewpoints with the Executive Branch on effective policies and plans, and work with standing committees to develop integrated legislative responses and guidance. Meetings would often be held in closed session so that Members could have access to interagency deliberations and diverging viewpoints, as well as to classified assessments. Such a body would have neither a legislative nor an oversight mandate, and it would not eclipse the authority of any standing committee. "At the same time, Congress needs to systematically review and restructure its committee system, as will be proposed in recommendation 48. A single, select committee in each house of Congress should be given authorization, appropriations, and oversight responsibility for all homeland security activities. When established, these committees would replace the function of the oversight body described in recommendation 7." ↔↔↔ 2) Road Map for National Security: Imperative for Change, The Phase III Report of the United States Commission on National Security/21 st Century, pp. 58-59. "It follows from a reform that integrates many of the nation's foreign policy activities under the Secretary of State that a similar logic should be applied to the State Department budget. We therefore recommend the following: "The State Department's International Affairs (Function 150) Budget Request would no longer be divided into separate appropriations by the Foreign Operations subcommittee on the one hand, and by a subcommittee on the Commerce, State, and Justice Departments on the other. The Congressional leadership would need to alter the current jurisdictional lines of the Appropriation subcommittees so that the Foreign Operations subcommittee would handle the entire State Department budget. Such a reform would give the administration the opportunity to: "—Allocate all the State Department's resources in a way to carry out the President's overall strategic goals; "—Ensure that the various assistance programs are integrated, rather than simply a collection of administrations' political commitments and Congressional earmarks; and "—Replace the existing budget categories with purposeful goals." (Footnote citation to Function 150 budget categories is not included.) ↔↔↔ 3) Road Map for National Security: Imperative for Change, The Phase III Report of the United States Commission on National Security/21 st Century, pp. 72-73. "Program turbulence, often stemming from lack of funds or from budgetary instability, is the primary cause of inefficiencies and cost overruns in DoD programs. This budgetary instability has several sources. One is the current reality of the resource allocation process itself within DoD, which unfortunately often takes all resources into account during budget reductions—including acquisition programs. This normally results in a known and deliberate underfunding of previously approved programs. Another problem is the acquisition system itself, which suffers from cost overruns and program extensions. Lastly, the Congress often uses small "takes" from large programs to reallocate funds to other priorities without realizing or understanding the problems this creates in having to reprogram funds, write new contracts, and establish new schedules. "We realize that many commissions, and ever more studies, over the past several years have recommended two-year budgeting and multiyear procurement as a way of limiting program turbulence. If these forms of budgeting were introduced, the disincentive to disrupt acquisition programs would appropriately be very high. We also know that Congress had doggedly refused to take such proposals seriously. Congress lacks confidence in DoD's ability to execute such a budget given past weapons cost overruns. Furthermore, appropriating funds on a yearly basis gives Congress a greater ability to influence the Defense Department's policies and programs. "Therefore, rather than propose two-year budgeting across the entire Department of Defense, we focus on the single area where two-year budgeting makes the most sense and stands to do the most good. We recommend the following: "Such steps would markedly increase the stability of weapons development programs and result in budgetary savings in the billions of dollars. For this to happen, however, the Secretary of Defense must impose discipline in the decision-making process. It is already difficult to start new engineering development programs. It should be made even more demanding, ensuring that the military requirements are understood and enduring, and that the technology, concepts, and funding are all well in hand. Once a program is approved, it should be equally difficult to change it. The Commission also notes that it is sometimes better to eliminate some programs early than to absorb the costs of constantly extending programs and procuring limited numbers of weapons at high costs. To accomplish this, Congress will need to let decisions to kill programs stand as well as support DoD budgeting and procurement reforms. "If the government will not take the measures to improve program stability by introducing two-year budgeting in modernization and R&D accounts, and more broadly adopt multiyear funding, it cannot expect private industry to obligate itself to suppliers, or to assume risks on its own investments with little prospect of long-term returns." ↔↔↔ 4) Road Map for National Security: Imperative for Change, The Phase III Report of the United States Commission on National Security/21 st Century, pp. 110-115. " V. The Role of Congress "This Commission has recommended substantial change in Executive Branch institutions, change that is needed if America is to retain its ability to lead the world and to assure the nation's safety. A number of prominent leaders have exhausted themselves and frustrated their careers by too aggressively seeking to reform the House and Senate. The Legislative Branch, however, must change as well. "It is one thing to appeal to Congress to reform the State Department or the Defense Department, quite another to call on Congress to reform itself. Over the years since World War II, the Legislative Branch has been reformed and modernized much less than the Executive Branch. Indeed, the very nature of power in Congress makes it difficult for legislators to reform their collective institution. Yet American national security in the 21 st century, and the prominent role of daily global involvement that is the nature of American life in our generation, mandates a serious reappraisal of both the individual and collective efforts of Congress and its members. "Such a reappraisal must begin with a shared understanding of the Legislative Branch's role in the development and assessment of post-Cold War foreign policy. Divided Constitutional responsibilities require the Executive and Legislature to work together in order for U.S. foreign policy to have coherence. Yet the Executive Branch has at times informed rather than consulted Congress. It has often treated Congress as an obstacle rather than as a partner, seeking Congressional input mostly in times of crisis rather than in an ongoing way that would yield support when crises occur. For its part, Congress has not always taken full responsibility for educating its members on foreign policy issues. It is not often receptive to consultation with the Executive Branch, as well, and has sustained a structure that undermines rather than strengthens its ability to fulfill its Constitutional obligations in the foreign policy arena. "Several measures are needed to address these shortcomings and they are described below. But as an immediate first step we recommend that: "The Speaker of the House, the Majority and Minority leaders of the House, and the Majority and Minority leaders of the Senate should form a bipartisan, bicameral working group with select staff and outside advisory panels to review the totality of Executive-legislative relations in the real-time global information age we are entering. Only by having the five most powerful members of the Congress directly involved is there any hope of real reform. They should work methodically for one year and, by the beginning of the second session of the Congress, they should report on proposed reforms to be implemented by the next Congress. The President, the Vice President, the National Security Advisor, and senior cabinet officers should work directly with this unique panel to rethink the structure of Executive-Legislative relations in the national security and foreign policy domains. "With that as a basis, reforms can and must be undertaken in three crucial areas: improving the foreign policy and national security expertise of individual members of Congress; undertaking organizational and process changes within the Legislative Branch; and achieving a sustained and effective Executive-Legislative dialogue on national security issues. "Despite the range of foreign policy challenges facing the United States, many current members of Congress are poorly informed in this area. Their main electoral priorities are generally within domestic policy; foreign policy concerns are often limited to issues of concern to special interests or to prominent ethnic groups in their districts. Once in office, attention to foreign policy issues generally focuses on pending votes and looming crisis. To build a broad base of informed and involved members on foreign policy issues, we recommend the following: "In particular, this means that: "●The Congressional leadership should educate its members on foreign policy and national security matters beyond the freshman orientation provided for new members. Such education should emphasize Congress' foreign policy roles and responsibilities. We must reinforce the principal of minimal partisanship on foreign policy issues: that politics stops at the water's edge. Effective education of members will ensure a more knowledgeable debate and better partnership with the Executive Branch on foreign policy issues. It also will allow members to become more effective educators of their constituencies about the importance of national security concerns. "●Members should be encouraged to travel overseas for serious purposes and each member should get letters from the President or from the head of their body formally asking them to undertake trips in the national interest. A concerted effort should be made to distinguish between junkets (pleasure trips at taxpayer expenses) and the serious work that members need to undertake to learn about the world. A major effort should be made to ensure that every new member of Congress undertakes at least one serious trip in his or her first term, and is involved in one or more trips each year from the second term on. "●Legislature-to-legislature exchanges and visits should be encouraged and expanded. More funding and staffing should be provided to both accommodate foreign legislators visiting the United States and to encourage American legislators and their spouses to visit foreign legislatures. Much is to be gained by strengthening the institutions of democracy and by improving understanding among elected officials. This should get a much greater emphasis and much more institutional support than it currently does. "●The wargaming center at the National Defense University should be expanded so that virtually every member of Congress can participate in one or more war games per two-year cycle. By role-modeling key decision-makers (American and foreign), members of Congress will acquire a better understanding of the limits of American power, and of the reality that any action the United States taken invariably has multiple permutations abroad. Giving members of Congress a reason to learn about a region, about the procedures and systems of Executive Branch decision-making, and about crisis interactions will lead eventually to a more sophisticated Legislative Branch. On occasion, particularly useful or insightful games should lead to a meeting between the participating Congressmen and Senators and key Executive Branch officials. "Member's increased fluency in national security issues is a positive steps but one that must be accompanied by structural reforms that address how Congress organizes itself and conducts its business. Several recommendations concerning Congressional structure have already been made in this report: to create a special Congressional body to deal with homeland security issues (recommendation 7); to consider all of the State Department's appropriations within the Foreign Operations subcommittee (recommendation 22); and to move to a two-year budget cycle for defense modernization programs (recommendation 31). To meet the challenges of the next quarter century, we recommend Congress take additional steps. "Our discussion of homeland security highlights the complexity and overlaps of the current committee structure. The Congressional leadership must review its structure systematically in light of likely 21 st century security challenges and of U.S. national security priorities. This is to ensure both that important issues receive sufficient attention and oversight and the unnecessary duplication of effort by multiple committees is minimized. "Such an effort would benefit the Executive Branch, as well, which currently bears a significant burden in terms of testimony. The number of times that key Executive Branch officials are required to appear on the same topics in front of different panels is a minor disgrace. At a minimum, we recommend that a public record should be kept of these briefings and published annually. If that were done, it would become obvious to all observers that a great deal of testimony could be given in front of joint panels and, in some cases, bicameral joint panels. While we emphasize the need for strong consultation with the Legislative Branch, we need a better sense of what constitutes a reasonable amount of time that any senior Executive Branch official should spend publicly educating Congress. "Specifically, in terms of committee structure, we believe action must be taken to streamline the budgeting and appropriations processes. In 1974, Congress developed its present budget process as a way of establishing overall priorities for the various authorizations and appropriations committees. Over time, however, the budget process has become a huge bureaucratic undertaking and the authorization process has expanded to cover all spending areas. In light of this, there is no longer a compelling rationale for separate authorization and appropriations bills. "This is why we believe that the appropriations subcommittees should be merged with their respective authorizing committees. The aggregate committee (for example, the Senate Armed Services Committee) should both authorize and appropriate within the same bill. This will require realigning appropriations subcommittees. For example, appropriations relating to defense are currently dealt with in three subcommittees (defense, military construction, and energy and water); under this proposal, all appropriations would be made within the Senate Armed Services Committee. "This approach has at least two important merits. First, it furthers the aim of rationalizing committee jurisdiction because all appropriating and authorizing elements relating to a specific topic are brought within one committee. Second, it brings greater authority to those charged with oversight as well as appropriations. In the current system, power has shifted from the authorizing committees to the appropriating committees with a much-narrower budgetary focus. By combining the two functions, more effort may be paid to examining how foreign policy laws have been implemented, what their results have been, and how policy objectives can be better achieved. Finally, this new structure may facilitate adoption of two-year budgeting if efforts such as those proposed for defense modernization programs prove successful. The merged committee could authorize, in less detail, for the two-fiscal-year period while appropriating, in greater detail, for the first fiscal year. "If this important reform were undertaken, then the budget committees in each house of Congress would consist of the Chairman and ranking member of each new combined committee. As part of the budget function, these two committees would distribute the macro-allocations contained in the budget resolution. "Once Congress has gotten its own house in order, it still remains to ensure that there is ongoing Executive-Legislative consultation and coordination. Efforts to do so are beneficial not only so that both branches can fulfill their Constitutional obligations but also because effective consultation can improve the quality of U.S. policy. We have acknowledged this, for example, in our Defense Department planning recommendation, which defers detailed program and budget decisions until Congress has marked up the previous year's submission. Because Congress is the most representative branch of government, Executive Branch policy that considers a range of Congressional views is more likely to gain public support. The objections raised by differing Congressional opinions can refine policy by forcing the administration to respond to previously unconsidered concerns. Finally, Congress can force the President and his top aides to articulate and explain administration policy—so the American people and the world can better understand it. "Given these benefits, efforts must be undertaken to improve the consultative process. Indeed, a coherent and effective foreign policy requires easy and honest consultation between the branches. The bicameral, bipartisan panel put forward in recommendation 46 is a good first step in this process, but additional processes must be established to ensure that such efforts are ongoing. Therefore, we recommend the following: "A sustained effort at consultation must be based on mutual trust, respect, and partnership and on a shared understanding of each branch's role. The Executive Branch must recognize Congress' role in policy formulation and Congress must grant the Executive Branch flexibility in the day-to-day implementation of that policy. Congress must also ensure that if it is consulted and its criticisms are taken seriously, it will act with restraint and allow the Executive Branch to lead. For his part, the President must convey to administration officials the importance of ongoing , bipartisan consultation and dialogue. Efforts must not be limited to periods of crisis. Further, administration officials should take into consideration the differences in knowledge and perspective among members. "Beyond these general principles, specific mechanisms can facilitate better consultation: "●Congress should create a permanent consultative group composed of the Congressional leadership and the Chairmen and ranking member of the main Congressional committees involved in foreign policy. Other members with special interest or expertise could join the group's work on certain issues. The group would meet regularly—in informal and private sessions—with representatives of the Executive Branch. While these may regularly be Cabinet officials, they may often be at the Under Secretary level. This will make possible a regular dialogue with knowledgeable administration officials, allowing the Congressional group not only to respond to crises but to be part of the development of preventive strategies. The agenda for these meetings would not be strictly limited, allowing members to raise issues they are concerned about. The group would also meet on any emergency basis whenever the President considers military action abroad or deals with a foreign policy crisis. "●Beyond this interaction between the leadership of both branches, the administration must reach out to consult with a broader Congressional group. This will involve increasing the number of administration representatives working to consult with Congress and assigning high-quality people to that task. The Executive must send mid-level, as well as high-level, officials to Capitol Hill and keep closer track of the foreign policy views and concerns of every member of Congress. Only through such concerted efforts, combined with the aforementioned education initiatives, will there be a critical mass of members knowledgeable of and engaged in foreign policy issues. "●Finally, in order for Congress to be most effective in partnering with the Executive Branch, it must undertake its own consultation with a broad group of leaders in science, international economics, defense, intelligence, and in the high-technology, venture-capital arena. Congress is fare more accessible to this expertise than the Executive Branch and should work to bring these insights into consultations. To do this, however, Members of Congress need regular and direct dialogue with experts without the screen of their staffs. The best experts in these fields are vastly more knowledgeable than any Congressional staff member, and there needs to be a routine system for bringing members of Congress in touch with experts in the areas in which they will be making decisions. All four parts of the National Academies of Science should play key roles in bringing the most knowledgeable scientists and engineers in contact with members of the Legislative Branch. Policy institutions with deep reservoirs of expertise on defense and foreign policy, too, can help build Congressional fluency with these issues with a measure of detachment and independent perspective. Similar institutions need to be engaged in other areas. (Footnote citations other parts of the report and to additional reading are not included.) "An effective national security policy for the 21 st century will require the combined resources of the Executive and Legislative Branches. While much of this report has rightly focused on the needs for reform within Executive Branch structures and processes, corresponding efforts must be undertaken for Congress. We believe that a tripartite effort focused on the foreign policy education of members, the restructuring of the Congressional committee system, and stronger Executive-Legislative consultative efforts will go a long way to ensuring that the United States can meet any future challenges." Appendix F. Recommendations on Congressional Organization Made by The Brookings Institution In this appendix, the reader will find excerpts from the report of The Brookings Institution. The excerpts are the verbatim recommendations related to congressional organization that are contained in this report. Different type styles and formats reflect those used in the original text. 1) Michael E. O'Hanlon, Ivo H. Daalder, David L. Gunter, Robert E. Litan, Peter R. Orszag, I.M. Destler, James M. Lindsay, and James B. Steinberg, Protecting the American Homeland: One Year On (Washington: Brookings Institution Press, 2002), p. xxviii-xxx. (Available online at http://brookings.edu/dybdocroot/fp/projects/homeland/newhomeland.pdf , visited December 10, 2004.) " Reforming Congress ' s Role "Much of the benefit of consolidating the homeland security mission within the executive branch will be lost if our national legislature fails to reflect that reorganization in its own structure. Congressional oversight of homeland security activities has traditionally been scattered across Capitol Hill. By the administration's count, thirteen full committees in each house, and a total of 88 committees and subcommittees overall, shared responsibility for overseeing the homeland security mission in 2002. The House Appropriations Committee alone had eight subcommittees overseeing the agencies and programs merged into DHS. With authority so badly fragmented, coordination problems were rife, and no one was responsible for trying to bring coherence to the decisions made by individual committees. "The Department of Homeland Security Act expresses "the sense of Congress that each House of Congress should review its committee structure in light of the reorganization of responsibilities within the executive branch." To its credit, Congress has taken some important steps to meet this call. The House and Senate Appropriations Committees agreed at the start of 2003 to realign their subcommittee jurisdictions to create new homeland security subcommittees. This restructuring both institutionalizes the responsibility for appropriations oversight of the executive branch—increasing the changes that budgetary supervision will occur even if events shift political appeal to other topics—and reduce fragmentation—increasing the chances that Congress can identify major gaps and sensible tradeoffs in homeland security spending. "Congress has not moved as aggressively to consolidate the badly fragmented authorization process. The Senate plans no changes to its committee structure. The Government Affairs Committee had responsibility for overseeing the creation of DHS, while other authorizing committees have responsibility for overseeing individual programs and agencies within DHS. The House has gone somewhat further. It has created a Select Homeland Security Committee, composed on the Republican side largely of the chairmen of the committees with a stake in homeland security. The goal is to establish a permanent Homeland Security Committee at the start of the 109 th Congress (2005-07). The question of what jurisdictions a permanent committee would take from other panels has yet to be answered. In the interim, the leadership of the select committee sees its task as coordinating the homeland security actions of other committees and reconciling any disagreements rather than establishing a claim to primary authorization oversight of homeland security. "Although the House's approach is preferable to the Senate's, neither is sufficient to ensure effective congressional oversight. Maintaining a fragmented authorization process increases the odds that Congress will drag its feet in considering executive branch proposals, bicker internally over the direction of homeland security, and issue conflicting directives to DHS. A streamlined appropriations process cannot eliminate these problems, even though appropriators normally follow the authorizers in the legislative process and can in theory reconcile any conflicting authorization mandates. Appropriators approach oversight largely through budgetary and management lenses. Their instinct is to ask how much is being spend and whether it can be spent efficiently. They devote less time to the related but distinct policy issues that the authorization committees specialize in. As a result, the chances remain that broader policy issues either will be the object of turf wars or fall through the cracks of the authorization process. Bringing committee heads together as the House proposes can mitigate these problems in the short term. It is debatable, however, that a select committee will provide adequate oversight in the long term. Committee chairs have numerous competing demands on their time, many of which are more politically salient than homeland security. Moreover, the select committee approach by its nature focuses oversight attention on where committees disagree rather than on the equally pressing question of whether the sum total of committee decisions makes sense. "Congress would be wise then to take to heart its message in the Department of Homeland Security Act and reorganize its jurisdictions to create authorizing committees for homeland security. Such a reorganization would not produce a unified decisionmaking process. Some fragmentation would remain as a result of bicameralism and the twin-track authorization and appropriations process. The task of coordinating the authorizers and appropriators on homeland security with those responsible for related activities by the intelligence agencies, the FBI, and the Pentagon (to name just a few) would also remain. But establishing dedicated homeland security committees to complement the homeland security appropriations subcommittees would likely maximize the efficacy of congressional oversight." ↔↔↔ 2) Protecting the American Homeland: One Year On , 2002, pp. 122-123. " Congress "However the executive branch conducts its work, many issues will inevitably engage the legislative branch. The president's ability to make homeland security his top priority will be helped, or hindered, according to whether and how much Congress can revamp its structure and process to the same end. Two reforms would be especially useful: establishment of House and Senate appropriations subcommittees for homeland security, and creation of a joint committee to oversee the national effort. The congressional role and focus would be further strengthened, moreover, if the Homeland Security Council were made a statutory entity, and its director subject to Senate confirmation—as recommended above. "One of Tom Ridge's signal achievements has been the submission of a unified homeland security budget. But once on Capital Hill, it now must be disaggregated and its components distributed among multiple appropriations subcommittees. There they will be weighed not in relation to overall homeland security needs, but within such jurisdictions as Commerce, Justice, and State; Defense; and Labor, Health and Human Services, and Education. What the executive branch has laboriously pulled together, Congress must quickly pull apart. The obvious remedy, difficult though it may be to implement, is to establish new appropriations subcommittees on homeland security in both branches. If that proves too large a reform to swallow, a second-best alternative would be for the appropriations committees as a whole to take up and pass the homeland security budget. "Ideally, there would also be established authorizing committees with the same jurisdiction. In the near term, however, this would likely prove even harder to accomplish than appropriations reform. A useful "second-best" option, therefore, would be to enhance congressional capacity for analysis and oversight by creating a new body on the model of the Joint Economic Committee. This would limit the threat to existing jurisdictions, as a joint committee for homeland security would have no legislative authority. This would also limit its impact, of course, but such a committee could be a useful focal point, holding hearings, issuing reports, calling executive officials to task." Appendix G. Recommendations on Congressional Organization Made By the Center for Strategic and International Studies In this appendix, the reader will find excerpts from the report of the Center for Strategic and International Studies (CSIS). The excerpts are the verbatim recommendations related to congressional organization that are contained in this report. Different type styles and formats reflect those used in the original text. Center for Strategic and International Studies, Meeting the Challenges of Establishing a New Department of Homeland Security: A CSIS White Paper, 2002, pp. 19-21. (Available online at http://www.csis.org/features/hamrefinalpaper.pdf , visited December 10, 2004.) Revamp Congressional Oversight of Homeland Security Create a Select Committee of oversight in the House, and a similar committee in the Senate. Congressional leadership should create new select committees in order to streamline the report process, eliminate fragmentation of authority, and ensure efficient and effective oversight of the new Homeland Security Department. Relinquish responsibility in committees that exercise overly broad and, in most cases, duplicative oversight of the agencies that will be folded into the Department of Homeland Defense. Today, far too many Congressional committees and subcommittees have been given, or have taken, oversight responsibility for various aspects of homeland security. To ensure effective oversight of homeland security, Congress must rein in the number of committees and subcommittees that exercise authority over the new department. Specifically, the scope of jurisdiction of the House Government Reform Committee should be narrowed and its functions redefined to eliminate duplicate oversight over the many defense and homeland security functions already under the jurisdiction of other committees. The Senate Government Affairs Committee should revise its charter and divest itself of the International Security and Proliferation function of the Subcommittee on International Security, Proliferation and Federal Services. This oversight role is adequately exercised in other standing Senate committees. Membership of each respective Select Committee should be made up of chairpersons and ranking members from the committees (House and Senate) and subcommittees (House) that now exercise oversight over the various agencies that will be consolidated in the new Department of Homeland Security. This criteria for membership will ensure cross-jurisdictional involvement by members, further providing comprehensive oversight. The relevant Senate committees include: Agriculture; Appropriations; Armed Services; Banking, Housing and Urban Affairs; Commerce, Science and Transportation; Energy and Natural Resources; Judiciary; and Intelligence. The relevant House committees (and attendant subcommittees) include: Agriculture (Specialty Crops and Foreign Agriculture); Appropriations (Agriculture; Commerce, Justice, State; Defense; Energy and Water; Transportation; Treasury, Postal Service and General Government); Armed Services (Military Readiness; Military Research and Development); Energy and Commerce (Environment and Hazardous Materials; Health; Telecommunications and the Internet); Financial Services (Financial Institutions and Consumer Credit); Judiciary (Courts, the Internet ad Intellectual Property; Crime; Immigration and Claims); Science (Energy; Research); Transportation (Aviation; Coast Guard and Maritime Transportation; Highways; Railroads); and Intelligence (Human Intelligence, Analysis and Counterintelligence; Intelligence Policy and National Security; Terrorism and Homeland Security). Terms of membership on each Select Committee should be governed by the same criteria that govern chairmanship or ranking member status on other committees. Term limits on membership ensure fresh perspectives, while maintaining more than adequate understanding of the issue because of members' other committee assignments. Each new Select Committee should have its own separate staff, not affiliated with any other committee or subcommittee. Separate staff will ensure independence and limit cross-jurisdictional turf battles. Further, a separate staff provides focused and expert insight to members of each Select Committee. Within each Appropriations Committee, create new subcommittees of oversight. In conjunction with those new subcommittees, dissolve oversight responsibilities now resident in standing subcommittees. "Unless separate new subcommittees are created, and oversight within current subcommittees is dissolved, the new Department will be whipsawed by competing demands and lines of authority within the Appropriations Committees."

This report has been updated with an epilogue on the creation of a standing House Committee on Homeland Security in the 109th Congress, the election of a new chair September 15, 2005, and the committee's organization in the 110th Congress. The original report was not changed; its summary follows: The 9/11 Commission and other commissions and think tanks studying homeland security recommended congressional committee reorganization to increase Congress's policy and oversight coordination. This report analyzes selected recommendations relevant to House committee reorganization. In the 108th Congress, the House created a Select Committee on Homeland Security, and charged it with studying the rules of the House with respect to the issue of homeland security. The select committee recommended a standing Committee on Homeland Security. This report digests the select committee's recommendations. Before the select committee made its recommendations, one of its subcommittees held four hearings on Perspectives on House Reform. To analyze the content of these hearings, this report organizes the testimony into 10 categories. One consideration in creating a homeland security committee relates to the concentration or dispersal of homeland security jurisdiction. The House at different times has made different decisions about concentrating or dispersing jurisdiction. A second consideration in creating a homeland security committee relates to implications of jurisdictional changes. Proponents of a new committee point to the fragmentation of jurisdiction over homeland security. Others point to the record of Congress as a strong indication that existing committees are capable of action. A third consideration in creating a homeland security committee is whether such a committee is sufficient for policymaking. Even if a new committee is created, other committees will still have jurisdiction over components of homeland security. The House has tended not to change its committee structure after executive branch reorganizations. This report contains a brief history of House committees. Related CRS reports: CRS Report RL32661, House Committees: A Framework for Considering Jurisdictional Realignment, by [author name scrubbed]; CRS Report RS21901, House Select Committee on Homeland Security: Possible Questions Raised If the Panel Were to Be Reconstituted as a Standing Committee, by [author name scrubbed] (pdf); CRS Report RL31835, Reorganization of the House of Representatives: Modern Reform Efforts, by [author name scrubbed], [author name scrubbed], and [author name scrubbed] (pdf); CRS Report RL31572, Appropriations Subcommittee Structure: History of Changes from 1920-2007, by [author name scrubbed]; and CRS Report RL33061, Homeland Security and House Committees: Analysis of 109th Congress Jurisdiction Changes and Their Impact on the Referral of Legislation, by [author name scrubbed] and [author name scrubbed]. This report will not be updated.

This report is designed to assist Congress as it considers how to proceed with the proposed nomination of General (Ret.) James Mattis to be Secretary of Defense. After exploring the history of the statutory restriction and its evolution over time (see " Preserving Civilian Control of the Military in the 1947 Act and Restricting the Position of Secretary of Defense "), it touches upon some of the broader questions that have recently been raised in the public debate on whether, and how, this proposed nomination might impact civilian-military relations and the principle of civilian control of the military. How to advance the nation's security while at the same time ensuring that instruments of force do not undermine the practice of American democracy has been a central question since the founding of the United States, if not before. The principle of civilian control of the military places ultimate authority over U.S. armed services in the hands of civilian leadership, with civilian responsibility and control of the military balanced between the executive and legislative branches of the government. In some ways, the relationship between the military and the civil society it serves can be thought of as a paradox: the military, by its very nature, has coercive power that could threaten civil society. Yet without a sufficiently strong and capable military, civil society becomes vulnerable to attack, and the former might not be able to defend the latter. The United States has balanced this tension through formulating and promulgating the principle of civilian control of the military. The fact that this principle has remained relatively unchallenged over the course of American history is, by most accounts, remarkable. This section briefly outlines the history of the principle of civilian control of the military, and how it influenced legislation over time. The designers of the Constitution were deeply skeptical of a standing military as, much like Oliver Cromwell demonstrated in 1653 when he used his army to disband Parliament, such a military instrument could also overthrow the government it professed to serve. Indeed, consternation regarding the British deployment of its military to the American colonies without the consent of local governing officials was among the key grievances listed in the Declaration of Independence and helped inform the Third Amendment of the Constitution. Applied to the context of a new, experimental, and democratic Republic, the Founding Fathers believed that subordination of the military to the authority of civil masters was critically important in order to prevent the emergence of a new form of tyranny or dictatorship. The principle was put to the test even before the American state was founded. During the Revolutionary War, particularly, upon the surrender of Cornwallis at Yorktown, the prestige of the American military was at its height, while regard for the Continental Congress—the civilian authority to which General George Washington reported—was dwindling. Had Washington, a popular figure at the time, been any less devoted to democratic principles, a New World variety of despotism might have been established. Indeed, there were ample opportunities for General Washington to install himself as a dictator—which would likely have had the end result of swapping one form of monarchical rule for another. As the war drew to a close, a group of his associates, cognizant of the impotence of the American Confederation, begged him to set himself up as the authoritarian head of a new government. Washington refused, arguably preventing the emergence of a military-authoritarian government in the process. Subsequent to the Revolutionary War, the fragility of the Confederation government was highlighted by the 1786 Shays rebellion, the first armed rebellion in the post-Revolutionary United States . The Shays Rebellion was a local uprising in Massachusetts in response to high taxes and difficult economic conditions. In September 1786, Captain Daniel Shays, along with other Massachusetts leaders, led several hundred armed men to close some local courts in order to prevent the execution of foreclosures and other debt processes. In January 1787, Shays led approximately 1,200 men in an attack on the federal arsenal at Springfield, MA. The local Massachusetts government put down the rebellion in February 1787. While the rebellion itself was small, and was quickly suppressed, for some it became a compelling argument for why the United States needed a stronger national-level government, including a standing army and militia. The challenge was how to do so while at the same time preventing the emergence of a national military that could threaten the new Republic . Accordingly, the Founding Fathers designed a system of civilian control of the military in a manner that conformed with its overall architecture of checks and balances. An elected President was designated the Commander-in-Chief of the nation's armed forces. This had the dual advantage of ensuring that an elected civilian leader presided over the nation's army while at the same time enhancing unity of command over the military. The President was also granted the ability to commission military officers, authority to appoint Secretaries to preside over military services, and the responsibility to regularly report to Congress on the state of the union. The desire to ensure that the military reflected, and was subordinate to, the will of the people also led to considerable congressional powers on matters concerning the armed services. Congress was granted the power to lay and collect taxes for the common defense. Congress was also given the sole power to declare war, the ability to raise and support armies, establish rules and regulations for the army, navy, and militias when in service of the United States. Finally, to hamper the establishment of a permanent, standing military, a provision was made specifying that no appropriation of money could be made for the army for a period longer than two years. This governance architecture was necessary, but not sufficient, to ensuring civilian control of the military. Here again, George Washington played a vital role in establishing the norms and culture that formed the foundation for American relationships between the military and the civilian leadership it served (also referred to as "civil-military" or "civilian-military" relations). For example, in putting down the 1794 Whiskey Rebellion in western Pennsylvania, President Washington ensured that his subordinates understood the importance of upholding civil rule of law while doing so. Despite disagreements—sometimes vehement—between military and civilian leaders throughout the nation's history, contemporary scholars of civil-military relations have noted that these norms, inculcated and promulgated by Washington and his successors, remain robust. Another reflection of American skepticism towards a standing army—and the desire to ensure that it remained under civilian control—was a general policy to keep the peacetime active duty army relatively small. Indeed, from the founding of the nation to the Cold War era, the bulk of force structure was maintained in the reserve component (especially the militia/National Guard), except in times of major conflicts. When major conflicts arose—such as the Civil War, World War I, and World War II—the comparatively small active component was expanded through the activation of militia and federal reserves, recruitment of additional volunteers for the active component, and the use of conscription. At the end of the conflict, active force levels were dramatically reduced. For example, in 1916, the end strength of the active duty military was approximately 179,000 personnel; over the course of World War I, this grew to nearly 2.9 million. After the war's conclusion, U.S. military end strength decreased to approximately 250,000. Similarly, in 1939, there were fewer than 350,000 active duty personnel in all branches of the U.S. armed forces. During World War II, this number grew enormously, reaching over 12 million servicemembers on active duty by 1945. While this approach to organizing for military campaigns generally suited the preferences of the American people and its leaders—and in particular, their overall skepticism towards a standing army—it came at the expense of preparedness. This resulted in the expenditure of more American blood and treasure during wartime than would have happened if there had been greater peacetime investment in the armed forces, an issue that was apparently not of great concern until World War II. For the first century and a half of the United States' history, the architecture designed at the Constitutional Convention, combined with the American military cultural norm of respecting civilian control of the military and the preference to disband the military after cessation of hostilities, served to largely circumscribe the armed forces and prevent them from becoming overly dominant within the U.S. government. After World War I, the concept of a single defense establishment was considered around Washington, but the military services opposed such proposals and blocked their serious consideration. Yet it was the experience of World War II—the surprise of Pearl Harbor, America's initial lack of preparedness, and a deficiently structured military organization to wage the campaign—that forced a serious reconsideration of the design of U.S. institutions associated with national security, and in particular, the military. The old way of doing business was no longer viewed as sufficient by most observers at the time. To that end, Congress began considering how to restructure its national security institutions as early as 1944, although it did not entertain serious recommendations and proposals until after the conclusion of the war. On December 6, 1945, President Truman submitted a letter to Congress arguing that the existing War and Navy Departments should be combined into a single Department of National Defense. Until that time, the Departments of War and Navy operated separately, each headed by a cabinet-level Secretary, with the effective execution of military operations relying on voluntary coordination between the departments. President Truman contended that such voluntary coordination was inadequate and argued for the integration of the military services into a single department, which would report to a new cabinet-level advisor on matters of national defense. The merits and risks of creating a new Department headed by a single individual were therefore vigorously debated by the military services, the executive branch, and Congress between 1944 and 1947. Although the United States has utilized a variation of Truman's proposed system of military governance for the past 60 years, there was, at the time, considerable pushback against his ideas. The proposal was controversial for at least three reasons. First, while demobilization of the Armed Forces took place at a rapid pace, peacetime force levels after 1947 were still at around 1.5 million—considerably higher than the 1939 end strength of less than 350,000. Although the public tended to support a standing military of this size, this larger standing military, combined with Truman's proposal for universal military training, cultivated a sense of unease about departing from the country's tradition of peacetime mobilization as a component of maintaining civilian control of the military. This sense was compounded in the wake of the use of atomic weaponry, which highlighted the notion that future wars might not be decided by armies in the field. The second concern about this new military organization was the notion of centralization of military governance, especially considering the enormous popularity of the military and its senior U.S. general and flag officers at the conclusion of World War II. Five-star officers such as the Army's George C. Marshall, Douglas MacArthur, Henry (Hap) Arnold and Fleet Admirals William D. Leahy, Ernest King, Chester Nimitz, and William F. (Bull) Halsey, Jr. had commanded millions of men and thousands of tanks, airplanes, and ships—both U.S. and allied—in an unprecedented endeavor to defeat the Axis powers. In addition to field command, they played a central role in formulating both U.S. and allied grand strategies and military strategies in Washington and abroad. These men enjoyed a heroic reputation and were treated to ticker tape parades, addressed joint sessions of Congress, and some were even considered as presidential contenders. By contrast, outside Presidents Roosevelt and Truman, few if any senior Administration officials or Members of Congress enjoyed a similar status among the American people, during or after the war. At a personal and political level, these current and future senior general and flag officers might have been viewed as being a bit too powerful—not unlike the proconsuls of the Roman Empire. Given these concerns, legislators might have considered a ten year gap in service as ample time for their "stars to fade" as well as for their influence to diminish to an acceptable level. Mixed in with the debate on how to best design a new military organizational structure were service rivalries which translated into deep differences of opinion between the Departments of War and the Navy about whether to reorganize under a single department. While the Army argued for bringing the departments together under a single civilian authority, the Navy maintained that doing so—thereby removing the cabinet-level status of Service secretaries—would overly empower a single individual. Ultimately, as 1947 approached, it became clear that President Truman's preference for a single civilian Secretary of National Defense would prevail, against the protests of the Department of the Navy. Subsequently, debates about the new Secretary of National Defense were occasionally peppered with concerns about whether, under this new construct, the Department of the Navy might have primacy over the Department of War (or vice-versa), especially if the new Secretary had served in one service or the other. Taken together, these three factors appear to have raised concerns that one byproduct of World War II might be the over-militarization of American society—a development that Truman himself feared. Added to this, the creation of a new Department of National Defense, under a single Secretary, caused many to wonder whether doing so might make the new defense establishment too powerful relative to the rest of the U.S. government, thereby undermining the principle of civilian control of the military. Yet several key post-war developments, in particular the rise of Soviet aggression, the belief that occupation and reformation of Germany and Japan was necessary to produce long-term peace, and the near-collapse of the British empire, underscored to many American leaders that the United States would need to assume a greater share of the burden for promoting international stability than ever before. Greater U.S. involvement in the world therefore necessitated more serious consideration of how the institutions governing the military might be better organized. The problem of peacetime military and national security organization could no longer be ignored. The question then became how to establish this new, overarching department in a manner that addressed the concerns of the day—in particular, managing inter-service rivalry—while preserving the principle of civilian control of the military. The overall intention of the 1947 National Security Act was to ensure that the American instruments of national security and defense might be better prepared and organized in order to meet the challenges presented by the post-war period and the dawn of the Cold War. As such, in designing a new National Military Establishment (which would subsequently be redesignated as the Department of Defense), Congress sought to create greater unity of command while at the same time ensuring that the institution they were creating—and the individuals they would be empowering to lead it—would not threaten the principle of civilian control of the military. As enacted in 1947, Section 202 of the National Security Act (later codified as 10 U.S.C. §113) stipulated that a person "who has within ten years been on active duty as a commissioned officer in a Regular component of the armed services shall not be eligible for appointment as Secretary of Defense." This provision emerged from conference negotiations—while both the House and Senate bills required the Secretary of Defense to be a civilian appointed by the President, the House bill specified that the Secretary of Defense "shall not have held a commission in a Regular component of the armed services." Historic congressional documentation is silent on the specific reasons for arriving at this compromise. However, one can infer from the statements made by Members of Congress as they debated the 1947 act, as well as the historical context at the time, that some viewed a break between military service and a Secretary of Defense appointment as desirable. This would help ensure that no one military service dominated the newly established Defense Department; ensure that the new Secretary of Defense was truly the President's (rather than a service's) representative; and, again, preserve the principle of civilian control of the military at a time when the United States was departing from its century-and-a-half long tradition of a small standing military. The new national security architecture—and the restrictions imposed upon the new Secretary of Defense position—were quickly put to the test as the United States became involved in the Korean War. Increasingly displeased with Secretary of Defense Louis A. Johnson, and recognizing the need to "choose a person of great national prestige to head the Department of Defense" in light of the "controversy surrounding Johnson's performance" and U.S. military readiness deficits exposed by the first months of the Korean War, President Truman approached General Marshall in early September 1950 to ask if he would "act as Secretary of Defense through the crisis [of the Korean War] if [President Truman] could get Congressional approval." By 1950, General Marshall already had a distinguished career , having served in senior civilian and military positions, both in and out of the U.S. g overnment. General Marshall was one of four World War II-era Army generals first temporarily designated as a five-s tar General of the Army in 1944, retiring in 1947 from that rank. In November 1945, T ruman sent Marshall to China in an unsuccessful attempt to mediate the civil war between Nationalists and Communists . He returned to th e United States in January 1947 to become secretary of state for two years , a position w ithout statutory restrictions . In that capacity, he presided over the formulation of t he Truman Doctrine, the Marshall Plan, the Inter-American Treaty of Reciprocal Assistance, and negotiation of the NATO pact. After he left the State Department he achieved further distinction as president of the American Red Cross. In 1949, General Marshall was returned by his request to "the active [duty] list of the Regular Army on March 1, 1949." For administrative purposes following his restoration to the Army active duty list, General Marshall was assigned to the Office of the Chief of Staff of the Army. In this role, General Marshall had no official position in the Army command structure, and had minimal official military duties and responsibilities. General Marshall accepted President Truman's request to nominate him as Secretary of Defense, on the condition that if confirmed, his tenure would be limited to a period of six months to a year. Accordingly, on September 13, 1950, President Truman forwarded a legislative proposal to the House and Senate Armed Services Committees that addressed two restrictions in statute that would otherwise prevent Marshall's nomination. These included 10 U.S.C. §113 (described earlier in this report) and 10 U.S.C. §576, which, at the time, barred officers on the active list of the Army from holding civil office, either by election or by appointment, and stipulated that officers who accepted or exercised the functions of a civil office had to vacate their commissions, thereby ceasing to be an officer of the Army. In a cover letter accompanying the proposal, the President addressed the committee heads, Truman noted: Attached is a draft of legislation which would permit General George C. Marshall to serve as Secretary of Defense. I request that you lay this matter before your committee with a view of obtaining early and favorable action by the Congress. I am a firm believer in the general principle that our national defense establishment should be headed by a civilian. However, in view of the present critical circumstances and General Marshall's unusual qualifications, I believe that the national interest will be served best by making an exception in this case. While the measure had the support of many Members, it also encountered significant opposition from other Members, both at the committee and floor levels in each chamber. Supporters of the bill contended that the crisis of the ongoing Korean War justified making an exception to the relevant statutes for General Marshall, who was viewed as uniquely and exceptionally qualified for the position. Opponents of the measure asserted that the principle of civilian control over the military superseded all other considerations, including General Marshall's personal qualifications and the pressure of external circumstances. (For a detailed legislative history, see the Appendix .) As enacted, P.L. 81-788 suspended, for General Marshall's nomination only, those two statutory provisions preventing his consideration for the position of Secretary of Defense. P.L. 81-788 also included a nonbinding section outlining congressional intent in providing President Truman with the authority to nominate General Marshall: It is hereby expressed as the intent of the Congress that the authority granted by this Act is not to be construed as approval by the Congress of continuing appointments of military men to the office of Secretary of Defense in the future. It is hereby expressed as the sense of the Congress that after General Marshall leaves the office of Secretary of Defense, no additional appointments of military men to that office shall be approved. President Truman submitted the nomination of General Marshall to be Secretary of Defense to the Senate on September 18, 1950. The Senate Armed Services Committee held a confirmation hearing for General Marshall on September 19, 1950, and favorably reported the nomination to the Senate on the same day. While the question of civilian control of the military was discussed during the confirmation hearing, it was not the only issue raised, as General Marshall was also asked to address questions on a variety of other topics. When asked by Senator Lyndon B. Johnson if he had made any public statements "on the necessity for ... civilian control" of the Department of Defense, Marshall replied: I just made one reference, not with respect to the Secretary of Defense himself, but in connection with representation on the National Security Council, that I objected in writing, when I was Secretary of State, to having three representatives of the fighting services on that Council. I thought that representation was out of balance. It ought to be more civil and less military. I made that representation about the second week I was Secretary of State. I also suggested, although I do not think that it was done in writing, that the Council should have two or three men, civilians you might say without portfolio, sitting on it. I thought that would be a very valuable contribution. Now, to go directly to your question, the only statement I recall having made was when as a second lieutenant, that I thought we would never get anywhere in the Army unless a solider was Secretary of War. As I grew a little older and served through some of our military history, particularly the Philippine Insurrection, I came to the fixed conclusion that he should never be a solider. The Senate voted to confirm General Marshall's nomination to the office of Secretary of Defense on September 20, 1950, by a vote of 57-11, with 28 Senators not voting. Since the enactment of the National Security Act of 1947, the statutory qualification provision associated with prior military service of the Secretary of Defense has been modified once. In January 2007, Representative Walter B. Jones introduced H.R. 417 , which would have reduced the eligibility requirement to three years. The provision was adapted and included in the House Armed Services Committee (HASC) Chairman's mark of H.R. 1585 , the initial House version of the FY2008 National Defense Authorization Act (NDAA). As reported to the House on May 11, 2007, by the HASC, H.R. 1585 contained a provision (Section 903) that would amend sections 113, 132, and 134 of Title 10, U.S.C., to reduce from 10 years to 5 years the period of time following active duty military service before a commissioned officer of a regular component could be appointed as Secretary of Defense, Deputy Secretary of Defense, or Under Secretary of Defense for Policy. In a May 2007 press release, Representative Jones described the language as "[reducing] an outdated prohibition and [enabling] the President to choose from a greater pool of qualified candidates with relevant military expertise." As the Senate amendment to the House bill contained no similar provision, a compromise was reached during conference committee negotiations. As enacted, Section 903 of the FY2008 NDAA ( P.L. 110-181 ) reduced from 10 to 7 years the required interval between an individual's retirement from active duty as a commissioned officer of a regular component of the armed services and eligibility for service as Secretary of Defense, Deputy Secretary of Defense, or Under Secretary of Defense for Policy. Similar to the debates surrounding the nomination of General Marshall in 1950, many observers agree that General Mattis is qualified to take on the role of Secretary of Defense. The key contrast between the debates 66 years ago and today is that the public discussion surrounding the proposed nomination of General Mattis seems to be less about preserving the principle of civilian control of the military (although that is certainly being debated), and more about civilian-military relations more generally. Very few observers, if any, appear concerned that General Mattis, if appointed to the position of Secretary of Defense, will compromise the longstanding American tradition of ensuring that the military remains subordinate to the authority of civilian leaders. Instead, the possible appointment of General Mattis has served as a catalyst for a more wide-ranging discussion on a key question he raises in his own book: whether 40 years of an all-volunteer force—of which, the last 15 have seen continuous war—has significantly altered the ways in which the U.S. military, civil society, and civilian leaders relate to each other. Several observers maintain that after the end of the Cold War, but particularly since 9/11, frictions and unhealthy tensions have emerged between the military and its civilian leadership, although few contend that these tensions might meaningfully challenge the principle of civilian control. The ongoing discussion suggests that perceptions regarding the wisdom of nominating a recently retired military officer to the position of Secretary of Defense tend to be largely predicated upon one's opinions on the overall health of the broader civilian-military relationship. In the view of some, overreliance upon recently retired generals to fill key national security and government leadership positions—including that of the Secretary of Defense—is "dangerous," as doing so might upset the balance between the military and the rest of the government. To others, focusing on whether an individual has had prior military experience obfuscates a more important and substantive conversation on the meaning of the principle of civilian control of the military today. According to this view, rigid adherence to a formal, and superficial, interpretation of civilian-military relations is "dangerous" in an era when both state and non-state actors possess means of coercion and the lines between "civilian" and "military" spheres is increasingly blurred. Other key questions that have emerged as part of the discussion include (but are not limited to) the following: In formulating and executing national security policy, what are the appropriate roles and responsibilities between civilian leaders and the military? In contrast to the "normal" model of civilian-military relations, whereby the civilians formulate guidance and give their military counterparts relatively wide latitude to execute that guidance, leaders—particularly during wartime—often play a more hands-on role. Some view the degree of greater involvement by civilians as damaging, while others maintain that the complexity of contemporary military operations, combined absence of more effective coordination mechanisms across the U.S. government have necessitated greater civilian involvement in military matters. One symptom of this greater civilian involvement is the growth of the National Security Council's (NSC) size. This has, in turn, led to concerns about civilian "micromanagement" of the Department of Defense by the NSC. These concerns led Congress to pass a provision in S. 2943 , the FY2017 National Defense Authorization Act, limiting the size of its professional staff to 200 persons. Related, does the fact that the U.S. military is a relatively small, all-volunteer force in which a small proportion of the population has served make it harder for the public to understand the military as an institution, and vice-versa? Is the all-volunteer force construct making it more difficult for civilian leaders to understand the military as a profession and the utility of force in accomplishing national security objectives? Will appointin g a recently retired General to the position of Secretary of Defen se affect the Chairman of the Joint Chiefs of Staff's ability to perform his statutory role as principal military advisor to the President? Determining that the Joint Chiefs of Staff was structurally incapable of providing quality military advice to the President, the Goldwater-Nichols 1986 Department of Defense Reform Act ( P.L. 99-433 ) sought to empower the Chairman to better perform his advisory responsibilities. Might the appointment of a recently retired four-star general risk creating a rival source of military advice to the President? Migh t the appointment of a recently retired General such as Mattis create the risk of politicizing the military ? Overall, the military, as a profession, takes great pains to ensure that it stays apolitical so as to help ensure that the Commander-in-Chief has respect for the integrity of the military advice provided to them. In taking a senior, cabinet-level position such as that of Secretary of Defense, might this change the President's view regarding whether the advice they are receiving from their military advisors is truly apolitical? This question is gaining increasing resonance, as Kori Schake, citing evidence gathered for her book on civil-military relations that she co-edited with General Mattis, finds that political elites are increasingly viewing the military as "just another actor in political debates." Somewhat related, what are the messages that the military forces more broadly are taking from this appointment? Might it suggest to some that affiliation with a political party is key to advancement to senior levels of the government? Has U.S. foreign policymaking been over-militarized, and would the appointment of General Mattis make it even more so? Particularly after the terrorist attacks of September 11, 2001, many scholars and practitioners have argued that U.S. foreign policy has become more "militarized." As evidence, these observers point to (among other things) the growth of DOD's role in security cooperation, the heightened stature and power of combatant commanders relative to ambassadors, and the dominance of defense spending relative to other international affairs spending. According to this view, the militarization of foreign policy also represents an ends-ways-means disconnect, as many of the security challenges the United States faces requires comprehensive, "whole-of-government," rather than solely military, solutions. Some therefore maintain that the appointment of a recently retired General to the position of Secretary of Defense might further exacerbate that trend. Others, however, note that while in uniform General Mattis argued for more resources to be allocated to the Department of State as a means to start correcting that imbalance. What is the role of Congress in the civilian-military relationship ? Debates and discussions on civil-military relations have tended to focus on the military's relationship with civil society broadly, or with the commander-in-chief and their political appointees. Yet the Constitution, by ensuring that key responsibilities for the raising and maintenance of U.S. armed forces were granted to the legislative branch, arguably intends for Congress to also play a role in exercising civilian control of the military which, in turn, can influence the overall health of civil-military relations. Indeed, as some policymakers and observers have noted, the manner and process through which Congress considers this appointment may have a bearing on whether the principle of civilian control of the military is upheld. As the 115 th Congress convenes, one of the first matters it will likely need to take up concerns whether to allow General Mattis's nomination to the position of Secretary of Defense to be considered by the Senate. This section details the current state of play and highlights several possible legislative courses of action. Section 179 of the Further Continuing and Security Assistance Appropriations Act, 2017 ( P.L. 114-254 ), establishes special "fast track" procedures governing Senate consideration of a bill or joint resolution which would suspend the seven-year restriction contained in 113(a) of Title 10 of the U.S. Code . It does so for the first person nominated to be Secretary of Defense after enactment of P.L. 114-254 who has been retired at least three years. In order to qualify for the expedited procedures, waiver legislation must be introduced during a 30-calendar day period which begins on the date that the 115 th Congress convenes. The legislation may be introduced by the Senate Majority Leader or the Minority Leader, or their respective designees, or by the Chair or Ranking Minority Member of the Committee on Armed Services. Both the title of the legislation and the matter after the enacting (or resolving) clause are stipulated. Once introduced, the legislation is to be referred to the Senate Committee on Armed Services. If the committee has not reported the waiver legislation within five session days after the date of its referral, it is automatically discharged of the further consideration of the measure. Once pending on the Senate Calendar of Business (either by being reported or by the committee being discharged) it is in order to make a non-debatable motion to proceed to consider the legislation. This motion may be repeated if it has previously been disagreed. All points of order against the waiver legislation and its consideration are waived. If the Senate adopts the motion to proceed, the waiver legislation would be pending and the Senate would consider the measure until it has disposed of it. There would be up to 10 hours of debate, divided and controlled by the party floor leaders or their designees. A nondebatable motion to further limit debate is in order. Amendments and potentially dilatory motions are barred. At the conclusion of debate, and after an optional quorum call, the Senate would automatically vote on passage of the waiver legislation. Passage of the waiver legislation in the Senate requires an affirmative vote of three-fifths of Members chosen and sworn—60 votes if there is no more than one vacancy in the Senate—the same threshold required for cloture on most legislation. The expedited procedures contained in Section 179, however, would permit the Senate to call up and reach a final vote on the waiver legislation without expending the same amount of floor time that could be necessary to call the waiver legislation up under the Standing Rules of the Senate and reach a vote thereon through the cloture process. In this regard, arguably the primary benefit of the Section 179 procedures is that they are a time saver. Should waiver legislation be subsequently vetoed, Senate consideration of a veto message would be limited to up to 10 hours. Because these "fast track" procedures are enacted as a Senate rule in law, the Senate could adjust the provisions described above in whole or in part by unanimous consent. Section 179 of P.L. 114-254 does not establish any expedited procedures providing for House consideration of waiver legislation. Presumably such legislation would come to the House floor under the terms of a special rule reported by the House Committee on Rules, or depending on its level of support, under the Suspension of the Rules procedure. Should waiver legislation ultimately be enacted, 10 U.S.C. 113(a) would no longer apply to General Mattis. The Senate would still, however, have to consider and confirm his nomination. Notwithstanding the legislation recently enacted that would streamline Senate consideration of legislation to waive the statutory prohibition against recently retired officers from serving as Secretary of Defense, Congress may pursue other legislative options, including choosing to (1) suspend the statutory limitation; (2) eliminate entirely or reduce the limitation; or (3) take no action regarding the statutory limitation. Suspend the statutory requirement that seven years elapse between relief from active duty and appointment to p osition of Secretary of Defense . This would require the enactment of legislation similar in nature to P.L. 81-788, which created a one-time suspension of statutory requirements for General Marshall. Proponents of this option believe this would enable the Senate to proceed with confirming General Mattis while at the same time upholding the principle of civilian control of the military by requiring participation of the House of Representatives in the process. Opponents might suggest that the provision is, itself, outdated. Eliminate entirely or reduce the statutory requirement that seven years elapse between relief from active duty and appointment to posit ion of Secretary of Defense . Much like the discussion surrounding the FY2008 National Defense Authorization Act, proponents of this option would likely maintain that the provision in Title 10 U.S.C. is outdated, and that the President should have maximum flexibility to appoint whomsoever they might wish to the position. Opponents to this course of action might maintain that doing so could risk the politicization of the military. Choosing not to pass legislation that would remove statutory barriers to the appointment of General Mattis as Secretary of Defense , thereby "blocking" his nomination . Proponents of this option might contend that a recently retired military officer serving in the position of Secretary of Defense might undermine the principle of civilian control of the military. Opponents would likely maintain that, much like the nomination of General Marshall, General Mattis is exceptionally qualified and supports the principle of civilian control of the military. Related, should Congress choose not to pass relevant legislation, the Senate may choose to allow General Mattis's nomination to proceed, regardless. It is currently unclear what the legal implications of pursuing this option might be. Still, proponents of this option might contend that the language contained within Title 10 U.S.C. is unconstitutional, as it restricts the ability of the President to nominate whomsoever they might wish to their cabinet. Opponents maintain that the Constitution gives Congress considerable authority over military matters, and that the provision has been in statute for almost 70 years. This appendix provides the legislative history associated with the September 18, 1950, enactment of P.L. 81-788 ("An act to authorize the President to appoint General of the Army George C. Marshall to the office of Secretary of Defense"), which authorized the suspension of certain statutory requirements otherwise prohibiting General of the Army George C. Marshall from serving as the Secretary of Defense. P.L. 81-788 was introduced at the request of President Harry Truman, and it was considered by the House and Senate over a period of four days in September 1950. While the measure had the support of many Members, it encountered significant and, at times, heated opposition by other Members, both at the committee and floor levels in each chamber. Background Increasingly displeased with Secretary of Defense Louis A. Johnson, and recognizing the need to "choose a person of great national prestige to head the Department of Defense" in light of the "controversy surrounding Johnson's performance" and U.S. military readiness deficits exposed by operations during the first months of the Korean War, President Truman approached General Marshall in early September 1950 to ask if he would "act as Secretary of Defense through the crisis [of the Korean War] if [President Truman] could get Congressional approval." General Marshall accepted, on the condition that if confirmed, his tenure as Secretary of Defense would be limited to a period of six months to a year. President Truman informally requested Johnson's resignation in a private meeting on September 11: Although Truman initially granted Johnson's request for a few days to think it over, the president called [Deputy Secretary of Defense Stephen T.] Early on 12 September to urge that Johnson resign immediately and recommend George C. Marshall as his successor. Resigning forthwith himself, Early gathered a small [Office of the Secretary of Defense] group to help compose a letter of resignation for Johnson to take to the Cabinet session that afternoon. Still hoping for a reprieve, Johnson took the unsigned letter with him, but when the two men met alone, Truman told the reluctant and distraught Johnson that he would have to sign. As instructed, Johnson's resignation letter recommended that General Marshall should succeed him as Secretary of Defense: it is my recommendation that [you] name as my successor a man of such stature that the very act of naming him to be Secretary of Defense will promote national and international unity. Such a man, in my opinion, is General George Marshall.... I recognize, of course, that many will argue that one of our great Generals should not be Secretary of Defense. I do not believe that this argument has validity in the case of General Marshall, who has already rendered distinguished service to his country, in a civilian capacity, as Secretary of State. I recognize also that an amendment to the National Security Act will be necessary, in order to make it legally permissible for General Marshall to serve as Secretary of Defense—but I believe that Congress will speedily amend the law in General Marshall's case, if you should so recommend. Johnson's letter references Section 202 of the National Security Act of 1947 (P.L. 80-253), which specified that the Secretary of Defense was to be "appointed from civilian life by the President, by and with the advice and consent of the Senate," and provided that "a person who has within ten years been on active duty as a commissioned officer in a Regular component of the armed services shall not be eligible for appointment as Secretary of Defense." George Catlett Marshall, General of the Army General Marshall was born in Uniontown, Pennsylvania, on 31 December 1880. He entered the Virginia Military Institute in 1897, graduated in 1901, and took a commission as second lieutenant in the United States Army in 1902.... Marshall had extensive combat experience in Europe during World War I, and between 1919 and 1924 he was aide-de-camp to General John J. Pershing. After three years in China (1924–27), he served for the next dozen years at posts in the United States.... He became a brigadier general in 1936. In 1939 just as World War II began in Europe, President Roosevelt appointed Marshall Army Chief of Staff. In that position and as a member of the Joint Chiefs of Staff beginning in 1942, Marshall labored unceasingly to build up U.S. defenses.... President Truman later described him as the 'architect of victory' in World War II. …in November 1945 Truman sent him to China [as the Special Representative of the President to China] in an unsuccessful attempt to mediate the civil war between the Nationalists and Communists and to establish a coalition government. He returned to the United States in January 1947 to become secretary of state [during two years] marked by the Truman Doctrine, the Marshall Plan, the Inter-American Treaty of Reciprocal Assistance, and negotiation of the NATO pact. After he left the State Department he achieved further distinction as president of the American Red Cross. General Marshall's Status as a Five-Star General of the Army General Marshall was also one of four World War II-era Army generals first temporarily designated as a five-star General of the Army in 1944. First authorized on December 14, 1944, as a temporary wartime grade by P.L. 78-482, the grade of General of the Army was made permanent on March 23, 1946, by P.L. 79-333. As established by P.L. 79-333, upon retirement General Marshall was entitled to continue to receive the same pay and allowances he had received while on active duty as General of the Army: The officers appointed under the provisions of this section ... shall receive the pay and allowances prescribed by section 4 of [P.L. 78-482].... Any officer on the active list, or any retired officer, who is appointed under the provisions of this section and who has been or may hereafter be retired or relieved from active duty, shall be entitled to have his name placed on the retired list with the highest grade or rank held by him on the active list or while on active duty, and shall be entitled to receive the same pay and allowances while on the retired list as officers appointed under this section are entitled to receive while on active duty. General Marshall retired in the grade of General of the Army on February 28, 1947, but was returned by his request to "the active [duty] list of the Regular Army on March 1, 1949" through P.L. 80-804, which provided that the laws requiring retirement of Regular Army and Regular Air Force officer because of age shall not apply to officers of the Regular Army or Regular Air Force appointed in the grade of General of the Army pursuant to the Act of March 23, 1946 … the President may, in his discretion, upon the request of the officer concerned, restore to the active list of the Regular Army or Regular Air Force any officer of the Regular Army or Regular Air Force on the retired list who was appointed in the grade of General of the Army pursuant to the Act of March 23, 1946. For administrative purposes following his restoration to the Army active duty list, General Marshall was assigned to the Office of the Chief of Staff of the Army. In this role, General Marshall had no official position in the Army command structure, and had minimal official military duties and responsibilities. Legislative Consideration of P.L. 81-788 Tuesday, September 12, 1950 Presidential Activities After President Truman accepted Johnson's resignation, contemporary press accounts report that the President telephoned General Marshall late in the afternoon on September 12, 1950, and formally asked him to serve as Secretary of Defense. General Marshall is reported to have immediately accepted the President's call to service. Johnson's letter of resignation, together with an acceptance letter from President Truman, was made public that evening. Wednesday, September 13, 1950 Presidential Activities On September 13, 1950, as press reports regarding Johnson's resignation and the President's selection of General Marshall to serve as Secretary of Defense circulated, President Truman forwarded a legislative proposal to Representative Carl Vinson (Georgia-6 th District), then Chairman of the House Armed Services Committee, and Senator Millard Tydings (Maryland), then Chairman of the Senate Armed Services Committee. In a cover letter accompanying the proposal, the President addressed the committee heads: Attached is a draft of legislation which would permit General George C. Marshall to serve as Secretary of Defense. I request that you lay this matter before your committee with a view of obtaining early and favorable action by the Congress. I am a firm believer in the general principle that our national defense establishment should be headed by a civilian. However, in view of the present critical circumstances and General Marshall's unusual qualifications, I believe that the national interest will be served best by making an exception in this case. The text of President Truman's draft legislation was not preserved in electronically available House or Senate committee documents. House Activities Meeting of the House Armed Services Committee While Senate Armed Services Committee documents and the Congressional Record make reference to a meeting of the House Armed Services Committee during the morning of September 13, 1950—presumably to review and discuss the President's legislative proposal—this meeting appears to have taken place as an executive session, with no record of the committee's discussions or debate preserved through electronically available committee documents. In floor remarks on September 15, 1950, Representative Paul J. Kilday (Texas-20 th District), seeking to correct the "impression that ... [Representative Vinson] had attempted to rush this matter through the committee without an opportunity for everyone to be heard," noted that "[on the 13 th ] this matter was brought up and thoroughly discussed. Not only was each Member given an opportunity to speak upon it, but [Representative Vinson] called upon each member of the committee individually to state his views." Floor Activity and Introduction of H.R. 9646 During the September 13, 1950, House session, Representative John McSweeney (Ohio-16 th District) made floor remarks generally supporting General Marshall's reported nomination, while Representative John E. Rankin (Mississippi-1 st District) made floor remarks criticizing General Marshall's record of service during World War II and as Secretary of State. Representative Rankin characterized General Marshall's appointment as Secretary of Defense as a "serious mistake," and called for the nomination to be withdrawn. Representative Vinson also introduced H.R. 9646 ("A bill to authorize the President to appoint General of the Army George C. Marshall to the office of Secretary of Defense"), which was referred to the House Armed Services Committee. Legislative Provisions of H.R. 9646 As introduced, H.R. 9646 waived certain requirements associated with two statutory provisions specifically and only for General Marshall's nomination to the office of Secretary of Defense. These requirements would have automatically made General Marshall ineligible for the position due to an insufficient period of time elapsing between his military service and appointment as Secretary of Defense (Section 202 of the National Security Act of 1947, which stipulated that a person who had, within 10 years, served on active duty as a commissioned officer in the regular armed services was ineligible for appointment as Secretary of Defense). Other statutory requirements would have forced him to relinquish his commission as an active duty Army officer in order to serve as Secretary of Defense (10 U.S.C. §576, which then barred officers on the active list of the Army from holding civil office, either by election or by appointment, and stipulated that officers who accepted or exercised the functions of a civil office vacated their commissions, thereby ceasing to be an officer of the Army). H.R. 9646 further provided that, so long as he held the office of Secretary of Defense, General Marshall would retain his rank and grade as a General of the Army, would continue to receive the pay and allowances to which he was entitled by virtue of such rank and grade, and would be authorized to receive any difference between such pay and allowances and the salary prescribed by law for the office of the Secretary of Defense. H.R. 9646 also specified that General Marshall would be subject to "no supervision, control, restriction, or prohibition (military or otherwise) other than would be operative with respect to him if he were not an officer of the Army" in the performance of his duties as Secretary of Defense. Senate Activities Meeting of the Senate Armed Services Committee At 11:30 a.m. on September 13, 1950, the Senate Armed Services Committee convened for a brief public meeting. After the meeting, Senator Tydings read out President Truman's letter to the committee "so that the press will have the information that has been sent up" by the President. Following a short question and answer period with members of the press in attendance, the Senate Armed Services Committee recessed and immediately reconvened in a closed executive session. Although the committee was in executive session, the Senate Armed Services Committee preserved a transcript of session discussion and debate in committee documents. Senator Tydings opened the executive session by noting that upon hearing the news of General Marshall's potential nomination, he had requested the "Legislative Counsel to draw different bills touching the matter different ways." As General Marshall was still considered to be on active duty status, Senator Tydings noted that a legislative approach was quickly discarded that would have modified the existing law to "[make] it so that if a man was out of the service on the retired list for three or four years" he could be nominated to the office of Secretary of Defense. Senator Tydings then presented two potential legislative options to the committee: modifying the existing statute to insert the phrase "except in time of war"; or passing legislation making an exception to the relevant statutes for General Marshall "alone, so that the law will remain intact and nobody else can get in, even in time of war, unless we pass a special act." The first proposal received little attention during the recorded committee discussion. Committee attention chiefly focused on the second proposal, with many Senators, including Senator Tydings, contending that the present "time of great crisis" justified making a specific, personal exception to the relevant statutes for General Marshall, who was viewed as having a record of service and leadership that made him uniquely and exceptionally qualified to take up the duties and responsibilities of the office of Secretary of Defense. General Marshall was further seen as having "the confidence of the people" to lead the Department of Defense during wartime, with one Member asserting that his appointment would "spread confidence throughout our [allies and would] cause our enemies to be a great deal more cautious before they make any overt movements right at this time." Other Senators looked beyond General Marshall's qualifications to support the procedural approach taken by the second proposal—one Member stated that providing a specific exception for General Marshall alone "indirectly serves notice to the people that this bill is designed for only one man, for only one appointment, and to meet an emergency." However, others objected, with Senator William F. Knowland (California) pointing to the "fundamental question" of civilian control of the military establishment raised by General Marshall's proposed nomination, especially in light of his status as an active duty military officer. On a procedural level, Senator Knowland objected to Truman "asking, upon twenty-four hours' notice, without prior consultation with this Committee or with the Congress, a change in the fundamental law of the land," and further charged that the committee was being rushed off its feet, without a chance to explore all of the implications of this suggested change ... in less than one day's notice we are being asked to waive [the relevant section of the National Security Act of 1947], and I believe, regardless of the fact that you write this in for one man, it is the old story of the camel getting his head in under the tent. Once having waived the law, it is going to be far easier for the President or any President to ask for its waiver a second time.... I think it is a very serious step we are being asked to take. The committee may in its judgement—and apparently is prepared to go ahead and approve this and send it to the floor. But I want to emphasize that I think we are taking an unprecedented step and one that may rise to plague this nation in the years ahead, when it may not be George Marshall who is being suggested for the position. Senator Knowland, while acknowledging General Marshall's qualifications, contended that equally well qualified candidates could be identified whose service as the Secretary of Defense would not require the suspension or alteration of existing United States law. Senator Harry P. Cain (Washington), in voicing his support for Senator Knowland's views, further objected to the "pre-merchandising" of the appointment by Truman to the public, describing Truman's actions as placing the committee in an "impossible situation." By a vote of 10 to 2, with one member not voting, the Senate Armed Services Committee voted to proceed in reporting the committee's original bill to the Senate. Although Senator Tydings pressed for unanimous support of the bill, both Senator Knowland and Senator Cain refused to vote in support of the measure. Procedural and administrative remarks made by Senator Tydings during the session also call attention to his view that the committee and the Senate should expedite passage of the measure, with an eye to confirming General Marshall's appointment in the Senate before the September 23 congressional recess for the 1950 elections. Floor Activity and Reporting of S. 4147 The bill was reported as S. 4147 during the afternoon Senate session, accompanied by a committee report including the minority views of Senator Knowland and Senator Cain. Legislative Provisions of S. 4147 Using legislative text identical to H.R. 9646, S. 4147 waived certain statutory requirements specifically and only for General Marshall's nomination to the office of Secretary of Defense. Thursday, September 14, 1950 House Activities Committee Activity During the morning of September 14, 1950, the House Armed Services Committee conducted a full committee hearing on two pending pieces of legislation—S. 4135, which would have authorized the President to appoint General Omar N. Bradley as a General of the Army, and S. 4136, which would have included the Coast Guard within the provisions of the Selective Service Act of 1948, and would have further authorized the President to extend enlistments in the Coast Guard. In concluding the hearing, Representative Vinson noted that the Committee's consideration of the two bills "[disposed] of everything that I know of that is on our calendar up to this hour, except the bill that we will vote on tomorrow, the bill in regard to General Marshall." Floor Activity During the afternoon House session, Representative Clare E. Hoffman (Michigan-4 th District) made floor remarks characterizing General Marshall's nomination to serve in the office of Secretary of Defense as a "tragic mistake." Representative Hoffman's remarks outlined his stance against General Marshall's appointment, questioning General Marshall's World War II service record, his physical capability to assume the duties and responsibilities of the office of Secretary of Defense, and his view of General Marshall as "[favoring] the Communist policy of the conquest of China" through his actions as Special Representative of the President to China in 1945 and 1946. Also during the afternoon House session, Representative Jacob K. Javits (New York-21 st District) briefly mentioned General Marshall's nomination in the context of extended remarks on the Korean War. While Representative Javits expressed his view that General Marshall would do an "effective job" if confirmed, he noted the "troublesome problems involving the continued civilian control of the military" invoked by General Marshall's nomination. Senate Activities Floor Activity Although the Senate briefly considered S. 4147 during its September 14, 1950, session, Senator Walter F. George (Georgia) requested that action on a motion to reconsider a vote by which the Senate voted to disagree to a House amendment to Senate amendment 191 to the Revenue Act of 1950 (H.R. 8920) be given precedence in order to expedite the work of a conference committee for the measure. Senator Harry F. Byrd (Virginia), who was serving as floor manager for S. 4147 in Senator Tydings' absence, agreed—provided that S. 4147 would be the next order of business following Senate action on the motion to reconsider. However, due in part to the Senate's consideration of the motion to reconsider consuming more time than had been anticipated, the Senate ultimately moved to stand in recess until the next day, with S. 4147 considered to be pending business for the next legislative day. Friday, September 15, 1950 House Activities Meeting of the House Armed Services Committee At 10 a.m. on September 15, 1950, the House Armed Services Committee met in executive session to consider H.R. 9646. In opening the session, Representative Vinson noted that it was the "first time" he had "ever heard of the House of Representatives having an opportunity to pass upon an executive appointment ... [ordinarily] the Senate has that right, but this bill is so drafted that we, for the first time, act on the question of confirmation by repealing a law." During the session, discussion and debate was limited to an extended statement from Representative Dewey Short (Missouri-7 th District) objecting to the pending legislation. Among other objections, Representative Short questioned General Marshall's physical capability to serve as Secretary of Defense, and advocated for the principle of civilian control of the military establishment. Following Representative Short's remarks, the House Armed Services Committee voted 18 to 7 to proceed in reporting H.R. 9646 to the House. Floor Debate Representative Vinson reported H.R. 9646, together with a committee report, back to the House during the afternoon House session. After the conclusion of routine House business, H.R. 9646 was brought to the floor after a two-thirds vote in favor of adopting standard procedural considerations outlined by H.Res. 853. The ensuing floor debate was contentious and at various times strongly supportive or sharply critical of General Marshall. Opposition to the bill in light of General Marshall's personal qualifications focused on questioning General Marshall's physical capability to assume the duties and responsibilities of the office of Secretary of Defense; challenging General Marshall's record of service as Special Representative of the President to China and as Secretary of State; and allegations that General Marshall would be unable to set aside any prior "special attachments" to the U.S. military establishment and effectively lead the combined military and civilian elements of the Department of Defense. Most representatives voicing opposition for the bill strongly advocated for holding the principle of civilian control of the military establishment above the personal qualifications of General Marshall, with some charging that the bill represented a "[weakening] of the Constitution" and a "first step toward a military state." Some further contended that Marshall was not the "indispensable" man to serve in the office of Secretary of Defense at that time, as equally well qualified candidates could be identified whose service as the Secretary of Defense would not require the suspension or alteration of existing United States law. Supporters of the bill, such as Representative Vinson, argued that in light of the "[critical] present international situation," and the need for "[restoration of] confidence in our military leadership," General Marshall's record of service and leadership would allow him to undertake this vast responsibility and, without the slightest postponement of urgently needed defense programs now under way, get the defense effort on a steady keel and carry it through with efficiency and dispatch.... The Nation cannot afford to take out time to educate a new Secretary of Defense. At least a year would pass before a new person could be truly effective. The Nation cannot now afford to indulge itself in a year of indecision and delay. Representative Vinson also addressed the issue of civilian control of the Department of Defense: With General Marshall as Secretary of Defense there can be no sensible case made that he, as a military man is likely to perform dangerously as regards our national institutions. Not only does his own background and personal convictions and public record shout the denial to that, but just what is the practical situation in the Government? We still have the President, a civilian.... We still have the National Security Council which formulates the Nation's military and foreign policies, headed by the President and composed of civilians outnumbering the Secretary of Defense. And of course we still have…the Senate and the House of Representatives, and the Supreme Court as well, all of which exercise civilian control over the Armed Forces and over the Secretary of Defense. So, while I subscribe to the principle set out in the Unification Act, the fact remains that this temporary suspension of the law cannot and assuredly will not have any hurtful impact on our governmental processes ... the question before the committee remains ... whether or not the pressure of time is such that the Nation should resort to a draft of General Marshall. Amendments Proposed Two procedural motions that would have returned H.R. 9646 to committee were introduced and defeated, while four amendments to H.R. 9646 were offered during floor debate. Representative James G. Fulton (Pennsylvania-31 st District) offered an amendment that would have authorized the appointment of Representative Vinson to the office of Secretary of Defense instead of General Marshall—Representative Vinson then made a point of order that the amendment was not germane to the bill. The House Chair sustained the point of order, and the amendment was dismissed. Representative Vinson offered an amendment that would insert a new section to the bill expressing the intent and sense of the Congress in granting the President the authority to appoint General Marshall as Secretary of Defense: It is hereby expressed as the intent of the Congress that the authority granted by this Act is not to be construed as approval by the Congress of continuing appointments of military men to the office of Secretary of Defense in the future. It is hereby expressed as the sense of the Congress that after General Marshall leaves the office of Secretary of Defense, no additional appointments of military men to that office shall be approved. In offering the amendment, Representative Vinson stated that he wished it to be distinctly understood that this bill shall not be a continuing precedent for the appointment of military men. We want to adhere to the viewpoint expressed in the President's letter, civilian control. For that reason I want the sense of the Congress affirmatively expressed not only in the committee report but also in the very heart of the bill. Representative Javits then offered a substitute amendment to Representative Vinson's amendment that would state that [i]t is the intent of Congress that the authority granted to the President by this act shall not constitute a precedent or reversal of the policy of our Government that there shall be civilian control of the National Military Establishment. Representative Javits's substitute amendment was rejected by voice vote; Representative Vinson's amendment was agreed to by voice vote. Representative Short offered an amendment that would have inserted a sunset clause into the legislation: "This bill shall terminate 1 year after its enactment." Representative Short's amendment was defeated by a vote of 136 to 61. Vote and Passage By a vote of 220-105, with 101 representatives not voting and three representatives answering "present" to the roll call, H.R. 9646 passed the House and was sent to the Senate. Senate Activities Floor Debate On September 15, 1950, the Senate resumed consideration of S. 4147. Senator Byrd, continuing to act as floor manager for the bill in Senator Tydings's absence, offered an extended explanation of the bill, which summarized the Senate Armed Services Committee's consideration of the legislation, and advocated for the passage of the measure in light of the "crisis" of the Korean War and General Marshall's "supreme qualifications" to take up the duties and responsibilities of the office of Secretary of Defense. As in the House, the ensuing floor debate was contentious, extensive, and at various times strongly supportive or sharply critical of General Marshall. Debate brought up many of the same issues raised in committee meetings, and chiefly focused on the question of holding the principle of civilian control of the military establishment above the personal qualifications of General Marshall. Substitution of House Bill As the Senate debate continued, a message from the House Clerk to the Senate announced that the House had passed H.R. 9646. By unanimous consent, the Senate accordingly substituted H.R. 9646 for S. 4147, and resumed its consideration of the measure. Vote and Passage By a vote of 47-21, with 28 Senators not voting, H.R. 9646 passed the Senate. Enactment of H.R. 9646 and Confirmation of General Marshall H.R. 9646 was signed into law by President Truman on September 18, 1950, as P.L. 81-788. Following a confirmation hearing held on September 19, 1950, the Senate voted to confirm General Marshall's nomination to the office of Secretary of Defense on September 20, 1950, by a vote of 57-11, with 28 Senators not voting. General Marshall took office as the third Secretary of Defense on September 21, 1950, and would serve in that role until September 12, 1951.

The proposed nomination of General (Ret.) James Mattis, United States Marine Corps (hereinafter referred to as "General Mattis"), who retired from the military in 2013, to be Secretary of Defense requires both houses of Congress to consider whether and how to suspend—or remove—a provision contained in Title 10 U.S.C. §113 that states, A person may not be appointed as Secretary of Defense within seven years after relief from active duty as a commissioned officer of a regular component of an armed force. This provision was originally contained in the 1947 National Security Act (P.L. 80-253), which mandated that 10 years pass between the time an officer is relieved from active duty and when he or she could be appointed to the office of the Secretary of Defense. Only one exception to this provision has been made. Enacted on September 18, 1950, at the special request of President Truman during a time of conflict, P.L. 81-788 authorized the suspension of statutory requirements otherwise prohibiting General of the Army George C. Marshall from serving as Secretary of Defense. In 2007, Section 903 of the FY2008 National Defense Authorization Act (P.L. 110-181), Congress changed the period of time that must elapse between relief from active duty and appointment to the position of Secretary of Defense to seven years. In response to the proposed nomination of General Mattis to the position of Secretary of Defense, Congress established special "fast track" procedures governing Senate consideration of a bill or joint resolution which would suspend the existing seven-year restriction (Section 179 of the Further Continuing and Security Assistance Appropriations Act, 2017 [P.L. 114-254]). Accordingly, there are at least three basic options that Congress may pursue as it considers the issue of General Mattis's nomination: suspending the statutory requirement that seven years elapse between relief from active duty and appointment to position of Secretary of Defense; eliminating entirely or reducing the statutory requirement that seven years elapse between relief from active duty and appointment to position of Secretary of Defense; and choosing not to pass legislation that would suspend the provision in Title 10, U.S.C. that currently prohibits General Mattis to become Secretary of Defense. Related to the latter, the Senate might also choose to consider General Mattis's nomination, regardless of whether or not Congress passes legislation designed to suspend or remove the relevant provision in Title 10, U.S.C. Should the Senate choose to pursue this option, it is not clear what the legal implications might be. Historically, the restriction relating to the prior military service of the Secretary of Defense appears to be a product of congressional concern about preserving the principle of civilian control of the military, a fundamental tenet underpinning the design and operation of the American republic since its inception in 1776, if not before. At the conclusion of World War II, some observers believed that the operational experience during the war pointed to the need for better integration of the military services, and therefore argued for the establishment of what would become the Department of Defense. Others, however, voiced concern that this greater degree of integration might overly empower the military, and thus threaten civilian control of the military. Accordingly, as the 81st Congress considered whether, and how, it should create a National Military Establishment, it determined to enact several provisions to mitigate the risk that greater military integration would come at the expense of civilian control. These included restrictions on military service member eligibility for the position of Secretary of Defense, and limitations on the powers of the Chairman of the Joint Chiefs of Staff. Nearly 67 years later, the proposed nomination of General Mattis has again generated a debate among policymakers, scholars, and practitioners regarding what civilian control of the military means in a contemporary context, and how to best uphold that principle.

The health of the U.S. manufacturing sector has been a major concern of Congress for more than three decades. Over the years, Congress has enacted a wide variety of tax preferences, direct subsidies, import restraints, and other federal programs intended to bolster the manufacturing sector, often with the goal of retaining or recapturing highly paid manufacturing jobs. Only a small proportion of U.S. workers is now employed in factories, as manufacturers have shifted low-value, labor-intensive production, such as apparel and shoe manufacturing, to other countries. Meanwhile, U.S. factories have stepped up production of goods that require high technological sophistication but relatively little direct labor. Despite highly publicized factory closures, the good-producing capacity of the U.S. economy remains near its all-time peak, as measured by the Federal Reserve Board. Recent data, however, challenge the belief that the manufacturing sector, taken as a whole, will continue to flourish. In particular, statistics showing that domestic value added represents a diminishing share of the value of U.S. factory output have been interpreted by many analysts as indicating that manufacturing is "hollowing out" as U.S. manufacturers undertake more high-value work abroad. Economic data have been slow to take note of this development, which raises the question of whether the United States will continue to generate highly skilled, high-wage jobs related to advanced manufacturing. This report discusses economic evidence related to the "hollowing out" thesis with respect to the manufacturing sector. It then considers the policy implications of the debate. The United States has a very large manufacturing sector. In 2011, manufacturers' shipments reached $5.4 trillion, more than one-third of the gross domestic product and 11% above the level of 2010. Although many factories closed or reduced production during the 2007-2009 recession, output has rebounded since the summer of 2009. In February 2013, the Federal Reserve Board's index of industrial production in manufacturing reached the highest seasonally adjusted level since June 2008, only 4% below the high recorded in December 2007. This cyclical recovery, however, has not stilled concerns about the sector's health. The number of U.S. manufacturing sites fell from 397,552 in 2001 to 335,553 as of September 2012, leaving many factories abandoned. Manufacturing employment, which peaked at 19.4 million in 1979, was 11.98 million in March 2013. Of those 12 million manufacturing workers, only 8.3 million, or 5.4% of the civilian labor force, are now engaged in factory production work. The remaining 3.7 million manufacturing workers are engaged in management, product development, marketing, and other nonproduction activities conducted within manufacturing establishments. These broad trends—generally expanding manufacturing output coupled with minimal job creation—are of long standing. In combination, they are taken as indicators of rapidly rising productivity. Labor productivity in U.S. manufacturing, defined as output per work hour, has increased 16% since 2005 and 45% since 2000 as manufacturers have shifted away from labor-intensive production. A rapid rise in productivity would be consistent with the belief that U.S. manufacturing is becoming more efficient and technologically sophisticated and therefore requires less labor; one analogy might be the farm sector, in which the labor force has shrunk to a small fraction of its size a century ago despite a vast increase in output. The estimates of rising manufacturing output and capacity and of rapidly improving labor productivity, however, rely critically on price adjustments that attempt to account for improvements in the quality of computers and certain other high-technology products. Such adjustments are required because, for example, simply measuring changes in the quantity or value of the computers produced each year would have little economic meaning given the very rapid increase in those computers' capabilities. Government statistical agencies address this problem by making highly technical adjustments when measuring certain prices. These adjustments can affect prominent economic indicators, such as gross domestic product and labor productivity. The industries for which data are adjusted in this way, such as semiconductor manufacturing, are among the most vigorous in U.S. manufacturing, leading to questions about whether reported improvements in manufacturing represent real changes or are merely the result of statistical adjustments. While some data thus indicate that U.S. manufacturing is resilient and recovering well from the 2007-2009 recession, two facts in particular support the argument that the manufacturing sector is more challenged than the government's output and productivity measures imply: Unlike previous expansions, the two most recent cyclical upturns in the U.S. economy have not brought more jobs in manufacturing. Factory output rose roughly 20% from the trough of the 2001 recession through 2007 without generating factory jobs. This pattern has repeated itself since June 2009; both total manufacturing employment and manufacturing production employment in March 2013 were only 2% higher than at in June 2009, the deepest point of the 2007-2009 recession, despite a 20.8% increase in factory output. By some measures, value added by U.S. manufacturing establishments appears to represent a declining share of the value of factory shipments. If this measurement is correct, although total factory output is rising, the measured contribution of U.S. workers to the value of the final products may not be keeping pace. Some commentators refer to this phenomenon as "hollowing out." Value added represents one measure of the health of manufacturing. Conceptually, value added equals the value of manufacturers' shipments less the value of purchased inputs. Employees' pay and benefits, depreciation of capital investment, business income taxes, and returns to business owners all are components of value added. In essence, value added is meant to capture the share of the value of final products that is being added "in house." Value added is typically assessed with two different metrics. One metric, the growth rate of "real" value added, provides information about the expansion of industrial output but is subject to the technology-related adjustment issues discussed above. The other metric, which avoids these adjustment issues, is the ratio of each year's manufacturing value added to that year's manufacturing shipments. For an individual firm, a decline in the ratio of value added to shipments may not be meaningful. To see why, consider a firm that produces a component, uses the component to make another product, and sells that product. If the firm were to split itself in half, so that one entity makes the component and sells it to a separate entity that makes the finished product, manufacturers' total shipments would increase but total value added would not change. The resulting decline in the ratio of value added to shipments would have no economic significance. The situation may be different, however, at the level of an industry or of the manufacturing sector as a whole. In these cases, a lower ratio of value added to shipments could reveal important changes. One might be diminished profitability. Another might be that manufacturers' costs for certain inputs, such as electricity or paperboard cartons, are rising faster than the prices manufacturers receive for their products. A third possibility could be that manufacturers are collectively making greater use of imported parts and components. From 1990 through 2005, U.S. manufacturing value added fluctuated in a narrow range, between 46.3% and 48.5% of the value of manufacturers' shipments, according to Census Bureau estimates. Since 2006, however, the ratio has remained below 44.8% (see Figure 1 ). The decline in the ratio, which began in 2003, predated the 2007-2009 recession. The ratio of value added to shipments as measured by the Census Bureau was 41.7% in 2011, well below the average of the past two decades. Data compiled by the Bureau of Economic Analysis (BEA), using different methods, show a generally similar trend, save for a spike in the manufacturing value-added ratio in 2009. According to BEA's estimates, the value-added ratio was 31.95% in 2011 and 32.5% in the first half of 2012, well below the 34.3% average since 1987. The interpretation of the trends in the two data series reported in Figure 1 is a matter of controversy among economists. A number of conceptual issues and statistical deficiencies complicate interpretation. Among the most important of these problems are the following. Accounting for purchased services. The Census Bureau includes manufacturers' outlays for telecommunications, advertising, transportation, and other services purchased from third parties in their value added, but BEA does not. This is the main reason the Census measurement of value added relative to sales is normally 9 to 12 percentage points higher than the BEA measurement. Census treats services purchased by manufacturers differently from materials purchased by manufacturers, which are excluded from its measurement of value added. Conceptually, there is no reason for this difference, but until recently the government lacked reliable data on purchased services, and a change in the Census methodology now would affect long-term comparability. Accounting for research and development. Government statistics include the costs of a manufacturer's research and development staff in value added in the same way as the costs of its production employees. Economists have long debated whether research and development should be treated instead as investment. BEA estimates that this accounting change would have raised the annual growth rate of value added in private industry slightly between 1995 and 2007, and that it would have caused value added in certain high-tech sectors, notably pharmaceutical, instrument, and aerospace manufacturing, to grow faster than official statistics indicate. BEA will begin publishing data treating corporate research and development spending as investment in 2013. Intellectual property exports. Many companies conduct research and development in the United States and use or license the resulting designs, patents, and brand names for manufacturing abroad. In principle, if this intellectual property is licensed to a foreign producer, whether or not owned by a U.S.-based company, it appears in U.S. trade data as a services export. However, the measurement of value added can become blurred if the foreign-made product is then imported into the United States to be incorporated into other goods; U.S. data on manufacturing may not adequately correct for the fact that some of the import's value was originally created in the United States or may categorize that U.S. value added as a product of the service sector rather than the manufacturing sector. Moreover, if the intellectual property is licensed from a U.S. operation to a foreign operation within a single multinational company, the licensing fee may not reflect the true economic value of the intellectual property. These complexities tend to make U.S. manufacturing value added appear smaller than it really is, and this bias may have increased over time as "offshoring" of assembly work has become more common. Factoryless manufacturing. A growing number of companies widely considered to be manufacturers—perhaps the best known is the electronics company Apple Inc.—specialize in certain processes, such as design, distribution, or service, but perform little or no physical production themselves. The activities of such "factoryless manufacturers" may show up in government data as "wholesale trade" rather than as "manufacturing," leading to the possibility that an increasing proportion of products with high U.S. value added are being omitted from the calculation of manufacturing output and value added. If this occurs, it may have contributed to the measured decline in the value-added ratio through most of the past decade. New internationally agreed statistical procedures would change the treatment of outsourcing by basing measurement of goods exports and imports on transfer of ownership. Conceptually, for example, if a company makes semiconductors in Texas, ships them to Mexico for assembly into a finished product, and then sells the finished product in the United States, the value of the semiconductors would henceforth count neither as an export nor as an import, and the value of the assembly work in Mexico would count as a U.S. import of manufacturing services rather than of goods. U.S. statistical agencies are still evaluating whether they can obtain the data necessary to measure trade in this way. According to a recent study by three Federal Reserve Board economists, if "factoryless manufacturing" is reclassified as a manufacturing activity rather than a wholesale trade activity, both total manufacturing shipments and U.S. value added in manufacturing are likely to be significantly larger than under current statistical procedures. Price biases. Import price indexes play a critical role in measuring value added in manufacturing. Around 40% of all imports are inputs for business use, such as parts and components, rather than consumer goods. Government statistics may understate the declines in input prices if manufacturers are shifting quickly from using a domestic input to a competing foreign-made input that is lower in cost. If this is occurring, it would mean that U.S. factories are using a greater quantity of the foreign input than assumed, and less of the domestically made alternative. These measurement problems may result in official data overstating the output of U.S. manufacturing workers, and hence their productivity, while understating the use of imported components in U.S. factories. This implies that value added in U.S. factories may be lower than statistics indicate. Table 1 summarizes the effects of these various measurement issues on reported value added in the manufacturing sector. The net effect is ambiguous. Although the statistical problems are serious, it is uncertain, on balance, whether they collectively make value added larger or smaller, relative to manufacturers' shipments, and whether they change the growth rate of value added in manufacturing. The declining share of domestic value added in particular industries is related to a broad change in businesses' strategies that emphasizes the use of global supply chains. In such arrangements, made possible by low freight transportation and communication costs, a retailer or manufacturer organizes its production on a worldwide basis rather than on a country-by-country basis. It may then obtain economies of scale in manufacturing by using a factory in one country to supply most or all of its need for a particular product worldwide, shipping intermediate inputs from place to place for additional processing in order to deliver the final product at the lowest total cost. The globalization of supply chains manifests itself in the increased use of imported inputs—so-called "intermediate inputs"—by manufacturers. This trend is strongly in evidence in the United States. In 1998, 24% of intermediate inputs used in U.S. manufacturing were imported. According to one analysis, the figure started rising in 2003 and reached 34% in 2006. Moreover, U.S. factories' use of domestic components and other materials (excluding energy) is estimated to have declined at an annual rate of 3.9% between 1998 and 2006, while their use of imported components and materials is estimated to have risen at a 3.5% rate. One consequence of increased reliance on international supply chains has been an increase in the share of manufactured goods' final value that is imported. This appears to be the case not just for the United States, but globally. According to a recent study for the World Bank, "For the world as a whole, there has been a discernible drop in the value added content of exports, relative to gross exports, since 1992." In 1992, for example, 45% of the value of machinery exports worldwide was added in the exporting country; by 2007, that figure had fallen to 35%. In the case of transportation equipment, value added in exporting countries accounted for 37% of export sales in 1992, but only 27% in 2007. If domestic value added relative to sales is a valid measure of "hollowing out," then the United States may be experiencing less "hollowing out" than other major trading nations, at least with respect to exports (see Figure 2 ). According to 2009 data compiled by the Organisation for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO), the United States ranked third among 40 countries in the share of export value produced domestically, and ranked first in share of domestic value added in exports of electrical and optical equipment. The data used in Figure 2 attempt to incorporate the value of imported services in foreign value added, alongside the value of imported components and raw materials. In principle, for example, if a Chinese component producer pays a licensing fee to a U.S. firm for use of a patent and then exports the resulting component to the United States, the licensing fee should count as imported value added in the Chinese export, and it should not count as imported value added in the U.S. product made with the Chinese component. However, the extent to which inputs imported into the United States contain value added in the exporting country, the United States, or third countries is uncertain due to the same conceptual factors that complicate analysis of U.S. value added in manufacturing. A recent study of the automotive seat industry illustrates the potential for confusion about the impact of global supply chains on national economies. U.S. imports of automobile seats have declined since 1994, suggesting, at first glance, that auto manufacturers are making greater use of U.S. content. More detailed analysis, however, shows that imports of seat parts, mainly from Mexico, have increased sharply. These imports consist of items such as fabrics and temperature-control devices, which may not be readily identified as auto-related. Collectively, such imports reduce the amount of measured U.S. content in the seat and in the vehicle in which the seat is installed. However, it may not be possible to determine the value of U.S. licenses and patent fees paid by the manufacturers of those imported fabrics and temperature-control devices. If that U.S.-origin intellectual property has accounted for an increasing share of the value of the foreign-made seat components over time, then the reported decline in the domestic content of finished seats may be entirely spurious. Data on the amount of U.S. content embedded in imported products have been developed only recently, and change over extended time periods cannot be tracked reliably. Data on various manufacturing sectors from the OECD-WTO database indicate that the United States is similar to other major manufacturing countries in the share of import value that can be attributed to domestic production (see Table 2 ). Evidence of the tenuous link between output and value added can be seen in China's soaring exports of what U.S. trade data label "advanced technology products," or ATP, including specified electronic and biotechnology goods. While China's bilateral trade surplus with the United States in such products soared from 2002 through 2006, all of the increase was due to processing of foreign components in Chinese factories owned, at least in part, by foreign investors. Although U.S. exports to China were lower than Chinese exports to the United States, "It appears that ATP exports from the United States to China are dominated by large scale, sophisticated, high-valued equipment and devices at the high end of these industries' value-added chains, while ATP exports from China to the United States are mainly small scale final products or components in the low end of the ATP value-added chain," a recent study concluded. It is questionable whether such studies are able to fully account for all trade conducted within global supply chains. In many instances, for example, imported inputs into U.S. manufacturing are likely to have been developed in the United States. In 2012, the United States booked $43 billion of exports of industrial process fees, including royalties and licensing fees, associated with production of goods, compared with $23 billion of imports (see Figure 3 ). These fees represent payments for intellectual property developed by manufacturing-related companies in the United States but used for physical production abroad. The true value of industrial process exports may be much larger than these official data indicate. Some 73% of reported exports of industrial process royalties and fees in 2012 stemmed from sales by a U.S. company to an affiliated company abroad, and the exporters are free to value those intra-firm transactions as they choose when they report them on BEA form BE-125. Those exports go disproportionately to countries where income from royalties and licenses receives favorable tax treatment: in 2011, 14% of U.S. industrial process exports went to Ireland and 13% to Switzerland, while only 4% went to China. These factors suggest that it is a common practice for U.S. manufacturers to initially assign licenses to their affiliates abroad, resulting in a one-time U.S. export of industrial process royalties and fees, after which the repeated relicensing by those affiliates to third parties would not be reported as U.S. exports. The difficulty in tracing the flow of funds related to intellectual property used in manufacturing has major implications for the measurement of value added. Consider, for example, an industrial process developed by workers at a manufacturing firm in the United States, licensed by the U.S. firm to its Irish affiliate, and then licensed by the Irish affiliate to a Chinese manufacturer. The Chinese firm would make payment to Ireland, not to the United States; if the U.S.-origin value added in its product is captured in international trade statistics at all, the value would be only the arbitrary amount for which the U.S. firm initially transferred the rights to Ireland. Therefore, if the Chinese firm exports the manufactured good to the United States, trade statistics may not capture the U.S.-origin value in the Chinese export. And if the Chinese export is an input into a final product manufactured in the United States, the share of U.S. value added in the final product may be underestimated because the true value of the U.S.-origin license used in making the input will not be included. Industrial process royalties and license fees are not the only services exports that may be intimately connected with manufacturing. Unfortunately, U.S. data are not sufficiently detailed to reveal the extent to which other services exports are supplied by manufacturing firms in the United States. However, the available data suggest that services likely to have been produced by U.S. manufacturers accounted for approximately $94 billion of U.S. exports in 2011. If a substantial amount of this U.S.-origin value was incorporated into foreign-made products that were then exported to the United States, value added in U.S. manufacturing might be higher than the $1.7 trillion officially reported by BEA. Industry-level data suggest that increased use of imported components may be occurring in some manufacturing industries that traditionally have high value added relative to shipments. These industries typically are intensive users of scientific research and advanced technology, and are often regarded as industries in which the United States should have an international competitive advantage. The pharmaceutical, medical instrument, tool and die, and navigation and control instrument industries have exhibited declining ratios of domestic value added to shipments over the last five years (see Table 3 ). However, all of these industries are vulnerable to the mismeasurement issues discussed above, as their imported inputs may be likely to draw on intellectual property and other services originating in the United States. The data discussed in this report shed light on a concern frequently raised in the context of national security, that U.S. manufacturers of vital products are critically dependent upon inputs from abroad. Evidence suggests that while the output of U.S. factories contains substantial foreign value added, many other countries are even more dependent upon foreign value added than is the United States, at least with respect to goods traded in international markets. As the research surveyed in this report emphasizes, traditional understandings of "manufacturing" are inadequate to explain the process by which goods are produced in the modern world economy. For a large number of goods, physical production—activities such as stamping, molding, cutting, machining, welding, and assembly—is no longer the heart of the manufacturing process. The bulk of the value in many goods comes from activities such as design, product development, marketing, and distribution, which are not necessarily performed by the same enterprises, or at the same locations, as physical production. The declining importance of physical production is in evidence in many countries, and is not a phenomenon limited to the United States. The shift to global supply chains has had both positive and negative effects on the U.S. economy. There is no doubt that it has contributed to reduced U.S. consumer prices for many manufactured products. The availability of imported intermediate inputs has probably preserved some manufacturing within the United States, as reliance on higher-cost domestic inputs might well make related U.S. final-goods manufacturing uncompetitive. Additionally, the supply chains themselves support U.S. jobs in transportation, logistics management, and other fields. At the same time, there is widespread agreement that "offshoring" has played a major role in loss of factory production work (see Figure 4 ), leading to higher unemployment and reduced incomes for some groups of workers and some communities where import-sensitive manufacturing is located. Two recent studies estimate that the rapid growth of manufactured imports from China accounted for a quarter or more of the decline in U.S. manufacturing employment in the first decade of this century. The broader impact on the U.S. labor market, however, remains a matter of considerable debate. One recent study of the growth of Chinese exports to the European Union between 1999 and 2007, directly applicable to the United States, concludes that "trade drives out low-tech firms … and increases the incentives of incumbents to speed up technical change." This finding contradicts the many economic studies that attribute declining factory employment to technological change, as it emphasizes that the rate of technological change speeds up when trade with low-wage countries increases. It also suggests that declines in manufacturing production employment may go hand in hand with increased demand for workers with skills that are in some way related to goods production and distribution, but may not fall within the traditional definition of "manufacturing" work. The transformation of manufacturing poses novel issues for public policies aimed at the manufacturing sector. A variety of federal programs, from the Hollings Manufacturing Extension Partnership administered by the National Institute of Standards and Technology to the National Nanotechnology Initiative to the Small Business Administration's 504/CDC Loan Guaranty Program, are designed, in part, to help manufacturers upgrade technology, replace capital stock, and compete more effectively in global markets. The extent to which such efforts lead private-sector firms to select U.S. locations for high-value activities within their supply chains, and the degree to which those activities create employment, are unclear. More broadly, shifts in the nature of value added in manufacturing put into question the efficacy of policies designed to promote factory production within the United States, such as tax policies favoring investment in manufacturing equipment and "Buy American" rules requiring certain goods financed by the federal government to be produced domestically. Given that employment and economic growth are increasingly decoupled from production, it is uncertain whether policies oriented to physical manufacturing activity are best suited to achieve desired economic goals. Finally, the changes described in this report raise questions about the adequacy of government statistics. U.S. statistical agencies have made significant efforts in recent years to improve the collection of data on the service sector, corporate spending on research and development, and international trade in intangible products. Nonetheless, available data still tend to treat manufacturing and services as unrelated economic activities, and it is not clear that existing data series on domestic economic activity, trade, and freight transportation completely capture changes in the nature of manufacturing, the sources of employment, and the creation of value.

The health of the U.S. manufacturing sector has been a long-standing concern of Congress. Although Congress has established a wide variety of tax preferences, direct subsidies, import restraints, and other federal programs with the goal of retaining or recapturing manufacturing jobs, only a small proportion of U.S. workers is now employed in factories. Meanwhile, U.S. factories have stepped up production of goods that require high technological sophistication but relatively little direct labor. Labor productivity in manufacturing, as measured by government data, has grown rapidly, suggesting that the manufacturing sector as a whole remains healthy. Recent data, however, challenge the belief that the manufacturing sector, taken as a whole, will continue to flourish. Unlike previous expansions, the two most recent cyclical upturns in the U.S. economy have generated few jobs in manufacturing. Moreover, statistics suggest that domestic value represents a diminishing share of the value of U.S. factory output. One interpretation of these data is that manufacturing is "hollowing out" as companies undertake a larger proportion of their high-value work abroad. These developments raise the question of whether the United States will continue to generate highly skilled, high-wage jobs related to advanced manufacturing. The evidence concerning "hollowing out" is ambiguous, as conceptual issues and statistical deficiencies make it difficult to determine whether the recent decline in manufacturing value added, relative to shipments, is a short-term phenomenon or a long-term trend. Despite improvements in recent years, U.S. statistical agencies still tend to treat manufacturing and services as unrelated economic activities, and it is not clear that existing data series on domestic economic activity, trade, and freight transportation adequately capture changes in the nature of manufacturing, the sources of employment, and the creation of value. Nonetheless, evidence suggests strongly that physical production activities account for a diminishing share of the final value of manufactured products, with service-related inputs such as research, product development, and marketing becoming more important. Further, the production of many goods is dispersed across multiple locations along global supply chains, making it difficult to determine where value is added. Such shifts pose a challenge to efforts to capture economic value by promoting goods production in the United States. In the context of national security, the fact that U.S. manufacturers of vital products are critically dependent upon inputs from abroad is frequently a subject of concern. International comparisons indicate that the United States is in no way unique in its dependence on foreign inputs to manufacturing. Although the output of U.S. factories contains a large proportion of foreign value added, many other countries appear to be even more dependent upon foreign value added than is the United States, at least with respect to goods traded in international markets.

The Historic June 2000 Summit. On June 13,2000, South KoreanPresident Kim Dae Jung flew to Pyongyang for a three-day summit with North Korea's paramount leader, KimJong-il. The meeting was the first-ever between the leaders of North and South Korea, which have been divided since 1945andofficially at war since 1950. (1) The two Kims signeda joint declaration pledging, among other things, to work towardseventual reunification, open a dialogue between government officials, engage in economic cooperation, permitfamilyreunions, and hold cultural and athletic exchanges. Upon his return to Seoul, Kim Dae Jung stated that Kim Jong-ilhadverbally agreed that even if North-South tensions continued to be reduced, U.S. troops should remain in South Koreatohelp preserve regional and peninsular stability. "It became clear," the South Korean president continued, "that wewill notever go to war again." (2) The Ebb and Flow of the New Inter-Korean Dialogue. Since theNorth-South summit, inter-Korean interchanges have alternated between bursts of meetings and lulls in publicactivity. Inthe summer and fall of 2000, North-South interchanges flowed, as the two Koreas rapidly developed a new dialogue. Fourrounds of inter-ministerial talks were held, the two countries' defense ministers met for the first time, talks oneconomiccooperation commenced, the two sides marched together at the 2000 Sydney Olympics, and emotional reunions wereheldamong hundreds of families separated by the inter-Korean divide. South Korean President Kim stated his desiretonegotiate a North-South peace agreement, which would officially end the Korean War, before he leaves office inFebruary2003. Moreover, numerous South Korean businesses and citizens forged their own contacts with North Korea, adevelopment made possible when President Kim - under his so-called "sunshine policy" of trying to induce morecooperative behavior from North Korea through engaging Pyongyang - relaxed Seoul's previous insistence that thegovernment monopolize all contact with the North. (3) In October of 2000 North Korea slowed the pace of the dialogue - perhaps to focus on a flurry of diplomatic activity withthe outgoing Clinton Administration - leading to the postponement and delay of scheduled family reunions andseveralmeetings. Inter-Korean activity again picked up from November 2000 to January 2001 as the talks entered a newphase:ministerial-level talks shifted from meeting approximately every month to every quarter, with more frequentworking-levelmeetings expected to provide forward momentum. (4) Kim Jong-il's business-oriented trip to China, combined with talk of"new thinking" in the state-run North Korean press, seemed to promise more breakthroughs in 2001. Such hopes were frustrated in March of 2001, however, as North Korea abruptly halted virtually all inter-Korean contactsfor nearly six months. Pyongyang linked the move to the Bush Administration's calls for stricter reciprocity indealingwith Pyongyang. However, the inter-Korean dialogue had slowed even before the Bush Administration launchedits reviewof U.S. policy toward North Korea, a process that was completed in June 2001. (5) Economic talks in late 2000 and early2001 had hit a snag over North Korea's demand that the South provide 500,000 kw of electricity immediately and2 millionkw soon thereafter. Although the two sides military-to-military talks in February produced an agreement on rulesofoperation for construction of a railroad through the DMZ, North Korea declined to sign and ratify the pact. Furthermore,Kim Jong-il made no move to fulfill his promise of a return summit visit to Seoul. The inter-Korean dialogue picked up again in September, following Kim Jong-il's trip to Russia and Chinese PresidentJiang Zemin's visit to Pyongyang. The resumption was curtailed, however, by the changed internationalenvironmentfollowing the September 11 terrorist attacks against the U.S. There were some signs that North Korea would usetheattacks as an opportunity to improve relations with the South and the U.S., if only to extricate itself from the U.S.list ofterrorist sponsoring nations. In addition to condemning the attacks, Pyongyang publicly rejected terrorism and thesupportof terrorist organizations, signed two anti-terrorism treaties and announced plans to sign five more. However, inter-Korean talks broke down completely in November 2001 due to Pyongyang's objections to Seoul'sheightened security posture to guard against terrorism, and the North's demand that all future talks be held in theDPRK(rather than alternating between North and South) for security reasons. North Korea's chronic fears of an Americanattackwere further heightened in November by the Bush Administration's apparent expansion of the definition of terrorismtoinclude the development of weapons of mass destruction (WMD), and by several Administration officials' referencesto theNorth's suspected WMD programs. Some have interpreted the North hard-line stance as a sign that hard-liners inPyongyang have gained the ascendancy. (6) Kim DaeJung and his Cabinet have expressed pessimism about future talksbeing held or bearing much fruit. Coinciding with the slowdown in inter-Korean dialogue since the spring of 2001, there have been a growing number ofnaval and border clashes between the two Koreas and between North Korea and Japan. Some analysts interprettheseincidents as signs that North Korea is attempting to pressure its neighbors to be more forthcoming in bilateral talks,andwarn of additional provocations from the North in the future. In the meantime, while Pyongyang's relations withSeoul,Washington, and Tokyo have worsened over the past year, North Korea has re-normalized relations with China andRussiaand has established relations with a number of Western European countries, in an apparent attempt to diversify itsdiplomatic contacts. Civilian Contacts Continue. Despite the freeze ingovernment-to-government talks, North-South links between groups and individuals have continued to expand. Thisis amarked contrast to earlier thaws (in 1972, 1985, and the early 1990s) in which the governments monopolizedcross-borderactivity. Although no South Korean firms have made no major direct investments in the North since the June 2000summit,a number have taken tentative steps toward building an arms-length presence in the North. Over one hundred fiftySouthern firms now manufacture goods in the North, primarily on a contract basis. (7) Samsung has sought to takeadvantage of the North's interest in information technology by opening a software center in Beijing using NorthKoreanprogrammers and by applying to open an operation in Pyongyang. Outside business circles, grassroots inter-Koreancivilian contacts also have continued to grow. Southern civic groups, for instance, donated approximately 73 billionwon(over $56 million at $1= 1,300 won) in the first 11 months of 2001, compared with over 40 billion won (over $30million)for all of 2000. (8) Criticism of the Sunshine Policy in South Korea. Within South Korea,criticism of President Kim's sunshine policy - particularly from the opposition Grand National Party (GNP) - hasmountedover the past year, particularly as North Korea put a halt to the dialogue. The tension peaked in August andSeptember2001, when a controversial visit to Pyongyang by South Korean unification activists led to the forced resignationof thePresident Kim's Unification Minister, the collapse of his ruling coalition, and his party's loss of control over theNationalAssembly. The GNP's concerns have been less over the logic of the policy - the party generally has come to supportsomeform of engagement with North Korea - than over its implementation. (9) The GNP leadership has charged President Kimwith failing to insist on reciprocity from Pyongyang in exchange for Seoul's concessions and with ignoring importantissues such as confidence-building measures and the several hundred South Korean POWs and kidnaping victimssaid toremain in the North. The GNP also has criticized Kim for failing to adequately consult with the National Assembly- inwhich the GNP is the largest party - and for trying to silence domestic criticism of North Korea. (10) President Kim'sdomestic support has been further weakened by the widespread perception that he is a "lame duck." By law, SouthKoreanpresidents can serve only one five-year term, and jockeying has already begun for presidential elections in December2002. The slowing of South Korea's economy in 2001 has added weight to the GNP's warnings that the government should avoidproviding North Korea with significant economic assistance. After recording an 8.8% growth rate in 2000, theeconomy isexpected to have grown by less than 3% in 2001. The slowdown also has accentuated the serious financialdifficulties ofthe Hyundai conglomerate, particularly its North Korean business ventures, which have been the economic flagshipsofKim Dae Jung's sunshine policy. Inter-Korean trade in the first 11 months of 2001 fell 9.3% year on year to $363million. What are North Korea's Intentions? With the apparent - and perhapstemporary - collapse of Kim Dae Jung's sunshine policy, South Korea's ability to take the initiative on peninsularmattersis limited. Thus, the future course of inter-Korean relations revolves to an even greater degree around North Korea'sintentions, which remain opaque. In the aftermath of the June 2000 summit, many wondered whether Pyongyang'sdiplomatic opening was a sign that Kim Jong-il had changed his stripes, deciding to adopt a more cooperativeposture andpossibly reform the faltering North Korean economy. Others warned that the North's actions were merely tacticsto obtaineconomic concessions from South Korea and its allies, thereby propping up North Korea's economy, rearming itsdeteriorating conventional military, and preserving the power of its communist elite. Another possibility is that theNorthKorean ruling elite is divided, with some reformers favoring a greater openness, and other interests - such as theKoreanPeople's Army - opposing it. In any event, thus far, North Korea has largely succeeded in steering the North-Southdialogue toward discussions over economic assistance and away from discussions over military confidence-buildingmeasures and internal economic reforms. 3/9/00 - Kim Dae Jung's "Berlin Declaration." In a speech in Berlin, ROK President Kim signaled Seoul's interest inextending economic assistance to North Korea, in exchange for reopening an official North-South dialogue. 4/8/00 - The ROK and DPRK announce they will hold the first-ever inter-Korean summit in June. 5/29-31/00 - DPRK leader Kim Jong-il makes a secret visit to Beijing, meeting with top Chinese leaders. 6/13-15/00 - The North-South summit , Pyongyang, between ROK President Kim Dae Jung (shown at left in photo) andDPRK leader Kim Jong-il. The two leaders sign a vaguely worded joint declaration, which indicates their agreementtowork toward unification, exchange visits by members of divided families around August 15, 2000, repatriate DPRKprisoners in the ROK who have completed their jail terms, work for "a balanced development" of both countries'economies, hold a dialogue between the two governments at an early date, and increase social and culturalexchanges. Thedeclaration also mentions that Kim Jong-il accepted Kim Dae Jung's invitation to visit Seoul "at an appropriatetime." After returning to South Korea, Kim Dae Jung states that Kim Jong-il verbally agreed that even if North-Southtensionscontinued to be reduced, U.S. troops should remain in South Korea to help preserve regional and peninsularstability. Fordetails, see CRS Report RL30188(pdf) , South Korea's "Sunshine Policy." 6/19/00 - The Clinton Administration eases economic sanctions imposed on North Korea since its invasion of South Koreain 1950. 7/31/00 - ROK and DPRK foreign ministers meet on the sidelines of the ASEAN (11) Regional Forum (ARF) in Bangkok,the first time the DPRK had been invited to the ARF. The ministers issue a joint press release agreeing to: holdministerial-level talks starting August 29, hold family reunions, reopen liaison offices in Panmunjon, and begindiscussingthe reopening of severed railway links. 8/11/00 - Major ROK media publishers meet with Kim Jong-il and the state-run North Korean press inPyongyang. Thepublishers agree on a plan of mutual coverage, including a pledge to "avoid confrontation . . . and stop slander." 8/15/00 - The North-South Liaison office in Panmunjon, in the Demilitarized Zone (DMZ), reopened. It had been closedby the DPRK in 1996. 8/15/00 - 200 families reunited . 100 ROK citizens travel to Pyongyang. 100 DPRK citizens travel to Seoul. 8/23/00 - Hyundai and the DPRK reach agreement to begin construction of an industrial park in Kaesong, a DPRK townnear the DMZ. Surveying is to begin in September 2000 and construction is to begin in November 2000. 8/29-9/1/00 - 2nd Interministerial Meetings , in Pyongyang. The ministers issue a 7-point joint press statement, whichincluded the following items: a 2nd round of family reunions is to held by year-end; the two RedCrosses are to begindiscussing the exchange of letters among divided families; discussions will begin in September over holdingmilitary-to-military meetings; and working level meetings will begin on economic cooperation and on reconnectingtheSeoul-Shinuiju railroad. The next round of ministerial talks is scheduled for Sept. 27-30. The DPRK asked for 1milliontons of food aid. The end of talks are delayed a day, reportedly due to DPRK opposition to military confidencebuildingmeasures, such as establishing a hotline and holding regular military-to-military talks. The communique did notmention areciprocal visit to Seoul by Kim Jong-il. Prior to the meetings, there had been speculation that such a trip wouldtake placein Nov. 2000. 9/12/00 - The ROK and DPRK announce that DPRK leader Kim Jong-il will visit Seoul in the spring of 2001 . Theannouncement is made during a meeting of key aides to both leaders. The aides sign a joint communique statingthatworking level economic talks will open on September 25, defense ministers will meet, and a joint flood controlsurvey ofthe Imjin River will be completed within the year. 9/17/00 - ROK President Kim's party announces its intention to revise ROK's National Security Law, which bans praise ofand unauthorized contacts with DPRK. 9/18/00 - The ROK starts work on reconnecting the Seoul-Shinuiju (DPRK) railroad. The ROK's main opposition partyboycotts the event. 9/19-23/00 - Red Cross negotiators meet and agree to two more family reunions (Nov. 2-5 and Dec. 5-7, 2000) for 100people from each side in Seoul and Pyongyang, and to allow 300 people from each Korea to exchange letters withseparated families, which would be the 1st ever inter-Korean mail links. 9/25-26/00 - 1st-ever inter-Korean defense ministerial meeting , on Cheju Island (ROK). In a joint statement, the twoministers agree to ease military tensions so as to "completely eliminate" the danger of war on the Korean peninsula. Toallow the relinking of inter-Korean railroads and highways through the DMZ, the defense ministers agree to beginclearingmines and create an area of joint control in the DMZ. Another round of ministerial talks is scheduled for Nov. 2000,and around of working level talks on the railroad is scheduled for October 2000. The DPRK did not respond to theROK'sconfidence-building proposals, which included: establishing joint military committees at the working and upperlevels,establishing a military hot line, and agreeing to observation and advanced notification of troop movements andexercises. Reportedly, the DPRK defense minister called on the U.S. to withdraw its troops from South Korea. 9/25-26/00 - 1st working level economic meeting , in Seoul, makes progress on investment and double taxationagreements. ROK agrees to give DPRK 500,000 tons of food aid. 9/27-10/1/00- 3rd Interministerial talks , on Cheju Island (ROK), end without much substantive progress. In a jointcommunique, the two Koreas agree to set up a joint economic commission and to increased social and academicexchanges. Reportedly, the DPRK requested a slowdown in the pace of inter-Korean projects. 10/1/00 - ROK President Kim proposes a "2+2" peace initiative, whereby the ROK and DPRK would sign a peaceagreement that would later be endorsed and guaranteed by U.S. and China. 10/6/00 - The U.S. and DPRK sign a statement in which the DPRK declares its opposition to all forms of terrorism. 10/9-12/00 - Vice Marshal Jo Myong Rok, the DPRK's second-in-command, travels to Washington, the first visit to theU.S. by a high-level DPRK official. The two sides sign a joint communique, which states that "there are a varietyofavailable means, including the four-party talks" for forging permanent peace arrangements, a move that the ROKhailed asa sign that North Korea might support President Kim's 2+2 peace treaty initiative, thereby abandoning its policy ofnegotiating a peace treaty only with the U.S. 10/18/00 - DPRK postpones scheduled 2nd round working level economic meetings due to its "internal situation." 10/23/00 - U.S. Secretary of State Madeleine Albright travels to the DPRK. 10/29/00 - 4th round of Ministerial-level talks are postponed. 10/31/00 - DPRK-Japan normalization talks. DPRK rejects Japan's proposal to offer it "economic aid" ratherthan financial"compensation" for the 40-year occupation of Korea. Future talks are not scheduled. 11/1/00 - DPRK-U.S. missile talks open. 11/2-5/00 - Scheduled family reunions are postponed. 11/6/00 - In talks with the United Nations Command (UNC) over opening the DMZ to inter-Korean rail and roads, theDPRK rejects a UNC proposal to transfer negotiating authority from the UNC to the ROK. 11/8-11/00 - 2nd round working level economic meeting , in the DPRK, which had been scheduled for Oct. 18. Fouragreements are signed, extending protection to foreign investors, ending double taxation, designating local banksto allowdirect financial transactions, and establishing a bilateral body to settle potential trade disputes. Officials estimatethat theagreements, which need to be ratified at the ministerial level and then by legislatures, could take 1-3 years beforethey gointo effect. During the visit, ROK negotiators inspect a DPRK food aid distribution center, the first time the DPRKopensits distribution infrastructure to ROK inspection. The DPRK also provides a detailed accounting of food aiddistribution. 11/16/00 - The DPRK and the United Nations Command in Korea agree that ROK can have administrative authority overthe southern portions of the DMZ, where an inter-Korean railroad and highway are to be built. 11/28/00 - In a speech in Singapore, ROK President Kim calls for reopening the Four Party talks among the two Koreas,the United States, and China as a vehicle to negotiate a peace agreement. The talks, which opened in 1997, had beenstalled since the fall of 1999. 11/28/00 - 1st working level military talks to discuss administering the construction of inter-Korean railroad and roadthrough the DMZ. 11/30/00 - 2nd round of defense minister talks, scheduled for Nov 2000, do not take place. 11/30-12/2/00 2nd round of family reunions of 100 people from each side. The reunions, originally scheduled for earlyNovember, are a lower key affair than the 1st round in August, in part due to protests in the ROKagainst the cost of the 1streunion. The reunions proceed less smoothly than the 1st round: the DPRK lashes out at the head ofthe ROK Red Cross forhis criticism of the reunion process, and the DPRK detains an ROK reporter who had criticized the DPRK. The twoRedCrosses agree that letters between families will be allowed at a future date. 12/5/00 - 3rd round family reunions, originally scheduled for this date, are postponed. 12/10/00 - ROK President Kim receives the Nobel Peace Prize in Oslo. 12/11/00 - ROK President Kim says he expects to sign a far-reaching pact if DPRK leader Kim Jong-il visits Seoul in thespring of 2001. 12/12/00 - 2nd round working level military talks , in the DMZ, produce a consensus on general principles for the repairof North-South railroads and construction of North-South roads in the DMZ. The two sides begin to draft commonregulations for emergencies or accidental military conflict. 12/12-16/00 - 4th round inter-ministerial talks , in Pyongyang. In a joint statement, the two sides announce: theestablishment of an economic cooperation panel to meet later in December; a 3rd round of familyreunions to be held in Feb.2001 and a 5th ministerial level meeting to be held in March; work would begin on a DPRK proposalto open its East Seawaters to ROK fishermen. The talks are more contentious than previous rounds. As a prerequisite for moredialogue, theDPRK demands that the ROK agree to provide 500,000 kw of electricity. The ROK refuses, convincing the DPRKto deferthe issue to economic cooperation panel meeting. The DPRK protests an ROK Defense White Paper identifyingDPRK as"the main enemy," pending a substantive reduction of the DPRK military threat. 12/21/00 - 3rd Round working level military talks , in the DMZ, produces no significant results. The DPRK did notrespond to ROK proposals for detailed safeguards to prevent accidental clashes between the two militaries, for ahotline beset up to link the two militaries, and for the DPRK to prevent its ships from crossing the Northern Limit Line (NLL),themarine extension of the DMZ that the DPRK has not accepted. The DPRK again expressed dissatisfaction aboutbeingdesignated as the ROK's main enemy in the ROK's Defense White Paper. 12/28/00 - Hoped-for military talks don't materialize after the DPRK fails to respond to an ROK proposal for more talks. 12/28-31/00- 1st South-North economic cooperation promotion committee meeting , in Pyongyang. The two sides agreeto prepare a joint inspection of the DPRK's energy situation in January and to discuss joint flood control surveysof theImjin River, which runs through the DMZ. The talks stalled at one point when the DPRK demanded that the ROKagree toprovide electricity before other issues were resolved. A second meeting is scheduled for Feb. 6-8, 2001 in Seoul. 1/1/01 - In joint New Year's editorials, three official DPRK newspapers state that North Korea will place top priority onrebuilding its economy. 1/1/01 - North Korean short-wave radio halts the broadcast of random numbers, which are believed to be coded instructions to spies in South Korea. 1/6/01 - Radio Pyongyang, the DPRK's official station, broadcasts a lecture on Korean unification that calls for aDPRK-U.S. peace treaty but omits any mention of a DPRK-ROK treaty. 1/8/01 - The ROK government delivers a draft inter-Korean agreement on a number of key issues to the DPRK Monday,which includes the provision of electricity, measures to prevent flooding along the Imjin River, joint-efforts toconstructrail and road links as well as an industrial complex in Kaesong, the DPRK. An ROK Finance and Economy Ministryofficial says the document also sets the timing for a special team to determine the extent of DPRK's power shortagesandfor a joint team of experts to survey the Imjin River. 1/13/01 - North Korea's Fisheries Ministry proposes inter-Korean talks on a fishing agreement. 1/15/01 - Kim Jong-il, accompanied by senior military officials, travels to China . Economic issues dominate his trip,which includes a visit to joint venture plants and an economic development zone in Shanghai. Reportedly, duringameeting with CCP President Jiang, Kim endorsed China's economic reforms. Kim had last visited Shanghai in1983, whenthe city was just beginning its economic reforms, and had criticized the reforms for ideological "revisionism." 1/17/01 - The ROK's foreign minister announces that the U.S. and ROK have reached an agreement allowing the ROK todeploy missiles with a 300 km. (187 mile) range, nearly double the previous 180 km. limit set by a 1979 bilateralagreement. 1/17/01 - At an ROK National Security Council meeting, President Kim sets three basic unification and securityguidelines: improving inter-Korean reconciliation and cooperation, particularly on economic matters; establishinganinter-Korean peace regime; and maintaining a steadfast security posture. 1/22/01 - President Kim tells his Cabinet to begin preparing for "wholesale" changes in the North-South relationshipbecause it appears that Kim Jong-il is ready to implement significant economic reforms 1/21-23/01- Chinese press accounts report that Kim Jong-il visited light industrial factories in the North Korea city ofShinuiju, near the Chinese border, and urged workers to abandon "old thinking" in order to adopt modern technologyandincrease production. 1/24/01 - In Tokyo, Kofi Annan says he hopes to visit North Korea in the first half of 2001. 1/25/01 - The South Korean government decides to send 100,000 tons of corn to North Korea through the World FoodProgram. In 2000, Seoul sent 600,000 tons of corn to the North. 1/25/01 - Presidents Bush and Kim hold their first phone conversation. Reportedly, few specifics are discussed. Bushissues a vague pledge to coordinate closely with South Korea and to help the two Koreas promote peace. 1/29/01 - Working level meeting on North Korea's electricity situation (in Kaesong, North Korea) delayed perPyongyang's request. 1/29-31/01 - At the 3rd Round of Red Cross Talks (in Mt. Kumgang, DPRK), the two sides issue a six-point agreementscheduling a third round family reunions on February 26, a letter exchange beginning March 15, and a fourth roundofmeetings from April 3-5 in a to-be-determined location. No agreement was reached on the South's primary goal atthemeeting - establishing a permanent reunion facility. ROK proposed 2 temporary centers, in Mt. Kumgang and inPanmunjon. North Korea reportedly insisted on Mt. Kumgang. Additionally, South Korea proposed periodical orregularletter exchanges and an increased number of families for such exchanges. 1/30/01 - Hyundai Asan sends half of its $12 million January 2001 payment to the DPRK, a violation of contract. Thecompany blames snowballing losses from the Mt. Kumgang venture, estimated to reach 488 billion won ($391million). 1/31/01 - At a 4th round of working level military talks (Panmunjon) on reconnecting the Seoul-Shinuiju railroad in theDMZ, the two sides near agreement on joint safety regulations aimed to help avert possible accidental clashes withintheDemilitarized Zone (DMZ). Landmine clearance work within the DMZ is likely to begin in March. 2/6/01 - A three-person EU economic mission arrives in North Korea. Reportedly, the group will stay for about twoweeks to inspect the DPRK's agricultural and energy industries, in preparation for a possible technical assistanceprogramin the future. 2/7/01 - In the first high-level meeting between the Bush and Kim administrations, Secretary of State Colin Powell andROK Foreign Minister Lee Joung-binn confer over breakfast in Washington and issue a joint statement affirmingthe BushAdministration's general support for ROK's policy of reconciliation and cooperation with the North. The meetingisnotably devoid of much discussion of details, however, and Powell reportedly makes it clear that there will nodevelopmentin relations between Washington and Pyongyang unless progress is made in discussions over the DPRK's missileprogram. 2/7-2/10/01 - Working level meetings on North Korea's electricity situation (Pyongyang) produces no results. ROKrepeats its proposal that the two Koreas form a joint survey team, to which North Korea responds that it would onlyagreeto more limited surveys if the South first supplies 500,000 kilowatts of electricity as soon as possible. No follow-upmeeting is scheduled, though South Korean officials propose a meeting in Seoul in early March. 2/8/01 - 5th working level military meeting, at which the North Korea and ROK militaries reach a 41-point agreement onarrangements to reconnect the Seoul-Shinuiju railway inside the DMZ. The agreement stipulates that: the two sideswilltwo checkpoints on either side of the military demarcation line (MDL); no military facilities will be allowed in thearea; theremoval of landmines and explosives in the area will be discussed a week before the de-mining work starts and thetwosides will jointly take part in it; a hotline between the military authorities will be set up; to protect the ecosystemwithin theDemilitarized Zone, the two sides agreed to construct an eco-bridge. Pyongyang agrees to send the document tothe Southon Feb. 12, after it was signed by its People's Armed Forces Minister, Kim Il-chol. DPRK delegates declared therewouldbe no more defense ministers' meetings between the two sides unless the ROK defense white paper is revised toremovethe designation of the DPRK as the ROK's "principal enemy." 2/11-22/01- First North Korean arts group tour of the U.S. 2/11/01 - North Korea notifies ROK that it will delay the conveyance of the DMZ agreement on railroad construction dueto "administrative problems." A new delivery date is not mentioned. Pyongyang earlier had agreed to send thedocumentto the South on Feb. 12, after it was signed by its People's Armed Forces Minister, Kim Il-chol. 2/12/01 - Lim Dong-won, ROK director general of the National Intelligence Service (NIS) and architect of DJ's sunshinepolicy, arrives in the U.S. for a "secret" week-long visit. He meets with Secretary of State Colin Powell, CIAdirectorGeorge Tenet and National Security Advisor Condoleezza Rice, FBI Director Louis Freeh, and many private playersonAsian security. Reportedly, Lim tells U.S. officials that President Kim will seek a vague declaration of peace, ratherthan aformal peace treaty, in a future summit with Kim Jong-il. Upon his return to the ROK, Lim acknowledges toreporters thata conceptual gap exists between Seoul and Washington over how to deal with North Korea. 2/13/01 - Hyundai Asan pays $6 million delinquent from its January payments. North Korea had demanded this paymentas precondition for considering Hyundai's request to reschedule payments. late February 2nd Inter-Korean Economic Cooperation Promotion Committee meeting is postponed. 2/20/01 - Hyundai Asan chairman Chung Mong-hun goes to DPRK to negotiate payments for its Mt. Kumgang projectwith North Korean officials. The DPRK rejects his proposal to cut the monthly $12 million payment in half. 2/22/01 - North Korea warns it might scrap a moratorium on long-range missile tests to protest what it calls a hard-linepolicy - including possible revisions of the Agreed Framework - by the Bush administration, following indicationsfromthe Bush Administration that it will review U.S. policy toward North Korea. 2/22-24/01 - Working level meeting in Pyongyang on joint flood control of Imjin River makes little progress. Seoulproposes that both sides conduct field surveys of the area beginning in March and that both sides exchange weatherreportsduring the summer rainy season beginning this year. A follow-up meeting is not scheduled. 2/26/01 - 3rd round of family reunions held. 2/27/01 - Putin - Kim summit in South Korea. The two leaders issue a joint communique stating that the 1972 Antiballistic Missile Treaty is a "cornerstone of strategic stability and an important foundation of internationalefforts onnuclear disarmament and nonproliferation," which many interpret to be a statement of opposition to the U.S. missiledefense program. In the days after the summit, Seoul insists that it did not intend the communique to represent itspositionon missile defense. While in Washington a week later, President Kim apologizes for the statement, which inretrospect hesays should not have been included. 2/27-3/1/01 - DPRK economic mission arrives in U.S. The mission is composed of deputy ministers and bureau chiefs ofthe DPRK's foreign trade and finance ministries. In New York City and Washington DC, the mission visitseconomicorganizations and institutions, computer companies, and universities. Later report revealed that at a March 2meeting withthe IMF, the officials expressed their desire to join World Bank. 3/1/2001 - Germany and DPRK establish formal relations. The two sides agreed to a protocol that permits Germandiplomats and aid officials freedom of movement inside North Korea - a first. The protocol also calls forestablishing adialogue on human rights and arms proliferation issues. 3/2/01 - In a letter to President Bush, House International Relations Committee Chair Henry Hyde and two othercongressmen urge the Administration to consider renegotiating the1994 Agreed Framework, specifically byproviding theDPRK with conventional power plants rather than nuclear facilities. 3/6/01 - Secretary of State Colin Powell states that the U.S. plans to pick up where Clinton left off in missile talks withNorth Korea. 3/7/01 - The first Bush-Kim summit (in Washington), a meeting both leaders describe as a "frank and honest" exchangeof views. Although expressing his support for President Kim's sunshine policy, President Bush rebuffed Kim'sdesire forthe U.S. to continue President Clinton's policy toward North Korea. Expressing his "skepticism" about the abilityofoutsiders to verify agreements with DPRK, Bush indicated that his Administration was conducting a comprehensivereviewof U.S. policy toward North Korea. President Kim reportedly tries to convince Bush to adopt a broad-based"comprehensive" reciprocity rather than a tit-for-tat strict reciprocity toward the North. In a related move, SecretaryofState Powell, backing away from his statements the previous day, denies that a resumption U.S.-DPRK negotiationsisimminent. 3/8/01 - In a speech in Washington the day after his meeting with President Bush, President Kim modifies his sunshinepolicy in two ways. First, backing away from his previously stated goal of pushing for an inter-Koreanpeace agreement,Kim says he instead would focus on reactivating an inter-Korean non-aggression pact signed in 1992. Second, Kimproposes that U.S. and South Korean adopt a North Korea policy of "comprehensive reciprocity," in whichWashington andSeoul would give Pyongyang economic assistance, a promise not to strike first against the Communist regime, andsupportthe North's bids to join global organizations in return for the North simultaneously promising to observe the 1994AgreedFramework, scrapping its missile program, and declaring non-aggression against the South. This is a departure fromKim'sprevious "flexible reciprocity" approach, in which many benefits to the North were to precede the North'sconcessions. 3/10-11/01 - DPRK and ROK trade union representatives meet at Mt. Kumgang. 3/13/01 - Henry Hyde, chairman of the House International Relations Committee, argues in a speech that North Korea hasviolated the 1994 Agreed Framework (AF) because it has not provided proof that it has discontinued its nuclearprogram. Hyde also calls on the U.S. to renegotiate the AF and backs President Bush's insistence on increased verificationof theDPRK's nuclear program. 3/13/01 - 5th inter-ministerial talks (in Seoul) are postponed by DPRK hours before the meeting is to take place. Itemson the ROK's agenda include briefing the DPRK on the Kim-Bush summit, scheduling Kim Jong-il's visit to ROK,anddiscussing military confidence building measures. 3/15/01 - Letters exchanged among 600 families, 300 from each side, the first-ever private letters to cross the DMZ. Theletters are permitted to include up to three pages and two photos. Cash and gifts are not permitted. Replies are notyetallowed, and the two countries' Red Crosses are due to discuss procedures for replies at their next Red Crossmeeting,scheduled for April 3-5, 2001. 3/21/01 - Chung Ju-yung, founder of Hyundai Group, dies. DPRK leader Kim Jong- il sends a telegram to the familyexpressing his "deep condolences" over Chung's death. The DPRK also sends a 4-person delegation to Chung'sfuneral. 3/22/01 - The DPRK invites the EU to join missile talks. 3/24/01 - The EU announces that Swedish Prime Minister Goeran Persson will lead a delegation to Seoul and Pyongyang- perhaps as early as May - for talks with the leaders of the DPRK and the ROK. Swedish Foreign Minister AnnaLindhstates, "It's becoming clear that the new U.S. administration wants to take a more hard-line approach toward North Korea. That means that Europe must step in to help reduce tension between the two Koreas...." 3/26/01 - Hyundai Asan and DPRK reportedly agree to halve Hyundai's $12 million monthly payment to DPRK for Mt.Kumgang venture. 3/26/01 - South Korea postpones scheduled continuation of work on the Seoul-Shinuiju railroad because North Korea stillhas not signed or ratified the January 2001 agreement on construction procedures in the DMZ. 3/26/01 - President Kim shuffles the ROK foreign policy team. Lim Dong-won goes from the National IntelligenceService head to Unification Minister. Former Ambassador to the U.S., Han Seung-soo, becomes Foreign Minister. Thenew Defense Minister, Kim Dong-shin, has conservative ties. The move is widely interpreted as an attempt byPresidentKim to shore up his sinking popularity, and to improve relations with the United States. 3/26/01 - Japan, the United States and South Korea hold talks in Seoul to coordinate their policy toward Pyongyang. Reportedly, there are few detailed discussions over DPRK strategies because the U.S. is still reviewing its policy. The nextTrilateral Coordination Group (TCOG) meeting is scheduled for May. In bilateral talks, ROK pushes the U.S. toaccept theprinciple of "comprehensive reciprocity" toward DPRK. 3/27-29/01 - North and South Korean religious leaders meet at Mt. Kumgang. 3/28/01 - The DPRK rejects an ROK proposal to field an inter-Korean ping pong team for the 46th World Table TennisChampionships in Osaka, Japan in late April. 3/28/01 - Ryang Gyu-sa, a resident of Japan with North Korean citizenship, arrives in South Korea to play professionalfootball for Ulsan Hyundai. Ryang also plays for the DPRK national team. 3/28/01 - General Thomas Schwartz, the commander of the Combined Forces Command in the ROK, testifies before theSenate's Armed Services Committee that the DPRK military is becoming larger, closer and more lethal day by day. 3/28/01 - With North Korea's tacit permission, an ROK navy ship travels two miles into DPRK waters torescue the crewof a sinking Cambodian merchant ship. The ROK ship reportedly notified the North, but received no response. 4/3-4/5 - 4th Round Red Cross are postponed when DPRK doesn't respond to a March 22 ROK proposal for the venueto be Seoul. 4/9/01 - North Korean patrol boats briefly enter ROK waters, on the southern side of the Northern Limit Line that is thede-facto border in the Yellow Sea. The boats, which ostensibly are guiding North Korean fishing vessels, retreatafterbeing challenged by ROK naval ships. The incident is repeated on April 10. Similar incidents occurred on February5 andMarch 3. 4/9/01 - Hyundai announces the temporary halving of its Mt. Kumgang tours 4/11/01 - The DPRK denies permission for 63 ROK tourists born in DPRK to travel to Mt. Kumgang, the first such denialfor Hyundai's Mt. Kumgang project. 4/15/01 - The first-ever marathon in Pyongyang is held, with 600 North Korean and 45 foreign runners. The event ispartially funded by foreign sponsorship and commercial advertising, also firsts. 4/17/01 - The reported date of Kim Jong-il's visit to Russia. The trip is delayed, however, reportedly because DPRK andRussia cannot agree on a military and economic aid package to DPRK. Reportedly, Russian President Putin turnsdownKim's request for new Russian tanks, MIG-29 fighters, and crude oil. 4/18/01 - The ROK Unification Ministry grants a license to Kook Yang Shipping Co. to run one freighter along the Inchon(ROK) - Nampo (DPRK) route at least three times a month for six months. Until now, only one company(Hansung)possessed a license to run the route on a regular basis, and in November 2000 the DPRK denied entry of ships fromHansung to its harbor, citing their high costs, effectively shutting down maritime trade. 4/19/01 - ROK Foreign Minister Han Seung-soo urges the U.S. to resume talks soon with the DPRK, saying that ROK-DPRK ties were suffering from the "uncertainties" of the U.S. policy review. 4/24/01 - Hyundai's Chung Mong-hun visits DPRK to try to resolve Hyundai Mt. Kumgang financial problems. 4/26/01 - The ROK Unification Ministry announces that it will provide 200,000 tons (worth approximately $52 million) infertilizer to the DPRK. The first shipment is scheduled for May 2. 4/27/01 - The Russian and DPRK Defense Ministries sign an agreement to upgrade the DPRK's weapons supplied duringthe Soviet era. 4/27/01 - ROK Unification Minister Lim Dong-won tells a National Assembly committee that relinking the Seoul-Shinuijurailroad will be difficult to achieve in 2001 because the DPRK has halted work on the project. 4/30/01 - The U.S. State Department, in its annual "Patterns of Global Terrorism" report, continued to designate NorthKorea as a state sponsor of terrorism. 5/1/01 - ROK and DPRK trade unions celebrate May Day jointly at Mt. Kumgang. 5/2-4/01 - Kim Jong-il tells a visiting European Union delegation that the DPRK will maintain a moratorium on thetesting of long-range missiles until 2003 and that he will travel to South Korea for a reciprocal visit at anundeterminedfuture date. Kim does not renounce his right to export missile technology, however. Later in May, in talks with aU.S.scholar, DPRK Foreign Minister Paek Nam Sun reportedly says that Kim Jong-il's missile moratorium commitmentispredicated on signs from the Bush administration that it was interested in better relations. 5/10/01 - Reports emerge that the DPRK has pulled its equipment and men from the construction site meant to reconnectthe Seoul-Shinuiju railroad. The men and equipment had been deployed in September 2000. 5/14/01 - The EU and DPRK establish diplomatic relations. 5/16/01 - The DPRK's Korean Central News Agency releases a report on the Light-Water Reactor Project stating that "Thefailure by the U.S. to live up to its obligation" to facilitate construction by 2003 could "possibly drive us to respondto itwith abandoning" the Agreed Framework. 5/22/01 - Hyundai Asan President Kim Yoon-kyu visits the DPRK for four days beginning Tuesday to ask the DPRK tohalve the $12 million monthly fee Hyundai pays Pyongyang for its money-losing Mt. Kumgang tourism project. Reportedly, little progress is made in talks, though Kim says the two sides reach an agreement to begin - at anundetermined date - overland tours to Mt. Kumgang. 5/22-26/01 - An International Atomic Energy Agency inspection meeting in the DPRK reportedly ends with no results other than the scheduling of the next meeting in October. The team had sought to reopen negotiations withPyongyang overconducting a far-reaching inspection of the DPRK's nuclear site at Yongbyon, including an analysis of spent fuelrods andplutonium waste to determine how much weapons-grade plutonium may have been extracted before 1994. 5/24/01 - Stating that inter-Korean talks have "temporarily stalled," ROK President Kim Dae-jung publicly asks KimJong-il to mark the first anniversary of the June 2000 ROK-DPRK summit by committing to a reciprocal visit. TheROKalso announces there will not be a joint North-South celebration of the first anniversary of the June 2000 summit. 5/27/01 - A DPRK patrol boat crosses the Northern Limit Line (NLL - see 12/21/00) for the second time in May and theseventh time in 2001. 5/27/01 - In Honolulu, at the first Trilatereal Coordination Group (TCOG) meeting since Bush's inauguration, the U.S.expresses its intention to resume talks with the DPRK once the Bush Administration completes its policy review. The talkswill be based on the North's ability to verify any agreements reached. 5/29/01 - An ROK civilian agricultural mission visits the DPRK for a week to discuss cooperative agricultural projects. 6/2/01 - Three DPRK commercial vessels pass between Cheju Island and South Korea, well into the ROK's territorialwaters. The ships are confronted by ROK naval patrols. Ignoring repeated warnings, one crosses the Northern LimitLine(NLL - see 12/21/00). The other two ships return to international waters. The ROK navy apparently does not fireon thevessels, causing a political row in Seoul, particularly after radio transcripts of the exchange are leaked to the press. 6/5/01 - Korean Peninsula Energy Development Organization (KEDO) head Charles Kartman arrives in Seoul for a 3-dayvisit. 6/6/01 - The Bush Administration announces it has completed its review of U.S. DPRK policy. The U.S. will offer theDPRK a further lifting of U.S. sanctions, assistance to the North Korean people (presumably food aid), and "otherpoliticalsteps" if the North agrees to 1) start to take serious, verifiable steps to reduce the conventional weapons threat tothe South,2) "improved implementation" of the '94 Framework, and 3) verifiable "constraints" on North Korea's missileexports. 6/7/01 - Following a meeting with ROK Foreign Minister Han Seung-soo, in Washington, Secretary of State Colin Powellstates "We are not setting any preconditions right now," in reopening talks with the DPRK. 6/7-8/01 - Hyundai Asan and the DPRK reportedly agree on a settlement of Mt. Kumgang financial problems, in whichHyundai will pay $22 million in back payments and the DPRK will open an overland route to the mountain. Theoverduefees are paid on July 2. Future fees will not be fixed, but will vary according to the number of visitors to the site. 6/13/01 - Jack Pritchard, U.S. special envoy for Korean Peace talks, meet with DPRK U.N. ambassador Li Hyong Chol inNew York to make arrangements for bilateral talks. 6/13/01 - A Singapore-bound DPRK cargo vessel, the Nampo 2, crosses the Northern Limit Line (NLL) into Southernwaters in the East Sea before heading to open seas in response to an ROK navy warning. 6/14/01 - A DPRK commercial vessel, the Nampo-ho, carrying bicycles from Japan to the North crosses the NorthernLimit Line, well outside the ROK's territorial waters. It is not challenged. 6/14-16/01 - At Mt. Kumgang, several hundred Koreans from Northern and Southern NGOs hold a semi-official celebration of the first anniversary of the inter-Korean summit. 6/15/01 - A DPRK vessel, Taedonggang, sailing toward the Northern Limit Line (NLL) in the Sea of Japan heads towardopen seas after receiving a warning from the ROK Navy. 6/16/01 - Haegumgang Hotel, a floating lodge built to accommodate tourists at Mount Kumgang, is shut down by itsowner, Hyundai Merchant Marine. 6/16/01 - ROK Defense Minister Kim Dong-shin begins a week-long trip in the U.S., during which he reportedly obtainsan agreement on a division of roles in talks with the DPRK, wherein the U.S. will focus on the missile issue, theIAEA willhandle the nuclear issue, and the ROK will focus on the conventional weapons issue. 6/18/01 - A DPRK Foreign Ministry spokesman states that U.S.-DPRK talks should begin by discussing U.S. compensationto the DPRK for economic losses suffered as a result of delays in the building of two light-water reactors in theDPRK. The U.S. rejects placing this matter at the top of the agenda. 6/19/01 - South Korea calls for a shipping pact with North Korea to establish rules of engagement and a bilateral consultative body. 6/19/01 - The International Atomic Energy Agency (IAEA) says that it cannot verify that the DPRK is not divertingnuclear material for military purposes because IAEA inspectors have not been given sufficient access. 6/20/01 - Stating that "tourism cannot be differentiated from politics and the economy," the state-run Korea NationalTourist Organization (KNTO) agrees to enter into a partnership with Hyundai Asan, in order to bail out Hyundai'stroubledNorth Korean tourism project. KNTO is expected to invest up to 100 billion won ($77 million) for marketing andtransportto North Korea's scenic Kumgang Mountain resort. Sources also say that the KNTO will be paying $22 million toacquireHyundai Asan-owned hotels and service facilities in the tourist region, enabling Hyundai Asan to pay the $22million itowes in tour fees to North Korea. 6/24/01 - ROK naval ships fire warning shots at a North Korean fishing boat that crossed the Northern Limit Line (NLL)into ROK territorial waters. The Northern boat retreated. 6/25/01 - Anniversary of the start of the Korean War. At a luncheon with Korean War veterans, ROK President Kim DaeJung calls for the signing of North-South peace treaty, to be endorsed by the U.S. and China. 6/27/01 - Samsung says it has requested permission to open an office in Pyongyang. 6/29/01 - Over DPRK objections, China allows a family of seven North Koreans holed up in a United Nations refugeeoffice to leave the country, whereupon they depart for the ROK via Singapore and the Philippines. The family hadsneakedinto the Beijing office of the United Nations High Commissioner for Refugees and asked for refugee status. 6/29/01 - U.S. Deputy Secretary of State Richard Armitage says that the DPRK must accept International Atomic EnergyAgency nuclear inspections, and that the ROK should take the lead in negotiating conventional force reductions. Armitagealso indicates that the U.S. is ready to discuss providing satellite launches with the DPRK in return for the DPRKgiving upthe long-range ballistic missile program. 7/1/01 - Kim Jong-il visits the Chinese Embassy in Pyongyang. 7/3/01 - Citing U.S. intelligence officials, the Washington Times reports that the DPRK conducted a ground test of aTaepodong-1 missile engine in the last week of June. Without commenting on the report, U.S. officials say thatflight tests,not ground tests, are prohibited by the North's moratorium on missile launches. 7/5-6/01 - A Trilateral Coordination Group (TCOG) meeting held on Cheju Island, ROK. 7/6/01 - A DPRK patrol boat crosses the Northern Limit Line (NLL) in the Yellow Sea. It retreats after receiving warningsfrom ROK naval vessels. 7/9/01 - On a visit to Seoul, the International Monetary Fund's (IMF) first deputy director, Stanley Fischer, says the IMF isready to investigate providing economic aid to North Korea once Seoul and Pyongyang agree on such a step. 7/11/01 - The ROK's Minister of Commerce, Industry, and Energy says his ministry is studying ways to send electricity tothe DPRK, perhaps in exchange for coal or minerals. 7/15/01 - In New York, U.S. and DPRK working level officials discuss resuming talks. No results are reported. 7/25/01 - In contrast to the previous year, the DPRK Foreign Minister does not attend the annual ASEAN Regional Forum(ARF), reportedly due to "internal problems." A lower-level delegate attends instead. 7/26/01 - Kim Jong-il begins a 24-day trip to Russia via train. Following the summit with Russian President VladimirPutin, the two countries issue an eight-point "Moscow Declaration" contending that the DPRK's missile programispeaceful, calling for joint efforts to combat terrorism, and labeling the 1972 Antiballistic Missile (ABM) Treaty acornerstone of arms control efforts. The Kremlin also expresses "understanding" - though not agreement - for theDPRK'sdemand that the United States remove its forces from South Korea. Putin reportedly urged Kim to visit the ROK. The twosides agree to a plan to link railroads, under which Russia will provide technical and financial assistance tomodernize theDPRK's tracks. Also, the two sides reportedly discuss an arms deal. Throughout the trip, Kim has virtually nocontactwith the public or the press. 8/2/01 - Hana Program Center, an inter-Korean computer software joint venture, opens in Dandong, China. Ten SouthKorean IT engineers will teach 30 North Korean trainees. 8/13/01 - At a press conference in Moscow, U.S. Secretary of State Donald Rumsfeld says that North Korea possessesenough plutonium to produce up to five nuclear warheads, and that North Korea is likely to successfully developanintercontinental ballistic missile (ICBM). 8/15/01 - In his Liberation Day speech, Kim Dae Jung says "I hope that Washington makes its best effort to resume talkswith Pyongyang," and calls on the North to deal with Washington "more positively." 8/15/01 - Some members of an 337-member ROK civic delegation to Pyongyang defy ROK authorities by attending aDPRK Liberation Day ceremony at a controversial DPRK monument to Kim Il-sung and the North's unificationpolicy. The members had promised the ROK government that they would not visit the monument. Several are arrestedupon theirreturn to the South, and the opposition prepares a "no confidence" vote in the National Assembly against theMinister ofUnification. 9/2/01 - The DPRK's Committee for Peaceful Reunification of the Fatherland proposes a "fast resumption" of inter-Koreantalks. The move comes on the eve of a parliamentary no-confidence vote against the head of the ROKMinistry ofUnification , Lim Dong-won, the co-architect of Kim Dae Jung's "sunshine policy." On September 3, theno-confidencemotion passes by a vote of 148-119. Kim's Cabinet resigns en masse . Kim's coalitionpartner, the United LiberalDemocrats, vote for the measure, sundering the coalition and depriving Kim's party of its position as ruling partyofthe National Assembly. 9/3/01 - KNTO reportedly refuses to loan Hyundai Asan a further 45 billion won. 9/3-5/01 - Chinese President Jiang Zemin visits the DPRK, symbolically restoring the DPRK-China relationship that hadbeen strained for nearly a decade. China promises aid in the form of food, fertilizer, and fuel, as well as economicsupport. Reportedly, Jiang encourages Kim Jong-il to visit Seoul. Kim openly praises China's economic reforms. 9/6/01 - Trilateral Coordination Group (TCOG) meeting is held in Tokyo. 9/10/01 - North Korea agrees to a joint feasibility study with Korea Gas Corp., South Korea's state-run gas corporation, onbuilding a pipeline through North Korea to carry natural gas from Siberia to the South, the South Koreangovernment saidMonday. Further details of the study are expected by the end of September, and a route is expected to be chosenin 2002. 9/11/01 - Terrorist attacks against the World Trade Center in New York City and the Pentagon in Washington, DC, killover 3,000. President Bush declares that the U.S. "will make no distinction between the terrorists who committedtheseacts and those who harbor them." 9/13/01 - North Korea denounces the terrorist attack on the United States. 9/13/01 - Groundbreaking ceremony held for excavation of the future light-water nuclear reactor site in Shinpo, DPRK. 9/15-18/01 - At their 5th ROK-DPRK ministerial meeting (Seoul). The two Koreas agree that a 6th inter-ministerialmeeting will be held in October; a new round of family reunions will be held October 16-18; the DPRK will beginconstruction as soon as possible on its portion of an inter-Korean railroad; a foreign survey team will study floodcontrol onthe Imjin River; and that working level discussions will begin on building an industrial complex in Kaesong andon aninter-Korean road along the peninsula's east coast. The ministers make no mention of a joint anti-terrorismagreement (asthe South had hoped) following opposition by the North. Reportedly, the ROK turns down the DPRK's request forfoodaid and electricity. 9/18/01 - ROK Foreign Minister Han Seung-soo meets with U.S. Secretary of State Colin Powell in Washington, DC. 9/19-20/01- ROK troops at the DMZ fire warning shots at DPRK soldiers, who twice reportedly cross the militarydemarcation line briefly. 9/25/01 - A KEDO delegation arrives in the DPRK for routine talks. 9/30/01 - South Korea opens the Imjin River Railroad Station, 3.6 miles south of the inter-Korean border, in a move toprepare for an eventual reconnection of the inter-Korean Seoul-Shinuiju Railroad line. 10/3-5/01- Tourism talks held, focusing on opening an inter-Korean road to Mt. Kumgang. No agreements are reached. 10/5/01 - At a U.N. General Assembly session, the DPRK expresses regret for the "tragic" September 11 terrorist attacksand rejects terrorism and the support of terrorist organizations. The U.S. publishes its annual terrorism report, inwhich theJapanese Red Army - members of which reportedly are sheltered by the DPRK - is removed from the list of terroristorganizations. 10/11/01 - The ROK announces plans to provide 300,000 tons of surplus rice (as a deferred loan) and 100,000 tons of corn(through the World Food Program) to the DPRK. The largest ROK opposition party backs the plan. 10/16-18/01 - A 4th round of family reunions is scheduled to take place , but is postponed when the DPRK unilaterallypulls out on October 12, citing the ROK's nation-wide anti-terrorism alert that had mobilized the South's military. Also,the DPRK calls on the ROK to continue with forthcoming bilateral talks, but insists that they be held in the Mt.Kumgangarea due to safety concerns with the South's military being on high alert. Seoul rejects the venue site, insisting thatthevarious talks be held at their originally planned locations in South Korea and in Pyongyang. 10/16/01 - In an interview with Korean, Japanese, and Chinese media outlets, President Bush says, "I've got a message toKim Jong Il: Fulfill your end of the bargain; you said you would meet - meet.... He won't meet with you [the ROK];hewon't meet with us - which kind of leads me to believe that perhaps he doesn't want to meet. So he can blame it onwhohe wants, but it's up to him to make that decision. Secondly, I think that he needs to earn the trust of the world. Ithink heneeds to take pressure off of South Korea and off of the DMZ (Demilitarized Zone)....I know he needs to stopspreadingweapons of mass destruction around the world." 10/19/01 - In Shanghai for an Asia Pacific Economic Cooperation (APEC) summit, President Bush says, "I must tell youthat I've been disappointed in Kim Jong-il not rising to the occasion, being so suspicious, so secretive." AftercriticizingBush's statements, a DPRK spokesman says that restarting talks can be discussed "when the Bush Administrationat leastresumes the position taken at the end of the Clinton Administration." 10/19/01 - Citing the ROK's military alert, the DPRK on October 18 postpones scheduled Mt. Kumgang tourism talks,which were to be held at Mt. Seorak, ROK. The North proposes they be rescheduled for October 25 at Mt.Kumgang. TheROK refuses to move the venue. 10/23-26/01 - Economic talks are scheduled to be held in Pyongyang. Citing the ROK's military alert, the DPRK onOctober 18 postpones the talks and proposes they be held November 5-6 at Mt. Kumgang. 10/28-31/01 - Scheduled 6th Ministerial talks are postponed until November 9 due to a DPRK demand that they be held atMt. Kumgang, not Pyongyang. 11/9-14/01- 6th Ministerial talks (at Mt. Kumgang) fail to reach agreement . Reportedly, both sides initially agree onadditional family reunions and inter-Korean talks, but the discussions break down over economic matters, thelocation offuture meetings, and the North's anger over the South's military alert. ROK Unification Minister Hong Soon-youngsaysthat the two sides differ so widely that it could be a long time before they resume dialogue. 11/12/01 - The DPRK signs two U.N. anti-terror treaties, the 1999 International Convention for the Suppression of theFinancing of Terrorism and the 1979 Convention Against the Taking of Hostages. 11/15/01 - At a joint press conference with ROK defense minister Kim Dong- shin in Hong Kong, U.S. Secretary ofDefense Donald Rumsfeld says that the DPRK's missiles "constitute a very real threat" to the U.S. 11/18/01 - A North Korean patrol boat crosses the Northern Limit Line, retreating after being approached by a ROKinterceptor boat. 11/19/01 - In a speech at a U.N. biological weapons conference, U.S. Under Secretary of State for Arms Control andInternational Security, John R. Bolton, says "The United States believes North Korea has a dedicated, national-leveleffortto achieve a biological weapons [BW] capability and that it has developed and produced, and may have weaponized,BWagents...." In Seoul, Defense Minister Kim Dong-shin tells the National Assembly that the North has anthrax andsmallpoxin its germ warfare arsenal and could easily gear up to mass-produce the two. 11/23/01 - A ROK Unification Ministry official says that Seoul has no immediate plan to contribute to an expected U.N.appeal for emergency food aid to the North given the lull in inter-Korean talks. 11/26/01 - In answering a questions regarding terrorism, President Bush says "...if you harbor a terrorist, you're a terrorist. If you feed a terrorist, you're a terrorist. If you develop weapons of mass destruction [WMD] that you want toterrorize theworld, you'll be held accountable." Some interpret the last sentence to mean that the U.S. has expanded its definitionofterrorism. When asked about the DPRK's WMD programs, the President says, "we want North Korea to allowinspectorsin....We've had that discussion with North Korea. I made it very clear to North Korea that in order for us to haverelationswith them, that we want to know, are they developing weapons of mass destruction? And they ought to stopproliferating." Pyongyang rejects the call for inspections. 11/26/01 - Trilateral Coordination Group meeting held in San Francisco. The three countries release a joint statementurging the DPRK to join the U.S.-led campaign against terrorism and to address concerns about its suspected nuclearweapons program. 11/27/01 - North Korean guards at the DMZ fire on an ROK guard post, prompting the first exchange of gunfire at theDMZ since June 1998. 11/28/01 - In an interview with Reuters, Kim Dae Jung acknowledges that he "cannot be fully certain" about whether KimJong-il will visit the ROK. 12/1-4/01 - Borje Ljunggren, leader of an EU delegation to Pyongyang, says DPRK officials tell him that Pyongyang iswilling join the five remaining U.N. treaties that it hasn't signed. (12) 12/3/01 - The DPRK and KEDO conclude an accord on quality assurance and warranties for the two light-water reactors(LWRs) being built in the North by the international consortium. Returning from the DPRK, KEDO head CharlesKartmansays that Pyongyang will not be given key nuclear components for the LWRs unless the North allows IAEAinspections andsecures power transmission and substation facilities. 12/10/01 - IAEA spokesman David Kyd says that contrary to media reports, "There are no contacts going on with NorthKorea on resuming our activity of inspection...." 12/10/01 - A meeting between Hyundai Asan and the DPRK's Asia-Pacific Peace Committee is scheduled to discussrejuvenating the Mt. Kumgang tour projects. The North postpones the meeting. 12/16/01 - President Bush announces the U.S. withdrawal from the Anti-Ballistic Missile (ABM) treaty, in order tocontinue work on a national missile defense system. The DPRK's initial response is relatively muted: "The U.S.announcement of its unilateral withdrawal from the treaty is arousing great apprehensions from the internationalcommunity." 12/17/01 - The DPRK says its Red Cross is suspending investigations to locate ten missing Japanese, whom Tokyo claimswere kidnaped by North Korean agents. The move follows Japanese authorities' arrest of leaders of pro-DPRKorganizations in Japan on charges of embezzling money from ethnic Korean credit unions. Japan has made thekidnapinginvestigation a requirement for improving relations. 12/17/01 - Under KEDO auspices, 20 DPRK officials arrive in the ROK for a two-week nuclear safety training session. The North had demanded that the South keep the meeting secret. 12/18-21/01 - North Korean delegates attend an ASEAN Regional Forum working level meeting in Delhi. 12/19/01 - The U.S. announces that it will donate 105,000 metric tons of soybeans, vegetable oil, wheat, rice and nonfat drymilk to the DPRK, per the World Food Program's request. 12/21/01 - South Korea's Unification Minister Hong Soon Young announces that in early December, Seoul had canceledthe South's military alert that had been in place since the outset of the war in Afghanistan. Additionally, U.S.militaryofficials say that 24 F-15 fighters that were deployed to Korea in October, at the Afghan war's outset, would returnto theirhome base in the U.S. Hong also announces that the ROK will provide 100,000 metric tons of corn to North Koreathroughthe World Food Program, but will discuss additional food aid only at inter-Korean talks. The ROK has set aside,but notdelivered, 300,000 tons of rice for the North. 12/22/01 - A vessel suspected of being a DPRK ship sinks in China's exclusive economic zone after being chased by andexchanging fire with Japanese coast guard patrol boats.

This report chronicles major developments in the thaw between North and South Korea that has followed the historicinter-Korean summit meeting in June 2000. In the months immediately following the summit, the two Koreasdeveloped anew dialogue, which included several inter-ministerial talks, a meeting of defense ministers, talks on economiccooperation, and family reunions. The sheer breadth and depth of the dialogue indicated to many analysts that SeoulandPyongyang were trying in earnest to regularize and institutionalize the rapprochement, in contrast to previouslyephemeralthaws in 1972, 1985 and the early 1990s. There have been several setbacks, however, leading many critics towonderwhether North Korea's diplomatic outreach is merely a tactic to obtain economic assistance and reduce the U.S.trooppresence in South Korea. Since February 2001, inter-Korean diplomacy has effectively been frozen. With SouthKoreanPresident Kim Dae Jung being openly labeled a "lame duck," many have wondered whether his sunshine policy ofengaging North Korea has run out of steam. Due to the growing length of the chronology, this report will not be updated. Instead, a new North-South timeline will bestarted each calendar year, beginning with events on January 1 of that year.

The Institute of Medicine (IOM), the National Committee on Vital and Health Statistics(NCVHS), and other expert panels have identified information technology (IT) as one of the mostpowerful tools for reducing medical errors, lowering health costs, and improving the quality ofcare. (1) They recommendthat health care organizations adopt IT systems to support the electronic collection and exchange ofpatient information. The goal is for these systems to operate seamlessly as part of a national healthinformation infrastructure (NHII), which would enable health care providers anywhere in the countryto access patient information at the point of care. While supporting the delivery of high-qualitypatient care, experts emphasize that a NHII must also meet the nation's needs for public healthsurveillance, biodefense, and biomedical research, and protect the privacy of individuals. The U.S. health care industry lags well behind other sectors of the economy in its investmentin IT, despite growing evidence that electronic information systems can play a critical role inaddressing the many challenges the industry faces. There are significant financial, legal, andtechnical obstacles to the adoption of health IT systems. The issue for Congress, in which there isbroad bipartisan support for health IT, is how best to create incentives for the adoption of ITthroughout the health care industry. Congress and the Administration have already taken a number of important steps to promotehealth IT. The 2003 Medicare Modernization Act instructed the HHS Secretary to adopt electronicprescription standards and establish a Commission for Systemic Interoperability. The Commissionis charged with developing a comprehensive strategy for implementing data and messaging standardsto support the electronic exchange of clinical data. On April 27, 2004, President Bush called for thewidespread adoption of interoperable electronic health records (EHRs) within 10 years andestablished the Office of the National Coordinator for Health Information Technology (ONCHIT). ONCHIT has developed a strategic 10-year plan outlining steps to transform the delivery of healthcare by adopting EHRs and developing a National Health Information Infrastructure (NHII) to linksuch records nationwide. The strategic plan identifies several potential policy options for providingincentives for EHR adoption. They include: providing grants to stimulate EHRs and regionalinformation exchange systems; offering low-rate loans and loan guarantees for EHR adoption;amending federal rules (e.g., Medicare physician self-referral law) that may unintentionally impedethe development of electronic connectivity among health care providers; and using Medicarereimbursement to reward EHR use. Lawmakers in the 109th Congress are likely to consider legislation to boost federal investmentand leadership in health IT and provide incentives both for EHR adoption and for the creation ofregional health information networks, which are seen as a critical step towards the goal ofinterconnecting the health care system nationwide. Congress laid the groundwork for establishingan NHII when it enacted the 1996 Health Insurance Portability and Accountability Act (HIPAA). HIPAA instructed the HHS Secretary to develop privacy standards to give patients more control overthe use of their medical information, and security standards to safeguard electronic patientinformation against unauthorized access, use, or disclosure. This report summarizes recently proposed and enacted legislation to promote the use ofEHRs and the development of the NHII. It begins with a brief discussion of some of the benefits ofbroadening the application of information technology (IT) in health care, as well as the significantfinancial, technical, and legal barriers to the adoption of health IT. That is followed by a summaryof the goals articulated in the federal government's strategic framework for health IT adoption. Thereport concludes with a set of tables summarizing health IT legislation in the 108th and 109thCongresses. Appendix A provides additional background information on health IT, including a listof congressional hearings, GAO reports, and online resources. In its June 2004 report, Revolutionizing Health Care Through Information Technology, thePresident's Information Technology Advisory Committee (PITAC) proposed a framework for a NHIIcomposed of four elements. (2) The EHR provides a clinician with real-time access to patient information, as well as acomplete longitudinal record of care. A fully integrated EHR enables a physician to update clinicaland other information about a patient on a continuous basis. Such an integrated system permits aphysician, for example, to view a history of the patient's medical condition and visits to healthproviders (with submenus for notes from those visits), images and reports of diagnostic procedures,current medications, functional status and social service eligibility, schedule of preventive services,allergies, and contact information for family caregivers. Linking a patient's EHR to a computerized CDS system provides clinicians with real-timediagnostic and treatment recommendations. CDS systems, which include a range of technologiesfrom simple clinical alerts and warnings of prescription drug interactions to detailed clinicalprotocols and procedures, facilitate the practice of evidence-based medicine by providing clinicianswith state-of-the-art medical knowledge at the point of care. CPOE minimizes handwriting and other communication errors by having physicians andother providers enter orders into a computer system. Originally designed for ordering medications,more advanced CPOE systems include orders for x-rays and other diagnostic procedures, referrals,discharges, and transfers. CPOE may also be linked to a patient's EHR and various decision supportfunctions. The final and most important element of a NHII is electronic connectivity (via the Internetand other networks) enabling health care providers to exchange patient health information. Networks that permit electronic communication among providers must be secure in order tosafeguard the information from unauthorized access, use, and disclosure. They also require thedevelopment of data and messaging standards to establish the critical goal of interoperability, thatis, the ability of two or more IT systems (computers, networks, software, and other IT components)to communicate with one another and make sense of the data they exchange. A small but growingnumber of communities and health care systems around the country have developed EHRs andestablished secure platforms for the exchange of health data among providers, patients, and otherauthorized users (e.g., the Veterans Health Administration, the Indiana Network for Patient Care,the Santa Barbara County Care Data Exchange, and the New England Healthcare Electronic DataInterchange Network). The IOM's March 2001 report on health care quality, Crossing the Quality Chasm: A NewHealth Care System for the 21st Century, emphasized the need for improvement in six key areas: safety, effectiveness, responsiveness to patients, timeliness, efficiency, and equity. A growingnumber of published studies suggest that IT can play a key role in improving the quality of care ineach of these areas. In the area of safety, CPOE systems with decision support functions can reduceerrors in drug prescribing and dosing. Clinical decision support systems have been shown toimprove efficiency, for example, by reducing redundant lab tests. They can also improve theeffectiveness of care by promoting compliance with clinical practice guidelines. Health IT may beespecially beneficial for inner-city and rural populations and other medically underserved areas. Real-time access to specialty information, including consultations between rural physicians andleading specialists at academic medical centers, helps promote an equitable health care system byreducing the geographic variability in access to the best quality care. The secure transmission ofpatient information among physicians will significantly improve the coordination of care among the60 million Americans with multiple chronic conditions. Studies have shown that poor coordinationof care among Medicare beneficiaries with multiple chronic conditions leads to unnecessaryhospitalization, duplicate tests, conflicting clinical advice, and adverse drug reactions as a result ofover-medication. An IT infrastructure has great potential to contribute to achieving other important nationalobjectives, such as homeland security and improved public health services. Linked healthinformation networks are key to reducing the time it takes to detect and respond to disease outbreaks,whether they are naturally occurring or the result of a bioterrorist attack. They are also an importanttool for helping organize and execute large-scale vaccination campaigns and for monitoring thehealth of the population. Finally, health IT is becoming increasingly important for various forms ofbiomedical and health services research, and for translating research findings into clinical practicemore quickly. By some estimates it may take as long as 17 years for new research findings to befully integrated into general medical practice. (3) The U.S. health care industry, which represents about 15% of GDP, lags far behind othersectors of the economy in its investment in IT, despite growing evidence that electronic informationsystems can play a critical role in addressing many of the challenges the industry faces. There aresignificant obstacles to the adoption of EHRs and the creation of a NHII, some of which are brieflydiscussed below. Enormous amounts of data needed for clinical care, patient safety, and quality improvementcurrently reside on computers. However, EHRs and community-based health information networkshave been slow to develop because of a lack of interoperability standards to support electronic dataexchange. Physicians and other providers are hesitant to invest in IT systems, fearing that they mightnot be able to exchange patient information with local pharmacies, hospitals, or even otherphysicians. Common standards for organizing, representing, and encoding health information permitthe efficient exchange of clinical and patient safety data. They also support the assimilation ofexternal data sources into decision support tools for providers (e.g., alerts for possible drug-druginteractions). The federal government is playing a leading role in encouraging the development andadoption of interoperability standards for health information throughout the U.S. health care system. The Departments of Health and Human Services (HHS), Defense (DOD), and Veterans Affairs (VA)are partners in the Consolidated Health Informatics (CHI) initiative, one of 24 eGov initiatives tosupport President Bush's Management Agenda. The goal of the CHI initiative is to establish federalhealth information interoperability standards both to promote information sharing across the threefederal departments that deliver health care services and to serve as a model for the private sector. To date, the agencies have adopted 20 sets of standards developed by private-sector StandardsDevelopment Organizations (SDOs). They include messaging standards, standards for the electronicexchange of clinical lab results, standards for retail pharmacy transactions, and standards for theretrieval and transfer of images and associated diagnostic information. HHS has also signed anagreement to license Systematized Nomenclature of Medicine -- Clinical Terms (SNOMED CT),a standardized medical vocabulary developed by the College of American Pathologists and availablefor free to users in the United States. SNOMED CT, which is now available through the NationalLibrary of Medicine, (4) isthe most comprehensive clinical vocabulary available and covers most aspects of clinical medicine. It will help structure and computerize the medical record and reduce variability in the way the dataare captured, encoded and used for clinical care of patients and for medical research. In May 2003, HHS requested that the IOM provide guidance to the agency on a set of basic"functionalities" that an EHR should possess, that is, the types of information that should beavailable to providers when making clinical decisions (e.g., diagnoses, allergies, lab results), and thetypes of decision-support capabilities that should be present (e.g., alerts to potential drug-druginteractions)." The IOM did not address specific data standards (e.g., terminology, messagingstandards, diagnostic codes). Health Level Seven (HL7), a leading SDO working on thedevelopment of an EHR standard, has taken the core functionalities identified by the IOM andincorporated them into its draft standard, which has been approved and is undergoing a two-year trialbefore it becomes an official standard. (5) Coordinating the care a patient receives from multiple providers does not require thetransmission of the entire EHR with each referral. In most cases the physician to whom a patient isreferred needs only the most relevant and timely facts about the patient's condition. ASTMInternational, in collaboration with the Massachusetts Medical Society, the Health InformationManagement and Systems Society, and the American Academy of Family Physicians, is developingthe Continuity of Care Record (CCR) to meet that need. The CCR is intended to be a nationalstandard for all relevant information necessary for continuity of care. It consists of a minimum dataset that includes provider information, insurance information, patient's health status (e.g., allergies,medications, vital signs, diagnoses, recent procedures), recent care provided, as well asrecommendations for future care and reasons for referral or transfer. The data contained within theCCR are a subset of the patient's full record that exists in an EHR. Each new provider that sees thepatient is able to access the CCR and update the information as necessary. Thus the CCR providesa vehicle for exchanging clinical information among providers, institutions, or other entities. It mayalso be used by the patient as a brief summary of recent care. (6) Congress laid the groundwork for establishing an NHII when it enacted the HIPAA, P.L.104-191 in 1996. HIPAA instructed the HHS Secretary to issue electronic format and data standardsfor several routine administrative transactions between health care providers and health plans (e.g.,reimbursement claims) and adopt security standards to safeguard electronic patient informationagainst unauthorized access, use, or disclosure. Developing a secure platform to protect confidentialhealth data is central to the growth of an NHII. Under HIPAA, HHS has also issued health privacystandards that give individuals the right of access to their medical information and prohibit plans andproviders from using or disclosing such information without the patient's authorization, except forroutine health care operations and other specified purposes. The growing use and exchange ofelectronic health data raises serious privacy concerns among the public and some lawmakers, whoquestion whether the privacy standards are sufficiently broad in scope to protect confidential patientinformation. There are two key financial obstacles to the adoption of EHR and the development of anNHII: investment costs, and the misalignment between costs and benefits. Investment in IT isexpensive and must compete with other priorities, including new buildings as well as othertechnologies with more direct application to clinical care and greater certainty for increasedrevenues. A full clinical IT system that includes CPOE and an EHR, coupled with clinical decisionsupport functions, can cost tens of millions of dollars for a large hospital. And that does not includethe costs of training and systems support. The start-up and maintenance costs of IT systems may be especially burdensome for smallphysician practices. While those costs vary tremendously, depending on the nature of the practiceand the applications involved, the average cost of an EHR can range from $16,000 to $36,000. Thecomplexity of the technology, the time to complete implementation, and the changes in officeworkflow patterns create additional barriers to adopting IT systems. But perhaps the most criticalissue for physicians is the perception that the IT-related benefits of improved efficiency and qualityof care accrue largely to the payers and patients, not to the providers who bear most of theimplementation costs. Rather than reward quality, most physician reimbursement systems emphasize volume ofservices. Physicians are paid for each procedure or service they provide, regardless of its quality. This approach encourages providers to see as many patients as possible and to emphasize theprovision of a billable service, such as an MRI, over technology that might improve the quality ofmany services. A physician group that invests in a clinical IT system to improve the way it managesthe care of patients with chronic conditions can reduce the number of complications and thehospitalization rate. But unless the change results in additional office visits, only the payer sees afinancial benefit. One potential solution to this problem is to provide direct payments to physicianswho use IT systems. Another is to adopt a pay-for-performance scheme that rewards clinicians whodeliver the best quality of care, according to standardized measures, as opposed to the highestvolume of care. Health IT experts have identified several federal laws that may unintentionally impede thedevelopment of electronic connectivity in health care. Because these laws do not directly addresshealth IT, health care providers are uncertain about what would constitute a violation or create therisk of litigation. The Medicare physician self-referral (Stark) law (42 U.S.C. § 1395nn) and theanti-kickback law (42 U.S.C. § 1320a-7b(b)), which covers all federal health care programs, are ofchief concern. Both are intended to counter fraud and abuse. (7) The Stark law prohibits physicians from referring patients to any entity for certain healthservices if the physician has a financial relationship with the entity, and prohibits entities from billingfor any services resulting from such referrals, unless an exception applies. The law discouragesphysicians from accepting IT resources (e.g., hardware and software) from a hospital or other healthcare entity out of concern that they would be in violation if they subsequently referred patients to thatentity. The anti-kickback law, like the self-referral law, also impedes arrangements between healthcare entities that promote the adoption of health IT. It prohibits an individual or entity fromknowingly or willfully offering or accepting remuneration of any kind to induce a patient referral foror purchase of an item or service covered by any federal health care program. On March 26, 2004, the Centers for Medicare and Medicaid Services (CMS) published afinal interim rule creating several new exceptions under the physician self-referral law, including onefor IT items and services furnished to physicians to enable them to participate in "community-widehealth information systems." (8) Experts have questioned whether this term is sufficiently inclusiveto cover all the various health IT arrangements. They have also criticized the lack of a parallelexception under the anti-kickback law. On April 27, 2004, President Bush called for the widespread adoption of interoperable EHRswithin 10 years and signed Executive Order 13335, which established the position of NationalCoordinator for Health Information Technology within HHS. Secretary Tommy Thompsonappointed David Brailer, MD, PhD, one of the country's foremost health IT experts, to serve in thenew position. The Executive Order directed the National Coordinator within 90 days to develop astrategic 10-year plan outlining steps to transform the delivery of health care by adopting EHRs anddeveloping a NHII to link such records nationwide. On July 21, 2004, Brailer and Thompson released a Framework for Strategic Action entitled, The Decade of Health Information Technology: Delivering Consumer-Centric and Information-RichHealth Care. (9) Althoughthe federal government has taken the lead in setting the health IT agenda, the framework sets out abottom-up approach in which the role of HHS is to promote and encourage the private sector to buildcommunity-level networks. Adopting interoperability standards will over time permit these localnetworks to connect with one another to form an NHII. The framework identified four major goals,with strategic action areas for each: Inform clinical practice . This goal focuses on bringing EHRs into clinicalpractice by providing incentives for EHR adoption, reducing the risk of EHR investment, andpromoting EHR diffusion in rural and medically underserved areas. Interconnect physicians . This goal centers on building an interoperable healthinformation infrastructure so that EHRs follow the patient, and clinicians have access to criticalhealth information when treatment decisions are being made. The strategies for realizing this goalinvolve fostering community-based health information exchange projects, developing a nationalhealth information network, and coordinating federal health informationsystems. Personalize health care . This goal involves using health IT to help individualsmanage their own wellness and become more involved in personal healthdecisions. Improve population health . The final goal requires the timely collection,analysis, and dissemination of clinical information to improve the evaluation of health care delivery,public health monitoring, and biosurveillance. It also helps accelerate research and the translationof research findings into clinical products and practice. The framework identifies several potential policy options for providing incentives for EHRadoption. They include: regional grants and contracts to stimulate EHRs and community informationexchange systems; improving the availability of low-rate loans for EHRadoption; updating federal rules on physician self-referral that may unintentionallyrestrict the development of health information networks; using Medicare reimbursements to reward the use of EHRs;and funding Medicare pay-for-performance demonstrationprograms. The Medicare Prescription Drug, Improvement, and Modernization Act (MMA), which thePresident signed into law on December 8, 2003 ( P.L. 108-173 ), included provisions for electronicprescribing standards. The bill requires the standards to include not just electronic script writing,but also the patient's medication history and decision support for identifying potential drug-to-druginteractions. In addition, the MMA called for the establishment of a commission to develop acomprehensive strategy for the adoption and implementation of health IT data standards. Finally,the bill authorized IT grants for physicians and established demonstration projects to determine howto improve the quality of care through the adoption of IT. Table 1 , beginning on page 10, providesa summary of the IT-related provisions in the MMA. In the 108th Congress, the House and Senate passed competing versions of the Patient Safetyand Quality Improvement Act ( H.R. 663 , S. 720 ). Despite broad bipartisansupport for the legislation, no further action took place before adjournment in December 2004. OnMarch 9, 2005, the Senate Committee on Health, Education, Labor, and Pensions (HELP)unanimously approved a new patient safety bill (S. 544), which is identical to last year'sSenate-passed measure. The patient safety legislation is intended to encourage the voluntaryreporting of information on medical errors by establishing federal evidentiary privilege andconfidentiality protections for such information. For more information on the patient safetylegislation, see CRS Report RL31983 , Health Care Quality: Improving Patient Safety by PromotingMedical Errors Reporting. S. 544 also requires the HHS Secretary to adopt voluntary, national interoperability standardsfor the electronic exchange of health care information. H.R. 663, in the 108th Congress, containeda similar requirement, as well as several additional health IT provisions, none of which are includedin S. 544. The House-passed bill authorized health IT grants for physicians and hospitals, andmandated the creation of a Medical Information Technology Advisory Board (MITAB). During the 108th Congress, lawmakers introduced a number of bills (i.e., H.R. 2915, H.R.4880, S. 2003, S. 2421, S. 2710, S. 2907) to boost federal investment and leadership in IT in aneffort to promote the adoption of EHRs and the development of a NHII. With the exception of H.R.2915, these measures also contained quality-of-care provisions. They included devising standardizedmeasures of physician performance and using them as the basis of pay-for-performance initiatives. So far in the 109th Congress, lawmakers have introduced two health IT bills. RepresentativeGonzalez has introduced the National Health Information Incentive Act of 2005 (H.R. 747), andSenator Kennedy has reintroduced S. 2907 as Title II of the Affordable Health Care Act (S. 16). Table 2 , beginning on page 12, compares the incentives in each of those health IT bills. Tables 3 and 4 provide more detailed summaries of the major provisions in the patient safety and health ITbills introduced in the 108th and 109th Congresses, respectively. Table 1. Summary of Health Care Information Technology (IT) Provisions in the Medicare ModernizationAct ( P.L.108-173 ) Table 2. Comparison of Bills to Encourage the Adoption of Health Information Technology (IT) Table 3. Summary of Health Information Technology (IT) Legislation Introduced in the 108thCongress a. H.R. 663 was reported (as amended) by the Energy and Commerce Committee on Mar. 6, 2003. The Ways and Means Committee approved similarlegislation (H.R. 877, H.Rept. 108-31 ) on Mar. 11, 2003. While the Ways and Means bill would amend the Medicare statute and apply only tohospitals and other health care facilities and their employees that provide health care services under Medicare Part A, the Energy and Commercemeasure would amend the Public Health Service (PHS) Act and have broader coverage. H.R. 663 would apply to any individual or entity licensedto provide health care services. Following negotiations between members of both panels, it was agreed that the new law should be written intothe PHS Act and that the Energy and Commerce bill (H.R. 633) would be brought to the floor for consideration by the full House. b. Institute of Medicine, Priority Areas for National Action: Transforming Health Care Quality (Washington: National Academy Press, 2003). c. P.L. 106-129 , the Healthcare Research and Quality Act of 1999, directed AHRQ to submit to Congress annually a report on "disparities in health caredelivery as it relates to racial factors and socioeconomic factors in priority populations," beginning in FY2003. The first National Report onHealthcare Disparities was released on Dec. 22. 2003, and is available online at http://qualitytools.ahrq.gov/disparitiesReport/download_report.aspx . Table 4. Summary of Health Information Technology (IT) Legislation Introduced in the 109thCongress a. Institute of Medicine, Priority Areas for National Action: Transforming Health Care Quality (Washington: National Academy Press, 2003).

The Institute of Medicine, the National Committee on Vital and Health Statistics, and otherexpert panels have identified information technology (IT) as one of the most powerful tools forreducing medical errors, lowering health costs, and improving the quality of care. However, the U.S.health care industry lags far behind other sectors of the economy in its investment in IT, despitegrowing evidence that electronic information systems can play a critical role in addressing the manychallenges the industry faces. Adoption of health IT systems faces significant financial, legal, andtechnical obstacles. Congress and the Administration have taken a number of important steps to promote healthIT. The 2003 Medicare Modernization Act instructed the HHS Secretary to adopt electronicprescription standards and establish a Commission for Systemic Interoperability. The Commissionis charged with developing a comprehensive strategy for implementing data and messaging standardsto support the electronic exchange of clinical data. On April 27, 2004, President Bush called for thewidespread adoption of interoperable electronic health records (EHRs) within 10 years andestablished the position of National Coordinator for Health Information Technology. Pursuant tothe President's order, the National Coordinator has developed a strategic 10-year plan outlining stepsto transform the delivery of health care by adopting EHRs and developing a National HealthInformation Infrastructure (NHII) to link such records nationwide. The strategic plan identifies several potential policy options for providing incentives for EHRadoption. They include: providing grants to stimulate EHRs and regional information exchangesystems; offering low-rate loans and loan guarantees for EHR adoption; amending federal rules (e.g.,Medicare physician self-referral law) that may unintentionally impede the development of electronicconnectivity among health care providers; and using Medicare reimbursement to reward EHR use. Health IT has broad bipartisan support among lawmakers. The 109th Congress is likely toconsider legislation to boost federal investment and leadership in health IT and provide incentivesboth for EHR adoption and for the creation of regional health information networks, which are seenas a critical step towards the goal of interconnecting the health care system nationwide. Severalhealth IT bills were introduced during the last Congress and, to date, two bills ( H.R. 747 , S. 16 ) have been introduced this year. Congress laid the groundwork forestablishing an NHII when it enacted the 1996 Health Insurance Portability and Accountability Act(HIPAA). HIPAA instructed the HHS Secretary to develop privacy standards to give patient morecontrol over the use of their medical information, and security standards to safeguard electronicpatient information against unauthorized access, use, or disclosure.

Campaign finance regulation invokes two conflicting values implicit in the application of the First Amendment's guarantee of free political speech and association. On the one hand, political expression constitutes "core" First Amendment activity, which the Supreme Court grants the greatest deference and protection in order to "assure [the] unfettered interchange of ideas for the bringing about of political and social changes desired by the people." On the other hand, according to the Court in its landmark 1976 decision, Buckley v. Valeo , an absolutely free "political marketplace" is neither mandated by the First Amendment, nor is it desirable, because when left uninhibited by reasonable regulation, corruptive pressures undermine the integrity of political institutions and undercut public confidence in republican governance. In other words, although the Court reveres the freedoms of speech and association, it has upheld infringements on these freedoms in order to further the governmental interests of protecting the electoral process from corruption or the appearance of corruption. Case law subsequent to Buckley further illustrates that neither the freedom of speech and association nor the government's regulatory powers are absolute. Accordingly, Supreme Court campaign finance holdings embody the doctrinal tension between striking a reasonable balance between protecting the liberty interests in free speech and association, on the one hand, and upholding campaign finance regulation enacted with the intent to encourage political debate while protecting the election process from corruption, on the other. The Court appears to uphold First Amendment infringements by campaign finance regulation only insofar as the regulation is deemed necessary to preserve the very system of representative democracy that unregulated First Amendment freedoms purport to insure. In Buckley , the Court reviewed the constitutionality of the Federal Election Campaign Act of 1971 (FECA), requiring political committees to disclose political contributions and expenditures, and limited to various degrees, the ability of natural persons and organizations to make political contributions and expenditures. While First Amendment freedoms and campaign finance regulation present conflicting means of preserving the integrity of the democratic political process, the Court resolved this conflict in favor of First Amendment interests and subjected any regulation burdening free speech and free association activities to "exacting scrutiny." Under this standard of review, the Court evaluates whether the state's interests in regulation are compelling, examines whether the regulation burdens and outweighs First Amendment liberties, and inquires whether the regulation is narrowly tailored to further its interest. If a regulation meets all three criteria, the Court will uphold it. This report discusses the critical holdings and rationales enunciated by the Buckley Court and then examines the Court's extension of Buckley in subsequent cases. Buckley 's extensions are evaluated in various regulatory contexts: contribution limits, expenditure limits, disclosure requirements, and political party spending and electioneering communication restrictions. When discussing the Court's rationale in each case, facts relevant to a regulator are highlighted: the object of regulation ( e.g., a corporation, labor union, or natural person); the asserted liberty interest ( e.g., freedom of speech or association); the asserted regulatory interest ( e.g., deterring corruption); the triggers of the regulatory interests ( e.g., political advantages gained by assuming the corporate form); the means by which the regulator obtained those interests ( e.g., limiting campaign contributions); the extent to which the regulation burdened First Amendment liberties ( e.g., completely prohibiting expenditures above a certain dollar amount); and the scope of regulation ( e.g., whether the regulation was "narrowly tailored" to serve the compelling governmental interests). In Buckley v. Valeo , the Supreme Court considered the constitutionality of the Federal Election Campaign Act of 1971 (FECA), as amended in 1974, and the Presidential Election Campaign Fund Act. The Court upheld the constitutionality of certain statutory provisions, including (1) contribution limitations to candidates for federal office, (2) disclosure and record-keeping provisions, and (3) the system of public financing of presidential elections. The Court found other provisions unconstitutional, including (1) expenditures limitations on candidates and their political committees, (2) the $1,000 limitation on independent expenditures, (3) expenditure limitations by candidates from their personal funds, and (4) the method of appointing members to the Federal Election Commission. In general, the Court struck down expenditure limitations, but upheld reasonable contribution limitations, disclosure requirements, and voluntary spending limits linked with public financing provisions. In considering the constitutionality of these statutes, the Buckley Court applied the standard of review known as "exacting scrutiny," a standard applied by a court when presented with regulations that burden core First Amendment activity. Exacting scrutiny requires a regulation to be struck down unless it is narrowly tailored to serve a compelling governmental interest. When analyzing First Amendment claims, a court will generally first determine whether the challenged government action implicates "speech" or "associational activity" guaranteed by the First Amendment. Most notably, the Buckley Court held that the spending of money, whether in the form of contributions or expenditures, is a form of "speech" protected by the First Amendment. A number of principles contributed to the Court's analogy between money and speech. First, the Court found that candidates need to amass sufficient wealth to amplify and effectively disseminate their message to the electorate. Second, restricting political contributions and expenditures, the Court held, "necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of the exploration, and the size of the audience reached. This is because virtually every means of communicating ideas in today's mass society requires the expenditure of money." The Court then observed that a major purpose of the First Amendment was to increase the quantity of public expression of political ideas, as free and open debate is "integral to the operation of the system of government established by our Constitution." From these general principles, the Court concluded that contributions and expenditures facilitated this interchange of ideas and could not be regulated as "mere" conduct unrelated to the underlying communicative act of making a contribution or expenditure. However, according to the Court, contributions and expenditures invoke different degrees of First Amendment protection. Recognizing contribution limitations as one of FECA's "primary weapons against the reality or appearance of improper influence" on candidates by contributors, the Court found that these limits "serve the basic governmental interest in safeguarding the integrity of the electoral process." Thus, the Court concluded that "the actuality and appearance of corruption resulting from large financial contributions" was a sufficient compelling interest to warrant infringements on First Amendment liberties "to the extent that large contributions are given to secure a quid pro quo from [a candidate.]" Short of a showing of actual corruption, the Court found that the appearance of corruption from large campaign contributions also justified these limitations. Reasonable contribution limits, the Court noted, leave "people free to engage in independent political expression, to associate [by] volunteering their services, and to assist [candidates by making] limited, but nonetheless substantial [contributions]." Further, a reasonable contribution limitation does "not undermine to any material degree the potential for robust and effective discussion of candidates and campaign issues by individual citizens, associations, the institutional press, candidates, and political parties." Finally, the Court found that the contribution limits of FECA were narrowly tailored insofar as the act "focuses precisely on the problem of large campaign contributions." On the other hand, the Court determined that FECA's expenditure limits on individuals, political action committees (PACs), and candidates imposed "direct and substantial restraints on the quantity of political speech" and were not justified by an overriding governmental interest. The Court rejected the government's asserted interest in equalizing the relative resources of candidates and in reducing the overall costs of campaigns. Restrictions on expenditures, the Court held, constitute a substantial restraint on the enjoyment of First Amendment freedoms. As opposed to reasonable limits on contributions, which merely limit the expression of a person's "support" of a candidate, the "primary effect of [limitations on expenditures] is to restrict the quantity of campaign speech by individuals, groups and candidates." "A restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed, the depth of their exploration, and the size of the audience reached," the Court noted. The Court also found that the government's interests in stemming corruption by limiting expenditures were not compelling enough to override the First Amendment's protection of free and open debate because unlike contributions, the risk of quid pro quo corruption was not present, as the flow of money does not directly benefit a candidate's campaign fund. Upon a similar premise, the Court rejected the government's interest in limiting a wealthy candidate's ability to draw upon personal wealth to finance his or her campaign, and struck down the personal expenditure limitation. In Buckley , the Supreme Court generally upheld FECA's disclosure and reporting requirements, but noted that they might be found unconstitutional as applied to certain groups. While compelled disclosure, in itself, raises substantial freedom of private association and belief issues, the Court held that these interests were adequately balanced by the state's regulatory interests. The state asserted three compelling interests in disclosure: (1) providing the electorate with information regarding the distribution of capital between candidates and issues in a campaign, thereby providing voters with additional evidence upon which to base their vote; (2) deterring actual and perceived corruption by exposing the source of large expenditures; and (3) providing regulatory agencies with information essential to the election law enforcement. However, when disclosure requirements expose members or supporters of historically suspect political organizations to physical or economic reprisal, then disclosure may fail constitutional scrutiny as applied to a particular organization. The Supreme Court in Buckley upheld the constitutionality of the system of voluntary presidential election expenditure limitations linked with public financing, through a voluntary income tax checkoff. The Court found no First Amendment violation in disallowing taxpayers to earmark their $1.00 "checkoff" for a candidate or party of the taxpayer's choice. As the checkoff constituted an appropriation by Congress, it did not require outright taxpayer approval, as "every appropriation made by Congress uses public money in a manner to which some taxpayers object." The Court also rejected a number of Fifth Amendment due process challenges, including a challenge contending that the public financing provisions discriminated against minor and new party candidates by favoring major parties through the full public funding of their conventions and general election campaigns, and by discriminating against minor and new parties who received only partial public funding under the act. The Court held that "[a]ny risk of harm to minority interests ... cannot overcome the force of the governmental interests against the use of public money to foster frivolous candidacies, create a system of splintered parties, and encourage unrestrained factionalism." In Buckley , the Supreme Court provided the genesis for the concept of issue and express advocacy communications. In order to pass constitutional muster and not be struck down as unconstitutionally vague, the Court ruled that FECA can only apply to non-candidate "expenditures for communications that in express terms advocate the election or defeat of a clearly identified candidate for federal office," i.e., expenditures for express advocacy communications. In a footnote to the Buckley opinion, the Court further defines "express words of advocacy of election or defeat" as, "vote for," "elect," "support," "cast your ballot for," "Smith for Congress," "vote against," "defeat," and "reject." Communications not meeting the express advocacy definition are commonly referred to as issue advocacy communications. In its rationale for establishing such a bright line distinction between issue and express advocacy, the Court noted that the discussion of issues and candidates as well as the advocacy of election or defeat of candidates "may often dissolve in practical application." That is, candidates—especially incumbents—are intimately tied to public issues involving legislative proposals and governmental actions, according to the Court. This section analyzes several Supreme Court opinions decided subsequent to Buckley in which the Court evaluated the constitutionality of contribution limitations. Specifically, in California Medical Association v. Federal Election Commission (FEC) , the Court upheld limits on contributions from an unincorporated association to its affiliated, non-party, multicandidate political action committee (PAC). In Citizens Against Rent Control v. Berkeley , the Court reviewed a statute severely limiting the ability of an unincorporated association to raise funds through contributions in connection with its activities in a ballot initiative, holding that the limit unduly burdened the association's free speech and association rights. In Nixon v. Shrink Missouri Government PAC, the Court evaluated campaign contribution limit amounts and considered, among other things, whether Buckley 's approved contribution limits established a minimum for state limits, with or without adjustment for inflation, and concluded that Buckley did not. Finally, in FEC v. Beaumont, the Court reaffirmed the prohibition on all corporations—including tax-exempt corporations—making direct treasury contributions in connection with federal elections. California Medical Association (CMA) v. Federal Election Commission (FEC) considered whether the rationale behind the Buckley Court affording such high protection to campaign contributions extended to political action committee (PAC) contributions as well. This case involved 2 U.S.C. § 441a(a)(1)©) of FECA, which limits individual contributions to PACs to $5,000 per year. An unincorporated association of medical professionals, ("the doctors") and the association's affiliated political action committee ("the PAC") challenged FECA's contribution limits, alleging, inter alia, violation of their free speech and association rights. The doctors argued that § 441a(a)(1)©) was unconstitutional because it inhibited their use of the PAC as a proxy for their political expression. Moreover, the doctors contended that the contribution limit did not serve a compelling state interest because the risk of corruption is not present where money does not flow directly into a candidate's coffers. Unpersuaded, the Supreme Court upheld FECA's contribution limits. In evaluating the doctor's free speech interest, the Court held that the doctors' "speech by proxy" theory was not entitled to full First Amendment protection because Buckley reserved this protection for independent and "direct" political speech. The Court found that the PAC was not simply the doctors' "political mouthpiece," but was a separate legal entity that received funding "from multiple sources" and engaged in its own, independent political advocacy. In rejecting the doctors' "speech by proxy" theory, the Court construed the doctors' relationship with the PAC as providing "support" through campaign contributions, which does not warrant the same level of First Amendment protection as independent political speech. In evaluating the state's interests, the CMA Court rejected the PAC and the doctors' argument that the risk of corruption is not present when contributions are made to a PAC. The Court interpreted this argument as implying that Congress cannot limit individuals and unincorporated associations from making contributions to multicandidate political committees. This rationale, the Court held, undercuts FECA's statutory scheme by allowing individuals to circumvent FECA's limits on individual contributions and aggregate contributions by making contributions to a PAC. Hence, the doctor's rationale would erode Congress' legitimate interest in protecting the integrity of the political process. Under Buckley, the Court held that the state's regulatory interests outweighed the doctors' relatively weak free speech interest. In Citizens Against Rent Control v. Berkeley , the Supreme Court addressed whether a city ordinance, imposing a $250 limit on contributions made to committees formed to support or oppose ballot measures, violated a PAC's liberty interest in free speech and free association under the Fourteenth Amendment. Citizens Against Rent Control ("the group"), an unincorporated association formed to oppose a Berkeley ballot initiative imposing rent control on various properties, challenged the ordinance's constitutionality. The Court found for the group, on freedom of association and freedom of speech grounds. The Court held that while the limit placed no restraint on an individual acting alone, it clearly restrained the right of association, as the ordinance burdened individuals who wished to band together to voice their collective viewpoint on ballot measures. The Court applied "exacting scrutiny" to the ordinance, weighing the city's regulatory interests against the group's associational rights. While the Court noted that Buckley permitted contribution limits to candidates in order to prevent corruption, contributions tied to ballot measures pose "no risk of corruption." Moreover, as the ordinance required contributors to disclose their identity, the regulation posed "no risk" that voters would be confused by who supported the speech of the association. Under "exacting scrutiny," therefore, the $250 contribution limitation was held unconstitutional. Extending its holding, the Court found that the contribution limitations unduly burdened the free speech rights of the group and of individuals who wish to express themselves through the group. Applying "exacting scrutiny," the Court found no significant public interest in restricting debate and discussion of ballot measures, and held that the ordinance's disclosure requirement adequately protected the sanctity of the political system. In Nixon v. Shrink Missouri Government PAC, the Supreme Court considered, among other things, whether Buckley ' s approved limitations on campaign contributions established a minimum for state contribution limits today, with or without adjustment for inflation. Asserting free speech and association rights, a political action committee and a candidate challenged the facial validity of a Missouri regulation limiting contributions to amounts ranging from $275 to $1,075. Missouri asserted interests similar to those articulated in Buckley , namely, that contribution limits serve the governmental interest in avoiding the real and perceived corruption of the electoral process. The Eighth Circuit found these interests unpersuasive and required Missouri to show that "there were genuine problems that resulted from the contributions in amounts greater than the limits in place ... " The Court granted certiorari to review the agreement between the Eighth Circuit's evidentiary requirement and Buckley . Reversing, the Court found Missouri's regulatory interests compelling and negated the proposition that the $1,000 limit upheld by Buckley is a constitutional floor to state contribution limitations. Though the Court reviewed the case under an exacting scrutiny standard, it upheld the regulation since it "was 'closely drawn' to match a 'sufficiently important interest.'" Notwithstanding the "narrow tailoring" requirement, the Court held that the limitation's dollar amount "need not be 'fine tuned.'" As the risk of corruption is greater when money flows directly into a campaign's coffers, the Court found that contribution limits are more likely to withstand constitutional scrutiny. In these cases, a contributor's free speech interest is less compelling since "contributions" merely index for candidate "support," not the contributor's "independent" political point of view. Addressing the lower court's evidentiary requirement, the Court noted that "[t]he quantum of empirical evidence needed to satisfy heightened judicial scrutiny of legislative judgments will vary up or down with the novelty and plausibility of the justifications raised." However, it found that Missouri cleared the standard implied by Buckley and its progeny. Given the relative weakness of the asserted free speech and associational interests, as compared to the state's weighty regulatory interest, the Court upheld the Missouri state campaign contribution limits. The Supreme Court in Federal Election Commission (FEC) v. Beaumont, evaluated the constitutional application of 2 U.S.C. § 441b of the Federal Election Campaign Act (FECA) to North Carolina Right to Life (NCRL), a tax-exempt advocacy corporation. Section 441b prohibits corporations, including tax-exempt advocacy corporations, from using treasury funds to make direct contributions and expenditures in connection with federal elections. Corporations seeking to make such contributions and expenditures may legally do so only through a political action committee or PAC. As it notes in Beaumont , the Supreme Court has long upheld the ban on corporate contributions, including those made by corporations that are tax-exempt under the Internal Revenue Code. However, in FEC v. Massachusetts Citizens for Life, Inc. (MCFL) , the Court created an exception for independent expenditures made by such entities that do not accept significant corporate or labor union money finding that restrictions on contributions require less compelling justification under the First Amendment than restrictions on independent expenditures. In FEC v. Beaumont, NCRL unsuccessfully attempted to extend the MCFL exception to contributions by tax-exempt corporations. Finding that limits on contributions are more clearly justified under the First Amendment than limits on expenditures, the Court reaffirmed the prohibition on all corporations making direct treasury contributions in connection with federal elections and upheld the ban on corporate contributions as applied to NCRL. According to the Court, quoting from some of its earlier decisions, it has upheld the "well established constitutional validity of ... regulat[ing] corporate contributions," including contributions by membership corporations that "might not exhibit all the evil that contributions by traditional economically organized corporations exhibit." Stating its refusal to "second-guess a legislative determination as to the need for prophylactic measures where corruption is the evil feared," the Court rejected the argument that deference to congressional judgments is determined by whether the corporations affected by a regulation are for-profit or non-profit. Beaumont also clarified the standard for review applicable to campaign finance regulation under the First Amendment. In the view of the Court, determining the appropriate standard of review depends on the nature of the activity being regulated. Commencing with its 1976 ruling in Buckley, the Court said that it has treated the regulation of contributions as only a "marginal" speech restriction, subject to "relatively complaisant review under the First Amendment," since contributions are a less direct form of speech than expenditures. Hence, the Court concluded that instead of requiring a contribution regulation to pass strict scrutiny by meeting the requirement that it be narrowly tailored to serve a compelling governmental interest, a contribution regulation involving "significant interference with associational rights" passes constitutional muster by merely satisfying the lesser requirement of "being 'closely drawn' to match a 'sufficiently important interest.'" The Court held that the Section 441b prohibition passed this lower level of scrutiny because it does not render a complete ban on corporate contributions, i.e., corporations are still permitted to use treasury funds to establish, solicit funds for, and pay the administrative expenses of a political action committee or PAC, which can then in turn make contributions. Invoking its unanimous holding in FEC v. National Right to Work, the Court rejected the argument that the regulatory burdens on PACs, including restrictions on their ability to solicit funds, renders a PAC unconstitutional as the only way that a corporation can make political contributions. In summary, the Supreme Court in FEC v. Beaumont upheld the ban on corporate contributions as applied to NCRL because corporate campaign contributions—including contributions by tax-exempt advocacy corporations—pose a risk of harm to the political system. Consequently, the Court found, courts owe deference to legislative judgments on how best to address their risk of harm. In addition, the Court announced that limits on contributions are merely "marginal" speech restrictions subject to a "relatively complaisant" or lesser review under the First Amendment than the strict scrutiny standard of review. This section analyzes several Supreme Court opinions decided subsequent to Buckley in which the Court evaluated the constitutionality of expenditure limitations. The first area of case law involves the regulation of corporations. In First National Bank v. Bellotti, the Court held that corporate speech in the form of expenditures, in a state referendum, could not be suppressed under the First Amendment. In two other corporate speech cases, the Court generally upheld a requirement that corporate political expenditures be made from a special segregated fund or political action committee (PAC), but subjected this requirement to an exception for "purely" political organizations: Federal Election Commission (FEC) v. Massachusetts Citizens for Life (MCFL) and Austin v. Michigan Chamber of Commerce. The second area of case law involves the regulation of labor unions. In FEC v. National Right to Work Committee the Court upheld a regulation restricting from whom labor unions can solicit funds for their separate segregated funds or PACs. The third area of case law addresses the regulation of political party expenditures. In Colorado Republican Federal Campaign Committee v. FEC, the Court upheld a political party's purchase and broadcasting of radio "attack ads," finding it was an "uncoordinated independent expenditure." The fourth area of case law examines the regulation of PACs. In FEC v. National Conservative Political Action Committee (NCPAC), the Court struck down a prohibition on independent expenditures above $1,000 in support of a "publicly funded" candidate. Finally, the issue of a state statute limiting state office candidate expenditures is examined. In Randall v. Sorrell, the Court struck down a Vermont statute imposing expenditure limits finding that the state's primary justification for the limits was not significantly different from Congress' rationale for the expenditure limits that the Court struck down in Buckley . Representing an important new emphasis on First Amendment protection of corporate free speech, in First National Bank of Boston v. Bellotti , the Supreme Court held that the fact that the corporation is the speaker does not limit the scope of its interests in free expression, as the scope of First Amendment protection turns on the nature of the speech, not the identity of the speaker. However, as demonstrated in FEC v. Massachusetts Citizens for Life, Inc. (MCFL) and Austin v. Michigan Chamber of Commerce , the fact that the speaker is a corporation may elevate the state's interests in regulating a corporation's expressive activity, on equitable grounds. MCFL and Austin appear to expand the Court's "governmental interest" jurisprudence from the interest identified in Buckley, i.e. , avoiding candidate corruption, to a broader interest of avoiding corruption in the entire electoral process. Although the Court emphasized that equalizing the relative voices of persons and entities in the political process is not a valid regulatory end, MCFL and Austin appear to hold that the government has equitable interests in ensuring fair and open debate in the political marketplace by preventing corporate monopolization. However, in both cases, the Court stressed that corporate wealth, in itself, is not a valid object of speech suppression. In First National Bank of Boston v. Bellotti , the Supreme Court evaluated the constitutional basis of a Massachusetts criminal statute, which in pertinent part, prohibited corporate expenditures made to influence the outcome of a referendum. The statute did not completely ban corporate expenditures: it permitted expenditures when a referendum's outcome could materially affect a corporation's business, property, or assets. Bellotti arose in connection with a proposed state constitutional amendment permitting the state to impose a graduated tax on an individual's income. When the proposal was presented to the voters, a group of corporations wanted to expend money to publicize their point of view; however, their desire was burdened by the statutory provision stating that issues concerning the taxation of individuals do not "materially affect" a corporate interest. The corporations sought to prevent enforcement of the statute, arguing that it was facially invalid under the First and Fourteenth Amendments. In agreement with the corporations, the Supreme Court struck down the statute. First, the Bellotti Court considered whether a speaker's "corporate" identity substantively affects the extension of First Amendment liberties. On the state's contention that the scope of the First Amendment narrows when the speaker is a corporation, the Court found no constitutional support. This conclusion followed from the Court's framing of the issues. The Court did not address the question of whether corporate interests in free speech are coextensive with those of natural persons, finding the issue peripheral to the case's efficient resolution. Instead, the threshold issue was whether the statute proscribed speech that "the First Amendment was meant to protect." In other words, the Court focused on the nature of the speech, not the identity of the speaker. As the Massachusetts statute burdened expressive activity addressing a proposed amendment to the state constitution, the nature of the speech fell squarely within the historic and doctrinal mandate of the First Amendment—protecting the free discussion of governmental affairs. As the corporations asserted 'core' First Amendment interests, the statute was subject to "exacting scrutiny," triggering the remaining issues, where the Court considered whether the government's regulatory interests were compelling and obtained by narrowly tailored means. Massachusetts advanced two rationales for the prohibition of corporate speech: (1) elevating and "sustaining" the individual's role in electoral politics, and (2) ensuring that corporate political expenditures are funded by shareholders who agree with their corporation's political views. In the context of candidate elections, the Court found these rationales "weighty," but in a "direct democracy" context, they were simply not advanced in a material way. While ensuring that individuals sustain confidence in government and maintain an active role in elections is "of the highest importance," the Bellotti Court did not find that regulating corporate speech would necessarily enhance the role of the individual in this context. The Court reasoned that the inclusion of corporate political perspectives does not demonstrate that they will unduly "influence the outcome of a referendum vote" and stressed that restricting the speech of some to amplify the voice of others is not a valid object suppression. As such, the Court held that permitting corporate speech in a referendum does not exert coercive pressures (real or perceived) on the "direct democracy" process. Likewise, the Bellotti Court rejected the state's purported interest in protecting minority shareholders who object to their corporation's majority political philosophy. With respect to this interest, the Court found the statute was both over and under-inclusive. The statute was over-inclusive insofar as it proscribed corporate speech, where the corporate political policy and speech enjoyed unanimous assent by its members. The Court emphasized that corporate democracy informs the decision to engage in public debate, that shareholders are presumed to protect their own interests, and that they are not compelled to contribute additional funds to their corporation's political activities. The statute was under-inclusive insofar as corporations may exert political influence by lobbying for the passage and defeat of legislation and may express its political views on an issue when it does arise in connection to a ballot measure. As a result, the Court held that the statute unduly infringed on the corporations' protected free speech interest in expressing its political point of view. The Supreme Court in Federal Election Commission (FEC) v. Massachusetts Citizens for Life (MCFL) evaluated the constitutional application of 2 U.S.C. § 441b of the Federal Election Campaign Act (FECA), prescribing a separate segregated fund or PAC for corporate political expenditures. In this case, the requirement was applied to a non-profit corporation founded for purely political purposes. The founding charter of MCFL was to "foster respect for life," a purpose motivating various educational and public policy activities. Drawing from its general treasury, the corporation funded a pre-election publication entitled "Everything You Need to Know to Vote Pro-life," which triggered litigation under § 441b. As the publication was tantamount to an "explicit directive [to] vote for [named] candidates," MCFL's speech constituted "express advocacy of the election of particular candidates," subjecting the expenditure to regulation under the express advocacy standard first articulated by the Court in Buckley . However, as applied to MCFL, § 441b was held unconstitutional because it infringed on protected speech without a compelling justification. Noting that § 441b burdened expressive activity, the Court examined the government's regulatory interests in alleviating corruptive influences in elections by requiring the use of corporate PACs and the Court held that concentration of wealth, in itself, is not a valid object of regulation. The Court noted that a corporation's ability to amass large treasuries confers upon it an unfair advantage in the political marketplace, as general treasury funds derive from investors' economic evaluation of the corporation, not their support of the corporation's politics. By requiring the use of a PAC, § 441b ensures that a corporation's independent expenditure fund indexes for the "popular support" of its political ideas. The Court held that by prohibiting general treasury fund expenditures to advance a political point of view, the regulation "ensured that competition among actors in the political arena is truly competition among ideas." While the Court found these interests compelling as applied to most corporations, it held the restriction unconstitutional as applied to MCFL. Specifically, the MCFL Court found the following characteristics exempt a corporation from the regulation: (1) its organizational purpose is purely political; (2) its shareholders have no economic incentive in the organization's political activities; and, (3) it was not founded by nor accepts contributions from business organizations or labor unions. Carving out an exception for corporations with these characteristics, the Court raised equitable grounds for the regulation, stressing that "[r]egulation of corporate political activity ... has reflected concern not about the use of the corporate form per se , but about the potential for the unfair deployment of [general treasury funds] for political purposes." The Court held that MCFL's general treasury is not a function of its economic success, but is an index for membership support of its political ideas. Thus, according to the Court, purely political organizations such as MCFL cannot constitutionally be regulated by § 441b because their treasuries already embody what the regulation purports to achieve: an index of the corporation's political support. In other words, MCFL is an example of a corporation that is not at risk for gaining an "unfair" advantage in the electoral process. In Austin v. Michigan State Chamber of Commerce, the Supreme Court affirmed and clarified its MCFL holding when it considered whether a non-profit corporation's free speech rights were unconstitutionally burdened by a state prohibition on using general treasury funds to finance a corporation's independent expenditures in state elections. While prohibiting expenditures from general treasury funds, the statute permitted independent expenditures as long as they were made from a separate segregated fund or PAC. Plaintiff-corporation, a non-profit founded for political and non-political purposes, asserted that the regulation burdened its First Amendment interest in political speech by limiting its spending. Further, the plaintiff contended that the regulation was not narrowly tailored to obtain the state's interests in avoiding the appearance of corruption by limiting a corporate entity's inherent ability to concentrate economic resources. Although economic power, in itself, does not necessarily index the persuasive value of a corporation's political ideas, the state argued, a corporation's structural ability to amass wealth makes it "a formidable political presence"—a presence which triggers its regulatory interest. Unpersuaded by the corporation's assertion of right, the Court upheld the regulation. Under Buckley and MCFL, the Court addressed whether the plaintiff's free speech interests were burdened by the regulation; evaluated the state's regulatory interests; and asked whether the regulation was narrowly tailored to achieve those interests. The Court found that the plaintiff's freedom of expression was burdened by the regulation, but held that the state achieved its compelling interests by narrowly tailored means. By limiting the source of a corporation's independent expenditures to a special segregated fund or PAC, the Austin Court held that the regulation burdened the plaintiff's freedom of expression. The regulation placed various organizational and financial burdens on a corporation's management of its PAC, limited PAC solicitations to "corporate members" only; and prohibited independent expenditures from corporate treasury funds. Similar to its finding in MCFL , the Court found that the statute's requirements burdened, but did not stifle, the corporation's exercise of free expression to a point sufficient to raise a genuine First Amendment claim. Thus, to overcome the claim, the regulation had to be motivated by compelling governmental interests and be narrowly tailored to serve those interests. First, the Austin Court evaluated the state's regulatory interests. The state argued that a corporation's "unique legal and economic characteristics" renders it a "formidable political presence" in the market place of ideas, which necessitates regulation of its political expenditures to "avoid corruption or the appearance of corruption." The Court stressed that the regulation's purpose was not to equalize the political influence of corporate and non-corporate speakers, but to ensure that expenditures "reflect actual public support for political ideas espoused by corporations." Moreover, the Court was careful to emphasize that the mere fact that corporations can amass large treasuries was not its justification for upholding the statute. Rather, the Court identified the compelling state interest as "the unique state-conferred corporate structure," which facilitates the amassing of large amounts of wealth. On these grounds, the Court appeared to recognize a valid regulatory interest in assuring that the conversion of economic capital to political capital is done in an equitable way. In other words, the Court held that corruption of the electoral process itself, rather than just the corruption of candidates, is a compelling regulatory interest. After finding a compelling state interest, the Austin Court determined that the regulation was neither over-inclusive nor under- inclusive with respect to its burden on expressive activity. Responding to the plaintiff's argument that the regulation was over-inclusive insofar as it included closely held corporations, which do not enjoy the same capital resources as larger or publicly-held corporations, the Court ruled that the special benefits conferred to corporations and their potential for amassing large treasuries justified the restriction. Plaintiff's under-inclusiveness argument, alleging that the regulatory scheme failed to include unincorporated labor unions with large capital assets, fared no better. The Court distinguished labor unions from corporations on the ground that unions "amass large treasuries ... without the significant state-conferred advantages of the corporate structure." Here again, the Court remarked that the corporate structure, not corporate wealth, triggers the state's interest in regulating a corporation's independent expenditures. Hence, despite the burden on political speech, the Court upheld the regulation because it was narrowly tailored to reach the state's compelling interests. In sum, the Austin Court clarified MCFL and upheld the three-part test for when a corporation is exempt from the state's general interest in requiring a corporation to use a separate segregated fund or PAC for its "independent expenditures." Under Austin , a corporation is exempt from the PAC requirement when (1) the "organization was formed for the express purpose of promoting political ideas;" (2) no entity or person has a claim on the organization's assets or earnings, such that "persons connected with the organization will have no economic disincentive for disassociating with it if they disagree with its political activity;" and (3) the organization is independent from "the influence of business corporations." In Federal Election Commission (FEC) v. National Right to Work Committee (NRWC), the Supreme Court evaluated 2 U.S.C. § 441b(b)(4)©) of FECA, which requires labor unions to solicit only "members" when amassing funds for its separate segregated fund or PAC. In particular, the Court considered, inter alia , whether the Federal Election Commission's (FEC) interpretation of "member" abridged NRWC's associational rights and held that it did not. The NRWC, a non-profit corporation, essentially considered anyone who gave a contribution a "member." On the other hand, the FEC advanced a narrower definition of "member," under which a participant would have to display various levels of involvement with the soliciting-organization, beyond providing a contribution, or the participant would have to enjoy responsibilities, rather than mere privileges, in connection to the soliciting organization. Persuaded by the FEC's interpretation, the Court held that NRWC's asserted associational liberties were burdened by the FEC's definition, but were overborne by the state's regulatory interests. While associational rights are "basic constitutional" freedoms deserving of the "closest scrutiny," they are not absolute. While § 441b restricts the solicitations of corporations and labor unions, thereby restricting their freedom of association, the state had an interest in hedging corporations and labor organizations' particular legal and economic attributes, since they may be converted into a political advantage. For example, corporations and labor unions can amass large, financial "war chests," which could be leveraged to incur political debts from candidates. Indeed, citing Bellotti, the Court affirmed the fundamental importance of curbing the potential, corruptive influence represented by political debts. The Court was further persuaded by the state's additional interest in protecting investors and members who provide financial support to their organization over their objection to or distaste for the corporation's majority-political philosophy. "In order to prevent both actual and apparent corruption," the Court concluded, "Congress aimed a part of its regulatory scheme at corporations, [reflecting a constitutionally warranted] judgment that the special characteristics of the corporate structure require particularly careful regulation." In Colorado Republican Federal Campaign Committee v. Federal Election Commission (Colorado I), the Supreme Court examined whether the FECA "Party Expenditure Provision," which imposed dollar limits on political party expenditures "in connection with the general election campaign of a [congressional] candidate," was unconstitutionally enforced against a party's funding of radio "attack ads" directed against its likely opponent in a federal senatorial election. This case concerned expenditures for radio ads by the Colorado Republican Party (CRP), which attacked the likely Democratic Party candidate in the 1986 senatorial election. At the time the ads were purchased and aired, the CRP already transferred to the National Republican Party the full amount of the funds it was permitted to expend "in connection with" senatorial elections under FECA. Finding that the CRP exceeded its election spending limits, the FEC noted that the ads were purchased after the fund transfer and found that the expenditure was "in connection with the campaign of a candidate for federal office." The CRP challenged the constitutionality of the Party Expenditure Provision's "in connection with" language as unconstitutionally vague and objected to how the provision was applied in this instance. Rendering a narrow holding, the Court found for the CRP on a portion of its "as applied" challenge. The Court's ruling turned on whether CRP's ad purchase was an "independent expenditure," a "campaign contribution" or a "coordinated expenditure." "Independent expenditures," the Court noted, do not raise heightened governmental interests in regulation because the money is deployed to advance a political point of view "independent" of a candidate's viewpoint. Indeed, the Court found that when independent expenditures display little coordination and prearrangement between the payor and a candidate, they alleviate the expenditure's corruptive influence on the polity. Moreover, the Court stressed that restrictions on independent expenditures "represent substantial ... restraints on the quantity and diversity of political speech," and constrict "core First Amendment activity." However, restrictions on "contributions," which only marginally impair a "contributor's ability to engage in free communication," do not burden free speech interests to the same degree and decrease the risk that corruptive influences will taint the political process. Similarly, "coordinated expenditures" are not as inviolable as "independent expenditures" because they are the functional equivalent of a "contribution" and accordingly, they trigger regulatory interests in staving off real and perceived corruption. Given the heightened First Amendment protection of independent expenditures, the Court did "not see how a provision that limits a political party's independent expenditures" could withstand constitutional scrutiny. The Court held that the CRP's ad purchase was an independent expenditure deserving constitutional protection. In categorizing the expenditure, the Court emphasized that at the time of the purchase the Republicans had not nominated a candidate and that the CRP's chairman independently developed the script, offering it for review only to the Party's staff and the Party's executive director. Moreover, the Court held that the CRP asserted significant free speech interests because "independent expression of a political party's philosophy is 'core' First Amendment activity." According to the Court, the CRP's First Amendment interests were not counterbalanced by the state's interest in protecting the sanctity of the political process, as restraints on "party" expenditures neither eliminate nor alleviate corruptive pressures on the candidate through an expectation of a quid pro quo . The greatest risk for corruption, the Court recognized, resided in the ability of an individual to circumvent the $1,000 restraint on "individual contributions" by making a $20,000 party contribution with the expectation that it will benefit a particular candidate; however, the Court did not believe "that the risk of corruption here could justify the 'markedly greater burden on basic freedoms caused by' ... limitations on expenditures." If anything, the Court remarked, an independent expenditure originating from a $20,000 donation that is controlled by a political party rather than an individual donor would seem less likely to corrupt than a similar independent expenditure made directly by a donor. Additionally, the Court held that the statute was not overly broad and was narrowly tailored to obtain its compelling interests. In FEC v. Colorado Republican Federal Campaign Committee (Colorado II) , the Supreme Court ruled 5 to 4 that a political party's coordinated expenditures, unlike genuine independent expenditures, may be limited in order to minimize circumvention of FECA contribution limits. While the Court's opinion in Colorado I was limited to the constitutionality of the application of FECA's "Party Expenditure Provision," to an independent expenditure by the Colorado Republican Party (CRP), in Colorado II the Court considered a facial challenge to the constitutionality of the limit on coordinated party spending. Persuaded by evidence supporting the FEC's argument, the Court found that coordinated party expenditures are indeed the "functional equivalent" of contributions. Therefore, in its evaluation, the Court applied the same scrutiny to the coordinated "Party Expenditure Provision" that it has applied to other contribution limits, i.e., whether the restriction is "closely drawn" to the "sufficiently important" governmental interest of stemming political corruption. The Court further determined that circumvention of the law through "prearranged or coordinated expenditures amounting to disguised contributions" is a "valid theory of corruption." In upholding the limit, the Court noted that "substantial evidence demonstrates how candidates, donors, and parties test the limits of the current law," which, the Court concluded, "shows beyond serious doubt how contribution limits would be eroded if inducement to circumvent them were enhanced by declaring parties' coordinated spending wide open." Although Federal Election Commission (FEC) v. Democratic Senatorial Campaign Committee (DSCC) dealt primarily with issues of statutory construction and application, the Supreme Court's rationale is relevant to the extension of Buckley and the First Amendment generally. Specifically, the Court addressed whether 2 U.S.C. § 441a(d) of FECA, which prohibits party committees from making expenditures on behalf of candidates, extends to party expenditures paid on behalf of other state and national party committees. This case arose in connection with the National Republican Senatorial Campaign Committee's (NRSC) agency relationship with its state and national party committees, under which the NRSC made various expenditures on behalf of its state and national affiliates. The DSCC challenged an FEC interpretation of §441a(d) permitting the NRSC to make such expenditures. The Court affirmed the FEC's interpretation. Under Buckley, the Court held, inter alia , the FEC's interpretation was not inconsistent with the purpose of FECA. Agency agreements do not raise the risk of corruption nor the appearance of corruption, spawned by the real or perceived coercive effect of large candidate contributions, so long as the candidate is not a party to the agency relationship. Under an agency agreement, contribution limits to candidates apply with equal force when a committee transfers its spending authority to one of its affiliate committees—the agreement does not increase the expenditure of a single additional dollar under FECA. Thus, the Court held, non-candidate agency agreements are consistent with Buckley and the purposes of FECA. In Federal Election Commission (FEC) v. National Conservative Political Action Committee (NCPAC) , the Supreme Court held that the First Amendment prohibits enforcement of 26 U.S.C. § 9012(f) of FECA, which proscribed any "committee, association, or organization" from making expenditures over $1,000 in furtherance of electing a "publicly financed" presidential candidate. NCPAC arose in connection with President Reagan's 1984 bid for reelection, where the Democratic National Committee sought an injunction under § 9012(f) against NCPAC from expending "large sums of money" to support President Reagan's publicly funded campaign. NCPAC, an ideological multicandidate political committee, argued that § 9012(f) unduly burdened its First Amendment interests in free expression and free association, as its expenditures were protected as "independent expenditures." NCPAC intended to raise and expend money for the purposes of running radio and television ads to encourage voters to elect Reagan. Holding § 9012(f) unconstitutional, the Court found that the expenditure limitation burdened NCPAC's "core" First Amendment speech, that it was supported by a comparatively weak state interest, and that it was fatally over-inclusive. The Court noted that in Buckley it had upheld expenditure restrictions on individual and political advocacy associations; however, in this case, the fact that NCPAC's expenditures were not made in coordination with the candidate supplied the distinguishing key opening the door to First Amendment protection. In sum, a regulation may not burden a non-candidate's First Amendment rights based on whether a candidate accepts or does not accept public funds. The Court first determined whether NCPAC was entitled to First Amendment protection. After interpreting the statute as proscribing NCPAC's expenditures, the Court concluded that the proscription burdened speech "of the most fundamental First Amendment activities, [as the discussion of] public issues and debate on the qualification of candidates [is] integral to [a democratic form of governance.]" While the statute did not exact a prior restraint on NCPAC's political speech, the Court held that limiting their expenditures to no more than $1,000 in today's sophisticated (and expensive) media market was akin to "allowing a speaker in a public hall to express his views while denying him the use of an amplifying system." The Court then rejected the argument that NCPAC's organizational structure eroded its First Amendment liberty interests. Associational values and class consciousness pervaded the Court's reasoning. For example, the Court stressed that political committees are "mechanisms by which large numbers of individuals of modest means can join together in organizations which serve to 'amplify the voice of [the committee's] adherents.'" Moreover, the Court did not find that individuals were speaking through a political committee constitutionally significant: "to say that ... collective action in pooling ... resources to amplify [a political perspective] is not entitled to full First Amendment would [unduly disadvantage those of modest means]." The Court distinguished its holding in National Right to Work Committee, which upheld a FECA regulation of corporations and unions by virtue of their unique organizational structure, and noted that "organizational structure" is irrelevant to its facial analysis of § 9012(f) because the statute equally burdens informal groups who raise and expend money in support of federally funded presidential candidates. After concluding that NCPAC's First Amendment liberties were burdened by § 9012(f), the Court evaluated the state's regulatory interests and asked whether the section was narrowly tailored to reach those interests. The state's interests in alleviating the specter of corruption through a regulation which proscribes uncoordinated, independent expenditures by informal and formal organizations were not compelling to the Court as "independent expenditures may well provide little assistance to the candidate's campaign and indeed may prove counter productive." As such, the Court held that low probability of truly independent expenditures materializing into a political debt owed by the candidate to an independent speaker significantly undermined the state's asserted interest in deterring actual and perceived corruption. Entertaining the state's contention that the ability of political committees to amass large pools of funds increase the risk of corruption tainting the political process, the Court held that § 9012(f) was fatally over-inclusive, as it included within its scope informal groups that barely clear the $1,000 limitation. In Randall v. Sorrell, the Supreme Court struck down as unconstitutional a Vermont statute imposing expenditure limits on state office candidates. The expenditure limits imposed were approximately $300,000 for governor, $100,000 for lieutenant governor, $45,000 for other statewide offices, $4,000 for state senate, and $3,000 for state representative, all of which were adjusted for inflation in odd-numbered years. In support of such statutory expenditure limits, the State of Vermont proffered that they were justified by the state interest in reducing the amount of time that candidates spend raising money. That is, according to a brief filed by Vermont Attorney General Sorrell, absent expenditure limits, increased campaign costs—coupled with the fear of running against an opponent having more funds—means that candidates need to spend more time fundraising instead of engaging in public debate and meeting with voters. Supporters of the law further argued that, in Buckley, the Court did not consider this time-saving rationale and had it done so, it would have upheld FECA's expenditure limitations back in 1976. While unable to reach consensus on a single opinion, six justices of the Supreme Court agreed that First Amendment free speech guarantees were violated by the Vermont expenditure limits. Announcing the Court's judgment and delivering an opinion, which was joined by Chief Justice Roberts and Justice Alito, Justice Breyer found that there was not a significant basis upon which to distinguish the expenditure limits struck down in Buckley from the expenditure limits at issue in Randall. According to Justice Breyer, it was "highly unlikely that fuller consideration of ... [the] time protection rationale would have changed Buckley ' s result." In Buckley, the Court recognized the link between expenditure limits and a reduction in the time needed by a candidate for fundraising, but nonetheless struck down spending limits as unconstitutional. Therefore, Justice Breyer's opinion concluded, given Buckley ' s continued authority, the Court must likewise strike down Vermont's expenditure limits as violating the First Amendment. This section analyzes Supreme Court opinions decided subsequent to Buckley in which the Court evaluated the constitutionality of disclosure requirements. The first line of cases clarifies the scope of Buckley 's general rule, upholding liberal disclosure requirements. In Buckley v. American Constitutional Law Foundation (ACLF), the Court struck down a regulation prescribing, among other things, "payee" disclosure in connection with a ballot initiative. Moreover, in Brown v. Socialist Workers ' 74 Campaign Committee, the Court struck down a state disclosure requirement as applied to a minority party that had historically been the object of harassment and discrimination in the public and private sectors. In the second regulatory context, the Court in Federal Election Commission v. Akins was presented with the question of whether certain "political committees," without the primary purpose of electing candidates, must nonetheless disclose under FECA. The Court, however, did not issue a holding on this issue. Reviewing a First Amendment privacy of association and belief claim, the Supreme Court in Buckley v. American Constitutional Law Foundation (ACLF) examined the facial validity of a Colorado ballot-initiative statute requiring initiative-sponsors to provide "detailed, monthly disclosures" of the name, address, and amount paid and owed to their petition-circulators. Colorado affords its citizens many "law-making" opportunities by placing initiatives on election ballots for public ratification. A non-profit organization founded to promote the tradition of "direct democracy" challenged the facial validity of the state's statute regulating the initiative-petition process, alleging, inter alia , that the regulation's disclosure requirement burdened citizens' associational and speech interests. Colorado did not dispute that the regulation burdened expressive activity, but asserted regulatory interests in disseminating information concerning the distribution of capital tied to initiative campaigns. Colorado asserted that the regulation promotes "informed public decision-making," and deters actual and perceived corruption. Unimpressed with Colorado's interests, the ACLF Court upheld the lower court's decision, finding the disclosure requirement unconstitutional. Under Buckley , the Court determined that "exacting scrutiny" is necessary where, as here, a regulation compels the disclosure of campaign related payments. After noting the state's interest in regulation, the Court examined the fit between the proposed statutory remedy and its requirements. As the lower court did not strike down the regulation in toto, but upheld the state's requirements for payor disclosure, the electorate had access to information about who proposed an initiative and who funded the circulation of the initiative. The added "informational" benefit of requiring payee disclosure was not supported by the record and would be de minimis at best, held the Court. The Court further noted that, as Meyer v. Grant demonstrates, the risk of quid pro quo corruption, while common in candidate elections, is not as great in ballot initiatives because there is no corrupting object present, especially at the time of petition. Ergo, the Court held that while compelling state interests motivated Colorado's regulatory régime, the link between "payee" disclosures and the state's interests was too tenuous to warrant First Amendment infringement. In Brown v. Socialist Workers ' 74 Campaign Committee, the Supreme Court considered whether a state disclosure requirement was constitutionally applied, under the Fourteenth Amendment's liberty interest in free speech and association, to a minority political party that historically had been the object of harassment and discrimination in the public and private sectors. The Court reviewed a state disclosure law requiring candidates to report the names and addresses of contributors and recipients of campaign funds. The principal plaintiff, a small political party operating in the socialist tradition, sought and obtained a restraining order against enforcement of the requirement and challenged the constitutionality of the statute as applied to its fundraising and expenditure activities. Agreeing with the plaintiff, the Court upheld the constitutional challenge. This was a fact intensive holding. The Brown Court affirmed Buckley 's prohibition on compelled disclosures where contributors would be subject to a reasonable probability of threats, harassment, or reprisals by virtue of their support of a currently and historically suspect political organization. The Court extended Buckley to protect recipients of campaign contributions. Affording the plaintiff "sufficient flexibility" in the proof of injury, the Court found "substantial evidence" to support the contention that compliance with the disclosure requirement would subject both contributors and recipients of campaign funds to the risk of threats, harassment, or reprisals. Plaintiff's showing of current hostility by government and private parties included threatening phone calls, hate mail, burning of party literature, dismissal from employment due to member's political affiliation, destruction of the membership's property, harassment of the party's candidate, and the firing of gunshots at the party's offices. Plaintiff also developed a factual record of historic discrimination and hostility against the party and its membership. From this expansive record, the Court found that the plaintiffs established a "reasonable probability" that acts of discrimination, threats, reprisals, and hostility would continue in the future. Therefore, the Court held that the disclosure requirement was unconstitutional as applied to the plaintiffs' political committees. In Federal Election Commission (FEC) v. Akins, the Supreme Court did not issue a holding on whether "an organization that otherwise satisfies the [FECA's] definition of 'political committee,' and thus is subject to its disclosure requirements, nonetheless falls outside that definition because 'its major purpose' is not 'the nomination or election of candidates.'" However, the Court reiterated that "political committees," for the purposes of FECA, refer to organizations under the "control of a candidate" or with the major purpose of nominating or electing a candidate to political office. In McIntyre v. Ohio Elections Commission , the Supreme Court further defined the universe of permissible disclosure requirements when it struck down an Ohio election law, which prohibited the distribution of anonymous campaign literature and required attribution disclosure of the name of the literature's author on all distributed campaign material. McIntyre arose in relation to a school tax levy, where a parent published and distributed anonymous campaign leaflets opposing the tax measure. The Court held that the statute violated the parent's liberty interest in free speech under the First Amendment as incorporated by the Fourteenth Amendment. As the statute burdened the parent's First Amendment interest in anonymous pamphleteering—"an honorable tradition of advocacy and dissent" in U.S. political history—the Court applied exacting scrutiny to the regulation. The Court construed the First Amendment interest in anonymity as "a shield from the tyranny of the majority.... [exemplifying] the purpose behind the Bill of Rights and of the First Amendment in particular, [which protects] unpopular individuals from retaliation and their ideas from suppression at the hand of an intolerant society." The Court recalled, for example, that the Federalist Papers were published under fictitious names. Balanced against the parent's interests in anonymous publishing, the Court acknowledged Ohio's interest in preventing the dissemination of fraudulent and libelous statements and in providing voters with information on which to evaluate the message's worth. However, the Court found that the state's interests were not served by a ban on anonymous publishing because it had a number of regulations designed to prevent fraud and libel and because a person's name has little significance to evaluating the normative weight of a speaker's message. Thus, the Court held that the statute was not narrowly tailored to serve its regulatory interests and therefore, struck it down. The McIntyre Court specifically found that neither Bellotti nor Buckley were controlling in the McIntyre case: Bellotti concerned the scope of First Amendment protection afforded to corporations and the relevant portion of the Buckley opinion concerned mandatory disclosure of campaign expenditures. Neither case involved a prohibition of anonymous campaign literature. In Buckley , the Court noted, it had stressed the importance of providing the electorate with information regarding the origin of campaign funds and how candidates spend those funds, but that such information had no relevance to the kind of "independent activity" in the case of McIntyre . "Required disclosures about the level of financial support a candidate has received from various sources are supported by an interest in avoiding the appearance of corruption that has no application in this case," the Court stated. Moreover, the Court found that independent expenditure disclosure above a certain threshold, which the Court upheld in Buckley, although clearly impeding First Amendment activity, is a "far cry from compelled self-identification on all election-related writings." An election related document, particularly a leaflet, is often a personally crafted statement of a political viewpoint and as such, compelled identification is particularly intrusive, according to the Court. In contrast, the Court found, expenditure disclosure, reveals far less information; that is, "even though money may 'talk,' its speech is less specific, less personal, and less provocative than a handbill—and as a result, when money supports an unpopular viewpoint it is less likely to precipitate retaliation." Further distinguishing Buckley , the McIntyre Court found that not only is a prohibition on anonymous campaign literature more intrusive than the disclosure requirements upheld in Buckley, but it rests on "different and less powerful state interests." The Federal Election Campaign Act (FECA), at issue in Buckley , regulates only candidate elections, not referenda or other issue-based elections, and the Buckley Court had construed "independent expenditures" to only encompass those expenditures that "expressly advocate the election or defeat of a clearly identified candidate." Unlike candidate elections, where the government can identify a compelling governmental interest of avoiding quid pro quo candidate corruption, issue based elections do not present such a risk and hence, the Court ruled, the government cannot justify such an intrusion on free speech. In its most comprehensive campaign finance ruling since Buckley v. Valeo, the Supreme Court in its 2003 decision, McConnell v. FEC, upheld against facial constitutional challenges key portions of the Bipartisan Campaign Reform Act of 2002 (BCRA), also known as the McCain-Feingold or Shays-Meehan campaign finance reform law. In McConnell, a 5-to-4 majority of the Court upheld restrictions on the raising and spending of previously unregulated political party soft money and a prohibition on corporations and labor unions using treasury funds to finance "electioneering communications," requiring that such ads may only be paid for with corporate and labor union political action committee (PAC) funds. The Court invalidated BCRA's requirement that parties choose between making independent expenditures or coordinated expenditures on behalf of a candidate and its prohibition on minors age 17 and under making campaign contributions. By a 5-to-4 vote, the McConnell Court upheld two critical BCRA provisions, Titles I and II, against facial constitutional challenges. In the majority opinion, coauthored by Justices Stevens and O'Connor and joined by Justices Souter, Ginsburg, and Breyer, the Court upheld the limits on raising and spending previously unregulated political party soft money (Title I), and the prohibition on corporations and labor unions using treasury funds—which is unregulated soft money—to finance directly electioneering communications (Title II). In upholding BCRA's "two principal, complementary features," the Court readily acknowledged that it is under "no illusion that BCRA will be the last congressional statement on the matter" of money in politics. The Court observed, "money, like water, will always find an outlet." Hence, campaign finance issues that will inevitably arise and the corresponding legislative responses from Congress "are concerns for another day." Title I of BCRA prohibits national party committees and their agents from soliciting, receiving, directing, or spending any soft money. As the Court noted, Title I takes the national parties "out of the soft-money business." In addition, Title I prohibits state and local party committees from using soft money for activities that affect federal elections; prohibits parties from soliciting for and donating funds to tax-exempt organizations that spend money in connection with federal elections; prohibits federal candidates and officeholders from receiving, spending, or soliciting soft money in connection with federal elections and restricts their ability to do so in connection with state and local elections; and prevents circumvention of the restrictions on national, state, and local party committees by prohibiting state and local candidates from raising and spending soft money to fund advertisements and other public communications that promote or attack federal candidates. Plaintiffs challenged Title I based on the First Amendment as well as Art. I, § 4 of the U.S. Constitution, principles of federalism, and the equal protection component of the Due Process Clause of the 14 th Amendment. The Court upheld the constitutionality of all provisions in Title I, finding that its provisions satisfy the First Amendment test applicable to limits on campaign contributions: they are "closely drawn" to effect the "sufficiently important interest" of preventing corruption and the appearance of corruption. Rejecting plaintiff's contention that the BCRA restrictions on campaign contributions must be subject to strict scrutiny in evaluating the constitutionality of Title I, the Court applied the less rigorous standard of review—"closely drawn" scrutiny. Citing its landmark 1976 decision Buckley v. Valeo and its progeny, the Court noted that it has long subjected restrictions on campaign expenditures to closer scrutiny than limits on contributions in view of the comparatively "marginal restriction upon the contributor's ability to engage in free communication" that contribution limits entail. The Court observed that its treatment of contribution limits is also warranted by the important interests that underlie such restrictions, i.e. preventing both actual corruption threatened by large dollar contributions as well as the erosion of public confidence in the electoral process resulting from the appearance of corruption. The Court determined that the lesser standard shows "proper deference to Congress' ability to weigh competing constitutional interests in an area in which it enjoys particular expertise." Finally, the Court recognized that during its lengthy consideration of BCRA, Congress properly relied on its authority to regulate in this area, and hence, considerations of stare decisis as well as respect for the legislative branch of government provided additional "powerful reasons" for adhering to the treatment of contribution limits that the Court has consistently followed since 1976. Responding to plaintiffs' argument that many of the provisions in Title I restrict not only contributions but also the spending and solicitation of funds that were raised outside of FECA's contribution limits, the Court determined that it is "irrelevant" that Congress chose to regulate contributions "on the demand rather than the supply side." Indeed, the relevant inquiry is whether its mechanism to implement a contribution limit or to prevent circumvention of that limit burdens speech in a way that a direct restriction on a contribution would not. The Court concluded that Title I only burdens speech to the extent of a contribution limit: it merely limits the source and individual amount of donations. Simply because Title I accomplishes its goals by prohibiting the spending of soft money does not render it tantamount to an expenditure limitation. In his dissent, Justice Kennedy criticized the majority opinion for ignoring established constitutional bounds and upholding a campaign finance statute that does not regulate actual or apparent quid pro quo arrangements. According to Justice Kennedy, Buckley clearly established that campaign finance regulation that restricts speech, without requiring proof of specific corrupt activity, can only withstand constitutional challenge if it regulates conduct that presents a "demonstrable quid pro quo danger." The McConnell Court, however, interpreted the anti-corruption rationale to allow regulation of not only "actual or apparent quid pro quo arrangements," but also of "any conduct that wins goodwill from or influences a Member of Congress." Justice Kennedy further maintained that the standard established in Buckley defined undue influence to include the existence of a quid pro quo involving an officeholder, while the McConnell Court, in contrast, extended the Buckley standard of undue influence to encompass mere access to an officeholder. Justice Kennedy maintained that the Court, by legally equating mere access to officeholders to actual or apparent corruption of officeholders, "sweeps away all protections for speech that lie in its path." Unpersuaded by Justice Kennedy's dissenting position that Congress's regulatory interest is limited to the prevention of actual or apparent quid pro quo corruption "inherent in" contributions made to a candidate, the Court found that such a "crabbed view of corruption" and specifically the appearance of corruption "ignores precedent, common sense, and the realities of political fundraising exposed by the record in this litigation." According to the Court, equally problematic as classic quid pro quo corruption, is the danger that officeholders running for re-election will make legislative decisions in accordance with the wishes of large financial contributors, instead of deciding issues based on the merits or constituent interests. Since such corruption is neither easily detected nor practical to criminalize, the Court reasoned, Title I offers the best means of prevention, i.e., identifying and eliminating the temptation. Title II of BCRA created a new term in FECA, "electioneering communication," which is defined as any broadcast, cable, or satellite communication that "refers" to a clearly identified federal candidate, is made within 60 days of a general election or 30 days of a primary, and if it is a House or Senate election, is targeted to the relevant electorate. Title II prohibits corporations and labor unions from using their general treasury funds (and any persons using funds donated by a corporation or labor union) to finance electioneering communications. Instead, the statute requires that such ads may only be paid for with corporate and labor union political action committee (PAC) regulated hard money. The Court upheld the constitutionality of this provision. In Buckley v. Valeo, the Court construed FECA's disclosure and reporting requirements, as well as its expenditure limitations, to apply only to funds used for communications that contain express advocacy of the election or defeat of a clearly identified candidate. After Buckley, many lower courts had interpreted the decision to stand for the proposition that communications must contain express terms of advocacy, such as "vote for" or "vote against," in order for regulation of such communications to pass constitutional muster under the First Amendment. Absent express advocacy, lower courts had held, a communication is considered issue advocacy, which is protected by the First Amendment and therefore may not be regulated. Effectively overturning such lower court rulings, the Supreme Court in McConnell held that neither the First Amendment nor Buckley prohibits BCRA's regulation of "electioneering communications," even though electioneering communications, by definition, do not necessarily contain express advocacy. The Court determined that when the Buckley Court distinguished between express and issue advocacy it did so as a matter of statutory interpretation, not constitutional command. Moreover, the Court announced that by narrowly reading FECA provisions in Buckley to avoid problems of vagueness and overbreadth, it "did not suggest that a statute that was neither vague nor overbroad would be required to toe the same express advocacy line." "[T]he presence or absence of magic words cannot meaningfully distinguish electioneering speech from a true issue ad," the Court observed. In response to plaintiffs maintaining that the justifications supporting the regulation of express advocacy do not apply to communications covered by the definition of "electioneering communication," the Court found that the argument failed to the extent that issue ads broadcast during the 30- and 60-day periods prior to primary and general elections are the "functional equivalent" of express advocacy. The Court reasoned that the justifications for the regulation of express advocacy "apply equally" to ads broadcast during those periods if the ads have the intent and effect of influencing elections. Based on the evidentiary record, the Court determined that the vast majority of such ads "clearly had such a purpose." While Title II prohibits corporations and labor unions from using their general treasury funds for electioneering communications, the Court observed that they are still free to use separate segregated funds (PACs) to run such ads. Therefore, the Court concluded that it is erroneous to view this provision of BCRA as a "complete ban" on expression rather than simply a regulation. Further, the Court found that the regulation is not overbroad because the "vast majority" of ads that are broadcast within the electioneering communication time period (60 days before a general election and 30 days before a primary) have an electioneering purpose. The Court also rejected plaintiffs' assertion that the segregated fund requirement for electioneering communications is under-inclusive because it only applies to broadcast advertisements and not print or internet communications. Congress is permitted, the Court determined, to take one step at a time to address the problems it identifies as acute. With Title II of BCRA, the Court observed, Congress chose to address the problem of corporations and unions using soft money to finance a "virtual torrent of televised election-related ads" in recent campaigns. In his dissent, Justice Kennedy criticized the majority for permitting "a new and serious intrusion on speech" by upholding the prohibition on corporations and unions using general treasury funds to finance electioneering communications. Finding that this BCRA provision "silences political speech central to the civic discourse that sustains and informs our democratic processes," the dissent further noted that unions and corporations "now face severe criminal penalties for broadcasting advocacy messages that 'refer to a clearly identified candidate' in an election season." In upholding BCRA's extension of the prohibition on using treasury funds for financing electioneering communications to non-profit corporations, the McConnell Court found that even though the statute does not expressly exempt organizations meeting the criteria established in its 1986 decision in FEC v. Massachusetts Citizens for Life (MCFL), it is an insufficient reason to invalidate the entire section. Since MCFL had been established Supreme Court precedent for many years prior to enactment of BCRA, the Court assumed that when Congress drafted this section of BCRA, it was well aware that this provision could not validly apply to MCFL-type entities. By an 8-to-1 vote, the Court upheld Section 311 of BCRA, which requires that general public political ads that are "authorized" by a candidate clearly indicate that the candidate or the candidate's committee approved the communication. Rejecting plaintiffs' assertion that this provision is unconstitutional, the Court found that this provision "bears a sufficient relationship to the important governmental interest of 'shedding the light of publicity' on campaign financing." By a 5-to-4 vote, the Court invalidated BCRA's requirement that political parties choose between coordinated and independent expenditures after nominating a candidate, finding that it burdens the right of parties to make unlimited independent expenditures. Specifically, Section 213 of BCRA provides that, after a party nominates a candidate for federal office, it must choose between two spending options. Under the first option, a party that makes any independent expenditure is prohibited from making any coordinated expenditure under this section of law; under the second option, a party that makes any coordinated expenditure under this section of law—one that exceeds the ordinary $5,000 limit—cannot make any independent expenditure with respect to the candidate. FECA, as amended by BCRA, defines "independent expenditure" to mean an expenditure by a person "expressly advocating the election or defeat of a clearly identified candidate" and that is not made in cooperation with such candidate. According to the McConnell Court, the regulation presented by Section 213 of BCRA "is much more limited than it initially appears." A party that wants to spend more than $5,000 in coordination with its nominee is limited to making only independent expenditures that contain the magic words of express advocacy. Although the Court acknowledges that "while the category of burdened speech is relatively small," it is nonetheless entitled to protection under the First Amendment. Furthermore, the Court determined that under Section 213, a party's exercise of its constitutionally protected right to engage in free speech results in the loss of a longstanding valuable statutory benefit. Hence, to pass muster under the First Amendment, the provision "must be supported by a meaningful governmental interest" and, the Court announced, the interest in requiring parties to avoid the use of magic words does not suffice. By a unanimous vote, the Court invalidated Section 318 of BCRA, which prohibited individuals age 17 or younger from making contributions to candidates and political parties. Determining that minors enjoy First Amendment protection and that contribution limits impinge on such rights, the Court determined that the prohibition is not "closely drawn" to serve a "sufficiently important interest." In response to the government's assertion that the prohibition protects against corruption by conduit—that is, parents donating through their minor children to circumvent contribution limits—the Court found "scant evidence" to support the existence of this type of evasion. Furthermore, the Court postulated that such circumvention of contribution limits may be deterred by the FECA provision prohibiting contributions in the name of another person and the knowing acceptance of contributions made in the name of another person. Even assuming, arguendo, that a sufficiently important interest could be provided in support of the prohibition, the Court determined that it is over-inclusive. According to the Court, various states have found more-tailored approaches to address this issue, for example, counting contributions by minors toward the total permitted for a parent or family unit, imposing a lower cap on contributions by minors, and prohibiting contributions by very young children. The Court, however, expressly declined to decide whether any alternatives would pass muster. By a unanimous vote, the Court determined that the challenges to Sections 304, 316, and 319 of BCRA, also known as the "millionaire provisions," were properly dismissed by the district court due to lack of standing. The millionaire provisions, which therefore remain in effect, provide for a series of staggered increases in otherwise applicable limits on contributions to candidates if a candidate's opponent spends a certain amount in personal funds on his or her own campaign. A notable aspect of the Supreme Court's ruling in McConnell v. FEC is the extent to which the majority of the Court deferred to Congressional findings and used a pragmatic rationale in upholding BCRA. According to the Court, the record before it was replete with perceived problems in the campaign finance system, circumstances creating the appearance of corruption, and Congress's proposal to address these issues. As the Court remarked at one point, its decision showed "proper deference" to Congress's determinations "in an area in which it enjoys particular expertise." Furthermore, "Congress is fully entitled," the Court observed, "to consider the real-world" as it determines how best to regulate in the political sphere. Ruling 5 to 4, the Supreme Court in its 2007 decision FEC v. W isconsin Right to Life, Inc.(WRTL II) found that a provision of the Bipartisan Campaign Reform Act of 2002 (BCRA), prohibiting corporate or labor union treasury funds from being spent on advertisements broadcast within 30 days of a primary or 60 days of a general election, was unconstitutional as applied to ads that Wisconsin Right to Life, Inc. sought to run. While not expressly overruling its 2003 ruling in McConnell v. FEC, which upheld the BCRA provision against a First Amendment facial challenge, the Court limited the law's application. Specifically, it ruled that advertisements that may reasonably be interpreted as something other than as an appeal to vote for or against a specific candidate are not the functional equivalent of express advocacy, and therefore, cannot be regulated. Section 203 of the Bipartisan Campaign Reform Act of 2002 (BCRA) prohibits corporate or labor union treasury funds from being spent for "electioneering communications." BCRA defines "electioneering communication" as any broadcast, cable, or satellite transmission made within 30 days of a primary or 60 days of a general election (sometimes referred to as the "blackout periods") that refers to a candidate for federal office and is targeted to the relevant electorate. In McConnell v. Federal Election Commission (FEC), the Supreme Court had upheld Section 203 of BCRA against a First Amendment facial challenge even though the provision regulates not only campaign speech or "express advocacy," (speech that expressly advocates the election or defeat of a clearly identified candidate), but also "issue advocacy," (speech that discusses public policy issues, while also mentioning a candidate). Specifically, the Court determined that the speech regulated by Section 203 was the "functional equivalent" of express advocacy. In July 2004, Wisconsin Right to Life (WRTL), a corporation that accepts contributions from other corporations, began broadcasting advertisements exhorting viewers to contact Senators Feingold and Kohl to urge them to oppose a Senate filibuster to delay and block consideration of federal judicial nominations. WRTL planned to run the ads throughout August 2004 and to finance them with its general treasury funds, thereby running afoul of Section 203, as such ads would have been broadcast within the 30 day period prior to the September 14, 2004, primary. Anticipating that the ads would be illegal "electioneering communications," but believing that they nevertheless had a First Amendment right to broadcast them, WRTL filed suit against the FEC, seeking declaratory and injunctive relief and alleging that Section 203's prohibition was unconstitutional as applied to the ads and any future ads that they might plan to run. Just prior to the BCRA 30-day blackout period, a three-judge district court denied a preliminary injunction, finding that McConnell v. FEC left no room for such an "as-applied" challenge. Accordingly, WRTL did not broadcast its ads during the blackout period, and the district court subsequently dismissed the complaint in an unpublished opinion. On appeal, in Wisconsin Right to Life, Inc. v. FEC (WRTL I), the Supreme Court vacated the lower court judgment, finding that by upholding Section 203 against a facial challenge in McConnell, "we did not purport to resolve future as-applied challenges." On remand, after permitting four Members of Congress to intervene as defendants, the three-judge district court granted WRTL summary judgment, determining that Section 203 was unconstitutional as applied to WRTL's ads. It concluded that the ads were genuine issue ads, not express advocacy or its "functional equivalent" under McConnell , and held that no compelling interest justified their regulation. The FEC appealed. Affirming the lower court ruling, the Supreme Court in FEC v. W isconsin Right to Life, Inc. ( WRTL II) determined that Section 203 of BCRA was unconstitutional as applied to the WRTL ads, and that they should have been permissible to broadcast. In a plurality opinion, written by Chief Justice Roberts, joined by Justice Alito—Justice Scalia wrote a separate concurrence, joined by Justices Kennedy and Thomas —the Court announced that "[b]ecause WRTL's ads may reasonably be interpreted as something other than as an appeal to vote for or against a specific candidate, we hold they are not the functional equivalent of express advocacy, and therefore, fall outside the scope of McConnell ' s holding." In determining the threshold question, as the Court found was required by McConnell, of whether the ads were the "functional equivalent" of speech expressly advocating the election or defeat of a candidate for federal office or genuine issue advocacy, the Court observed that it had long recognized that the practical distinction between campaign advocacy and issue advocacy can often dissolve because candidates, particularly incumbents, "are intimately tied to public issues involving legislative proposals and governmental actions." Nonetheless, the Court stated, its jurisprudence in this area requires it to make such a distinction, and "[i]n drawing that line, the First Amendment requires ... err[ing] on the side of protecting political speech rather than suppressing it." The FEC argued that in view of the fact that McConnell had already held that Section 203 was facially valid, WRTL—and not the government—should bear the burden of demonstrating that BCRA is unconstitutional as applied to its ads. Rejecting the FEC's contention, the Court pointed out that Section 203 burdens political speech and is therefore subject to strict scrutiny. Under strict scrutiny, the Court determined that the FEC—not the regulated community—had the burden of proving that the application of Section 203 to WRTL's ads furthered a compelling interest, and was narrowly tailored to achieve that interest. As it had already ruled in McConnell that Section 203 "survives strict scrutiny to the extent it regulates express advocacy or its functional equivalent," the Court found that in order to prevail, the FEC needed to show that the WRTL ads it sought to regulate fell within that category. On the other hand, if the speech that the FEC sought to regulate is not express advocacy or its functional equivalent, the Court cautioned that the FEC's task is "more formidable" because it must demonstrate that banning such ads during the blackout periods is narrowly tailored to serve a compelling governmental interest, a conclusion that no precedent has reached. In response to the FEC's and the dissent's argument that McConnell had established a test for determining whether an ad is the functional equivalent of express advocacy, that is, "whether the ad is intended to influence elections or has that effect," the Court disagreed, finding that it had not adopted any type of test as the standard for future as-applied challenges. Instead, the Court found that its analysis in McConnell was grounded in the evidentiary record, particularly studies showing that the BCRA definition of "Electioneering Communications accurately captures ads having the purpose or effect of supporting candidates for election to office." Hence, when the McConnell Court made its assessment that the plaintiffs in that case had not sufficiently proven that Section 203 was overbroad and could not be enforced in any circumstance, it did not adopt a particular test for determining what constituted the "functional equivalent" of express advocacy. Indeed, the Court held, the fact that in McConnell it looked to such intent and effect "neither compels nor warrants accepting that same standard as the constitutional test for separating, in an as-applied challenge, political speech protected under the First Amendment from that which may be banned." Accordingly, the Court turned to establishing the proper standard for an as-applied challenge to Section 203 of BCRA, finding that such a standard "must be objective, focusing on the substance of the communication rather than amorphous considerations of intent and effect," involving "minimal if any discovery" so that parties can resolve disputes "quickly without chilling speech through the threat of burdensome litigation," and eschewing "'the open-ended rough-and-tumble of factors,' which 'invit[es] complex argument in a trial court and a virtually inevitable appeal.'" In summation, the Court announced that the standard "must give the benefit of any doubt to protecting rather than stifling speech." Taking such considerations into account, the Court held that [A] Court should find that an ad is the functional equivalent of express advocacy only if the ad is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate. Under this test, WRTL's three ads are plainly not the functional equivalent of express advocacy. First, their content is consistent with that of a genuine issue ad: The ads focus on a legislative issue, take a position on the issue, exhort the public to adopt that position, and urge the public to contact public officials with respect to the matter. Second, their content lacks indicia of express advocacy: The ads do not mention an election, candidacy, political party, or challenger; and they do not take a position on a candidate's character, qualifications, or fitness for office. Moreover, the Court cautioned, contextual factors "should seldom play a significant role in the inquiry." Although courts are not required to ignore basic background information that provides relevant contextual information about an advertisement—such as whether the ad describes a legislative issue that is under legislative consideration—the Court found that such background information "should not become an excuse for discovery." In applying the standard it developed for as-applied challenges to the ads that WRTL sought to broadcast, the Court determined that the FEC had failed to demonstrate that such ads constituted the functional equivalent of express advocacy because they could reasonably be interpreted as something other than a vote for or against a candidate. The Court's established jurisprudence has recognized the governmental interest in preventing corruption and the appearance of corruption in elections, which has been invoked in order to justify contribution limits and, in certain circumstances, spending limits on electioneering expenditures that pose the risk of quid pro quo corruption. In McConnell, the Court noted, it had applied this interest in justifying the regulation of express advocacy and its functional equivalent, but in order to justify regulating WRTL's ads, "this interest must be stretched yet another step to ads that are not the functional equivalent of express advocacy." In strongly worded opposition to extending the application of this governmental interested yet again, the Court announced, "Enough is enough." The WRTL ads are not equivalent to contributions—they are political speech—and the governmental interest in avoiding quid pro quo corruption cannot be used to justify their regulation. The Court also announced that the discussion of issues cannot be suppressed simply because the issues may also be relevant to an election: "Where the First Amendment is implicated, the tie goes to the speaker, not the censor." While the ultimate impact and aftermath of the Supreme Court's decision in WRTL II remains to be seen, application of the federal law prohibiting corporate and labor union treasury funds from being spent on ads that are broadcast 30 days before a primary and 60 days before a general election has been limited. As a result of this ruling, only ads that are susceptible of no reasonable interpretation other than an exhortation to vote for or against a candidate can be regulated. While the Court's ruling was careful not to overrule explicitly its earlier upholding of this portion of the Bipartisan Campaign Reform Act (BCRA) in its 2003 decision, McConnell v. FEC, WRTL II seems to indicate that the FEC's ability to regulate the electioneering communication ban has nonetheless been circumscribed. A potentially pivotal case in the Supreme Court's campaign finance jurisprudence, Citizens United v. F ederal Election Commission (FEC) , is currently before the Supreme Court. Citizen s United involves the constitutionality of federal regulation of electioneering communications and corporate expenditures. Citizens United, a nonprofit Internal Revenue Code Section 501(c)(4) tax-exempt corporation, filed suit in U.S. district court seeking a preliminary injunction to enjoin the Federal Election Commission (FEC) from enforcing Sections 203, 201, and 311 of the Bipartisan Campaign Reform Act of 2002 (BCRA). Section 203 of BCRA prohibits corporate or labor union treasury funds from being spent for "electioneering communications." BCRA defines "electioneering communication" as any broadcast, cable, or satellite transmission made within 30 days of a primary or 60 days of a general election (sometimes referred to as the "blackout periods") that refers to a candidate for federal office and is targeted to the relevant electorate. In its 2007 decision, FEC v. Wisconsin Right to Life, Inc. (WRTL II) , discussed above, the Supreme Court ruled that Section 203 could not constitutionally apply to advertisements that may reasonably be interpreted as something other than as an appeal to vote for or against a specific candidate, and that such ads are not the functional equivalent of express advocacy. Citizens United had produced a movie regarding a presidential candidate and planned to fund three television advertisements to coincide with its release. The group argued that Section 203 violated the First Amendment on its face and as applied to its movie and advertisements. In addition, Citizens United maintained that BRCA Sections 201 and 311, requiring disclosure and identification of funding sources, were unconstitutional as applied to the advertisements. The U.S. District Court for the District of Columbia denied the request by Citizens United for a preliminary injunction, finding that the BCRA provisions in question had previously been upheld by the Supreme Court as regulation that does not unconstitutionally burden First Amendment free speech rights. Likewise, the court found that the group's as-applied claim would also fail on the merits because the movie did not focus on legislative issues, but instead took a position on candidate character, qualifications, and fitness for office, thereby falling within the FEC's regulatory definition of an electioneering communication. The court concluded that Supreme Court precedent upholding Section 203 applied to Citizens United to the extent that it prohibited the group from funding electioneering communications that constituted the functional equivalent of express advocacy. The court also found that BCRA's disclosure requirements were constitutional. Citizens United appealed. BCRA provides that if an action is brought for declaratory or injunctive relief to challenge the constitutionality of any BCRA provision, a final decision from the district court shall be reviewable only by direct appeal to the U.S. Supreme Court. The U.S. Supreme Court heard oral argument in Citizens United v. FEC on March 24, 2009. On June 29, the Court scheduled the case for re-argument on September 9, ordering the parties to file supplemental briefs addressing whether the Court should overrule its earlier holdings in Austin v. Michigan Chamber of Commerce and the portion of its decision in McConnell v. FEC addressing the facial validity of Section 203 of BCRA. In the landmark 1976 decision, Buckley v. Valeo , the Supreme Court established the constitutional framework for campaign finance regulation and in numerous subsequent decisions, extended its holding. Although it has provided much guidance with regard to the constitutionality of various aspects of campaign finance regulation, the Court's jurisprudence in this area continues to evolve and many questions remain unanswered. While awaiting further guidance from the Court, those proposing or evaluating campaign finance legislation rely on Buckley and its progeny for constitutional direction.

Political expression is at the heart of First Amendment activity and the Supreme Court has granted it great deference and protection. However, according to the Court in its landmark 1976 decision, Buckley v. Valeo, an absolutely free political marketplace is not required by the First Amendment—nor is it desirable—because without reasonable regulation, corruption will result. Most notably, the Buckley Court ruled that the spending of money in campaigns, whether as a contribution or an expenditure, is a form of "speech" protected by the First Amendment. The Court upheld some infringements on free speech, however, in order to further the governmental interests of protecting the electoral process from corruption or the appearance of corruption. In Buckley, the Supreme Court considered the constitutionality of the Federal Election Campaign Act of 1971 (FECA), requiring political committees to disclose campaign contributions and expenditures and limiting, to various degrees, the ability of persons and organizations to make contributions and expenditures. While First Amendment freedoms and campaign finance regulation present conflicting means of attempting to preserve the integrity of the political process, the Court resolved this conflict in favor of the First Amendment interests and subjected any regulation burdening free speech and free association to "exacting scrutiny." Under this standard of review, a court will evaluate whether the government's interests in regulating are compelling, examine whether the regulation burdens and outweighs First Amendment liberties, and inquire as to whether the regulation is narrowly tailored to serve the government's interests. If a regulation meets all three criteria, a court will uphold it. This report first discusses the key holdings enunciated by the Supreme Court in Buckley, including those upholding reasonable contribution limits, striking down expenditure limits, upholding disclosure reporting requirements, and upholding the system of voluntary presidential election expenditure limitations linked with public financing. It then examines the Court's extension of Buckley in several subsequent cases, evaluating them in various regulatory contexts: contribution limits (California Medical Association v. FEC; Citizens Against Rent Control v. Berkeley; Nixon v. Shrink Missouri Government PAC; FEC v. Beaumont); expenditure limits (First National Bank of Boston v. Bellotti; FEC v. Massachusetts Citizens for Life; Austin v. Michigan Chamber of Commerce; FEC v. National Right to Work; Colorado Republican Federal Campaign Committee (Colorado I) v. FEC; FEC v. Colorado Republican Federal Campaign Committee (Colorado II); FEC v. Democratic Senatorial Campaign Committee; FEC v. National Conservative Political Action Committee; Randall v. Sorrell); disclosure requirements (Buckley v. American Constitutional Law Foundation; Brown v. Socialist Workers '74 Campaign Committee; FEC v. Akins; McIntyre v. Ohio Elections Commission); and political party soft money and electioneering communication restrictions (McConnell v. FEC; Wisconsin Right to Life, Inc. v. FEC (WRTL II)). This report also discusses a case that is currently pending before the Court, Citizens United v. FEC, that may result in a decision that is pivotal to the Supreme Court's campaign finance jurisprudence.

Senate rules, procedures, and precedents give significant parliamentary power to individual Senators during the course of chamber deliberations. Many decisions the Senate makes—from routine requests for additional debate time, to determinations of how legislation will be considered on the floor—are arrived at by unanimous consent. When a unanimous consent request is proposed on the floor, any Senator may object to it. If objection is heard, the consent request does not take effect. Efforts to modify the original request may be undertaken—a process that can require extensive negotiations between and among Senate leaders and their colleagues—but there is no guarantee that a particular objection can be addressed to the satisfaction of all Senators. The Senate hold emerges from within this context of unanimous-consent decision-making as a method of transmitting policy or scheduling preferences to Senate leaders regarding matters available for floor consideration. Many hold requests take the form of a letter addressed to the majority or minority leader (depending on the party affiliation of the Senator placing the hold) expressing reservations about the merits or timing of a particular policy proposal or nomination. An example of a hold letter is displayed in Appendix A . More often than not, Senate leaders—as agents of their party responsible for defending the political, policy, and procedural interests of their colleagues—honor a hold request because not doing so could trigger a range of parliamentary responses from the holding Senator(s), such as a filibuster, that could expend significant amounts of scarce floor time. Unless the target of a hold is of considerable importance to the majority leader and a supermajority of his colleagues—60 of whom might be required to invoke cloture on legislation under Senate Rule XXII—the most practical course of action is often to lay the matter aside and attempt to promote negotiations that could alleviate the concerns that gave rise to the hold. With hold-inspired negotiations underway, the Senate can turn its attention to more broadly-supported matters. Holds can be used to accomplish a variety of purposes. Although the Senate itself makes no official distinctions among holds, scholars have classified holds based on the objective of the communication. Informational holds, for instance, request that the Senator be notified or consulted in advance of any floor action to be taken on a particular measure or matter, perhaps to allow the Senator to plan for floor debate or the offering of amendments. Choke holds contain an explicit filibuster threat and are intended to kill or delay action on the target of the hold. Blanket holds are leveled against an entire category of business, such as all nominations to a particular agency or department. Mae West holds intend to foster negotiation and bargaining between proponents and opponents. R etaliatory holds are placed as political payback against a colleague or administration, while rolling (or rotating ) holds are defined by coordinated action involving two or more Senators who place holds on a measure or matter on an alternating basis. Until recently, many holds were considered a nonymous (or secret ) because the source and contents of the request were not made available to the public, or even to other Senators. Written hold requests emerged as an informal practice in the late 1950s under the majority leadership of Lyndon B. Johnson as a way for Senators to make routine requests of their leaders regarding the Senate's schedule. Early usage was largely consistent with prevailing expectations of Senate behavior at that time, such as reciprocity, deference, and accommodation of one's Senate colleagues. Over time, holds have evolved to become a potent extra-parliamentary practice, sometimes likened to a "silent filibuster" in the press. "The hold started out as a courtesy for senators who wanted to participate in open debate," two Senators wrote in 1997. Since then, "it has become a shield for senators who wish to avoid it." These and other Senators were concerned that keeping holds confidential tended to enable Senators who placed holds to block measures or nominations while leaving no avenue of recourse open to their supporters. Accordingly, rather than restricting the process itself, recent attempts to alter the operation of holds have focused on making the secrecy of holds less absolute. The Senate has considered a variety of proposals targeting the Senate hold in recent years, two of which the chamber adopted. Both sought to eliminate the secrecy of holds by creating a process through which holds—formally referred to in the new rules as "notices of intent to object to proceeding"—would be made public within some period of time if certain criteria were met. Prior to these rules changes, hold letters were written with the expectation that they would be treated as private correspondences between a Senator and his or her party leader. The first proposal, enacted in 2007 as Section 512 of the Honest Leadership and Open Government Act ( P.L. 110-81 ), established new reporting requirements that were designed to take effect if either the majority or minority leader or their designees, acting on behalf of a party colleague on the basis of a hold letter previously received, objected to a unanimous consent request to advance a measure or matter to the Senate floor for consideration or passage. If objection was raised on the basis of a hold letter, then the Senator who originated the hold was expected to submit a "notice of intent to object" to his or her party leader and, within six days of session thereafter, deliver the objection notice to the Legislative Clerk for publication in both the Congressional Record and the Senate's Calendar of Business (or, if the hold pertained to a nomination, the Executive Calendar ). Under Section 512, objection notices were to take the following form: "I, Senator ___, intend to object to proceeding to ___, dated ___ for the following reasons___." To accommodate the publication of these notices, a new "Notice of Intent to Object to Proceeding" section was added to both Senate calendars as shown in Appendix B . Each calendar entry contained four pieces of information: (1) the bill or nomination number to which the hold pertained; (2) the official title of the bill or nomination; (3) the date on which the hold was placed; and (4) the name of the Senator who placed the hold. Publication was not required if a Senator withdrew the hold within six session days of triggering the notification requirement. Once published, an objection notice could be removed from future editions of a calendar by submitting for inclusion in the Congressional Record the following statement: "I, Senator ___, do not object to proceed to ___, dated ___." On October 3, 2007, roughly two weeks after the new disclosure procedures were signed into law, the first notice of an intent to object was published in the Congressional Record . A total of 5 such notices appeared during the 110 th Congress (2007-2008), and 12 were published during the 111 th Congress (2009-2010), but these numbers should not be interpreted to reflect the entirety of hold activity that occurred during those two Congresses. Instead, they represent the subset of holds that activated the notification requirements established in Section 512 of P.L. 110-81 . Recall that notification is required when three conditions are met: (1) the majority or minority leader (or their designee) asks unanimous consent to proceed to or pass a measure or matter; (2) objection is raised on the basis of a colleague's hold letter; and (3) six days of session have elapsed since the objection was made. Many holds lodged during the 110 th and 111 th Congresses (2007-2010) are likely to have fallen outside the purview of Section 512 regulation. At least two reasons account for this. First, the new notification requirements would not apply to holds placed on measures or matters the Senate did not attempt to proceed to or pass (perhaps on account of an implicit filibuster threat contained in a hold letter). When scheduling business for floor consideration, the content and quantity of hold letters received on a particular measure or matter are likely to factor into the negotiations and considerations Senate leaders make. Rather than take action that could have the effect of vitiating the confidentiality of a holding Senator, Senate leaders might simply decide to advance other matters to the floor instead (or at least try to). A second reason the actual number of holds is likely to exceed the number published in the Record during these two Congresses has to do with the six session day window between an objection being raised and reporting requirements becoming mandatory. Designed to provide Senators with sufficient time to study an issue before deciding whether or not to maintain a hold beyond the six session day grace period, this provision may have encouraged the use of revolving (or rotating) holds. If one Senator removes his or her hold within six session days of activating the reporting requirement and another Senator puts a new hold in its place, the effect would be to reset the six session day clock each time a new hold was placed on a given measure or matter. In this way, two or more Senators could maintain the secrecy of their holds for an indefinite period without running afoul of the new disclosure procedures. In response to the limited applicability of Section 512, the Senate established—by a 92-4 vote on January 27, 2011—a standing order ( S.Res. 28 ) that extends notification requirements to a larger share of hold activity. Instead of a six day reporting window, S.Res. 28 provides two days of session during which Senators are expected to deliver their objection notices for publication. The action that triggers the reporting requirement also changed: from an objection on the basis of a colleague's hold request (under Section 512) to the initial transmission of a written objection notice to the party leader (under S.Res. 28 ). The proper language to communicate a hold remained largely the same as before, except that holding Senators must now include a statement that expressly authorizes their party leader to object to a unanimous consent request in their name. In the event that a Senator neglects to deliver an objection notice for publication within two session days and a party leader nevertheless raises objection on the basis of that hold, S.Res. 28 requires that the name of the objecting party leader be identified as the source of the hold in the "Notice of Intent to Object" section of the appropriate Senate calendar. The process of removing an objection notice from either calendar remains unchanged. During the 112 th Congress (2011-2012), a total of 24 objection notices were published in accordance with the provisions of S.Res. 28 . Nine notices were printed during the 113 th Congress (2013-2014), and 34 were published in the 114 th Congress (2015-2016). See Appendix C for an example of how these notices appear in the Congressional Record . As before, caution should be exercised when interpreting these numbers. What looks like a drop-off in the use of holds could instead reflect broader challenges inherent in efforts to regulate this kind of communication. Senate holds are predicated on the unanimous consent nature of Senate decision-making. The influence they exert in chamber deliberations is based primarily upon the significant parliamentary prerogatives individual Senators are afforded in the rules, procedures, and precedents of the chamber. As such, efforts to regulate holds are inextricably linked with the chamber's use of unanimous consent agreements to structure the process of calling up measures and matters for floor debate and amendment. While not all holds are intended to prevent the consideration of a particular measure, some do take that form, and Senate leaders justifiably perceive those correspondences as implicit filibuster threats. As agents of their party, Senate leaders value the information that holds provide regarding the policy and scheduling preferences of their colleagues. For this reason, rules changes that require enforcement on the part of Senate leaders—as both efforts discussed here do—tend to conflict with the managerial role played by contemporary Senate leaders and the expectation on the part of their colleagues that leaders will defend their interests in negotiations over the scheduling of measures and matters for floor consideration. A second challenge to hold regulation involves the nature of the transmission itself. Both recent proposals address a particular kind of communication: a letter written and delivered to a Senator's party leader that expresses some kind of reservation about the timing or merits of a particular proposal or nomination. Hold requests might be conveyed in less formal ways as well; in a telephone call to the leader's office, for instance, or in a verbal exchange that occurs on or off the Senate floor. An objection to a unanimous consent request transmitted through the "hotline" represents another common method of communicating preferences to Senate leaders. Some Senate offices have circulated "Dear Colleague" letters specifying certain requirements legislation must adhere to in order to avoid a hold being placed. It remains unclear, however, whether or not these alternative forms of communication fall within the purview of recent hold reforms. Appendix A. A Hold Letter Appendix B. The "Notice of Intent to Object" section of the Calendar of Business Appendix C. A Notice of Intent to Object

The Senate "hold" is an informal practice whereby Senators communicate to Senate leaders, often in the form of a letter, their policy views and scheduling preferences regarding measures and matters available for floor consideration. Unique to the upper chamber, holds can be understood as information-sharing devices predicated on the unanimous consent nature of Senate decision-making. Senators place holds to accomplish a variety of purposes—to receive notification of upcoming legislative proceedings, for instance, or to express objections to a particular proposal or executive nomination—but ultimately the decision to honor a hold request, and for how long, rests with the majority leader. Scheduling Senate business is the fundamental prerogative of the majority leader, and this responsibility is typically carried out in consultation with the minority leader. The influence that holds exert in chamber deliberations is based primarily upon the significant parliamentary prerogatives individual Senators are afforded in the rules, procedures, and precedents of the chamber. More often than not, Senate leaders honor a hold request because not doing so could trigger a range of parliamentary responses from the holding Senator(s), such as a filibuster, that could expend significant amounts of scarce floor time. As such, efforts to regulate holds are inextricably linked with the chamber's use of unanimous consent agreements to structure the process of calling up measures and matters for floor debate and amendment. In recent years the Senate has considered a variety of proposals that address the Senate hold, two of which the chamber adopted. Both sought to eliminate the secrecy of holds. Prior to these rules changes, hold letters were written with the expectation that their source and contents would remain private, even to other Senators. In 2007, the Senate adopted new procedures to make hold requests public in certain circumstances. Under Section 512 of the Honest Leadership and Open Government Act (P.L. 110-81), if objection was raised to a unanimous consent request to proceed to or pass a measure or matter on behalf of another Senator, then the Senator who originated the hold was expected to deliver for publication in the Congressional Record, within six session days of the objection, a "notice of intent to object" identifying the Senator as the source of the hold and the measure or matter to which it pertained. A process for removing a hold was also created, and a new "Notice of Intent to Object" section was added to both Senate calendars to take account of objection notices that remained outstanding. An examination of objection notices published since 2007 suggests that many hold requests are likely to have fallen outside the scope of Section 512 regulation. In an effort to make public a greater share of hold requests, the Senate adjusted its notification requirements by way of a standing order (S.Res. 28) adopted at the outset of the 112th Congress (2011-2012). Instead of the six session day reporting window specified in Section 512, S.Res. 28 provides two days of session during which Senators are expected to deliver their objection notices for publication. The action that triggers the reporting requirement also shifted: from an objection on the basis of a colleague's hold request (under Section 512) to the initial transmission of a written objection notice to the party leader (under S.Res. 28). In the event that a Senator neglects to deliver an objection notice for publication and a party leader nevertheless raises objection on the basis of that hold, S.Res. 28 requires that the name of the objecting party leader be identified as the source of the hold in the "Notice of Intent to Object" section of the appropriate Senate calendar.

Adults may go missing due to personal choice; an abduction or foul play; a physical or developmental disability; natural catastrophes that displace individuals, such as a hurricane; or certain high-risk behaviors, including gang involvement or drug use, among other circumstances. State and local laws govern how criminal justice entities respond to missing adult cases. This response is complicated by a number of factors. Unlike children, adults have the legal right to go missing in most cases and may do so to seek protection from a domestic abuser and other related reasons. Further, law enforcement agencies may be hesitant to devote resources to missing adult cases, given competing priorities. Law enforcement agencies within and across states also respond differently to missing adult cases. Some states require at least a 24-hour waiting period after the person is believed to be missing before a police report may be filed, while others take reports without a waiting period. The federal government has played a role in both (1) seeking to prevent certain types of missing adult incidents and (2) recovering adults who go missing, including those who are deceased and for whom only remains provide clues to their identity and circumstances surrounding their disappearance. Congress authorized the Missing Alzheimer's Disease Patient Alert program under the Violent Crime Control and Law Enforcement Act of 1994 ( P.L. 103-322 ) to assist in locating missing individuals with Alzheimer's disease and other forms of dementia through a patient identification program, as well as outreach and education efforts. This program was funded through FY2015. In 2000, Congress authorized the Department of Justice (DOJ), through Kristen's Act ( P.L. 106-468 ), to make grants to establish a national clearinghouse for missing adults and provide technical assistance to law enforcement agencies in locating missing adults. This grant was funded from FY2002 through FY2006. The federal government has also supported efforts to establish databases to track and identify missing adults, their relatives, and unidentified human remains. The first section of this report discusses demographics and record keeping of missing adults and unidentified remains, as well as some of the factors that may contribute to the disappearance of adults. This section also discusses federally funded databases that are used to track data on missing adults and unidentified individuals. The second section of the report describes the federal programs and initiatives to assist in locating missing adults, including funding data where applicable. Finally, the third section discusses issues about the federal role in missing adult cases. Certain circumstances can make adults vulnerable to going missing. Adults may go missing because of an abduction or foul play. A physical or developmental disability or cognitive disorder, such as Alzheimer's disease and other forms of dementia, may also contribute to a missing episode. Adults with dementia have been identified as high-risk for going missing by advocates for older adults. According to the Alzheimer's Association, a nonprofit organization that provides research on Alzheimer's disease, 5.5 million people in the United States suffer from Alzheimer's disease and related dementia, and about 60% of those will wander away from their homes or health care facilities. Further, a natural catastrophe can displace individuals and make their whereabouts unknown to others. Finally, other adults vulnerable to missing incidents may include those with high-risk lifestyles, such as individuals who abuse drugs or are gang involved, and those that have a history of victimization, including domestic violence. There is no definitive estimate of the number of adults who go missing, because some adults are not known to be missing or are not reported to databases that compile data on missing persons. However, three federally supported data sources provide some insight into this number: the Missing Person File at the FBI's National Crime Information Center (NCIC); the FBI's National DNA Index System (NDIS), which stores information on offenders and arrestees, forensic evidence, as well as individuals believed to be missing, their relatives, and unidentified human remains; and the National Missing and Unidentified Persons System (NamUs), administered by DOJ's National Institute of Justice (NIJ). Profiles of missing individuals entered into one database do not necessarily populate other databases, although some missing individuals may be reported to more than one of the databases. Therefore, numbers of missing persons should not be added across any of the databases. The NCIC Unidentified Person File, NamUs, and NDIS contain information about unidentified decedents, or remains. However, the true number of unidentified missing adult cases is unknown because remains can go undiscovered, or if they are recovered, they may not be reported to the databases or retained. In a census conducted by DOJ in 2004, medical examiners and coroners reported a total of 13,486 unidentified human remains on record, though about 51% of medical examiner and coroners' offices lacked policies for retaining records such as x-rays, DNA, or fingerprints that could identify missing individuals. (The report also found that 90% of offices serving large jurisdictions did retain such records.) Further, medical examiners and coroners estimated that about 4,400 unidentified human decedents were reported in an average year, with approximately 1,000 (23.0%) remaining unidentified after one year. Another DOJ study estimated, using death records reported to the Centers for Disease Control and Prevention from 1980 through 2004, that as many as 10,300 of these records were for unidentified decedents. This number is an approximation, as states do not uniformly specify on the death certificate when a person's identity is not known. In addition, the criteria used by DOJ to search the death records may have included individuals whose identities were known, as well as unidentified individuals who were later identified. The discussion in the next section will show that the databases range in the number of profiles they contain, as well as the type of information they collect, such as basic demographic profiles, DNA profiles, etc. ( Note that only the data on missing persons and unidentified decedents, as reported in NCIC, are regularly updated in this report .) The NCIC within the FBI's Criminal Justice Information Services (CJIS) Division maintains statistics on missing adults and unidentified decedents. The NCIC is a computerized index of documented information concerning crimes and criminals of nationwide interest and a locator file for missing and unidentified persons. Since October 1, 1975, the NCIC has maintained records of missing persons (known as the Missing Person File) who are reported to the FBI by federal, state, and local law enforcement agencies; foreign criminal justice agencies; and authorized courts. The Missing Person File was created in response to a request in 1974 from the NCIC Advisory Policy Board (APB). The APB is composed of local, state, and federal criminal justice and national security agencies, and it advises the FBI on criminal justice information matters. The Missing Person File includes records for individuals who are missing because they have a proven physical or mental disability, are missing under circumstances indicating that they may be in physical danger, are missing under circumstances indicating their disappearance may not have been voluntary, are under the age of 21 and do not meet the above criteria, are missing after a catastrophe, or are 21 and older and do not meet any of the above criteria but for whom there is a reasonable concern for their safety. These categories are presented in further detail in Table A-1 . Pursuant to the National Child Search Assistance Act of 1990 (Title XXXVII of the Crime Control Act of 1990, P.L. 101-647 ), records of missing children under age 18 must be immediately entered into the Missing Person File. The act also requires the Attorney General to publish an annual statistical summary of the Missing Person File. Suzanne's Law, enacted by the Prosecutorial Remedies and Other Tools to End the Exploitation of Children Today Act of 2003 (PROTECT Act, P.L. 108-21 ), requires law enforcement to also immediately submit information about missing adults to the NCIC ages 18 through 20. Law enforcement agencies are not mandated under federal law to submit missing person records of adults over the age of 21 into the Missing Person File. Although records of missing adults are captured, the NCIC does not include the complete number of adults who go missing and are not reported to the database. As of December 31, 2016, there were 88,040 individual records (entered in 2016 and previous years) remaining in the Missing Person File. Of these, 54,334 (61.7%) were for missing adults ages 18 and older and 33,052 (38.3%) were for children ages 17 and younger. In calendar year 2016, over 647,000 (647,435) individuals of all ages were reported missing to the NCIC. Of all individuals reported missing in 2016, a total of 181,759 (28.1%) were ages 18 and older. Also in 2016, nearly 585,000 missing person records were cleared or canceled; some of these records were entered prior to 2016. Table A-1 summarizes the number of missing cases entered in 2012 through 2016 for individuals ages 18 and older under the six missing person categories listed previously. The highest number of missing adults went missing for an unspecified reason, but there was a reasonable concern for their safety. Of all adults age 18 and older who were reported missing in 2016, most were male (59.1%). The majority of missing adults were white (66.0%), followed by individuals who were black (26.6%), of an unknown race (3.0%), Asian (3.1%), and American Indian or Alaskan Native (1.3%). Relative to their share of the population generally, missing white and Asian adults appear to be underrepresented and missing African American adults appear to be overrepresented. The NCIC does not report on the Hispanic origin of missing individuals, and NCIC users are instructed to enter records for Hispanic individuals using the race code (American Indian or Alaskan Native, Asian or Pacific Islander, black, or white) that most closely represents that individual as perceived by the law enforcement official. Some individuals who go missing may be deceased, and their remains, intact or not, may be the only available clues concerning their identity and circumstances surrounding their disappearance. Since 1983, the NCIC has taken reports of unidentified missing persons, pursuant to the passage of the Missing Children Act of 1982 ( P.L. 97-292 ). The act required the FBI to "acquire, collect, classify, and preserve any information which would assist in the identification of any deceased individual who has not been identified after the discovery of such deceased individual." Pursuant to this requirement, the NCIC's Unidentified Remains File was established to take reports of unidentified deceased persons, persons of any age who are living and unable to determine their identity, and unidentified catastrophe victims. Reports may include information about bodies found shortly after death, when a person's remains may be fairly intact, as well as skeletal remains. For those individuals who are living and their identities are unknown, information entered about their appearances could help in reuniting them with relatives. The total number of unidentified persons in the NCIC may represent just a fraction of the true number of missing remains. As of December 31, 2016, the Unidentified Remains File included 8,431 unidentified persons. During 2015, nearly 900 unidentified person records were entered into NCIC. Of those, about 80% were for deceased unidentified bodies; less than 1% was for unidentified victims of catastrophes; and approximately 19% were for living persons who could not be identified because they could not identify themselves (e.g., an individual with amnesia, infant). Another database operated by the FBI stores DNA records, including for missing adults and unidentified remains, and was authorized under the DNA Identification Act of 1994 as part the Violent Crime Control and Law Enforcement Act of 1994 ( P.L. 103-322 ). This database is known as NDIS. P.L. 103-322 specified that the FBI could establish an index of DNA identification records of persons convicted of crimes, analyses of DNA samples recovered from crime scenes, and analyses from unidentified human remains. A fourth category of records for relatives of missing persons was added in 1999 by the Consolidated Appropriations Act of 2000 ( P.L. 106-113 ). DNA laboratories may enter DNA information into NDIS that involves one of the four categories of records, as well as the records of missing adults. The data are first entered by authorized users into the Local DNA Index System (LDIS), which can then populate the central laboratory for each state, known as a State DNA Index System (SDIS). Only SDIS laboratories may upload DNA profiles directly to the NDIS. LDIS or SDIS laboratories can conduct searches of their own databases prior to uploading the data to NDIS. Searches of data entered by other states into NDIS are conducted by the FBI Laboratory, which automatically searches new DNA data when profiles are submitted by the states. NDIS contains approximately 15 million profiles in the five databases: offenders and arrestees database, forensic evidence database, missing unidentified human remains database, missing person database, and biological relatives of missing persons database. Most of the DNA profiles are those stored in the criminal and forensic evidence databases. The three missing person databases are part of the FBI Laboratory's National Missing Person DNA Database (NMPDD) program, which works to identify missing and unidentified persons based on available DNA profiles and other clues. The unidentified human remains database contains DNA profiles from the remains of individuals that cannot be identified by fingerprint; dental, medical, or anthropological examinations; and of individuals who are living, but are unidentifiable using typical investigative methods (e.g., children and others who cannot or refuse to identify themselves). The relatives of missing persons database contains DNA profiles that are voluntarily submitted by the relatives of known missing individuals. Finally, the missing person database contains DNA records of missing persons obtained from their belongings or derived from the profiles of their relatives. The three missing person databases can be searched against one another. The Combined DNA Index System (CODIS) is the software in NDIS that compares various DNA profiles, and if a match is made between two sets of DNA profiles, the software sends an electronic message to the laboratories that contributed the samples. DNA analysts at the laboratories review the data to confirm the match. The laboratories are responsible for alerting the investigating law enforcement agency, medical examiner, coroner, or medical-legal authority of the results. The FBI is continuing to develop technology, including software to conduct kinship DNA analyses, and is using metadata (e.g., sex, date of last sighting, and age) that is intended to assist in locating missing persons. The National Missing and Unidentified Persons System (NamUs) is an online repository for information about missing persons and unidentified remains that is overseen by DOJ's National Institute of Justice (NIJ). According to DOJ, NamUs was established in response to an overwhelming need for a central reporting system for unidentified human remains cases. In 2005, DOJ's National Institute of Justice convened stakeholders—medical examiners, coroners, law enforcement personnel, managers of state missing children clearinghouses, family members of missing persons, forensic scientists, and policymakers—for a national strategy meeting called the "Identifying the Missing Summit." The summit focused on the challenges in investigating and solving missing person cases. After the summit, work began on the development of the online repository. To further work on the feasibility of a database, DOJ appointed an expert panel of medical examiners and coroners, which ultimately confirmed the need for a central reporting system for unidentified human remains. These efforts also led DOJ to establish and fund NamUs. NamUs is composed of three databases: missing persons, unidentified remains, and unclaimed remains. The system has been accessible via the web since 2009 , and is operated through an NIJ grant to the University of North Texas (UNT) Health Center . NamUs users, including members of the public, can search across databases in an effort to identify unidentified human remains and solve missing person cases. Funding has been provided at $2.4 million in FY2016 ( P.L. 114-113 ) and FY2017 ( P.L. 115-31 ) for the "operationalization, maintenance, and expansion" of the system. NIJ has provided funding in previous years through appropriations for "DNA and other forensics." The missing person database serves as a repository for information on missing persons that can be entered by law enforcement agencies or members of the public. Profiles of missing individuals may include photographs and information about the circumstances around their disappearance, their dental records, DNA, physical appearance, and police contact information, among other items. Users of the website may search the database based on these attributes. The database also includes information about state statutes on recovering missing persons as well as links to state missing person clearinghouses, which are maintained by state law enforcement agencies or advocacy organizations and provide information about missing adults. The unidentified remains database is available for medical examiners and coroners to upload their cases. Website users may view profiles of the unidentified remains; however, only law enforcement agencies and other authorized entities may enter information and review additional information and photographs that are not available to the public. Some of the profiles cover remains that are fully intact, whereas others include pieces of the missing person's body or information about the remains and where they were found. Website users can also search based on characteristics such as demographics, anthropologic analysis, the NCIC record number, dental information, and distinct body features. The unclaimed remains database is available for medical examiners and coroners to upload profiles of deceased individuals who have been identified by name, but for whom no family members have been identified or located to claim the body. NamUs automatically performs comparisons of the various databases to determine matches or similarities between profiles of missing persons, unidentified persons, or unclaimed remains. Records of missing persons or unidentified remains are submitted to most of the databases by authorized law enforcement agencies, state missing persons clearinghouses, medical examiners and coroners, or DNA laboratories. All of the databases can be accessed only by the federal government or authorized law enforcement and other personnel; however, records in NamUs and the NCMA database can also be reviewed by the public, though sometimes only on a limited basis for NamUs. Table A-2 summarizes some of the features of the databases as well as others that store records of missing persons and unidentified remains. In recent years, the federal government has played a role both in preventing certain types of missing adult incidents and in working to recover adults who go missing, including those who are deceased and for whom only remains provide clues to the circumstances surrounding their disappearance. In addition to funding or operating databases that track information about missing adults and unidentified remains, the federal government has undertaken other related efforts, including some that are no longer funded. These efforts are (1) the DNA Initiative, created under President George W. Bush, which focused on identifying the remains of unidentified deceased individuals; (2) National Missing Persons Task Force, with its emphasis on achieving greater cooperation among the various federal databases; (3) the Missing Alzheimer's Disease Patient Alert program to prevent missing episodes and locate missing individuals with Alzheimer's disease and related dementia; (4) activities funded under Kristen's Act to locate missing adults; and (5) the National Center for Missing and Exploited Children (NCMEC), which works to recover missing children and adults ages 18 to 21 who are reported to the agency as missing by law enforcement officials. The Missing Alzheimer's Disease Patient Alert program and activities funded under Kristen's Act have specifically received congressional appropriations for missing adult activities. The other activities have been funded under appropriations for initiatives or programs that encompass activities other than just those for missing adults. In March 2003, President George W. Bush announced a new DNA Initiative to promote the use of forensic DNA technology to solve crimes, protect individuals from wrongful prosecution, and identify missing persons. Funding was provided under the initiative from FY2004 through FY2008. Within the past several years, Congress has appropriated funding to DOJ to carry out the following activities to assist with locating missing adults and unidentified remains: sample analysis of unidentified human remains and family reference samples; standardized sample DNA collection kits for unidentified remains of missing persons; evaluation and implementation of advanced DNA technologies to facilitate the analysis of skeletal remains; focus group on using DNA technology to assist the identification of human remains; training and technical assistance on using DNA to identify missing persons and unidentified remains; census of medical examiners and coroners and inventory of unidentified remains; and NamUs databases. As part of the DNA Initiative, in 2005, NIJ and FBI were directed by DOJ leadership to establish a national task force to assess how to better encourage, facilitate, and achieve greater use of federal missing person databases to solve missing persons cases and identify human remains. In response to this directive, NIJ and the FBI convened the National Missing Persons Taskforce, composed of a broad cross-section of criminal justice officials, forensic science experts, and victim advocates. The task force met July 2005 through January 2006 to address, among other issues, the federal databases that store information on missing persons and unidentified human remains. According to DOJ, members of the task force convened these meetings to better understand and improve the information sharing tools and DNA technologies available to solve cases involving missing persons and unidentified decedents. The task force also created model state legislation to encourage states to adopt laws that improve the ability of law enforcement to locate and return missing persons, identify human remains, and provide timely information to family members of missing persons. The Violent Crime Control and Law Enforcement Act of 1994 ( P.L. 103-322 ) authorized the Missing Alzheimer's Disease Patient Alert program to provide grants to locally based organizations to protect and locate missing individuals with Alzheimer's disease and related dementia. Such individuals may be unable to think clearly; to recognize persons and landmarks; or to react rationally under normal circumstances. Those with Alzheimer's disease and dementia tend to hide or seclude themselves when they are in unfamiliar and disorienting situations. About 60% of missing persons with Alzheimer's disease and dementia who were found were located within the first 6 hours of going missing and about 30% within 6 to 12 hours. Funding was authorized for the program at $900,000 for each of FY1996, FY1997, and FY1998. Congress appropriated funding for the program from FY1996 through FY2015. Annual funding ranged from $750,000 to $2.0 million. Funding was not appropriated in FY2016 and FY2017. The program is administered by DOJ's Bureau of Justice Assistance (BJA) within the Office of Justice Programs. Funding under the program has been awarded to a variety of entities, including the International Association of Chiefs of Police (IACP), Alzheimer's Association, MedicAlert Foundation Project Lifesaver, and universities. For example, IACP has used these funds to develop its Alzheimer's Initiative program. The program seeks to increase awareness among law enforcement agencies and the public in addressing the needs of missing persons with Alzheimer's disease. Their website provides a clearinghouse of information and resources for those who may come across missing persons, including a guide to state alert systems for missing seniors and adults. In addition, IACP provides training for public safety administrators, law enforcement officers, and others from the first responder community with training on Alzheimer's and dementia. BJA awarded funds through the Missing Alzheimer's Disease Patient Alert program to the Alzheimer's Association from FY1996 through 2015. These funds were used to establish and carry out the MedicAlert® + Alzheimer's Association Safe Return Program. The program is a nationwide emergency response service for individuals with Alzheimer's or a related dementia who wander or have a medical emergency. Enrollees receive a bracelet indicating that the individual is memory impaired and including a toll-free, 24-hour emergency response number to call if the person is found wandering or has a medical emergency. In 2000, Congress passed Kristen's Act ( P.L. 106-468 ), named after Kristen Modafferi, who has been missing since 1997. Kristen was 18 when she disappeared and her family was unable to access services through the National Center for Missing and Exploited Children (NCMEC) because, at the time, the organization only provided assistance to missing incident cases for children under age 18. NCMEC now provides services for missing young adults ages 18 to 21, pursuant to Suzanne's Law, which requires law enforcement to also immediately submit information about missing adults ages 18 through 20 to the NCIC. Kristen's Act authorized $1 million in funding for each of FY2001 to FY2004 and permitted the Attorney General to make grants to assist law enforcement agencies in locating missing adults; maintain a database for tracking adults believed by law enforcement to be endangered due to age, diminished mental capacity, and possible foul play; maintain statistical information on missing adults; provide resources and referrals to the families of missing adults; and establish and maintain a national clearinghouse for missing adults. Kristen's Act grants were made from FY2002 through FY2006 through the Edward Byrne Discretionary Grant Program to the National Center for Missing Adults (NCMA), though funding authorization expired at the end of FY2004. Funding levels ranged from $150,000 to $1.7 million. NCMA began in 1995 as the missing adult division of the Nation's Missing Children Organization. NCMA received funding under Kristen's Act to expand its efforts to recover missing adults beginning in FY2002 and received this funding through FY2006. The organization merged with Let's Bring Them Home, a nonprofit organization that provides education and resources on missing persons. The National Center for Missing and Exploited Children is a primary component of the federally funded Missing and Exploited Children's Program. Although NCMEC's mission is to recover missing children under age 18, it also provides services for missing young adults ages 18 through 20, pursuant to Suzanne's Law, which requires law enforcement to also immediately submit information about missing adults to the NCIC ages 18 through 20. This law changed the upper age limit of individuals who must be entered into the NCIC. NCMEC processes young adult cases differently than cases for missing children. NCMEC will accept a young adult case only if it is reported by a law enforcement entity—and not by parents, spouses, partners, or others—because the organization relies on law enforcement personnel to verify that the young adult is missing due to foul play or other reasons that would cause concern about the individual's whereabouts, such as diminished mental capacity. NCMEC then assists in recovery efforts for these adults as it would for children under age 18. A case manager in the Missing Children's Division is assigned to serve as the single point of contact for the searching family and to provide technical assistance to locate abductors and recover missing children and young adults. Federal and state policymakers and other stakeholders have increasingly focused on three issues related to adults who go missing: (1) coordinating databases on missing persons; and (2) assisting states with building the capacity to develop both alert systems to inform the public about missing older adults and technology to recover these individuals. The first section of this report discussed the various federally funded databases that store information on missing persons and unidentified decedents. These databases do not currently populate one another, although some of the databases indicate whether information about a particular individual is available in another database. This limitation raises the question about whether the federal government can and should develop technology to enable the databases to coordinate, although concerns about privacy and funding would likely need to be addressed. Alert systems, known as Silver or Senior Alerts, have been established in multiple states. These alert systems were created out of concern for the safety of seniors and other at-risk adult populations who are prone to wandering due to a physical or cognitive disability or medical condition such as Alzheimer's or other forms of dementia. Some missing adult alert programs are modeled after the states' AMBER Alert system for abducted children. Issuing alerts to law enforcement agencies and the public for missing vulnerable adults in some the states appears to be at the discretion of the law enforcement agency—local or state or both—and is not required of the agency. In addition, state alert systems vary in terms of the target population for issuing an alert (i.e., older adults with dementia versus any adult with a disability). Most law enforcement agencies have the ability to disseminate the alert to law enforcement agencies and media in the local area, region, statewide, and other states. For example, the Texas Division of Emergency Management disseminates information within the alert advisory area to local, state, and federal law enforcement agencies; primary media outlets; the Texas Department of Transportation; the Texas Lottery Commission; and the Independent Bankers Association of Texas. Some stakeholders have raised concerns that alert systems may not be useful for some adults who go missing. For example, the media repeatedly reporting missing adult cases could desensitize the public to the issue of wandering. In addition, missing persons may not be found in a place that is well-trafficked. Among missing persons with Alzheimer's Disease, about three-quarters leave on foot; and of those found alive, about half are found 1 to 5 miles from where they originated. For these reasons, policymakers may wish to consider Silver Alerts in combination with a combination of other policy approaches. Further, some stakeholders have raised concerns that broadcasting information about missing adults can infringe on their rights to privacy. Unlike incidents involving the AMBER Alert program, which was established to alert law enforcement and the public when a child is missing and criminal activity may be involved, it is not a crime for an adult to wander from home or purposely go missing. The stakeholders assert that states should have criteria for activating an alert that limits disclosure of information to the public only when it is absolutely necessary to preserve the missing person's life. They also assert that disclosure of this information should be reserved to the most limited geographic area possible. Further, concerns have been raised that having only selected criteria for the alert may be short-sighted. For example, some have argued that making age the primary factor for issuing an alert overlooks the possibility that age alone does not necessarily signal whether a person is endangered. Another consideration is the extent to which information about a missing person's health background can be broadcast to the public. The Health Insurance Portability and Accountability Act (HIPAA) Health Privacy Rule—the federal rule that regulates the use or disclosure of protected health information—limits disclosure of health information by health care providers. In 2011, DOJ published a guide to assist states and communities in developing or enhancing what DOJ calls an Endangered Missing Advisory (EMA), or an advisory for individuals who do not meet the AMBER Alert criteria established by DOJ. The guide suggests that EMAs can be issued for missing adults, or for children while law enforcement determines whether a case meets the AMBER Alert criteria. The guide outlines the steps states and communities can take in developing an EMA plan, including creating a task force—comprised of key AMBER Alert stakeholders, broadcasters and other representatives from the media, and law enforcement, among others—that can establish criteria and procedures for the EMA and oversee its operation and effectiveness. The guide suggests that adults may benefit from a different type of alert system than AMBER Alert, and that task forces should determine which elements of the AMBER Alert plan should be used to activate an EMA. Still, some states with alert systems could have difficulty coordinating with another state that lacks a similar system. States could also have challenges coordinating with states that have alert systems with different criteria for activating an alert. Although state and local governments have taken the lead in implementing alert systems, the federal government could play a role in coordinating efforts when a missing individual is believed to have crossed state lines as well as assist in the development of formal agreements or protocols for the use of interstate alerts. The federal government could model any policies to coordinate across state lines on the AMBER Alert program, which provides training and technical assistance to states on a number of issues related to abducted children. This training addresses how jurisdictions, including those in different states, can work together to recover children who are abducted, among other topics. Through conference and training exercises, state AMBER Alert coordinators, state and local law enforcement agencies, and other stakeholders have opportunities to meet and exchange ideas, which may further facilitate coordination. Electronic monitoring services for individuals who are susceptible to going missing are being implemented. One such electronic monitoring program is used by some state and local law enforcement agencies with technology developed by Project Lifesaver International, a nonprofit organization that administers the Project Lifesaver program and has received funding under the Missing Alzheimer's Disease Patient Alert program. Project Lifesaver uses a personalized wristband that emits a signal to track individuals prone to going missing. The wristband is worn by the clients continuously, and each month, a law enforcement officer or trained volunteer visits with the clients to replace the wristband batteries and provide referrals to clients and their caregivers in need of social services. When family members or caregivers report to the designated Project Lifesaver agency—typically a local law enforcement or first responder agency—that the client is missing, a search and rescue team responds to the wanderer's area to search using a mobile locator tracking system. Project Lifesaver grew out of local law enforcement experience with search and rescue efforts for missing persons with Alzheimer's and other forms of dementia. The target population of the program has expanded to include children with special needs such as autism and Down's syndrome and to anyone else that may be at risk of wandering for a medical reason. In addition to providing the technology, the program trains the designated agency to communicate with persons with Alzheimer's disease and other disorders. Project Lifesaver International reports that the tracking technology is used by hundreds of law enforcement agencies in nearly all states and the District of Columbia. According to Project Lifesaver International, the benefits from the program include saving law enforcement and search and rescue response time and resources in locating missing persons due to wandering. The Alzheimer's Association also has a program, known as Comfort Zone, that uses tracking technology. The program is a web application that includes a location-based mapping service. The enrolled individual carries a tracking device with global positioning system (GPS) technology. Caretakers can track the individual's whereabouts via a secure online website through the Alzheimer's Association. The website includes a map with addresses of the vicinity in which the person is located. Caretakers can also receive alerts and notifications of the individual's whereabouts, such as when the individual leaves a specified radius (e.g., beyond their house or some other location). Tracking technology raises questions about the rights to privacy and autonomy of individuals who are enrolled. These organizations appear to have taken steps to ensure that enrolled participants meet the eligibility criteria and to secure the consent of the enrolled individual, where possible. For individuals who participate in Project Lifesaver, consent usually comes from a caregiver having legal responsibility for the individual. In rare cases, the individual gives consent. Individuals enrolled in Comfort Zone give consent to be enrolled, and in some cases the caregiver with legal responsibility gives consent. According to the Alzheimer's Association, the program is ideally for individuals with early stages of dementia.

Adults may go missing due to personal choice, an abduction, foul play, a mental or physical disability, or a natural catastrophe, among other reasons. Although no accurate estimates exist of the number of missing adults, the Federal Bureau of Investigation (FBI) reported that as of December 31, 2016, approximately 54,000 cases of missing adults (age 18 and older) were pending in the National Crime Information Center (NCIC) system, a federal computerized index with data on crimes and locator files for missing and unidentified persons. Certain adults are particularly vulnerable to missing episodes; for example, those with dementia are at risk for becoming disoriented while engaged in a routine activity and may not be able to determine where they are or get to where they should be. Adults who engage in high-risk behaviors, including involvement in gang activity, may also be more prone to going missing. Unlike children, adults have the legal right to go missing under most circumstances. As a result, families of missing adults may receive limited assistance from state and local law enforcement entities in recovering their loved ones. The federal government has not been involved in assisting law enforcement entities with missing adult cases in the same way it has with missing children cases. Further, cases of missing children and young adults under the age of 21 must be reported to the NCIC, while reporting missing adults to the database is voluntary. In recent years, however, the federal government has increasingly played a role in (1) preventing certain types of missing adult incidents; (2) working to recover adults who go missing, including those who are deceased and for whom only remains can be found; and (3) supporting databases, including NCIC, that maintain records of missing adults and unidentified remains. Recognizing the needs of a growing aging population, Congress authorized funding for the Missing Alzheimer's Disease Patient Alert program under the Violent Crime Control and Law Enforcement Act of 1994 (P.L. 103-322). The purpose of the program is to locate and respond to those with Alzheimer's and dementia who go missing. Congress provided appropriations for the program of $750,000 to $2 million annually from FY1996 through FY2015. No funding was appropriated for FY2016 or FY2017. Grants had been awarded under the program to a variety of entities, including the International Association of Chiefs of Police (IACP), Alzheimer's Association, Project Lifesaver, and universities. In 2000, Congress passed Kristen's Act (P.L. 106-468) to authorize the Department of Justice (DOJ) to make grants to establish a national clearinghouse for missing adults and provide technical assistance to law enforcement agencies in locating these individuals. From FY2002 through FY2006, DOJ made grants for these purposes. In addition, the federal DNA Initiative has also supported efforts to recover missing persons and identify unidentified human remains by funding DNA analysis and related assistance. In addition to the NCIC, the federal government maintains the National DNA Index System (NDIS), which stores criminal information as well as information on individuals believed to be missing, their relatives, and unidentified human remains; and the National Missing and Unidentified Persons System (NamUs), which includes databases for missing adults and unidentified remains. Records are submitted to most of the databases by law enforcement agencies, state missing persons clearinghouses, medical examiners and coroners, or DNA laboratories. The NDIS, NamUs, and NCIC databases can be accessed only by authorized law enforcement and other personnel; however, records in NamUs can also be reviewed by the public. Policymakers and other stakeholders have increasingly focused on the coordination of the federal databases on missing persons, as well as the role of the federal government in providing assistance to states and localities to develop alert systems and technology to locate missing adults. Many states have developed alert systems to recover vulnerable adults who have gone missing.

The number of foreign-born people residing in the United States is at the highest level in U.S. history and has reached a proportion of the U.S. population—12.6%—not seen since the early 20 th century. Of the 38 million foreign-born residents in the United States, approximately 16.4 million are naturalized citizens. According to the latest estimates by the Department of Homeland Security (DHS), about 10.8 million unauthorized aliens were living in the United States in January 2009. The Pew Hispanic Center recently reported an estimate of 11.1 million unauthorized aliens in March 2009, down from a peak of 12 million in March 2007. Some observers and policy experts maintain that the presence of an estimated 11 million unauthorized residents is evidence of flaws in the legal immigration system as well as failures of immigration control policies and practices. There is, indeed, a broad-based consensus that the U.S. immigration system is broken. This consensus erodes, however, as soon as the options to reform the U.S. immigration system are debated. Substantial efforts to reform immigration law have failed in the recent past, prompting some to characterize the issue as a "zero-sum game" or a "third rail." The thorniest of these immigration issues centers on policies directed toward unauthorized aliens in the United States. Although the economy appears to be recovering from the recession and some economic indicators suggest that growth has resumed, unemployment remains high and is projected to remain so for some time. Historically, international migration ebbs during economic crises (e.g., immigration to the United States was at its lowest levels during the Great Depression). While preliminary statistical trends suggest a slowing of migration pressures, it remains unclear how the current economic climate will affect immigration to the United States. Whether the Congress will act to alter immigration policies—either in the form of comprehensive immigration reform or in the form of incremental revisions aimed at strategic changes—is at the crux of the debate. Addressing these contentious policy reforms against the backdrop of economic turbulence sharpens the social and business cleavages and may narrow the range of options. This report synthesizes the following components of the reform debate: legal immigration; legalization; immigration control; refugees, asylees, and humanitarian migrants; and alien rights, benefits, and responsibilities; and offers a roadmap to other Congressional Research Service reports that more fully analyze the policy options. The challenge inherent in this policy issue is balancing employers' hopes to have access to a supply of legally present foreign workers, families' longing to reunite and live together, and a widely-shared wish among the stakeholders to improve the policies governing legal immigration into the country. The scope of this issue includes temporary admissions (e.g., guest workers, foreign students) and permanent admissions (e.g. employment-based, family-based immigrants). Four major principles underlie current U.S. policy on permanent immigration: the reunification of families, the admission of immigrants with needed skills, the protection of refugees, and the diversity of admissions by country of origin. The Immigration and Nationality Act (INA) specifies a complex set of numerical limits and preference categories that give priorities for permanent immigration reflecting these principles. Legal permanent residents (LPRs) refer to foreign nationals who live lawfully and permanently in the United States. Although the INA establishes a worldwide level of permanent admission at 675,000 annually, it allows for admission beyond these limits. The family-based level of LPR admissions is set at 480,000 annually, but immediate relatives of U.S. citizens may enter in a number that exceeds the statutory caps. The INA also provides a floor of 226,000 annually for the other categories of family-based LPRs. The statutory limit on employment-based LPRs is 140,000 annually. Each year, the INA allocates 55,000 for diversity visas to LPRs from countries underrepresented in the family and employment preference categories. The INA establishes per-country levels at 7% of the worldwide level. For a dependent foreign state, the per-country ceiling is 2%. During FY2009, a total of 1.1 million aliens became LPRs in the United States. Of this total, 66.1% entered on the basis of family ties. Immediate relatives of U.S. citizens made up the single largest group of immigrants—535,554—in FY2009. Other major categories in FY2009 were employment-based LPRs (including spouses and children) and refugees/asylees adjusting to LPR status—12.7% and 15.7%, respectively. A variety of constituencies are advocating a significant reallocation from the family-based to the employment-based visa categories or a substantial increase in legal immigration to meet a growing demand from families and employers in the United States for visas. Even as U.S. unemployment levels rise, employers assert that they continue to need the "best and the brightest" workers, regardless of their country of birth, to remain competitive in a worldwide market and to keep their firms in the United States. While support for the option of increasing employment based immigration may be dampened by the economic recession, proponents argue it is an essential ingredient for economic growth. Proponents of family-based migration alternatively point to the significant backlogs in family based immigration due to the sheer volume of aliens eligible to immigrate to the United States and maintain that any proposal to increase immigration levels should also include the option of family-based backlog reduction. Citizens and LPRs often wait years for their relatives' petitions to be processed and visa numbers to become available. Against these competing priorities for increased immigration are those who offer options to scale back immigration levels, with options ranging from limiting family-based LPRs to the immediate relatives of U.S. citizens to confining employment-based LPRs to exceptional, extraordinary or outstanding individuals. Legislation aimed at eliminating the diversity visa lottery arises as well. The INA provides for the temporary admission of various categories of foreign nationals, who are known as nonimmigrants. Nonimmigrants are admitted for a temporary period of time and a specific purpose. They include a wide range of visitors, including tourists, students, and temporary workers. Among the temporary worker provisions are the H-1B visa for professional specialty workers, the H-2A visa for agricultural workers, and the H-2B visa for nonagricultural workers. Foreign nationals also may be temporarily admitted to the United States for employment-related purposes under other categories, including the B-1 visa for business visitors, the E visa for treaty traders and investors, J visas for cultural exchange, and the L-1 visa for intracompany transfers. Some business people express concern that a scarcity of labor in certain sectors may curtail the pace of economic growth at a time when encouraging economic growth is paramount. A leading legislative response to skills mismatches is to increase the supply of temporary foreign workers (rather than importing permanent workers). While the demand for more skilled and highly-trained foreign workers garners much of the attention (e.g., lifting the ceiling on H-1B visas or set-asides of visas for foreign graduates of U.S. universities), pressure to increase unskilled temporary foreign workers, commonly referred to as guest workers, also remains. Those opposing increases in temporary workers assert that there is no compelling evidence of labor shortages and cite the growing rate of unemployment. Opponents argue that continuing temporary foreign workers programs during an economic recession would have a deleterious effect on salaries, compensation, and working conditions of U.S. workers. Most recently, some are suggesting that temporary foreign workers visas should be scaled back or placed in moratorium during the economic recession. The debate over legal immigration reform is complicated by proposals to enable unauthorized aliens residing in the United States to become LPRs, (commonly termed amnesty" by opponents and earned legalization by supporters). There are a range of options being offered, and these alternatives generally require unauthorized aliens to meet specified conditions and terms as well as pay penalty fees to legalize their status. Examples would include documenting physical presence in the United States over a specified period; demonstrating employment for specified periods; showing payment of income taxes; or leaving the United States to obtain the legal status. Using a point system that credits aliens with equities in the United States (e.g., work history, tax records, and family ties) would be another possible option. Other avenues for legalization would be guest worker visas tailored for unauthorized aliens in the United States or a legalization program that would replace guest worker visas. There are also options (commonly referred to as the DREAM Act) that would enable some unauthorized alien students to become LPRs through an immigration procedure known as cancellation of removal. Advocates for these legalization avenues maintain that unauthorized residents are working, paying taxes, and contributing to the community. Some also point out that legalization would provide employers with a substantially increased legal workforce without importing additional foreign workers. Opponents maintain that legalization rewards illegal actions at the expense of potential immigrants who are waiting to come legally. They further argue that it would serve as a magnet for future flows of unauthorized migrants. Reassessing immigration control policies and agencies and considering options for more effective enforcement of the INA are integral to immigration reform. Immigration control encompasses an array of enforcement tools, policies, and practices to prevent and investigate violations of immigration laws. The spectrum of enforcement issues ranges from visa policy at consular posts abroad and border security along the country's perimeter, to the apprehension, detention, and removal of unauthorized aliens in the interior of the country. If the flow of unauthorized migrants is abating during the economic recession, some may seek to divert resources from immigration control activities to other areas. Illustrative among these issues that might arise in the 111 th Congress are border security, worksite enforcement, document fraud, criminal aliens and the grounds for inadmissibility. Border security involves securing the many means by which people and goods enter the country. Operationally, this means controlling the official ports of entry through which legitimate travelers and commerce enter the country, and patrolling the nation's land and maritime borders to interdict illegal entries. In recent years, Congress has passed a series of provisions and funding streams aimed at strengthening immigration-related border security. Border Patrol apprehensions of unauthorized migrants along the southern border in 2008 were reportedly at the lowest level since the 1970's, with competing credit given to the economic crisis and to increased border control and enforcement. One flashpoint of this debate is the construction of a "virtual fence" as well as physical barriers along the border. P.L. 111-230 provides $600 million for emergency border security funding in supplemental FY2010 appropriations. Whether additional changes are needed to further control the border remains a question. For two decades it has been unlawful for an employer to knowingly hire, recruit or refer for a fee, or continue to employ an alien who is not authorized to be so employed. The large number of unauthorized aliens in the United States, the majority of whom are in the labor force, led many to criticize the adequacy of the current worksite enforcement measures. In response, highly visible worksite raids by the U.S. Department of Homeland Security's (DHS) Immigration and Customs Enforcement (ICE) bureau during 2007-2008 have sparked praise among some and alarm among others. Critics of the ICE worksite raids assert that the government is targeting low-wage foreign workers rather than the employers who hire them. Former DHS Secretary Michael Chertoff argued, however, that cases against supervisors and employers often depend on proving knowledge and intent, making it more difficult to build a criminal case against an employer. Efforts to strengthen worksite enforcement, however, are sometimes met by fears that more stringent penalties may inadvertently foster discrimination against legal workers with foreign appearances. DHS Secretary Janet Napolitano called for a thorough review, specifically requesting ICE agents to apply more scrutiny to the selection and investigation of worksite raids, which might be signaling a policy shift. All employers are required to participate in a paper-based employment eligibility verification system in which they examine documents presented by every new hire to verify the person's identity and work eligibility. Employers also may opt to participate in an electronic employment eligibility verification program, known as E-Verify, which checks the new hires' employment authorization through Social Security Administration and, if necessary, DHS databases. Employer organizations have long complained that E-Verify is too costly and poses practical and technical problems. Other critics maintain its expansion would make applying for jobs a hassle for all U.S. citizens and would effectively deny some law-abiding individuals the ability to work. According to DHS, however, E-Verify immediately verifies almost everyone who is authorized to work in the United States. DHS further reports that only about 0.5% of legal workers receive a tentative non-confirmation and, as a result, need to correct their records. The authorizing legislation for the optional E-Verify program was temporarily extended in March 2009 by the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) and is now scheduled to terminate on September 30, 2012. Whether to extend, revise and possibly require all employers to conduct electronic employment eligibility verification of all new hires or all of their employees will continue to be an issue in the 111 th Congress. Immigration-related document fraud includes the counterfeiting, sale, and use of identity documents (e.g., birth certificates or Social Security cards), as well as employment authorizations, passports, or visas. The INA has civil enforcement provisions for individuals and entities proven to have engaged in immigration document fraud. In addition, the U.S. Criminal Code makes it a criminal offense for a person to knowingly produce, use, or facilitate the production or use of fraudulent immigration documents. More generally, the U.S. Criminal Code criminalizes the knowing commission of fraud in connection with a wide range of identification documents. When ICE began charging aliens arrested in worksite raids with criminal offenses, including identity theft and false use of a Social Security number, advocates for the unauthorized aliens argued that such charges were excessive. These advocates maintained that showing bogus documents in order to work does not constitute identity theft and that civil penalties for document fraud should have been sufficient. Those supporting the stepped up enforcement emphasize that ICE should prosecute offenders with the full force of the laws. The integrity of the documents issued for immigration purposes, the capacity to curb immigration fraud, and the distinctions between identity theft and immigration fraud are among the central elements of the document fraud issue. A criminal alien, simply put, is a foreign national convicted of a criminal offense. Criminal offenses in the context of immigration law cover violations of federal, state, or, in some cases, foreign criminal law. Most crimes affecting immigration status fall under a broad category of crimes defined in the INA, notably those involving moral turpitude or aggravated felonies. It does not cover violations of the INA that are not defined as crimes, such being an unauthorized alien in the United States. There has been bipartisan agreement for over a decade to dedicate a portion of immigration enforcement resources to the removal of criminal aliens. In one of her first press conferences after becoming Homeland Security Secretary, Janet Napolitano stated that the removal of criminal aliens would be one of her top priorities. An emerging issue is whether current law on who is a criminal alien under the INA encompasses individuals whom many people would not consider dangerous. Critics of a hard-line approach cite examples of people who they argue should not be deported as criminal aliens: someone who shoplifted years ago; an elderly LPR of color who was arrested in the1960s by a police department known at that time for racism; or, a longtime LPR who pled guilty to attempted possession of a controlled substance 20 years ago—all of whom could have U.S. citizen spouses and U.S. citizen children. Legislation aimed at comprehensive immigration reform may take a fresh look at the grounds for excluding foreign nationals that were enacted in the 1990s. All foreign nationals seeking visas must undergo admissibility reviews performed by U.S. Department of State (DOS) consular officers abroad. These reviews are intended to ensure that they are not ineligible for visas or admission under the grounds for inadmissibility spelled out in the INA. These criteria are: health-related grounds; criminal history; security and terrorist concerns; public charge (e.g., indigence); seeking to work without proper labor certification; illegal entrants and immigration law violations; ineligible for citizenship; and, aliens previously removed. Over the past year, Congress incrementally revised the grounds for inadmissibility. Two laws enacted in the 110 th Congress altered longstanding policies on exclusion of aliens due to membership in organizations deemed terrorist. The 110 th Congress also revisited the health-related grounds of inadmissibility for those who were diagnosed with HIV/AIDS. More recently, the "H1N1 swine flu" outbreak focused the spotlight on inadmissibly screenings at the border. Questions about the public charge ground of inadmissibility arose in the context of Medicaid and the state Children's Health Insurance Program (CHIP) in the 111 th Congress. While advocacy of sweeping changes to the grounds for inadmissibility has not emerged, proponents of comprehensive immigration reform might seek to ease a few of these provisions as part of the legislative proposals. The provision that makes an alien who is unlawfully present in the United States for longer than 180 days inadmissible, for example, might be waived as part of a legislative package that includes legalization provisions. Tightening up the grounds for inadmissibility, conversely, might be part of the legislative agenda among those who support more restrictive immigration reform policies. While refugee, asylee and humanitarian concerns have traditionally been treated as distinct from immigration reform, comprehensive reform legislation may include provisions that impact these issue areas. As precedent, asylum reforms were included in the 1990 and the 1996 overhauls of the INA. Additionally, the foreign nationals who have been denied asylum or who have had temporary protected status (TPS) in the United States for many years may often be covered by legalization or status adjustment provisions. Those who would revise refugee and asylum provisions in the INA have divergent perspectives. Some express concern that potential terrorists could use refugee status or asylum as an avenue for entry into the United States, especially aliens from trouble spots in the Mideast, northern Africa and south Asia. Some assert that the non-governmental organizations and contractors for the United Nations that assist displaced people are expanding the definition of "refugee" to cover people never before considered refugees. Others argue that—given the religious, ethnic, and political violence in various countries around the world—it is becoming more difficult to differentiate the persecuted from the persecutors . Others maintain that current law does not offer adequate protections for people fleeing human rights violations and gender-based abuses that occur around the world, or that it is time to re-think U.S. refugee policy. As a signatory to the United Nations Protocol Relating to the Status of Refugees, the United States agrees that it will not return an alien to a country where his life or freedom would be threatened. A refugee is a person fleeing his or her country because of persecution or a well-founded fear of persecution on account of race, religion, nationality, membership in a particular social group, or political opinion. Asylum-seekers are individuals who apply for refugee protections after they have arrived in the United States. Those granted asylum as well as those who are determined to be refugees are eligible to become LPRs after one year in the United States. Not all humanitarian migrants, however, are eligible for asylum or refugee status. When civil unrest, violence, or natural disasters erupt in spots around the world, the United States may offer TPS or relief from removal, for example. How to establish an appropriate balance among the goals of protecting vulnerable and displaced people, maintaining homeland security, and minimizing the abuse of humanitarian policies is the crux of this issue. Specific topics include refugee resettlement, asylum policy, temporary protected status, unaccompanied alien children, and victims of trafficking and torture. War, violence, civil unrest, economic destablization, or food crisis, for example, would trigger the urgency of these issues in the 111 th Congress. The devastation caused by the January 12, 2010, earthquake in Haiti has led DHS Secretary Janet Napolitano to grant TPS to Haitians in the United States at the time of the earthquake and has raised a series of policy concerns on Haitian migration. The degree to which foreign nationals should be accorded certain rights and privileges as a result of their presence in the United States, along with the duties owed by such aliens given their legal status, sparks debate. Any immigration legislation, whether it expands, alters, or retracts migration levels, will likely prompt a debate over potential trade-offs and impacts on alien rights and responsibilities. All persons in the United States, whether U.S. nationals or foreign nationals, are accorded certain rights under the U.S. Constitution. However, foreign nationals do not enjoy the same degree of constitutional protections as U.S. citizens. Aliens who legally reside in the United States, moreover, possess greater constitutional protections than those aliens who do not. Federal laws, for example, place comprehensive restrictions on noncitizens' access to means-tested public assistance, with exceptions for LPRs with a substantial U.S. work history. Aliens in the United States without authorization (i.e., illegally present) are ineligible for federal public benefits, except for specified emergency services. Nonetheless, controversies and confusion abound, particularly regarding the eligibility of families comprised of people with a mix of immigration and citizenship status, such as an LPR married to an unauthorized alien with U.S. citizen children. A corollary issue is foreign nationals who have temporary employment authorizations and social security numbers, but who are not LPRs. Although it does not address the legality of the alien's immigration status, the Internal Revenue Code makes clear that "resident aliens" are generally taxed in the same manner as U.S. citizens. Those who are temporary legal residents or "quasi-legal" migrants pose a particular dilemma to some because they are permitted to work and have likely paid into the system that finances a particular benefit, such as social security or a tax refund, for which they may not be eligible. Unintended consequences, most notably when tightening up the identification requirements to stymie false claims of citizenship results in denying benefits to U.S. citizens, add complexity to the debate. These issues are arising in the context of specific legislation on due process rights, access to health care, tax liabilities and refunds, educational opportunities, and means-tested federal assistance. In the 110 th Congress, Senate action on comprehensive immigration reform legislation stalled at the end of June 2007 after several weeks of intensive floor debate. At the same time, the House Judiciary Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law held multiple hearings weekly in April, May and June of 2007 on various aspects of immigration reform. The House, however, did not act on comprehensive legislation in the 110 th Congress. During the 109 th Congress, both chambers passed major overhauls of immigration law, but did not reach agreement on a comprehensive reform package. During his time in the Senate, President Barack Obama supported comprehensive immigration reform legislation that included increased enforcement as well as a pathway to legal residence for certain unauthorized residents. Similar views have been expressed by the Secretary of Homeland Security Janet Napolitano. The Obama Administration has outlined its principles for comprehensive immigration reform as follows: Create Secure Borders: Protect the integrity of our borders. Support additional personnel, infrastructure and technology on the border and at our ports of entry. Improve Our Immigration System: Fix the dysfunctional immigration bureaucracy and increase the number of legal immigrants to keep families together and meet the demand for jobs that employers cannot fill. Remove Incentives to Enter Illegally: Remove incentives to enter the country illegally by cracking down on employers who hire undocumented immigrants. Bring People Out of the Shadows: Support a system that allows undocumented immigrants who are in good standing to pay a fine, learn English, and go to the back of the line for the opportunity to become citizens. Work with Mexico: Promote economic development in Mexico to decrease illegal immigration. The Obama Administration has stated that comprehensive immigration reform will be a top priority, along with other competing priorities in the areas of domestic and foreign policy. In February 2009, President Obama said, "we're going to be convening leadership on this issue so that we can start getting that legislation drawn up over the next several months." President Obama and officials in his Administration met with Members of Congress from both parties at a June 25, 2009, meeting on comprehensive immigration reform at the White House. In his 2010 State of the Union address, the President pledged to "continue the work of fixing our broken immigration system." It is precedented and usual, however, for Congress to take the lead on immigration legislation. Senate Judiciary Subcommittee on Immigration, Refugees and Border Security Chairman Charles Schumer has stated that comprehensive immigration reform legislation could be taken up as soon as later in 2009, but only if the first priority is a crackdown on illegal immigration. Senator Schumer has stated his principles for reform, summarized as follows: dramatically curtail future illegal immigration; significant additional increases in infrastructure, technology, and border personnel; illegal aliens must register their presence and submit to a rigorous process of converting to legal status and earning a path to citizenship, or face imminent deportation; biometric-based employer verification system; more room for both family immigration and employment-based immigration; encourage the world's best and brightest individuals to immigrate, but discourage businesses from using our immigration laws as a means to obtain temporary and less-expensive foreign labor; and convert the current flow of unskilled illegal immigrants into the United States into a more manageable and controlled flow of legal immigrants. The ranking Republican on the Senate Judiciary Subcommittee on Immigration, Refugees and Border Security, Senator John Cornyn, has stated his willingness to continue working on immigration reform: "Comprehensive, common-sense immigration reform remains a top priority for me. Any legislation must protect our borders, promote economic prosperity in Texas and throughout the United States, and be consistent with our American values of compassion, family, and opportunity." Senator Cornyn's articulated his principles for immigration reform, summarized as follows: strengthen border security first; strengthen interior security; create tamper-proof identification and deliver a reliable employer verification system; streamline the temporary worker programs and offer visas to more highly-skilled workers; and deliver a fair but firm solution to the millions of men, women, and children who are here in violation of our laws. Despite the similar sounds across these three sets of principles, achieving these consensus likely will be daunting. The ranking Republican on the House Judiciary Committee, Representative Lamar Smith, offers a counter perspective: "To achieve immigration reform, the choices are not just amnesty or mass deportation. A strategy of 'attrition through enforcement' would dramatically reduce the number of illegal immigrants over time." The difficulties in accomplishing immigration reform were underscored by Vice President Joseph Biden when he was asked about the chances of extending temporary migrant protection programs: "We believe, the President and I, that this problem can only be solved in the context of an overall immigration reform." Biden further stated, "We need some forbearance as we try to put together a comprehensive approach to deal with this." As the 111 th Congress nears its end, some observers are speculating that specific immigration reform measures that have a tradition of bipartisan support, such as legislation that would enable some unauthorized alien students to become LPRs (DREAM Act), revise the H-1B visas process, or amend provisions pertaining to victims of trafficking, might be handled independent of comprehensive immigration reform.

There is a broad-based consensus that the U.S. immigration system is broken. This consensus erodes, however, as soon as the options to reform the U.S. immigration system are debated. The number of foreign-born people residing in the United States is at the highest level in U.S. history and has reached a proportion of the U.S. population—12.6%—not seen since the early 20th century. Of the 38 million foreign-born residents in the United States, approximately 16.4 million are naturalized citizens. According to the latest estimates by the Department of Homeland Security (DHS), about 10.8 million unauthorized aliens were living in the United States in January 2009. The Pew Hispanic Center recently reported an estimate of 11.1 million unauthorized aliens in March 2009, down from a peak of 12 million in March 2007. Some observers and policy experts maintain that the presence of an estimated 11 million unauthorized residents is evidence of flaws in the legal immigration system as well as failures of immigration control policies and practices. The 111th Congress is faced with strategic questions of whether to continue to build on incremental reforms of specific elements of immigration (e.g., employment verification, skilled migration, temporary workers, worksite enforcement, and legalization of certain categories of unauthorized residents) or whether to comprehensively reform the Immigration and Nationality Act (INA). President Barack Obama has affirmed his support for comprehensive immigration reform legislation that includes increased enforcement as well as a pathway to legal residence for certain unauthorized residents. This report synthesizes the multi-tiered debate over immigration reform into key elements: legal immigration; legalization; immigration control; refugees, asylees, and humanitarian migrants; and alien rights, benefits, and responsibilities. It delineates the issues for the 111th Congress on permanent residence, temporary admissions, border security, worksite enforcement, employment eligibility verification, document fraud, criminal aliens, and the grounds for inadmissibility. Addressing these contentious policy reforms against the backdrop of economic crisis sharpens the social and business cleavages and narrows the range of options. The report will be updated as events warrant.

The Environmental Protection Agency's (EPA's) Spill Prevention, Control, and Countermeasure (SPCC) regulations include requirements for certain facilities to prevent, prepare for, and respond to discharges of oil and oil products—defined broadly—that may reach U.S. navigable waters or adjoining shorelines. Requirements include secondary containment (e.g., dikes or berms) for certain storage units and the need for a licensed professional engineer to certify a facility's SPCC plan. In recent years, the SPCC program has received considerable interest from Congress. Most of this interest has involved the SPCC program's applicability to farms. Because farms may store oil onsite for agricultural equipment use, they may be subject to the SPCC regulations if the oil storage capacity exceeds regulatory thresholds. Legislation from the 113 th and 114 th Congresses altered the applicability of the SPCC regulations for farms. Stakeholder arguments in support of such legislation often involve the financial impact of the SPCC regulations, particularly for farms. For example, a 2012 House report stated that the "mandated infrastructure improvements—along with the necessary inspection and certification by a specially licensed Professional Engineer will cost many farmers tens of thousands of dollars." However, some Members have argued that EPA has considered the costs and benefits of its SPCC regulations during multiple rulemaking processes and determined that the benefits outweigh the costs. EPA contends that the SPCC compliance costs that help prevent oil spills are much less than the costs of oil spill cleanup and potential civil penalties. In addition, a 2015 EPA study stated: EPA concluded that there was insufficient evidence to provide an exemption specific to farms or make changes to regulatory thresholds since the types of tanks and oil storage conditions at farms were generally similar to those of other facilities, with similar potential for discharge. The first section of this report provides background information on EPA's SPCC program, including the program's statutory authority and regulatory developments and requirements. The second section identifies legislation in the 114 th Congress that addresses provisions in the SPCC regulations. The Federal Water Pollution Control Act Amendments of 1970 included a provision directing the President to promulgate oil spill prevention and response regulations. Two years later, Congress amended that provision with the enactment of the Federal Water Pollution Control Act Amendments of 1972—commonly referred to as the Clean Water Act (CWA). The relevant provision from the 1972 CWA remains the same today and reads as follows: Consistent with the National Contingency Plan … the President shall issue regulations consistent with maritime safety and with marine and navigation laws … establishing procedures, methods, and equipment and other requirements for equipment to prevent discharges of oil and hazardous substances from vessels and from onshore facilities and offshore facilities, and to contain such discharges. In 1970, President Nixon established the Environmental Protection Agency (EPA) and reorganized the executive branch delegations of various presidential authorities. Subsequent executive orders and interagency agreements altered the implementation authority framework. In the context of oil discharge regulations, the Coast Guard has jurisdiction over vessels, and several agencies have jurisdiction over facilities. As of a 1994 interagency agreement, EPA has jurisdiction over non-transportation-related onshore and offshore facilities, which includes facilities located "landward of the coast line." Pursuant to the 1994 agreement, the Department of Transportation has jurisdiction over transportation-related onshore facilities, deepwater ports, and transportation-related facilities located landward of coast line. The Department of the Interior has jurisdiction over offshore facilities, including associated pipelines, located seaward of the coast line. In addition, Section 311(o) of the CWA states, "Nothing in this section shall be construed as preempting any State or political subdivision thereof from imposing any requirement or liability with respect to the discharge of oil or hazardous substance into any waters within such State, or with respect to removal activities related to such discharge." Many states have their own oil spill programs. A discussion of these state programs is beyond the scope of this report. EPA's SPCC regulations are in 40 C.F.R. Part 112. The regulations require certain facilities (discussed below) to prepare and implement, but not submit, SPCC plans. (A subset of higher-risk facilities must submit Facility Response Plans to EPA.) Among other obligations, SPCC regulations require secondary containment (e.g., dikes or berms) for certain oil-storage units. In addition, SPCC plans must be certified by a licensed professional engineer unless a facility owner/operator meets the conditions that allow for self-certification. In general, facilities with no reportable discharge history that store 10,000 gallons or less, in aggregate, can self-certify their SPCC plans. For farms, this particular threshold is 20,000 gallons. EPA estimated that approximately 99% of all farms have an oil storage capacity less than or equal to 20,000 gallons and would thus be able to self-certify their plans if they were subject to SPCC requirements. EPA issued its first SPCC regulations in 1973, which became effective January 10, 1974. EPA made changes and clarifications to the SPCC regulations in 2002. Over the next eight years, EPA extended the 2002 rule's compliance date on multiple occasions and made further amendments to the 2002 rule. For most types of facilities subject to SPCC requirements, the deadline for complying with the changes made in 2002 was November 10, 2011. However, a subsequent EPA rulemaking extended this compliance date for farms to May 10, 2013. On March 26, 2013, Congress enacted P.L. 113-6 , which prohibited EPA from using appropriations to enforce SPCC provisions at farms for 180 days after enactment (i.e., through September 22, 2013). Notwithstanding these recent deadlines, the 2002 final rule and subsequent revisions did not alter the requirement for owners or operators of facilities, including farms, to maintain and continue implementing their SPCC plans in accordance with the SPCC regulations that have been in effect since 1974. The EPA SPCC plan requirements apply to non-transportation-related facilities that produce, store, use, or consume oil or oil products and could reasonably be expected to discharge oil into or upon navigable waters of the United States or adjoining shorelines. The definition of "navigable waters" has been a long-standing controversial topic and subject of litigation in recent years. On May 27, 2015, the Army Corps of Engineers and EPA finalized revised regulations that define the scope of waters protected under the CWA. The definition of oil has also garnered attention from policymakers and stakeholders in recent years. The CWA Section 311 definition states: "oil" means oil of any kind or in any form, including, but not limited to, petroleum, fuel oil, sludge, oil refuse, and oil mixed with wastes other than dredged spoil. Since the inception of the SPCC regulations, EPA has interpreted this definition to apply to both petroleum-based and non-petroleum-based oil. In a 1975 Federal Register notice, EPA clarified that its 1973 SPCC regulations apply to oils from animal and vegetable sources. EPA's SPCC regulatory definition (40 C.F.R. §112.2) states: Oil means oil of any kind or in any form, including, but not limited to: fats, oils, or greases of animal, fish, or marine mammal origin; vegetable oils, including oils from seeds, nuts, fruits, or kernels; and, other oils and greases, including petroleum, fuel oil, sludge, synthetic oils, mineral oils, oil refuse, or oil mixed with wastes other than dredged spoil. Except for farms, which are discussed below, facilities are subject to the rule if they meet at least one of the following capacity thresholds: an aboveground aggregate oil storage capacity greater than 1,320 gallons, or a completely buried oil storage capacity greater than 42,000 gallons. In 2009, EPA estimated that approximately 640,000 facilities are subject to the SPCC requirements. Figure 2 illustrates the breakdown of these facilities by industry categories. Facilities involved in oil and gas production represent the largest percentage (29%) of facilities subject to the SPCC regulations, with farms coming in a close second (27%). EPA estimated that the SPCC requirements apply to approximately 152,000 farms, which represents approximately 8% of all farms nationwide. Many of the recent SPCC issues have involved program scope and applicability, particularly in the context of farms. The SPCC regulations (40 C.F.R. §112.2) define the term farm as a facility on a tract of land devoted to the production of crops or raising of animals, including fish, which produced and sold, or normally would have produced and sold, $1,000 or more of agricultural products during a year. The applicability of SPCC regulations to farms garnered considerable attention in recent Congresses. Members introduced a number of bills to modify the applicability of the SPCC regulations to farms, ultimately resulting in enacted legislation. On June 10, 2014, the President signed the Water Resources Reform and Development Act (WRRDA) of 2014 ( P.L. 113-121 ). Section 1048 of the act altered the applicability of the SPCC to farms. Selected changes include the following: Farms with an aggregate aboveground storage capacity of less than 2,500 gallons are not subject to SPCC regulations (compared to 1,320 gallons for other facilities); Farms with an aggregate aboveground storage capacity of less than 6,000 gallons (or a to-be-determined lower threshold, discussed below) and no reportable discharge history are not subject to SPCC regulations; Farms with an aggregate aboveground storage capacity of less than 20,000 gallons (the prior threshold was 10,000 gallons), no individual storage tank greater than 10,000 gallons, and no reportable discharge history may self-certify their SPCC plan in lieu of hiring a professional engineer for certification; and Farms can exclude oil containers on separate parcels with capacities less than 1,000 gallons when determining aggregate storage capacity. WRRDA directed EPA to determine whether the interim 6,000 gallon threshold (mentioned above) should be decreased (to not less than 2,500 gallons) based on a significant risk of an oil discharge to water. If the agency determines that the 6,000 gallon threshold is not appropriate, the act directs EPA to adjust the exemption level through the regulatory process according to the findings in the study. EPA released the SPCC threshold study in June 2015. "Based on evidence that small discharges cause significant harm and lack of evidence that farms are inherently safer than other types of facilities," EPA concluded that the appropriate threshold should be 2,500 gallons instead of 6,000 gallons. According to the regulatory agenda, EPA was scheduled to release a proposed rule regarding this change in August 2016, with a final rule scheduled for December 2016. As of the date of this report, EPA has not published a proposed rule. On December 16, 2016, the President signed the Water Infrastructure Improvements for the Nation Act (WIIN, P.L. 114-322 ). Many WIIN provisions are drawn in whole or in part from other legislation in the 114 th Congress, including the House or Senate versions of the Water Resources Development Act of 2016— H.R. 5303 and S. 2848 . Section 5011 of WIIN modifies the applicability of the SPCC regulations for farms. WIIN provisions build upon the changes made in WRRDA 2014. In particular, the SPCC regulations would not apply to farm containers on separate parcels with (1) an individual storage capacity of 1,000 gallons or less, and (2) an aggregate storage capacity of 2,500 gallons or less. Under WRRDA, smaller containers (i.e., 1,000 gallons or less) would not be counted toward an aggregate storage capacity, but these containers were still subject to any relevant SPCC regulations. Pursuant to the above WIIN provision, smaller containers would not be counted toward a farm's aggregate storage capacity or covered by SPCC regulations even if the farm's aggregate storage capacity breached regulatory thresholds. The phrase "separate parcels" is a key term in the existing statutory language, but it is uncertain how EPA would interpret this phrase. Although the term parcel is included in the definition of facility , the term parcel is not defined in SPCC regulations. EPA modified the definition of facility in 2008, which reads: Facility means any mobile or fixed, onshore or offshore building, property, parcel, lease, structure, installation, equipment, pipe, or pipeline (other than a vessel or a public vessel) used in oil well drilling operations, oil production, oil refining, oil storage, oil gathering, oil processing, oil transfer, oil distribution, and oil waste treatment, or in which oil is used, as described in appendix A to this part. The boundaries of a facility depend on several site-specific factors, including but not limited to, the ownership or operation of buildings, structures, and equipment on the same site and types of activity at the site. Contiguous or non-contiguous buildings, properties, parcels, leases, structures, installations, pipes, or pipelines under the ownership or operation of the same person may be considered separate facilities. Table 1 below compares the SPCC aggregate capacity thresholds before WRRDA, after WRRDA, and after enactment of WIIN in 2016. Unlike EPA regulations promulgated under some other statutes, SPCC regulations have not been delegated to states for implementation or enforcement. Section 311 of the CWA does not provide authority to delegate SPCC authority to the states. Therefore, enforcement of the program is performed by the EPA regional offices. As noted earlier, many states have their own regulatory programs that address oil storage units, but these programs do not replace EPA's authority or responsibility. Enforcement of the SPCC program may be an issue for policymakers. According to a 2012 EPA inspector general report, "the Agency remains largely unaware of the identity and compliance status of the vast majority of CWA Section 311 regulated facilities." The report stated that EPA regional offices inspected approximately 3,700 facilities (between August 2010 to June 2011) for compliance with SPCC requirements and that approximately 55% of the facilities were deemed to be out of compliance for various reasons. CRS is not aware of a more recent report documenting enforcement activities.

In 1970, Congress enacted legislation directing the President to promulgate oil spill prevention and response regulations. President Nixon delegated this presidential authority to the Environmental Protection Agency (EPA) in 1970. In 1973, EPA issued Spill Prevention, Control, and Countermeasure (SPCC) regulations that require certain facilities to prevent, prepare for, and respond to oil discharges that may reach navigable waters of the United States or adjoining shorelines. In general, a facility must prepare an SPCC plan if the facility has an aboveground aggregate oil storage capacity greater than 1,320 gallons or a completely buried oil storage capacity greater than 42,000 gallons. Among other obligations, SPCC regulations require secondary containment (e.g., dikes or berms) for certain oil-storage units. A licensed professional engineer must certify the plan, although some facilities—depending on storage capacity and spill history—may be able to self-certify. In recent years, the SPCC regulations have received considerable interest from Congress. Most of this interest has involved the applicability of SPCC regulations to farms, which may be subject to the SPCC regulations for oil stored onsite for agricultural equipment use. Farms account for approximately 25% of SPCC regulated entities, second only to oil and gas production facilities. In 2002, EPA issued a final rule that made changes and clarifications to its SPCC regulations. For most types of facilities subject to SPCC requirements, the compliance deadline was November 10, 2011. However, EPA extended this compliance date for farms to May 10, 2013. The 2013 compliance date generated considerable attention in the 113th Congress. On June 10, 2014, the President signed the Water Resources Reform and Development Act (WRRDA) of 2014 (P.L. 113-121). The act altered the applicability of the SPCC regulations to farms. Two key changes include 1. farms with an aggregate aboveground oil storage capacity less than 2,500 gallons are not subject to SPCC regulations; and 2. farms with an aggregate aboveground oil storage capacity less than 6,000 gallons (or an alternate threshold determined by EPA) and no reportable discharge history are not subject to SPCC regulations. WRRDA directed EPA to conduct a study to determine whether the interim 6,000 gallon threshold should be decreased (to not less than 2,500 gallons) based on a significant risk of an oil discharge to water. In June 2015, EPA concluded that the appropriate threshold should be 2,500 gallons instead of 6,000 gallons. According to the regulatory agenda, EPA was scheduled to release a proposed rule regarding this change in August 2016, with a final rule scheduled for December 2016. As of the date of this report, EPA has not published a proposed rule. On December 16, 2016, the President signed the Water Infrastructure Improvements for the Nation Act (WIIN, P.L. 114-322). WIIN provisions build upon the changes made in WRRDA. In particular, the SPCC regulations would not apply to farm containers on separate parcels with (1) an individual storage capacity of 1,000 gallons or less, and (2) an aggregate storage capacity of 2,500 gallons or less. Under WRRDA, smaller containers (i.e., 1,000 gallons or less) would not be counted toward an aggregate storage capacity, but these containers were still subject to any relevant SPCC regulations. Pursuant to the WIIN provision, smaller containers would not be counted toward a farm's aggregate storage capacity or covered by SPCC regulations even if the farm's aggregate storage capacity breached regulatory thresholds.

On July 9, 2009, the Senate Appropriations Committee reported S. 1434 , the FY2010 State, Foreign Operations Appropriations, providing $375 million in ESF and $52 million in INCLE. On July 9, 2009, the House approved H.R. 3081 , the FY2010 State, Foreign Operations Appropriations, providing $400 million in ESF and $52 million in INCLE. In June 2009, Congress approved the FY2009 supplemental appropriations ( P.L. 111-32 , H.R. 2346 ), providing $439 million in ESF and $20 million in INCLE. The $1 billion in ISFF funding appropriated in P.L. 110-252 was rescinded and reappropriated in this bill. The CERP appropriation of $453 million is to be shared with Afghanistan. On May 7, 2009, the Administration issued its FY2010 State, Foreign Operations budget request, including $500 million for Iraq economic aid, composed of $415.7 million in ESF, $52 million in INCLE, $30.3 million in NADR, and $2 million in IMET account funds. The FY2010 DOD budget request contained $1.5 billion for the CERP, to be shared with Afghanistan. There was no DOD request for the Iraq Security Forces Fund. Following the 2003 intervention in Iraq, the United States undertook a large-scale assistance program meant to stabilize the country, rehabilitate economic infrastructure, and introduce representative government, among other objectives. Even as the U.S. military role in Iraq winds down, this program, funded through a mix of appropriations accounts, will continue to be scrutinized closely by the 111 th Congress. This report describes recent developments in this assistance effort. For detailed discussion of the Iraq political and security situation, see CRS Report RL31339, Iraq: Post-Saddam Governance and Security , by [author name scrubbed]. Over the years, U.S. assistance to Iraq has been provided through multiple appropriations accounts (see Table 1 for funding levels). In the first several years of the U.S. effort in Iraq, the bulk of U.S. assistance was provided through a specially created Iraq Relief and Reconstruction Fund (IRRF), placed under the direct control of the President, supporting aid efforts in a wide range of sectors, including water and sanitation, electricity, oil production, training and equipping of Iraqi security forces, education, democracy, and rule of law. The Fund, established in the April 2003 FY2003 Emergency Supplemental ( P.L. 108-11 , H.R. 1559 / H.Rept. 108-76 ) and replenished in the November 2003 FY2004 Emergency Supplemental ( P.L. 108-106 , H.R. 3289 / H.Rept. 108-337 ), eventually totaled nearly $21 billion. A new DOD account supporting the training and equipping of Iraqi security forces, the Iraq Security Forces Fund (ISFF), was set up under the May 2005 FY2005 emergency supplemental ( P.L. 109-13 , H.R. 1268 / H.Rept. 109-72 ). Previously, most security training funds had been provided out of the IRRF. Policy responsibility for the IRRF, originally delegated to the CPA (under DOD authority), had, since the end of the occupation in June 2004, belonged to the State Department as a result of a Presidential directive (NSPD 36, May 11, 2004), which, nonetheless, continued to give DOD the main role in directing security aid. Putting funding for security assistance entirely under DOD, however, was a sharp departure from historic practice. Under most military assistance programs—Foreign Military Financing (FMF) and the International Military Education and Training Program (IMET)—State makes broad policy and DOD implements the programs. The conference report on the supplemental adopted the President's formula for the new account but required that the Iraq Security Forces Fund be made available "with the concurrence of the Secretary of State." Another DOD account, the Commander's Emergency Response Program (CERP), has provided immediate reconstruction and humanitarian assistance at the local level to support the work of U.S. military commanders. A Business Task Force, attempting to rehabilitate state-owned enterprises to stimulate the Iraqi economy and increase employment, has been funded out of the DOD Iraq Freedom Fund account. By FY2006, the Economic Support Fund (ESF) account had replaced the IRRF as the main spigot of U.S. economic aid, provided in support of a wide variety of economic development and governance efforts, but not funding the large-scale infrastructure programs or the security forces training that characterized much of the IRRF. ESF, in particular, was a key component of the so-called "surge" initiative, announced in January 2007. It largely funds the programs implemented by the Provincial Reconstruction Teams (PRTs), including local governance support; programs implemented by USAID, such as improvements to community infrastructure, job training, vocational education, and micro-loans; and supports programs at the national level, including Ministerial capacity development, agriculture and private sector reform, and strengthening of the judicial process and democratization efforts. In addition to ESF, the International Narcotics and Law Enforcement account (INCLE) has supported "rule of law" efforts, the Democracy Fund supports a range of democratization and civil society efforts, and the Treasury Department Technical Assistance program offers experts on financial issues to the government of Iraq. Humanitarian refugee and displaced persons concerns have been addressed by programs funded under the Migration and Refugee (MRA) and International Disaster Assistance (IDA) accounts. Until now, most funding for Iraq reconstruction has been appropriated under emergency supplemental appropriations legislation, because it is "off-budget" and does not compete with other aid priorities in the regular aid bill. Efforts to "regularize" the economic assistance program for Iraq by requesting funds in the traditional annual foreign operations appropriations bill have met with limited success. The first such effort, in 2005 for the FY2006 foreign operations bill ( P.L. 109-102 , H.R. 3057 ), saw only $60.4 million (after rescission) provided of a $414 million request, because some Members felt that sufficient funds remained unobligated in the IRRF—at the time, $3-$5 billion—from which the Administration could draw to pay for continuing reconstruction. In December 2007, Congress rejected almost all of the regular FY2008 ESF and INCLE request for Iraq (sec. 699K of P.L. 110-161 , Division J), specifically approving only humanitarian aid, including demining and refugees and internally displaced persons programs. In the FY2009 regular appropriations for foreign operations (sec. 7042 of P.L. 111-8 , Division H), Congress only approved demining assistance. From FY2010 on, the Obama Administration intends to request all Iraq aid in the annual regular appropriations. On February 4, 2008, the Bush Administration submitted its FY2009 regular appropriations request, providing $397 million for Iraq reconstruction under foreign operations and, as had been the case until the FY2010 budget submission, making no Iraq aid request under the regular DOD appropriations. Of the requested amount, $300 million was for ESF, $75 million for INCLE (rule of law), and $20 million for NADR (mostly demining). On July 16, 2008, the House State/Foreign Operations Subcommittee approved its FY2009 bill. It provided no funding for Iraq. On July 17, the full Senate Appropriations Committee reported S. 3288 ( S.Rept. 110-425 ), its version of the FY2009 State/Foreign Operations bill, recommending $75 million in ESF and $25 million in INCLE funds for Iraq, $275 below the combined request for these accounts. A recommended NADR account amount for Iraq was not specified. On March 11, 2009, the President signed the FY2009 Omnibus appropriations into law ( P.L. 111-8 , H.R. 1105 ), providing regular FY2009 foreign operations funding (Division H). With the exception of demining assistance, it provides no funds for Iraq reconstruction (Div. H, sec. 7042). As noted above, most economic and security assistance for Iraq has been provided under emergency supplemental legislation. The legislation requires that all FY2009 assistance, including supplementals, be provided "only to the extent that the Government of Iraq matches such assistance on a dollar-for-dollar basis." It also requires that the Secretary of State submit a report detailing plans for the transition of assistance programs to the Government of Iraq. On October 14, 2008, the Duncan Hunter National Defense Authorization Act for FY2009 was signed into law ( S. 3001 , P.L. 110-417 ). It contains several provisions of importance to the reconstruction of Iraq. The most significant provision (sec. 1508) bans the use of ISFF funds for infrastructure projects. A large proportion of IRRF security funding and ISFF funds has gone to the construction of training facilities, border forts, police stations, and the like. The congressional view in approving this measure is that the Iraqis should now provide such infrastructure from their own resources. In another effort to limit the use of U.S. funds for infrastructure, the Act (sec. 1214) restricts the use of the CERP by setting a maximum limit on project cost at $2 million; anything over $1 million must be certified by the Secretary of Defense as an urgent humanitarian or reconstruction requirement. The legislation also authorizes (sec. 1501) only half of the Administration's FY2009 ISFF request, providing only the $1 billion already approved in the FY2008/2009 supplemental approved in June 2008. The FY2009 supplemental assistance request for Iraq reflects the Obama Administration's intention to move toward a diminished U.S. presence in the country. The total non-humanitarian foreign operations aid request amounted to $482 million, which, with already appropriated amounts from the June 2008 FY2009 "bridge" supplemental ( P.L. 110-252 ) and the regular FY2009 appropriations approved in March 2009 ( P.L. 111-8 ), would bring total non-humanitarian foreign operations assistance to $605 million, basically the same amount as appropriated in FY2008. The equivalent amount in FY2007 was $2 billion, which would have been available through FY2008. Without a similar cushion of funds from the preceding year, the FY2009 request may be seen as a notable decrease in economic assistance. The request for DOD assistance represents a more pronounced decline. The Administration asked that the $1 billion appropriated in the FY2009 "bridge" appropriation to the Iraq Security Forces Fund (ISFF), which supports training and equipping of Iraqi security forces, be rescinded and re-appropriated in this new FY2009 supplemental bill. In essence, the request was made in order to extend availability of these funds. The "bridge" appropriation would have expired at end of September 2009; with this new appropriation, it would be available until end of September 2010. If the request was approved—as largely turned out to be the case—the trend in ISFF totals would appear as follows: $5.5 billion in FY2007, $3 billion in FY2008, and $1 billion in FY2009. The Commander's Emergency Response Program (CERP) request, totaling $453 million, was, as for other years, to be shared by both Afghanistan and Iraq. The $482 million foreign operations request broke down as follows—$449 million in Economic Support Fund (ESF), $20 million in International Narcotics and Law Enforcement (INCLE), $2 million in International Military Education and Training (IMET), and $11 million in Narcotics, Anti-Terrorism, Demining and Related Programs (NADR) funds. Within these accounts, the largest amounts were requested for certain programs in ESF that well-characterize the Iraq assistance program at this stage. Of programs supporting improved governance, the Quick Response Fund ($45 million), a civilian equivalent of the CERP, is a key tool of the Provincial Reconstruction Teams (PRTs) that allow U.S. civilians, with security provided by the U.S. military, to maintain a presence in the provinces, deal directly with local leaders, and bolster local government. The Local Governance Program ($55 million), managed by USAID, helps build management and knowledge skills of provincial government personnel. The Community Action Program (CAP) ($35 million) funds projects identified by local representative associations. Ministerial Capacity Development ($60 million) seeks to enhance the capabilities of Iraqi central government personnel, especially focusing on helping them execute their budgets. Significant funding ($112 million) was requested to support national elections scheduled for later this year. Key programs supporting economic growth in Iraq are Economic Reform ($50 million) activities to build a better regulatory system and in Agriculture ($43 million), which after oil production is Iraq's best hope for an improved economy. In addition to the security and economic aid-related requests for Iraq, the supplemental request contained a humanitarian aid component. The Migration and Refugee Assistance account (MRA) included $108 million to address the needs of the roughly 4.8 million Iraqi refugees and internally displaced persons (IDPs). The House-approved bill (H.R. 2346) matched the Administration request for most items associated with Iraq reconstruction aid. Bill language appropriated the request for the ISFF, and House Appropriations Committee explanatory language provided the request for the CERP, ESF, INCLE, NADR, and IMET accounts. Sufficient funds were provided to the overall MRA account to meet the Iraq request here. The most notable change from the Administration request came in operating expense accounts. The State Department Diplomatic and Consular Programs account, which funds staff salaries, expenses, and security, was increased in the case of Iraq by 224%, from a request of $150 million to a House allocation of $486 million. The Appropriations Committee took this action in order to fund the Iraq Mission through the first quarter of 2010 as it transitions "both to an annualized funding cycle and to a more regular diplomatic and development program." Funds are largely to lease facilities supporting the Mission and to provide for civilian security needs that, presumably, are expected to increase as U.S. troops draw down. The FY2009 supplemental approved by the Senate mostly followed the Administration request for Iraq reconstruction—matching the request for CERP, INCLE, NADR, and IMET accounts, and reducing by only $10 million the ESF level to $439 million. Sufficient funds were also provided to the overall MRA account to meet the Iraq request. On the ISFF, however, the Senate bill departed from the request. Instead of rescinding $1 billion from the FY2009 "bridge" supplemental and re-appropriating it in this bill, the Senate version left the "bridge" appropriation intact and still appropriated $1 billion in the new supplemental. Further, recognizing that responsibility to train Iraqi security forces will transition from DOD to the Department of State in August 2010, the committee added language transferring unobligated balances, as of July 31, 2010, to State to use for this purpose. Unlike the House bill, the Senate bill matched the Administration's $150 million request for the State Diplomatic and Consular Programs account. The conference report on H.R. 2346 closely follows the Administration request for Iraq reconstruction aid. ESF is provided at $439 million, $10 million less than the request. INCLE, at $20 million, and IMET, at $2 million, match the request. The ISFF appropriation from P.L. 110-252 was essentially extended for another year, by the rescission and reappropriation of its $1 billion. The $453 million in requested CERP funds (shared with Afghanistan) is provided. Amounts from other accounts requested by the Administration are not specified in the bill, but will likely be allocated at or near the request level. Bill language specifies that not less than $15 million of ESF be used for targeted development programs determined by the Ambassador. Explanatory language made special reference to the treatment of women in Iraq and encouraged the use of funds to incorporate women in the course of stabilizing the country and building government institutions. The conference report adopted the $486 million House level for State Operating Expenses, addressing the FY2010 request early in order to assist the Embassy transition to a more regular diplomatic and aid program. On May 7, 2009, the Administration issued its FY2010 State, Foreign Operations budget request, including $500 million for Iraq economic aid. The request is composed of $415.7 million in ESF, $52 million in INCLE, $30.3 million in NADR, and $2 million in IMET account funds. The FY2010 DOD budget request contains $1.5 billion for the CERP, to be shared with Afghanistan. There is no DOD request for the Iraq Security Forces Fund, the first time since 2003 that there has been no large funding request for the training and equipping of Iraqi security forces. In H.R. 2647, the House authorized $1.3 billion for the CERP; in S. 1390, the Senate authorized $1.4 billion. The House-approved FY2010 DOD appropriations bill, H.R. 3326 (July 30, 2009), provides $1.3 billion, to be shared with Afghanistan. On July 9, 2009, the House approved H.R. 3081, the FY2010 State, Foreign Operations Appropriations. The House bill provides $400 million in ESF and $52 million in INCLE, but makes no specific allocation under NADR and IMET accounts. In report language (H.Rept. 111-187), the Appropriations Committee recommended that $50 million of the ESF go to USAID's Civilian Assistance Program and $126 million go to democracy and civil society activities. It also notes its support for all efforts to incorporate women in Iraq's stabilization and government institutions. The bill would require that assistance follow the U.S. government guidelines that have been established in response to earlier legislation requiring that funds be matched by Iraq. On July 9, 2009, the Senate Appropriations Committee reported S. 1434, its version of the FY2010 State, Foreign Operations Appropriations, providing $375 million in ESF and $52 million in INCLE. It does not specify an amount for NADR and IMET. The committee report (S.Rept. 111-44) recommended $5 million for the Marla Ruzicka War Victims Fund and not more than $50 million for USAID's Ministerial Capacity Development program, $35 million below the Administration request for this program, because of its belief that the Iraqi government should funds such programs itself. Among the key policy objectives laid out by the Bush Administration was the economic and political reconstruction of Iraq. Since 2003, discussion and debate have been ongoing regarding the strategy to reach these ends utilizing reconstruction aid funds and the effectiveness of aid implementation. Although the aid program is already greatly diminished from its first years, a changed U.S. role in Iraq, as proposed by the Obama Administration, is reflected in the FY2010 aid request largely due to the absence of a request for the ISFF, but ESF would also decline by 23% from FY2009 if the request is met. As U.S. forces draw down, there are likely to be substantial changes in the way in which U.S. assistance is provided. Elements of the history, current state, and possible future of the aid program are discussed below. On June 28, 2004, the Coalition Provisional Authority (CPA), the agency established to temporarily rule Iraq and implement reconstruction programs, was dissolved as Iraq regained its sovereignty. At that time, broad responsibility for assistance programs moved from the Secretary of Defense to the Secretary of State. In Iraq, the United States provides assistance and, to the extent possible, policy guidance to the Iraqi government through its U.S. embassy under U.S. Ambassador Christopher Hill. Within the embassy, an Iraq Transition Assistance Office (ITAO) was established by executive order (13431) in May 2007, supplanting some of the functions of the Iraq Reconstruction Management Office (IRMO) that had, itself, supplanted CPA efforts in setting requirements and priorities for the aid program. It managed most of the IRRF and continues to manage much funding related to infrastructure. It is expected to expire in May 2010. The embassy's Office of Provincial Affairs is in charge of the PRTs (see PRT section below). Within the embassy, there are also separate coordinators for the many activities addressing anti-corruption and rule of law that are carried out by multiple U.S. government entities. With the policy guidance of the ambassador, U.S. military officers are in charge of overseeing the training and support of all Iraqi security forces. Although the State Department had assumed control of technical assistance provided to the different Iraq ministries, in October 2005 it ceded responsibility to DOD for the two ministries most closely involved in security matters—Interior and Defense. Among reasons given for this switch were that DOD had greater resources at its disposal and that State had difficulty filling advisor positions in these ministries, the latter point disputed by some. In most other countries, State has responsibility for training police forces. The State Department is expected to resume a police training role in Iraqi in FY2010 as U.S. troops withdraw. DOD has also played a major role administering and implementing development programs more normally associated with civilian agencies. In charge of the embassy's Project and Contracting Office (PCO), the Army Corps of Engineers, Gulf Region Division (ACE-GRD), was chiefly responsible for the more than $10 billion in FY2004-funded IRRF programs dedicated to infrastructure construction, as well as follow-on sustainability efforts. Although in the Department of the Army, it reported to the Department of State as well as to the Department of the Defense. More recently, ACE-GRD has implemented the infrastructure projects under the roughly $700 million ESF-funded Provincial Reconstruction Development Committee (PRDC) program and the DOD-funded CERP. A third major U.S. actor in the implementation of the aid program is the U.S. Agency for International Development (USAID). Responsible for more than $6 billion of assistance to date, USAID manages a wide range of economic, social, and political development programs. Its programs have included a multi-faceted, large-scale construction project and most activities related to public health, agricultural development, basic and higher education, civil society, local governance, democratization, and policy reform. A July 2009 State Department Inspector General inspection of the U.S. embassy noted that many aid functions are dispersed among numerous actors and are misaligned with traditional aid roles, largely as a result of the ad hoc and urgent nature of their origin during the occupation and insurgency. Among other things, it noted that multiple agencies and offices are involved in some capacity development activities, but have only recently adopted a coordination mechanism to address redundancies and gaps in aid. In view of the impending military drawdown and the anticipated decline in numbers of specialist temporary employees, the IG recommended that steps be taken to incorporate appropriate assistance programs into USAID's portfolio. Most funding during the first several years of the U.S. assistance program came from the Iraq Relief and Reconstruction Fund (IRRF). The nearly $21 billion provided through that account supported the entire range of economic and security programs. Although FY2004 IRRF funding levels were initially established in 10 categories of assistance, reconstruction priorities changed over time and allocations mirrored shifting events on the ground. For example, after the State Department took charge in June 2004, the new U.S. Embassy country team reallocated FY2004 IRRF resources, emphasizing security needs, increased oil production, greater employment, and democracy as the highest priorities, at the expense of many large-scale economic infrastructure projects—in particular water and sanitation and electricity—that were viewed as too slowly implemented and dependent on an improved security situation to have an immediate impact. In the end, nearly a quarter of the IRRF ($5 billion) has gone to the training and equipping of Iraqi security forces, nearly half (roughly $10 billion) to economic infrastructure—the construction of water, oil, electric, and other facilities—and another quarter to a range of more traditional assistance in health, education, policy reform, and other areas. These reconstruction programs have shown mixed results. There have been many positive outputs. Among achievements of the U.S. reconstruction program, more than 1,200 security facilities—police stations, border forts, fire stations, courts, etc.—were completed. Nearly a half-million police and military security forces were trained and equipped. Health facilities were rehabilitated and equipped, health care providers trained, and medical services such as immunizations provided. The deepwater port at Umm Qasr was restored, as were 96 of 98 railway stations, two international airports, and three regional ones. Local governance was strengthened through establishment of councils and community associations. More than 6,000 grassroots projects were conducted through USAID grants provided to more than 1,450 community action groups. Voter education, training of election monitors, and related activities contributed to three successful elections in 2005. Technical experts provided advice to government agencies regarding adoption of budgetary and management reforms. About 6,716 schools were rehabilitated and 60,000 teachers trained. Irrigation systems were rehabilitated, 68 veterinary clinics reconstructed, and 83,500 date palm offshoots planted. Agricultural extension agents were trained and agribusiness supported. Credit was provided to micro and small business. U.S.-funded projects added 2,500 megawatts (MW) to Iraq's generating capacity. Water and sanitation sector assistance provided clean water to 6.7 million people and sanitation to 5.1 million. Oil production, largely stagnant in the first years, by 2008 had risen to near pre-war levels. Yet, along with the accomplishments have come less than satisfactory outcomes. In the critical sectors of electric power and oil production, outputs were less than originally envisioned. Many health-related construction projects experienced considerable delays, and contracts won by U.S. firms had to be revoked and re-awarded to Iraqis, including 12 of 20 refurbished hospitals. Only 91 of a planned 142 new clinics will be completed with U.S. funding. Further, the Basrah Children's Hospital had significant cost overruns. Although the airports and seaport showed considerable activity, only a tiny percentage of Iraqi trains ran because of security concerns, although numbers have been improving since 2008. Despite democratization efforts, halting progress has been made on achieving national reconciliation. Moreover, the impact of U.S. projects on Iraq is hard to estimate, and the extent to which they and other-donor contributions meet the total needs of Iraq has not been fully assessed. While the U.S. water and sanitation contribution has been significant, the International Committee of the Red Cross estimated in 2008 that more than 40% of Iraqis do not have access to clean water. Despite U.S. efforts in the health sector, Oxfam reported in 2007 that 90% of Iraq's 180 hospitals lacked basic medical and surgical supplies. U.S. transport assistance is said to have repaired only 8 bridges of 1,156 in poor condition or destroyed. Although mismanagement and corruption play a large role in diminishing returns from reconstruction efforts, it has been the lack of stability and the effects of the insurgency that have most affected the course of reconstruction. A more peaceful environment since 2007 has set the stage for noteworthy improvements in the electric, oil, and other sectors. Reconstruction priorities in the period from 2007 mainly reflect the "surge" strategy enunciated by the Bush Administration in January 2007 as well as the fact that IRRF funds are exhausted and large-scale infrastructure programs, which chiefly characterized IRRF economic efforts, are no longer funded as plentifully by the United States. The major elements of assistance in this period have been as follows: Military-Security Assistance. More than 62% of total FY2007-FY2008 regular and supplemental reconstruction appropriations were applied to the training and equipping of Iraqi security forces. This effort was funded entirely from the ISFF. Economic-social-democratization assistance has been funded mostly with Economic Support Fund (ESF) assistance, categorized under three "tracks": Security Track. Under the security track are assistance programs supporting work of the Provincial Reconstruction Teams (PRTs) and USAID to improve local governance and establish stability in strategic locations (see PRT section below for details). Economic Track. This track encompasses assistance to help Iraqis operate, maintain, and sustain U.S.-funded infrastructure projects (see sustainability section below for discussion), and to develop agriculture and small business. Political Track . Under the political track are a range of efforts to support governance, democratization, and rule of law programs at all levels of government in Iraq, including helping Iraqi ministries improve their ability to operate and helping local governments administer their provinces and municipalities. Finally, there has been increasing attention paid to humanitarian needs. Humanitarian Aid. The Migration and Refugee Assistance (MRA) and International Disaster Assistance (IDA) accounts address the problems of a refugee and internally displaced persons population amounting to more than 4.6 million. Security, sustainability, PRTs, governance, and humanitarian needs constituted the key features of Bush Administration reconstruction aid program from 2007 through 2008. The Obama Administration can be said to be continuing many of these programs, but some key distinctions can be seen based on statements from officials as well as the FY2009 supplemental and FY2010 appropriations requests. For one, the overall level of assistance is falling significantly. In FY2009, the change is largely in ISFF levels, which decreased by two-thirds in FY2009 from the previous year. As suggested by this decrease and the absence of any request for the ISFF in FY2010, support for the Iraq security forces will alter in coming months. The training of the Iraqi military will be conducted by an Iraq Training and Advisory Mission (ITAM), and training of the Iraqi police will be handed to the Department of State. The pending drawdown on U.S. troops means that both the CERP, distributed by U.S. forces, and PRT activities, dependent on U.S. troop protection, may be expected to decline, while other mechanisms to provide aid to the grassroots might be found. It has been reported that four new Army brigades—Advise and Assist Brigades (AABs)—have been created focusing on advising Iraqi troops and providing transport and other stability support to civilian reconstruction personnel. Economic aid in the two main spigots, ESF and INCLE, would fall by about 17% if the FY2010 Administration request is met. Assistance would emphasize improved local and national governance capabilities as well as specific economic policy reforms at the national level. As large-scale construction projects—power plants, water and sanitation systems, oil facilities, etc.—have been completed, there has been concern regarding the ability of Iraqis to maintain and fund their operations once they are handed-over to Iraqi authorities. This concern has grown following SIGIR "sustainment reviews" that suggested projects transferred to Iraqi control are not being adequately maintained. For instance, a July 2007 assessment found that two Baghdad region power station units that had been rehabilitated with U.S. funds were not operational, largely because of insufficiently maintained equipment. More recently, Humvees provided to the Iraqi military, reportedly, are being cannibalized for spare parts rather than properly repaired. To insure long-term sustainability, a U.S. effort led by the Army Corps of Engineers has focused on capacity development—providing training to the appropriate personnel in the labor force who will operate and maintain facilities and insuring sufficient funds are available for repairs and equipment replacement following project completion. At the Ministry level, the United States is assisting development of policies and laws conducive to efficient use and maintenance of infrastructure. Nearly $300 million in ESF has been used to support sustainment of U.S. projects. In addition, the United States has provided significant assistance to support the physical protection of important infrastructure, in particular electricity and oil facilities. Efforts to secure infrastructure include the use of biometrics, construction of security perimeters, lighting and communications improvements, establishment of exclusion zones for pipelines, and enhancements to the forward operating bases used by the Iraqi army to protect infrastructure. The long-term responsibility for sustainability, however, lies with the Iraqi government. Although a "principal objective" of the U.S. infrastructure construction program has always been the "swift transition of the reconstruction effort to Iraqi management and control," the SIGIR found in July 2007 that the Iraqi government had not accepted any U.S. project transfers since July 2006. As of May 31, 2007, 2,363 projects valued at $5.3 billion awaited transfer. According to the SIGIR, the U.S. government in some cases has continued to fund maintenance of projects pending acceptance by Iraq. A SIGIR report in April 2008 found that only limited progress had been made in establishing an asset transfer process, and that planning included only IRRF projects and excluded more than $2 billion in ESF, ISFF, and CERP projects. In July 2008, the SIGIR noted the continued lack of a definitive asset transfer agreement—many facilities were being transferred unilaterally without formal Iraqi government acceptance. As of October 2008, according to the Embassy, of the $13.5 billion in completed projects, 72% had been transferred locally and 13% transferred nationally. However, the SIGIR notes that this data is unreliable. P.L. 110-252 withheld $10 million in infrastructure maintenance funding until the Department of State certified that Iraq had entered into and begun to implement an asset transfer agreement, including an agreement to maintain U.S.-funded infrastructure. As of April 26, 2009, when the SIGIR issued yet another report on the issue, little progress had been made on reaching agreement with the Iraqi government on an asset transfer process. Much effort and assistance has gone into improving the capabilities of government ministries, including equipping and training personnel at all levels of service, and situating U.S. advisers in every ministry. In particular, government ministry officials and staff have been deficient in knowledge of modern administrative systems and management practices, a problem addressed under the Ministerial Capacity Development Program and the National Capacity Development Program ("Tatweer"). The latter program, according to USAID, has trained more than 70,000 staff in a recent two-year period. A focus of these efforts is on improving budget execution and service delivery, considered by many to be essential elements of an effective Iraqi government. In particular, both the national Government of Iraq and provincial governments have had difficulty implementing capital budgets that support construction of schools, roads, and oil and electricity production facilities and the like. Among the reasons offered for this situation were a rapid turnover in personnel, security concerns preventing construction, a lack of personnel skilled in contracting and managing projects, and a fear by government employees of being accused of corrupt practices. According to U.S. officials, only about 23% of the 2006 capital budget of about $6.2 billion was spent in that year, and only 3% of a $3.5 billion capital budget available to the Oil Ministry was spent in 2006. Congressional concern on the issue led to its making the allocation and expenditure of the 2007 capital budget one of the 18 benchmarks assessed under section 1314 of the FY2007 Supplemental. U.S. programs to facilitate budget execution included institution of 18 Provincial Procurement Assistance Teams, several Procurement Assistance Centers (two in Baghdad and one in Erbil), and a range of training programs in public administration. According to U.S. officials, since 2007, the government of Iraq has taken significant steps as well, including formation of a senior-level task force, establishment of new procedures such as revised procurement regulations, and additional training. In 2008, a number of ministries and governors have been permitted to enter into contracts at much higher levels than previously and a central contracts committee has been replaced with a more decentralized system. These steps appear to have led to improvements in budget execution, although definitional disagreements and lack of available data make it difficult to precise. According to DOD, the Iraqi government spent about $9 billion on capital projects in 2008 compared with $3.4 billion in 2007. If commitments are added to spending, the figure is $16 billion in 2008 compared with $6 billion in 2007. The FY2008 supplemental appropriations ( P.L. 110-252 ) and subsequent FY2009 appropriations ( P.L. 111-8 ) require that Iraq match U.S. economic aid appropriations on a dollar-for-dollar basis. Although prior to this legislation, the Iraqi government budget, on paper, had provided funding for capital investments equivalent to the U.S. reconstruction effort in some sectors, its expenditures did not match those of the United States. According to the GAO, the United States spent about $23.2 billion on four critical sectors—security, oil, electricity, and water—from FY2003 through June 2008, 70% of its total allocation of $33.4 billion in these sectors. Iraq, however, spent 14%, $3.9 billion, of its total $28 billion allocation for these same sectors from 2005 through June 2008. Dwindling U.S. contributions and the rising Iraqi budget execution expenditures noted above would suggest that this imbalance has been corrected, and the Department of State has certified that sufficient Iraqi government contributions are being made. The 2009 Iraqi budget contains $12.5 billion for reconstruction projects, a significant decrease from the previous year's level of about $21 billion due to the fall in world oil prices and Iraqi revenue, but still significantly greater than the U.S. reconstruction budget for Iraq. In an effort to expand outreach to the provinces and strengthen local government, the U.S. Embassy, in mid-2005, began establishing Provincial Reconstruction Teams (PRTs). There are two types of PRTs in Iraq—PRTs and ePRTs (embedded PRTs). In each case, the military provides protection to U.S. civilian officials and development specialists, allowing them access to parts of Iraq that otherwise would not be possible. The PRTs were a key element in the surge strategy and remain a major purveyor of U.S. reconstruction aid. PRTs are made up of Embassy, PCO, USAID, military, and other U.S. agency staff, between 35 and 100 members in each, with the State Department as leader. There are currently 16 PRTs—15 U.S.-led and one Italian-led. A South Korean and a British-led PRT transitioned to U.S. control in the 2008 and 2009 respectively. The current seven ePRTs are structured differently than their predecessors. They are embedded in Brigade Combat Teams with the Brigade Commander acting as leader. Most have 8 to 12 personnel. They were created as part of the January 2007 surge strategy, which also saw an increase in U.S. forces. In essence, the strategy envisioned that, as U.S. and Iraqi military forces worked to clear and hold an area, ePRT staff would work with local Iraqis to further stabilize the area by drawing on all available spigots of U.S. and Iraqi government funding to create jobs and meet other basic needs. They have played a major role in reconciling tribal, municipal, district, and provincial government entities. While the ePRTs are more focused on establishing stability, the PRTs emphasize improvement of local governance. They work together with local community and Iraqi government representatives—forming Provincial Reconstruction Development Councils (PRDCs)—to identify projects that can be implemented and carried out with U.S. financing. It is anticipated that, as a result of this collaboration, local governments may be strengthened while U.S. projects achieve more lasting support. The PRTs also work closely with provincial governments to strengthen their capacities and enable them to better interact with the central government as well as to more effectively utilize the Iraqi government funds that have been allocated to each province. At the disposal of both PRTs and ePRTs (henceforth collectively referred to here as PRTs) is a tool-box of projects that can be implemented at the grass-roots level. PRDC-identified projects tend to be focused on infrastructure—road and bridges, water and sanitation, schools, and health clinics—and usually are finished in one year. Although the Embassy must approve them, PRDC projects generally are implemented by the Army Corps of Engineers. In August 2007, a new Quick Response Fund (QRF) that mimics the flexibility of the CERP in funding local community projects was made available to the PRTs. They support local government, NGOs, and small businesses. In addition to economic projects directly handled by the PRTs, USAID runs several programs, often in conjunction with the PRTs, that address local-level concerns. The Community Action Program (CAP) funds projects identified by local representative associations, stimulating democratic participation, while meeting local needs and creating short-term employment. The Community Stabilization Program (CSP) addresses economic needs in specific strategic cities, providing youth programs, micro and small enterprise support, and vocational training. The Local Governance Program (LGP) helps build management and knowledge skills of provincial government personnel. Complementing the work of the PRTs and USAID, although provided independently, Commander's Emergency Response Program (CERP) funding is also available to pacify the local population where PRTs reside. A large proportion of CERP projects support local, small-scale infrastructure construction, especially in the water and sanitation and electrical power sectors. One problem with these multiple assistance programs is that they are implemented by different agencies, with different funding sources, and different authorities, raising concerns regarding coordination of program coherence. Among other criticisms of the PRTs are that they lack clear lines of authority, agreed missions, and measurable objectives. Even before the announced drawdown of U.S. forces, the concern had been raised that security obstacles facing PRTs might increase as U.S. troops protecting PRT civilian staff hand responsibility for security over to Iraqi forces. In September 2007 testimony to Congress, a SIGIR official suggested that U.S. civilians would be unable to move about freely and, consequently, PRTs might be unable to function in those areas where the U.S. military steps down. In addition to security, the PRTs rely on the military for food and housing, and civil affairs officers make up about 10% of PRT staff. The FY2008/2009 supplemental withheld all PRT operating expenses and program funds until the State Department reported on a strategy for winding down and closing out the PRTs. That strategy, was issued on September 7, 2008. This and an associated document issued by the Embassy Office of Provincial Affairs on October 1, 2008, in the SIGIR's view, suggested that no specific timeline existed for PRT close-out. However, it appeared "uncertain whether military resources will be available to support the PRTs until all conditions for close out are met." In March 2009, the National Security Council issued "preliminary verbal guidance" that PRTs total 16 by August 2010 and six by end of 2011. The State Department envisions that the mission currently carried out by PRTs will evolve into a traditional USAID program at some point. Drawn from Department of Defense funds rather than IRRF or ESF appropriations, the Commander's Emergency Response Program (CERP) contributes to the reconstruction effort by providing U.S. military commanders on the ground with "walking around money" intended to win hearts and minds throughout Iraq. Up to now, a total of about $4.1 billion—$548 million in CPA-provided Iraqi funds and about $3.6 billion in U.S. DOD appropriations—has been made available for this purpose. In April 2008, the Iraqi government allocated $300 million to establish an Iraqi CERP to be managed by the U.S. military. That program has ended, however, due to the decline in Iraqi oil revenue. In addition to the dolls, tee shirts, sheep, and other items reportedly provided to win popular support, the CERP supports a wide variety of reconstruction activities at the local level, from provision of micro-grants to businesses to digging wells to painting schools, provided in the form of small grants. CERP also funds many infrastructure efforts, such as repair or provision of electric generators and construction of water and sewer systems, roads, and schools. Commanders identify local needs and dispense aid with few bureaucratic encumbrances. Major subordinate commanders have authority to approve grants up to $500,000. The grants have been credited with helping the military better exercise their security missions, while at the same time meeting immediate neighborhood development needs, often much more quickly than equivalent efforts of the civilian reconstruction program. In addition to reconstruction, CERP funds are used for compensation payments to the families of killed or injured Iraqis. The CERP has also been used to pay the salaries of the so-called Sons of Iraq (formerly known as the Concerned Local Citizens); this effort accounted for more than one third of total FY2008 CERP obligations. Responsibility for the Sons of Iraq was fully transferred to the Iraqi Government in April 2009. As the IRRF program declined, the CERP program grew as a major spigot of U.S. aid in Iraq. From its beginnings as a small-scale village program—the average grant in FY2004 was $67,000—it became a major source of U.S. infrastructure construction aid with an average grant in FY2006 of $140,000. The SIGIR, however, indicates that in FY2008 the number of large-scale projects declined. The 2009 Defense Authorization ( P.L. 110-417 , sec. 1214) sets the maximum cost of CERP projects at $2 million unless waived by the Secretary of Defense, and requires certification of any project over $1 million as an urgent need. The SIGIR and others have raised some concerns regarding the CERP, most derived from the essentially different security and reconstruction objectives of military and civilian efforts, respectively. Among the SIGIR's concerns is that there is no mechanism to measure the outputs and outcomes of CERP projects. Secondly, the high turnover of military personnel in Iraq means that there is little continuity in management and oversight of the projects. Third, little weight has been given to the handing-over of projects to Iraqis and insuring their sustainability. The House Appropriations Committee report on the FY2010 Defense appropriations ( H.R. 3326 ) notes its concern that the CERP is growing into an alternative development program "with few limits and little management." Other observers have noted that civil affairs officers and others allocating CERP grants are not development specialists and have been provided little or no training on the selection and management of reconstruction activities. The program's early rationale—that the military were the only ones able to conduct small-scale reconstruction in places where civilian U.S. officials and NGO aid personnel were unable to go—appears less strong with civilian ePRT personnel embedded in combat battalions. Further, an October 2007 SIGIR report on the PRTs points to cases where the use of CERP funds to meet local needs conflicted with PRT efforts to make local government assume responsibility for provision of local services and work with the provincial and national government, instead of the U.S. military, to address problems. The impact on the CERP of the withdrawal of U.S. forces from Iraqi cities into bases is not yet clear. To the extent that military contact with the local populace is diminished, the utility of the CERP may decline as well. There have been two elements in the effort to provide the security that might allow political and economic reconstruction to take hold—U.S. (and earlier coalition) forces and the training and equipping of Iraqi security forces to replace them. The number of U.S. troops is currently about 130,000. About $23 billion in U.S. appropriations has been aimed at building Iraqi security forces. As of April 2009, there were roughly 645,000 Iraqi security forces—police, army and other defense forces. During the first four years of the U.S. presence in Iraq, poorly trained and equipped security forces, no-shows and desertions, dismissals of police for criminal behavior, and infiltration of police and other units by sectarian militia groups threatened U.S. plans to increase security using Iraqi personnel. In June 2008, the DOD stated that 67% of all formed Iraqi Army combat units are able to plan and execute operations with "minimal or no assistance." It reports "continued progress" since then, but with the end of the multinational force mandate in Iraq, estimates of Iraqi security force proficiency are considered sensitive and are not made public. In recent months, the emphasis of U.S. security assistance funding has shifted from provision of infrastructure—prohibited by Congress—to training and equipment. U.S. assistance in the security sector includes improving the institutional capacities of the Ministry of Defense and the Ministry of Interior, both of which, according to DOD, improve "slowly and unevenly." The SIGIR reports that the pace of police training has not kept up with the growth in numbers of police forces. U.S. military officials point to a lack of logistical capabilities—procurement and maintenance of equipment, for example—on the part of the Iraqi military as a continuing major challenge. See CRS Report RL34387, Operation Iraqi Freedom: Strategies, Approaches, Results, and Issues for Congress , by [author name scrubbed], for further discussion. A lack of transparency in early contracting and numerous reports in the media suggesting that reconstruction funds were being squandered led to the establishment in November 2003 of an Inspector General for the CPA, now called the Special Inspector General for Iraq Reconstruction (SIGIR). To date, the SIGIR has issued 149 audits and 154 project assessments, and it has conducted 96 limited onsite inspections as well as hundreds of investigations of possible criminal activity. Stuart W. Bowen, Jr. has been the SIGIR from the beginning. In congressional testimony, Mr. Bowen estimated that as much as 15%-20% of the IRRF—$3-$5 billion—was wasted. Summing up the assistance program in a recently published review report, the SIGIR asked and answered the question: Was the program grossly burdened by waste and fraud? Regarding waste, yes; regarding fraud, no. The overuse of cost-plus contracts, high contractor overhead expenses, excessive contractor award fees, and unacceptable program and project delays all contributed to a significant waste of taxpayer dollars. Although SIGIR and other law enforcement agencies have uncovered egregious examples of fraud, the size of the total criminal wrongdoing known to date amounts to a relatively small percentage of the overall reconstruction investment, and the number of individuals involved was relatively low. Some of the worst examples of misconduct found to date appear to center on the CPA's use of Iraqi funds during the year-long occupation. For instance, a January 2005 SIGIR audit found that the CPA "provided less than adequate controls" for $8.8 billion of DFI resources it moved through Iraqi ministries. An April 2005 audit concluded that CPA managers of DFI funds distributed in the South-Central region of Iraq could not account for more than $96.6 million in cash and receipts. An October 2005 audit found that South-Central personnel could not account for more than $20.5 million in Rapid Regional Response Program funds and made $2.6 million in excessive payments. In late 2005, several U.S. citizens were criminally charged with respect to the handling of these funds—and have since pled guilty. In February 2007, five more were indicted, of whom four were convicted and one pled guilty. While some investigations of reconstruction programs utilizing U.S.-appropriated funds have raised the possibility of criminal activity and the number of such investigations has risen significantly in 2009, many more have produced evidence of poor project implementation and questionable management and oversight of projects, a large proportion of these the responsibility of the Army Corps of Engineers which runs the Embassy's Project and Contracting Office. SIGIR auditors and project assessment teams with engineering, audit, and investigative experience have traveled to major U.S.-funded project sites to see if work was performed properly. Although most conclude that projects were either carried out as intended or point out correctable quality control and structural deficiencies, the SIGIR has found some projects to be especially problematic, including the following: The Basrah Children's Hospital, expected to cost $50 million, will run to at least $98 million and nearly a year behind schedule. Bechtel, the project contractor, was removed and the project will be completed using local contractors. USAID, the agency responsible, failed to report the cost and delays, in part because it had only one contracting officer and one technical officer to oversee 20 projects worth $1.4 billion. In September 2006, the SIGIR reported that the Baghdad Police College, a $75 million construction project implemented by Parsons, was riddled with deficiencies, including improperly fabricated wastewater plumbing which poses a health and structural hazard. Press reports in November 2007 indicated that the problems had still not been fixed by the contractor, despite promises made to Congress. The Mosul police headquarters, constructed by an Iraqi contractor at a cost of approximately $1 million, was similarly troubled. A $218 million first responders network was ineffective—communication was not possible between the three established zones of the system and Iraqi citizens could not call in to request emergency assistance, among other problems. After the expenditure of $186 million, only 6 of 150 planned primary health care centers to be constructed by Parsons were completed and only 14 more were expected to be finished. A contract was awarded to Iraqi firms to complete 121 partially constructed centers. A project to run 16 oil pipelines under the Tigris River failed amidst warnings from a geologist that the subsoil was not conducive to drilling, demonstrating a lack of appropriate oversight by the Army Corps of Engineers. Nearly $76 million in DFI funds were wasted. An examination of Task Force Shield, a program to train and manage an oil and electricity infrastructure protection force, found it had been unsuccessful after the expenditure of $147 million. In part, this outcome was due to the absence of a clear management structure for the various U.S. agencies involved. Further, auditors, reportedly, could not determine how many Iraqis were trained or how many weapons were purchased. An audit of "design-build" contracts that characterized many of the infrastructure projects found very high administrative costs in some cases. About 55% of KBR work on the RIO project and 43% of a Parsons oil project were consumed by overhead costs. Security is likely one factor in the high level of overhead found here, and enforced idleness while awaiting government direction to begin work is another. However, the audit also found inadequate accounting and billing systems to capture administrative costs in four of five contracts examined. Roughly 370,000 weapons purchased with $133 million in IRRF funds for the use of Iraqi security forces were not accompanied by spare parts or technical repair manuals, and were not registered to insure accountability. (Some of these weapons reportedly made their way to the black market.) A DynCorp project to provide services to international police trainers spent nearly $44 million on a residential camp that was not used (including an Olympic-size swimming pool that was unauthorized) and about $36 million for weapons that cannot be accounted for. The audit found the State Department Bureau for International Narcotics and Law Enforcement (INL) and State Office of Acquisition Management provided poor contract administration. A 2007 SIGIR financial review of the State Department's DynCorp contract for training Iraqi police could not be completed, because documents were in disarray, invoices had not been validated, and INL did not know what it received for the $1.2 billion in expenditures. A more than $38 million project to provide a new accounting system for the Iraq Ministry of Finance had been of limited use and was suspended pending clarification of Iraqi government support for the effort. A 2007 DOD IG audit of $5.2 billion in the Iraq Security Forces Fund found a lack of proper accountability for $1 billion in equipment purchase contracts. A 2008 assessment of the $270 million Nassriya water treatment plant was producing water at one fifth its intended capacity, because the Iraqi government had failed over a four-year period to meet its promises to provide permanent power, repair leaks in the distribution system, and provide qualified staff to operate the facility. A 2008 audit of the USAID Community Stabilization Program found potential fraud ranging from $6.7 to $8.4 million in a district of Baghdad, including possible diversion of funds to militia activities by means of overpriced trash collection contracts as well as phantom workers for cleanup campaigns. The project was suspended in that district. Two July 2008 audits demonstrated the level of waste incurred by contract terminations, usually due to poor planning and cost estimates. In one case, $6.9 million was wasted when water-supply project task orders were terminated at the 60% design stage due to lack of funds. In the other, $142 million was spent on task orders for fire station and police training facilities that were terminated. A 2008 audit of the $98 million Fallujah Waste Water Treatment System found a system costing three times the original estimate, but serving only one third the homes originally planned. In addition, the original U.S. plan to provide a system requiring little power and maintenance was rejected by the Iraqi Public Works Ministry because it was for "third-world countries." The new system requires thousands of gallons of fuel per day, provision of which there is no commitment from the Ministry, raising the possibility that the U.S. effort has been wasted. Dozens of reports and articles published during the past six years have sought to analyze, criticize, and recommend action regarding the progress of reconstruction aid. Among the more notable: Anthony Cordesman, Cleaning Up the Mess , Center for Strategic and International Studies, July 7, 2004. David Rieff, "Blueprint for a Mess," New York Times Magazine , November 2, 2003. George Packer, "War After War: Letter from Baghdad," The New Yorker , November 24, 2003. Kenneth M. Pollack, "After Saddam: Assessing the Reconstruction of Iraq," Foreign Affairs , January/February 2004. John Hamre et al., Iraq's Post-Conflict Reconstruction: A Field Review and Recommendations , Center for Strategic and International Studies, July 17, 2003. James Fallows, "Blind into Baghdad," The Atlantic Monthly , January/February 2004. Center for Strategic and International Studies, Post-Conflict Reconstruction Project, Frederick Barton and Bathsheba Crocker, Co-Directors, Progress or Peril? Measuring Iraq's Reconstruction , September 2004 and November 12, 2007, Update. Larry Diamond, Squandered Victory: The American Occupation and the Bungled Effort to Bring Democracy to Iraq , Henry Holt, 2005. James Fallows, "Why Iraq Has No Army," The Atlantic Monthly , December 2005. Rajiv Chandrasekaran, Imperial Life in the Emerald City: Inside Iraq's Green Zone , Knopf, 2006. George Packer, The Assassins' Gate: America in Iraq , Farrar, Straus and Giroux, 2005. International Crisis Group, Reconstructing Iraq , September 2, 2004, available at http://www.crisisgroup.org/home/index.cfm? . T. Christian Miller, Blood Money , Little, Brown, and Company, 2006. SIGIR, Iraq Reconstruction: Lessons in Program and Project Management , March 2007. Glenn Zorpette, "Re-engineering Iraq," IEEE Spectrum , February 2006, available at http://www.spectrum.ieee.org/feb06/2831 . SIGIR, Hard Lessons: The Iraq Reconstruction Experience , January 2009, available at http://www.sigir.mil . Nora Bensahel et al., After Saddam: Prewar Planning and the Occupation of Iraq , RAND Arroyo Center, 2008.

A large-scale assistance program has been undertaken by the United States in Iraq since mid-2003. To date, over $49 billion has been appropriated for Iraq reconstruction. Most recently, in June 2009, Congress provided $439 million in ESF and $20 million in INCLE funds for Iraq in the FY2009 supplemental appropriations (P.L. 111-32, H.R. 2346). The $1 billion in ISFF funding appropriated previously in P.L. 110-252 was rescinded and reappropriated in this bill. The CERP appropriation of $453 million is to be shared with Afghanistan. A significant number of reconstruction activities, especially those involving construction of road, sanitation, electric power, oil production, and other infrastructure, are completed or near completion. Security concerns slowed progress and added considerable expense to these efforts. Reconstruction priorities and funding mechanisms have changed over time. The Iraq Relief and Reconstruction Fund (IRRF), the main U.S. assistance account in the first few years, is no longer available, and most large-scale infrastructure programs are no longer funded. However, many small-scale, targeted community-level infrastructure efforts are funded under the Commander's Emergency Response Program (CERP) and the Economic Support Fund (ESF). The key emphases of the aid program are the training of Iraqi forces and programs assisting the development of Iraqi governing capacities and supporting the work of the Provincial Reconstruction Teams (PRTs). The report will be updated as events warrant. For discussion of the Iraq political situation, see CRS Report RL31339, Iraq: Post-Saddam Governance and Security, by [author name scrubbed].

The diversity rationale for affirmative action in public education has long been a topic of political and legal controversy. Many colleges and universities have established affirmative action policies not only to remedy past discrimination, but also to achieve a racially and ethnically diverse student body or faculty. Although the Supreme Court has recognized that the use of race-based policies to promote diversity in higher education may be constitutional in two cases involving the University of Michigan's admissions policies—namely Grutter v. Bollinger and Gratz v. Bollinger —the Court had never, until recently, considered whether diversity is a constitutionally permissible goal in the elementary and secondary education setting. To resolve this question, the Supreme Court agreed to review two cases that involved the use of race to maintain racially diverse public schools. The cases were Meredith v. Jefferson County Board of Education —formerly MacFarland v. Jefferson County Public Schools —and Parents Involved in Community Schools v. Seattle School District No. 1 . In Parents Involved in Community Schools v. Seattle School District No. 1 , a consolidated ruling that resolved both cases, the Court ultimately struck down the school plans at issue, holding that they violated the equal protection guarantee of the Fourteenth Amendment. This report provides an overview of the Court's decision, as well as a discussion of its implications for future educational efforts to promote racial diversity. The two cases that the Court reviewed involved challenges to school assignment and transfer plans in Louisville and Seattle. In MacFarland v. Jefferson County Public Schools, issued on the first anniversary of the University of Michigan decisions and the 50 th anniversary of Brown v. Board of Education , a federal district court in Kentucky upheld a Louisville district's voluntary consideration of race in making student assignments to achieve racial integration in the public schools. Jefferson County Public Schools (JCPS) were ordered by judicial decree to desegregate in 1975. Under the desegregation plan, each school was to have between 15% and 50% African-American enrollment and students were bused, if necessary, to ensure racial diversity. Twenty-five years later, in 2000, the federal courts ended their supervision of the desegregation plan, but the JCPS voluntarily opted to maintain its integrated schools through a "managed choice" plan that involved consideration of geographic boundaries, special programs, and school choice, as well as race. The plan was challenged in a lawsuit in 2000 by black parents whose children were denied admission to Central High School, which was already at the upper percentage limit for minority enrollment. The district court upheld the school plan, finding that the managed choice plan served numerous compelling state interests, many of which were similar to interests upheld by the Supreme Court in Grutter , and that the student assignment plan was narrowly tailored in all respects but one, which the district was required to revise. For reasons "articulated in the well-reasoned opinion of the district court," the Sixth Circuit summarily affirmed the district court's decree without issuing a detailed written opinion. Meanwhile, in Parents Involved in Community Schools v. Seattle School District No. 1 , the Ninth Circuit applied Grutter and Gratz to approve a school district's plan to maintain racially diverse schools. Under Seattle's "controlled choice" high school student assignment plan, students were given the option to attend high schools across the district, but if the demand for seats exceeded the supply at a particular school, a student's race was considered as a tie-breaker in determining admittance to the oversubscribed school. The racial tie-breaker applied only to schools whose student bodies deviated by more than 15 percentage points from the overall racial makeup of the district, then "approximately 40% white and 60% nonwhite." The Seattle plan was voluntarily adopted to "achiev[e] diversity [and] limit racial isolation" in the schools, not as a part of a desegregation remedy. In an en banc decision, the Ninth Circuit ruled that the school district had a compelling interest in the educational and social benefits of racial diversity and in avoiding racially concentrated or isolated schools. Further, the court held that the district's plan was sufficiently narrowly tailored to pass constitutional muster. The ruling reversed an earlier three-judge appellate panel's contrary decision that the school district's plan to maintain racially diverse schools was not sufficiently narrowly tailored. As noted above, the Supreme Court granted review in MacFarland v. Jefferson County Public Schools —now Meredith v. Jefferson County Board of Education —and Parents Involved in Community Schools v. Seattle School District No. 1 to consider the question of what steps a public school district may take to maintain racial diversity in elementary and secondary schools. In a consolidated ruling that resolved both cases, the Court ultimately struck down the school plans, holding that they violated the equal protection guarantee of the Fourteenth Amendment. Prior to its ruling in Parents Involved in Community Schools , the Supreme Court had considered the constitutionality of school plans to promote racial diversity on three separate occasions. In all three of these cases, however, the Court considered the issue in the context of higher education. Nevertheless, the Court's reasoning in its three higher education cases guided its review in Parents Involved in Community Schools . Therefore, the three cases— Regents of the University of California v. Bakke , Grutter v. Bollinger , and Gratz v. Bollinger —are described below. The Bakke ruling in 1978 launched the contemporary constitutional debate over state-sponsored affirmative action. The notion that diversity could rise to the level of a compelling constitutional interest in the educational setting sprang more than a quarter century ago from Justice Powell's opinion in the case. While concluding that a state medical school could not set-aside a certain number of seats for minority applicants, Justice Powell opined that a diverse student body may serve educators' legitimate interest in promoting the "robust" exchange of ideas. He cautioned, however, that "[t]he diversity that furthers a compelling state interest encompasses a far broader array of qualifications and characteristics of which ethnic origin is but a single though important element." A "notable lack of unanimity" was evident from the six separate opinions filed in Bakke . Justice Powell split the difference between two four-Justice pluralities in the case. One camp, led by Justice Stevens, struck down the admissions quota on statutory civil rights grounds. Another led by Justice Brennan would have upheld the medical school's policy as a remedy for societal discrimination. Justice Powell held the "dual admissions" procedure to be unconstitutional, and ordered Bakke's admission. But, he concluded, that the state's interest in educational diversity could warrant consideration of students' race in certain circumstances. For Justice Powell, a diverse student body fostered the "robust" exchange of ideas and academic freedom deserving of constitutional protection. Justice Powell's theory of diversity as a compelling governmental interest did not turn on race alone. He pointed with approval to the "Harvard Plan," which defined diversity in terms of a broad array of factors and characteristics. Thus, an applicant's race could be deemed a "plus" factor. It was considered on a par with personal talents, leadership qualities, family background, or any other factor contributing to a diverse student body. However, the race of a candidate could not be the "sole" or "determinative" factor. No other Justice joined in the Powell opinion. Although Justice Powell's opinion announced the judgment of the Court, no other Bakke Justices joined him on that point. Justice Powell ruled the "dual admission program" at issue to be unconstitutional and the white male plaintiff entitled to admission, while four other Justices reached the same result on statutory rather than constitutional grounds. Another four Justice plurality concluded that the challenged policy was lawful, but agreed with Justice Powell that the state court had erred by holding that an applicant's race could never be taken into account. Only Justice Powell, therefore, expressed the view that the attainment of a diverse student body could be a compelling state interest. For nearly two decades, colleges and universities relied on the Powell opinion in Bakke to support race-conscious student diversity policies, although there was some disagreement among federal appeals courts regarding the meaning and application of the ruling. The judicial divide over Bakke 's legacy was vividly underscored by a pair of separate trial court decisions, one upholding for diversity reasons the race-based undergraduate admissions policy of the University of Michigan, the other voiding a special minority law school admissions program at the same institution. Restoring a degree of clarity to the law, the Supreme Court concluded its 2002-03 term with rulings in the Michigan cases. In Grutter v. Bollinger , a 5 to 4 majority of the Justices held that the University of Michigan Law School had a "compelling" interest in the "educational benefits that flow from a diverse student body," which justified its consideration of race in admissions to assemble a "critical mass" of "underrepresented" minority students. But in a companion decision, Gratz v. Bollinger , six Justices decided that the University of Michigan's policy of awarding "racial bonus points" to minority applicants was not "narrowly tailored" enough to pass constitutional scrutiny. Generally setting the bar for admission to the Michigan Law School was a "selection index" based on applicants' composite LSAT score and undergraduate GPA. A 1992 policy statement, however, made an explicit commitment to "racial and ethnic diversity," seeking to enroll a "critical mass" of black, Mexican-American, and Native American students. The objective was to enroll minority students in sufficient numbers to enable their participation in classroom discussions without feeling "isolated or like spokesmen for their race." To foster, "distinctive perspectives and experiences," admission officers consider a range of "soft variables"—e.g., talents, interests, experiences, and "underrepresented minority" status—in their admissions decisions. In the course of each year's admissions process, the record showed, minority admission rates were regularly reported to track "the racial composition of the developing class." The 1992 policy replaced an earlier "special admissions program," which set a written goal of 10-12% minority enrollment and lower academic requirements for those groups. A notable aspect of the Grutter majority opinion was the degree to which it echoed the Powell rationale from Bakke. Indeed, the majority quoted extensively from Justice Powell's opinion, finding it to be the "touchstone for constitutional analysis of race-conscious admissions policies." Overarching much of the Court's reasoning were two paramount themes, both of which drew considerable criticism from the dissent. First, in applying "strict scrutiny" to the racial aspects of the Law School admissions program, the Court stressed the situational nature of constitutional interpretation, taking "relevant differences into account." Thus, the majority opined, "[c]ontext matters when reviewing race-based governmental action" for equal protection purposes and "[n]ot every decision influenced by race is equally objectionable," but may depend upon "the importance and the sincerity of the reasons advanced by the governmental decisionmaker" for that particular use of race. Second, and equally significant, was the deference accorded to the judgment of educational decisionmakers in defining the scope of their academic mission, even in regard to matters of racial and ethnic diversity. "[U]niversities occupy a special niche in our constitutional tradition," the Court stated, such that "[t]he Law School's educational judgment ... that diversity is essential to its educational mission is one to which we defer." Institutional "good faith" would be "presumed" in the absence of contrary evidence. One group of dissenters took particular exception to what it viewed as "the fundamentally flawed proposition that racial discrimination can be contextualized"—deemed "compelling" for one purpose but not another—or that strict scrutiny permits "any sort of deference" to "the Law School's conclusion that its racial experimentation leads to educational benefits." Indeed, the dissenters found such deference to be "antithetical" to the level of searching review demanded by strict scrutiny. Satisfied that the Law School had "compelling" reasons for pursuing a racially diverse student body, the Court moved to the second phase of strict scrutiny analysis. "Narrow tailoring," as noted, requires a close fit between "means" and "end" when the state draws any distinction based on race. In Grutter , the concept of "critical mass" won the majority's approval as "necessary to further its compelling interest in securing the educational benefits of a diverse student body." According to the Court: We find that the Law School's admissions program bears the hallmarks of a narrowly tailored plan. As Justice Powell made clear in Bakke , truly individualized consideration demands that race be used in a flexible, nonmechanical way. It follows from this mandate that universities cannot establish quotas for members of certain racial groups or put members of those groups on separate admissions tracks. Nor can universities insulate applicants who belong to certain racial or ethnic groups from the competition for admission. Universities can, however, consider race or ethnicity more flexibly as a "plus" factor in the context of individualized consideration of each and every applicant. The Court drew a key distinction between forbidden "quotas" and permitted "goals," exonerating the Law School's admission program from constitutional jeopardy. The majority observed that both approaches pay "some attention to numbers." But while the former are "fixed" and "reserved exclusively for certain minority groups," the opinion continues, the Law School's "goal of attaining a critical mass" of minority students required only a "good faith effort" by the institution. In addition, minority Law School enrollment between 1993 and 2000 varied from 13.5 to 20.1 percent, "a range inconsistent with a quota." In a separate dissent, the Chief Justice objected that the notion of a "critical mass" was a "sham," or subterfuge for "racial balancing," since it did not explain disparities in the proportion of the three minority groups admitted under its auspices. Other factors further persuaded the Court that the Law School admissions process was narrowly tailored. By avoiding racial or ethnic "bonuses," the policy permitted consideration of "all pertinent elements of diversity," racial and nonracial, in "a highly individualized, holistic review of each applicant's file." The Court also found that "race neutral alternatives" had been "sufficiently considered" by the Law School, although few specific examples are provided. Importantly, however, the opinion makes plain that "exhaustion" of "every conceivable alternative" is not constitutionally required, only a "serious good faith consideration of workable race-neutral alternatives that will achieve the diversity the university seeks." Consequently, the Law School was not required to consider a lottery or lowering of traditional academic benchmarks—GPA and LSAT scores—for all applicants since "these alternatives would require a dramatic sacrifice of diversity, the academic quality of all admitted students, or both." And, because the admissions program was based on individual assessment of all pertinent elements of diversity, it did not "unduly burden" non-minority applicants. Nonetheless, the Court emphasized the need for "reasonable durational provisions," and "periodic reviews" by institutions conducting such programs. To drive home the point, the majority concluded with a general admonition. "We expect that 25 years from now, the use of racial preferences will no longer be necessary to further the interest approved today." Undergraduate admission to the University of Michigan had been based on a point system or "student selection index." A total possible 150 points could be awarded for factors, academic and otherwise, that made up the selection index. Academic factors accounted for up to 110 points, including 12 for standardized test performance. By comparison, 20 points could be awarded for one, but only one, of the following: membership in an underrepresented minority group, socioeconomic disadvantage, or athletics. Applicants could receive one to four points for "legacy" or alumni relationships, three points for personal essay, and five points for community leadership and service, six points for in-state residency, etc. In practice, students at the extremes of academic performance were typically admitted or rejected on that basis alone. But for the middle range of qualified applicants, these other factors were often determinative. Finally, counselors could "flag" applications for review by the Admissions Review Committee, where any factor important to the freshman class composition—race included—was not adequately reflected in the selection index score. The four Grutter dissenters were joined by two Justices in striking down the racial bonus system for undergraduate admissions in Gratz . Basically, the same factors that saved the Law School policy, by their absence, conspired to condemn the undergraduate program in the eyes of the majority. Since the university's "compelling" interest in racial student diversity was settled in Grutter , the companion case focused on the reasons why the automatic award of 20 admission points to minority applicants failed the narrow tailoring aspect of strict scrutiny analysis. Relying, again, on the Powell rationale in Bakke , the policy was deemed more than a "plus" factor, as it denied each applicant "individualized consideration" by making race "decisive" for "virtually every minimally qualified underrepresented minority applicant." Nor did the procedure for "flagging" individual applications for additional review rescue the policy since "such consideration is the exception and not the rule," occurring—if at all—only after the "bulk of admission decisions" are made based on the point system. The Court rejected the university's argument based on "administrative convenience," that the volume of freshman applications makes it "impractical" to apply a more individualized review. "[T]he fact that the implementation of a program capable of providing individualized consideration might present administrative challenges does not render constitutional an otherwise problematic system." Finally, the majority made plain that its constitutional holding in Gratz is fully applicable to private colleges and universities pursuant to the federal civil rights laws. "We have explained that discrimination that violates the Equal Protection Clause of the Fourteenth Amendment committed by an institution that accepts federal funds also constitutes a violation of Title VI [of the 1964 Civil Rights Act]." As noted above, the Supreme Court had never, until recently, considered the constitutionality of the voluntary use of race as a factor in achieving diversity in elementary and secondary education. All three of the federal appeals courts to consider the issue since Grutter and Gratz were decided upheld racial diversity measures in public schools, but these opinions conflicted with pre- Grutter / Gratz appellate rulings that rejected such racially based plans. Possibly as a result of this conflict, the Supreme Court agreed to review whether the school diversity plans at issue in Meredith and Parents Involved in Community Schools violate the equal protection clause of the Constitution. The Fourteenth Amendment of the Constitution provides, in relevant part: No state shall make or enforce any law which shall abridge the privileges or immunities of the citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws . 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." Laws based on suspect classifications such as race or gender, however, typically receive heightened scrutiny and require a stronger state interest to justify the classification. The highest level of judicial review, known as strict scrutiny, is applied to laws that contain classifications based on race. Such classifications will survive strict scrutiny only if the government can show that they: (1) further a compelling governmental interest, and (2) are narrowly tailored to meet that interest. Ultimately, the Supreme Court held that the Louisville and Seattle school plans violated the equal protection clause. However, the decision was fractured, with five different Justices filing opinions in the case. Announcing the judgment of the Court was Chief Justice Roberts, who led a plurality of four Justices in concluding that the school plans were unconstitutional because they did not serve a compelling governmental interest. Although Justice Kennedy, who concurred in the Court's judgment striking down the plans, disagreed with the plurality's conclusion that the diversity plans did not serve a compelling governmental interest, he found that the school plans were unconstitutional because they were not narrowly tailored. In addition, Justice Thomas filed a concurring opinion, and Justices Stevens and Breyer filed separate dissenting opinions. In the portion of his opinion that was joined by Justice Kennedy and that therefore announced the judgment of the Court, Chief Justice Roberts began by noting that the Court had jurisdiction in the case, thereby rejecting a challenge to the standing of the plaintiff organization Parents Involved in Community Schools (PICS). Chief Justice Roberts then turned to the substantive merits of the claims involved, reiterating that governmental racial classifications must be reviewed under strict scrutiny. As a result, the Court examined whether the school districts had demonstrated that their assignment and transfer plans were narrowly tailored to achieve a compelling governmental interest. In assessing the compelling interest prong of the strict scrutiny test, Chief Justice Roberts noted that the Court has recognized two interests that qualify as compelling where the use of racial classifications in the school context is concerned: remedying the effects of past intentional discrimination and promoting diversity in higher education. However, the Chief Justice found that neither of these interests was advanced by the school plans at issue. According to the Chief Justice, because Seattle schools were never intentionally segregated and because the lifting of its desegregation order demonstrated that Louisville schools had successfully remediated past discrimination in its schools, neither school district could assert a compelling interest in remedying past intentional discrimination. Likewise, the Court argued that the Grutter precedent, which recognized diversity in higher education as a compelling governmental interest, did not govern the current cases. According to Chief Justice Roberts, the compelling interest recognized in Grutter was in a broadly defined diversity that encompassed more than just racial diversity and that focused on each applicant as an individual. Because race was the only factor considered by the school districts rather than other factors that reflected a broader spectrum of diverse qualifications and characteristics, and because the plans did not provide individualized review of applicants, the plurality opinion found that the school districts' articulated interest in diversity was not compelling. Added the Chief Justice, "[e]ven when it comes to race, the plans here employ only a limited notion of diversity, viewing race exclusively in white/nonwhite terms in Seattle and black/'other' terms in Jefferson County." In rejecting Grutter as applicable precedent, the Court also noted that the decision had rested in part on the unique considerations of higher education, and that those considerations were absent in the elementary and secondary education context. Even if the school districts had met the first prong of the strict scrutiny test by establishing a compelling governmental interest in the use of racial classifications to make school assignments, the Court found the school plans would still have failed the second prong of the test because they were not sufficiently narrowly tailored to meet their stated goals. According to Chief Justice Roberts, in both Seattle and Louisville, only a few students were assigned to a non-preferred school based on race. As a result, "the minimal impact of the districts' racial classifications on school enrollment casts doubt on the necessity of using racial classifications," especially in light of the fact that such racial classifications are permissible in only the most extreme circumstances. Additionally, the Court was concerned that the school districts had failed to consider methods other than racial classifications to achieve their goals, despite a requirement that narrowly tailored programs consider race-neutral alternatives. Although Justice Kennedy joined the above portions of the plurality opinion, thereby forming a majority in favor of striking down the school plans, he did not join the remainder of the plurality opinion, which concluded for additional reasons that the school plans were unconstitutional. In these portions of his opinion, Chief Justice Roberts faulted the school plans for tying their diversity goals to each district's specific racial demographics rather than to "any pedagogical concept of the level of diversity needed to obtain the asserted educational benefits." In other words, each district tried to establish schools with racial diversity that mirrored the percentages of racial groups in their respective overall populations. This effort, according to the Chief Justice, amounted to unconstitutional racial balancing because the plans were not in fact narrowly tailored to the goal of achieving the educational and social benefits that allegedly flow from racial diversity, but rather were tailored to racial demographics instead. Indeed, Chief Justice Roberts wrote, "[a]ccepting racial balancing as a compelling state interest would justify the imposition of racial proportionality throughout American society, contrary to our repeated recognition that at the heart of the Constitution's guarantee of equal protection lies the simple command that the Government must treat citizens as individuals, not as simply components of a racial, religious, sexual or national class." Such racial balancing could not, in the Chief Justice's view, amount to a compelling governmental interest even if pursued in the name of racial diversity or racial integration. In another portion of the plurality opinion not joined by Justice Kennedy, Chief Justice Roberts criticized Justice Breyer's dissent for misapplying precedents that recognized a compelling interest in remedying past discrimination. According to the Chief Justice, the Court has recognized a compelling interest in remedying past discrimination when that discrimination is caused by governmental action but not when caused by other factors, such as social or economic pressures. Noting that the Seattle school district was never segregated due to state action and the Louisville school district had eliminated all vestiges of state segregation, the Chief Justice therefore argued that the cases cited by Justice Breyer as precedents for race-conscious school integration efforts were inapplicable to the current case. The plurality opinion concluded with a discussion of Brown v. Board of Education , in which the Court held that the deliberate segregation of schoolchildren by race was unconstitutional. According to the plurality: Before Brown , schoolchildren were told where they could and could not go to school based on the color of their skin. The school districts in these cases have not carried the heavy burden of demonstrating that we should allow this once again—even for very different reasons.... The way to stop discrimination on the basis of race is to stop discriminating on the basis of race. Although he joined the Court in striking down the school plans, Justice Kennedy wrote a separate concurring opinion that provides additional insight into how the Justices might handle future cases involving the consideration of race in the educational context. As noted above, Justice Kennedy declined to sign on to the plurality opinion in full, in part because he disagreed with its implication that diversity in elementary and secondary education, at least as properly defined, does not serve a compelling governmental interest. According to Justice Kennedy, "[d]iversity, depending on its meaning and definition, is a compelling educational goal a school district may pursue," but neither Seattle nor Louisville had shown that its plans served a compelling interest in promoting diversity or that the plans were narrowly tailored to achieve that goal. Justice Kennedy also pointedly criticized the plurality opinion for "imply[ing] an all-too-unyielding insistence that race cannot be a factor in instances when, in my view, it may be taken into account. ...In the administration of public schools by the state and local authorities, it is permissible to consider the racial makeup of schools and to adopt general policies to encourage a diverse student body, one aspect of which is its racial composition." Justice Kennedy identified several ways in which schools, in his view, could constitutionally pursue racial diversity or avoid racial isolation, including strategic site selection of new schools, altering attendance zones, providing resources for special programs, and recruiting students and faculty. According to Justice Kennedy, such measures would be constitutional because, while race-conscious, they are not based on classifications that treat individuals differently based on race. However, Justice Kennedy would not limit schools to facially neutral methods of achieving diversity, saying that racial classifications might be permissible if based on "a more nuanced, individual evaluation of school needs and student characteristics" similar to the plan approved in Grutter . Although no other justice joined his concurrence, Justice Kennedy's unique role in providing the pivotal swing vote in the case makes his concurring opinion significant to any future legal developments regarding the use of racial classifications in the education context. Although Justice Thomas joined the plurality opinion written by Chief Justice Roberts in full, he also wrote a separate concurring opinion that took issue with certain aspects of Justice Breyer's dissent. Among other things, Justice Thomas disagreed with the dissent's assertion that the school plans were necessary to combat school resegregation, arguing that neither Seattle nor Louisville faced the type of intentional state action to separate the races that the school districts in Brown had. In addition, Justice Thomas contested the dissent's argument that a less strict standard of review should apply when racial classifications are used for benign purposes, in part because Justice Thomas disagreed that the school plans—which, he wrote, inevitably exclude some individuals based on race and therefore may exacerbate racial tension—are as benign as the dissent asserted. More importantly, Justice Thomas argued that the perception of what constitutes a benign use of race-conscious measures is nothing more than a reflection of current social practice that relies too heavily on the good intentions of current public officials. According to Justice Thomas, "if our history has taught us anything, it has taught us to beware of elites bearing racial theories," adding in a footnote, "Justice Breyer's good intentions, which I do not doubt, have the shelf life of Justice Breyer's tenure." As noted above, both Justices Stevens and Breyer dissented from the Court's decision to strike down the school plans. In his brief dissent, Justice Stevens, who also joined Justice Breyer's dissent, described the Court's reliance on Brown as a "cruel irony" because it ignored the historical context in which Brown was decided and the ways in which subsequent precedents applied the landmark decision to uphold school integration efforts. Meanwhile, in a lengthy and passionate dissent nearly twice as long as Chief Justice Roberts's opinion, Justice Breyer argued that the Court's holding "distorts precedent, ... misapplies the relevant constitutional principles, ... announces legal rules that will obstruct efforts by state and local governments to deal effectively with the growing resegregation of public schools, ... threatens to substitute for present calm a disruptive round of race-related litigation, and ... undermines Brown ' s promise of integrated primary and secondary education that local communities have sought to make a reality." Although the Court's decision to strike down the Seattle and Louisville school assignment and transfer plans will have a profound impact on similar plans at many of the nation's elementary and secondary schools, the Parents Involved in Community Schools case did not completely foreclose the possibility that school districts may constitutionally pursue certain measures to avoid racial isolation and promote racial diversity in their schools. However, it is not entirely clear what these measures might entail. While the methods identified in Justice Kennedy's concurring opinion—such as engaging in strategic site selection of new schools, altering attendance zones, providing resources for special programs, and recruiting students and faculty—seem more likely to survive judicial scrutiny, the fate of other kinds of race-conscious school plans may become apparent only as a result of legal developments that emerge over time.

The diversity rationale for affirmative action in public education has long been a topic of political and legal controversy. Many colleges and universities have established affirmative action policies not only to remedy past discrimination, but also to achieve a racially and ethnically diverse student body or faculty. Although the Supreme Court has recognized that the use of race-based policies to promote diversity in higher education may be constitutional, the Court had never, until recently, considered whether diversity is a constitutionally permissible goal in the elementary and secondary education setting. To resolve this question, the Supreme Court recently agreed to review two cases that involved the use of race to maintain racially diverse public schools and to avoid racial segregation. In a consolidated ruling in Parents Involved in Community Schools v. Seattle School District No. 1, the Court held that the Seattle and Louisville school plans at issue violated the equal protection guarantee of the Fourteenth Amendment. This report provides an overview of the Court's decision, as well as a discussion of its implications for future educational efforts to promote racial diversity.

To better confront the military demands of a post-Cold War world, as well as to reduce costs of maintaining excess military infrastructure, Congress authorizes the Department of Defense (DOD) to realign or close military bases. Following an examination of its military forces and installations, the department compiles a list of recommended Base Realignment and Closing (BRAC) actions. This proposed list of base closures and realignments is presented to an independent BRAC Commission, which reviews the proposed actions and sends the list to the President with any recommended changes. After the President reviews and approves the list, it is sent to Congress. The recommended list is automatically enacted unless Congress passes a joint resolution disapproving the list as a whole and sustains it over a potential presidential veto. Following the actual base closings and realignments, the DOD carries out an environmental remediation plan to enable the conveyance of surplus federal land to other entities. Four separate BRAC rounds were initiated in 1988, 1991, 1993, and 1995. In total, 97 bases were closed or realigned under these rounds. By 2001, the DOD had implemented the recommendations from the previous rounds, although significant environmental remediation and asset transfers remain unfinished in many of the affected communities. Congress authorized a fifth round of military base realignments and closures for 2005 through the National Defense Authorization Act of 2002 ( P.L. 107 - 107 ). A primary objective of the 2005 BRAC round was "joint activity"—integration and realignment of cross-service functions in such areas as industrial, supply and storage facilities, technical, training, headquarters, and support activities. The list of recommended actions to achieve these objectives was presented to the BRAC Commission on May 13, 2005. The report became law on November 10, 2005. Small-area economic impact analysis can be a difficult and imprecise undertaking. Assumptions and supporting statistical reasoning can lead to predictions that are, in hindsight at least, inaccurate. For example, multiplier effects—measures of the rate at which a direct effect (e.g., base job losses) creates indirect effects—are central elements in estimating the socioeconomic impact of a base closing or realignment. If, for example, one assumes that a base job has a large indirect employment multiplier (e.g., 2.5-3.0), then for each direct job lost, employment indirectly related to the base job within some defined geographic area is also predicted to be lost. Similarly, an income multiplier allows one to estimate the total income generated by a military base and the resulting income loss or gain within a region. Assumptions about the extent to which base incomes are spent within a particular community can lead to very different assessments of the impacts from the loss of that income. A shift to a smaller employment multiplier will show a much reduced total employment loss from closure. Using data from military base closings between 1971 and 1994, one 2001 study estimated multipliers of less than one and concluded that employment impacts were mostly limited to the direct job loss associated with military transfers out of the region. On average, the study found that per capita income was little affected by the closures. Base closings in communities that have been declining economically for some time, however, may produce impacts different from (and possibly more severe than) those of base closings in communities where growth and economic diversification are more in evidence. The relative strength or weakness of the national or regional economy also can strongly influence the magnitude of community effects from base closure or realignment and the length of time for economic recovery. Evidence from earlier base closures suggests that the impacts can be less than expected because, unlike many other major employers, military bases may be relatively isolated economic entities, purchasing base needs outside the community and spending income at the base rather than in the local community. Local communities are also concerned about the fiscal impacts borne by local governments, especially rural governments. Revenue from property taxes, sales tax, licenses and permits, and state and federal aid is influenced by population gains and losses. With population loss, and related changes to local income, base closures can affect the ability of local governments to raise revenue and support existing services. Similarly, with significant population increases, a community may find greater demand for public services (e.g., transportation, schools, public safety, water and sewerage) without the necessary revenue to support the additional demand. Even where increased revenue can contribute to mitigating the impact of base expansion, the planning and adjustment costs impose other burdens on communities and residents. Local government expenditures and services can also be affected by closure and realignment, depending on the extent to which the military base is integrated into the community's fiscal planning. Here as well, statistical assumptions can lead to significant differences in estimated impact. For example, an economic development analyst estimated that the closure of Hanscom Air Force Base would mean the loss of about $200 million in defense contracts to Massachusetts's firms. Another analysis estimated the same losses at $3 billion. A review of impacts on local government revenue and expenditures, however, generally confirmed that these impacts were, like those impacts affecting the economy, not as severe as had been originally projected. The announcements of previous BRAC Commissions have been greeted in affected communities and elsewhere by significant concern over the potential consequences of closing or significantly realigning a military installation. Military bases in many rural areas, for example, provide an economic anchor to local communities. Even where the local and regional economy is more diversified, military bases provide a strong social and cultural identification that can be shaken by the announcement that a base is closing or being downsized. Not only can there be an immediate impact from the loss of military and civilian jobs, local tax revenues also can decline, leaving counties and communities less able to provide public services. School districts with a high proportion of children from military families can experience significant declines in enrollment. With these effects can come related reductions in state and/or federal funding. With the importance given to joint service activity in the 2005 BRAC round, some bases saw their functions moved to other bases. Other bases, however, are expanding and creating impacts on schools, housing, traffic, and local government services (e.g., Fort Belvoir, Virginia). DOD's Office of Economic Adjustment identified 20 locations where expected growth as a result of force realignments in FY2006-FY2012 would adversely affect surrounding communities. Communities have until September 15, 2011, to implement the changes specified in the BRAC Commission Report. While it is predictable that communities will react to news of a base's closing with concern and anxiety, evidence from past BRAC rounds shows that local economies are, in many cases, more resilient after an economic shock than they expected. Some worst-case scenarios predicted for communities did not occur, perhaps because they were based, in part, on assumptions about economic multipliers, the perceived versus actual role of a base in the local economy, and over-generalization from individual cases where there was significant economic dislocation. Many communities that developed a comprehensive and realistic plan for economic redevelopment were able to replace many of the lost jobs and restore lost income. The DOD programs for assisting communities with base redevelopment (e.g., the Office of Economic Adjustment) have also played a role in mitigating some of the effects of base closure and/or realignment. Some communities came to regard the closing as an opportunity for revitalizing and diversifying their economies. Other communities found they were in stronger economic shape after several years than they thought possible on first learning their bases were closing. Coping with the closure in the short term and revitalizing communities over the long haul can, nonetheless, be daunting tasks. Not all communities recover, and for those that do, the recovery can be uneven. The Government Accountability Office (GAO) found that many communities in 2005 were still recovering from prior closures. Rural areas in particular can find the loss of a base and the revitalization of their communities especially difficult challenges. The effects on individuals can also vary. For example, persons who lose jobs in a closure may not have the kinds of skills needed by the economic activity generated by the redevelopment. Individuals may relocate to other regions where the jobs they find may not match the wages of the jobs lost. Significant environmental cleanup costs from toxic elements at military installations can delay the transfer of the base to local authorities and limit the kinds of redevelopment options available to a community. In some respects, a closed military base shares similarities with other closed industrial facilities such as steel mills, oil refineries, or port facilities. Research and previous economic development experience suggest that converting a closed military base into a source of new competitive advantage is a major community effort. Some bases closed in earlier BRAC rounds have been successfully redeveloped into manufacturing facilities, airports, and research laboratories (e.g., Charleston, SC). Bases also may hold certain advantages for redevelopment that are not shared by other industrial sites. Pricing for the closed bases might be steeply discounted and liability for environmental protection indemnified. Federal grants and incentives also exist to aid community redevelopment efforts. Once a base is slated for closing, consideration of property transfer mechanisms, the extent of environmental cleanup necessary, and a realistic base reuse plan for the transferred property become central elements in organizing the economic development process. Establishing a Local Redevelopment Authority (LRA) with power to assume ownership of the transferred land is a necessary initial step in the economic redevelopment process. The LRA must be approved by the DOD before property can be transferred. The DOD's Office of Economic Adjustment (OEA) is a resource available to communities seeking assistance in managing the impact of a base closing or realignment. The OEA awards planning grants to communities and also provides technical and planning assistance to local redevelopment authorities. By 2002, a cumulative $1.9 billion in DOD and other federal funds had been expended to assist communities affected by base closures. Other sources of federal assistance may also be available to assist communities in recovering from a base closure. Given the variance in the economic conditions of the local area and the usable facilities left behind, there is no single template for redeveloping a closed military base. One generality that might be applied to almost all cases, however, is that the sooner economic redevelopment can begin after base closure, the better for local communities. Base closure can be economically difficult for a community, but closure with a long lag in which the closed base is essentially a hole in the local economy can be worse. While many factors can delay the economic redevelopment of a closed base, the most common may be the need for environmental cleanup of the closed property. Except for limited circumstances, property from a closed military base must be cleaned of environmental contamination before being transferred for redevelopment. The degree of cleanup and the timetable for completion, however, is left to DOD which operates under the appropriations authorized by Congress. Because of the extent of contamination and magnitude of costs involved once funds are allocated, the process of environmental cleanup can be lengthy. A complicating factor in the cleanup process can be the different levels of cleanup that might be completed. As of FY2009, 88% of sites from bases closed in prior BRAC rounds (so-called Legacy BRAC sites) that were not contaminated with munitions had been readied for transfer to local development authorities. Approximately 54% of the sites from the 2005 BRAC that were not contaminated with munitions have now been readied for transfer to local development authorities. For sites with munitions contamination, 68% of Legacy BRAC sites and 33% of 2005 BRAC sites had been readied for transfer at the end of FY2009. Land intended for use as housing or schools, for example, must be cleaned to a greater degree than land intended for industrial use. DOD, however, is not legally required to clean land past the point needed for industrial use. Sites that have been cleaned to DOD's satisfaction and readied for transfer to local authorities, may not have actually been transferred. When a community desires an ultimate land use that would require a greater level of cleanup than that done by DOD, this may result in a property being left vacant until either another use is found or until additional cleanup is done. In general, previous base closures suggest that communities face many specialized challenges, but there is little strong evidence that the closing of a base is the definitive cause of a general economic calamity in local economies. On the other hand, rural areas could experience substantially greater and longer-term economic dislocation from a base closing than urban and suburban areas. Rural areas with less diversified local economies may be more dependent on the base as a key economic asset than urban/suburban economies. Communities where bases are recommended for significant expansion can also find the effects of growth a major challenge. Over the five- to six-year phasing out of a base, however, environmental cleanup, successful property transfers to a local redevelopment authority, and widespread community commitment to a sound base reuse plan have been shown to be crucial elements in positioning communities for life without a military installation.

The most recent Base Realignment and Closure (BRAC) Commission submitted its final report to the Administration on September 8, 2005. Implementation of the BRAC round was officially completed on September 15, 2011. In the report, the commission rejected 13 of the initial Department of Defense recommendations, significantly modified the recommendations for 13 other installations, and approved 22 major closures. The loss of related jobs, and efforts to replace them and to implement a viable base reuse plan, can pose significant challenges for affected communities. However, while base closures and realignments often create socioeconomic distress in communities initially, research has shown that they generally have not had the dire effects that many communities expected. For rural areas, however, the impacts can be greater and the economic recovery slower. Early planning and decisive leadership from officials are important factors in addressing local socioeconomic impacts from base realignment and closing. Drawing from existing studies, this report assesses the potential community impacts and proposals for minimizing those impacts. For additional information on the BRAC process, see CRS Report RL32216, Military Base Closures: Implementing the 2005 Round, by [author name scrubbed]; and CRS Report RL33766, Military Base Closures and Realignment: Status of the 2005 Implementation Plan, by [author name scrubbed].

B roadly understood, domestic content restrictions are provisions which require that items purchased using specific funds appropriated by Congress be produced or manufactured in the United States. Over the years, Congress has enacted a number of such restrictions, pursuant to its broad power over federal spending, in order to protect U.S. businesses and labor by generally barring the use of federal funds to purchase "foreign" products. However, these restrictions are potentially less stringent than they might at first appear, since Congress has permitted the President to waive them so that the United States may comply with its obligations under various international trade agreements and accomplish certain other goals, or expressly provided for supplies produced or manufactured in countries with which the United States has trade agreements to be treated the same as supplies produced or manufactured domestically. Such promotion of trade has also been seen as generally benefitting U.S. firms and labor by facilitating the export of supplies and services in whose production the United States enjoys competitive advantages. Federal law currently has four major domestic content regimes, which apply in different contexts and impose different requirements upon the use of federal procurement, grant, and other funds: 1. The Buy American Act of 1933 , as amended, generally requires federal agencies to purchase "domestic end products" and use "domestic construction materials" on contracts exceeding the micro-purchase threshold (typically $3,500) performed in the United States. 2. The Trade Agreements Act of 1979 , as amended, permits the waiver of the Buy American Act and has resulted in "eligible products" from "designated countries" receiving equal consideration with domestic offers when certain federal agencies procure certain goods or services whose value exceeds certain monetary thresholds. 3. The Berry Amendment (10 U.S.C. §2533a) and its former "specialty metals" provision , now codified at 10 U.S.C. §2533b, require that food, clothing, tents, certain textile fabrics and fibers, and hand or measuring tools purchased by the Department of Defense (DOD) be entirely grown, reprocessed, reused, or produced in the United States; and that any "specialty metals" contained in any aircraft, missile and space system, ship, tank and automotive item, weapon system, ammunition, or any components thereof, purchased by DOD be melted or produced in the United States. 4. The Buy America Act —which is the popular name for a group of domestic content restrictions that have been attached to specific grant funds administered by the Department of Transportation (DOT) and certain other federal agencies—generally requires that steel, iron, and manufactured products made primarily of steel or iron and used in infrastructure projects be produced or manufactured in the United States. However, there are also a number of other domestic content restrictions that apply in specific contexts and, in many cases, are intended to address perceived "gaps" left by the four major domestic content regimes noted above. This report provides an overview of the Buy American Act, Trade Agreements Act, Berry Amendment (including its former specialty metals provision), and Buy America Act, specifically highlighting the commonalities and differences among them. The report also lists other federal domestic content restrictions codified in the U.S. Code . It does not address state or local "Buy American" provisions; nor does it address use of the "Made in America" label. It is also important to note that existing domestic content restrictions generally pertain to the place of production or manufacture of supplies. They generally do not address the place of performance of services, or, with certain exceptions, the nationality of the vendor. The Buy American Act is the earliest and arguably the best known of the major domestic content restrictions. On its face, the Buy American Act appears to prohibit federal agencies from acquiring "foreign" goods by providing that "[o]nly unmanufactured articles, materials, and supplies that have been mined or produced in the United States, and only manufactured articles, materials, and supplies that have been manufactured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States, shall be purchased for public use." As implemented, however, the act is better understood as generally establishing a price preference for domestic end products and construction materials. Specifically, the provisions of the Federal Acquisition Regulation (FAR) implementing the Buy American Act require that, when a domestic offer (i.e., an offer of a domestic end product) is not the low offer, the procuring agency must add a certain percentage of the low offer's price (inclusive of duty) to that offer before determining which offer is the lowest priced, or provides "best value" for the government. This percentage typically ranges from 6%, in cases where the lowest domestic offer is from a large business; to 12%, when the lowest domestic offer is from a small business; to 50%, for Department of Defense procurements, although agencies may adopt higher percentages by regulation. If the domestic offer is the lowest, or tied for lowest, after the application of this price preference, the agency must generally award the contract to the domestic offeror. However, if the foreign offer still has the lowest price, the agency may generally award the contract to the foreign offeror pursuant to provisions of the Buy American Act permitting the purchase of foreign end products, and the use of foreign construction materials, when the costs of domestic ones are "unreasonable." The Buy American Act makes separate provisions for federal agencies' purchase of supplies and their construction of "public works," as discussed below. It also incorporates several exceptions that permit the use of foreign end products and construction materials even if the cost of domestic ones is not "unreasonable." In addition, the application of the Buy American Act has been waived in certain procurements pursuant to the Trade Agreements Act (TAA). As implemented by the FAR, the Buy American Act generally requires that federal agencies acquiring supplies for use in the United States under a contract valued in excess of the micro-purchase threshold (typically $3,500) purchase "domestic end products." Whether an end product (i.e., an article, material, or supply to be acquired for public use) is "domestic" depends, in part, upon whether it is unmanufactured or manufactured. Unmanufactured end products must be mined or produced in the United States in order to qualify as "domestic" for purposes of the Buy American Act. Manufactured end products, in contrast, qualify as domestic if they are manufactured in the United States, and either (1) the cost of the components mined, produced, or manufactured in the United States exceeds 50% of the cost of all components, or (2) the end product is a commercially available off-the-shelf (COTS) item. The meaning of "manufacture" is not defined by the Buy American Act, executive orders implementing the act, or the FAR, and determining whether particular activities constitute "manufacturing"—such that a product can be said to be manufactured in the United States—can be complicated. In answering this question, judicial and other tribunals have, at various times, considered whether there were "substantial changes in physical character"; whether separate manufacturing stages were involved, or whether there was one continuous process; and whether the article is completed in the form required by the government. Operations performed after the item has been completed (e.g., packaging, testing) generally are not viewed as manufacturing. The cost of components, in turn, is generally determined based upon certain costs incurred by the contractor in purchasing or manufacturing the components. Specifically, for components purchased by the contractor, the cost of components includes the acquisition costs (including transportation costs to the place of incorporation into the end product), and any applicable duty (regardless of whether a duty-free certificate of entry is issued); and for components manufactured by the contractor, the cost of components includes all costs associated with the manufacture of the component (including transportation costs), and allocable overhead costs, but excludes profits and any costs associated with the manufacture of the end product. Specific components generally need not be manufactured in the United States, so long as at least 50% of the costs of all components are mined, produced, or manufactured in the United States, or the end product is a COTS item. In general, anything that is not itself acquired as an end product is seen as a component, even if the agency could theoretically have purchased it as an end product. The Buy American Act also generally requires that domestic materials be used in federal agencies' construction projects by prohibiting them from "allow[ing] the contractor to acquire foreign construction materials." Construction material generally includes any "article, material, or supply brought to the construction site by a contractor or subcontractor for incorporation into [a] building or work," including items brought to the site preassembled from articles, materials, or supplies. However, materials purchased directly by the government are treated as supplies, not construction materials. Domestic construction material includes unmanufactured construction material mined or produced in the United States, as well as construction material manufactured in the United States, provided that (1) the cost of the components mined, produced, or manufactured in the United States exceeds 50% of the cost of all components, or (2) the material is a COTS item. Manufacture is determined in the same way as for end products, and the costs of construction materials are also generally calculated in the same way as the costs of end products. The FAR lists five "exceptions" to the Buy American Act, or five circumstances in which an agency may purchase foreign end products, or permit the use of foreign construction materials, without violating the act. These exceptions apply when 1. the procurement of domestic goods or the use of domestic construction materials would be "impracticable" or "inconsistent with the public interest"; 2. domestic end products or construction materials are unavailable "in sufficient and reasonably available commercial quantities and of a satisfactory quality"; 3. the contracting officer determines that the cost of domestic end products or construction materials would be "unreasonable"; 4. the goods are acquired specifically for commissary resale; or 5. the agency procures information technology that is a commercial item. However, some commentators also treat procurements whose value is at or below the micro-purchase threshold (generally $3,500), and procurements for use outside the United States, as exceptions to the act. The procuring agency may determine, on its own initiative, whether one of these exceptions applies. Alternatively, particularly in the case of construction contracts, vendors may request that the contracting officer make a determination regarding the applicability of an exception prior to or after contract award. In practice, the applicability of the Buy American Act is significantly limited by its waiver pursuant to the Trade Agreements Act, as discussed below. Its requirements generally only apply when (1) the anticipated value of the procurement is below the relevant monetary thresholds prescribed by U.S. trade agreements; (2) the acquisition involves agencies, supplies, or services excluded from the coverage of particular trade agreements; or (3) the circumstances of the acquisition are otherwise such that the acquisition is exempt from the TAA's waiver of the Buy American Act (e.g., acquisitions set aside for small businesses). The Trade Agreements Act (TAA) allows the President to waive "the application of any law, regulation, procedure, or practice regarding Government procurement" that would discriminate against eligible products or suppliers from "designated countries" so that the United States may comply with its obligations under various international trade agreements and accomplish certain other goals. Laws subject to waiver include the Buy American Act and similar domestic content restrictions. Under the TAA and its implementation in the FAR, offers of "eligible products" from certain countries with which the United States has trade agreements, or which it otherwise treats as designated countries, are generally entitled to "receive equal consideration with domestic offers" whenever the value of the acquisition exceeds certain monetary thresholds. The TAA also prohibits procurement of products of nondesignated countries, with certain exceptions and waivers, in acquisitions covered by the World Trade Organization (WTO) Government Procurement Agreement (GPA) whose value exceeds the relevant monetary thresholds, in order to encourage additional countries to join this agreement and provide reciprocal competitive government procurement opportunities to U.S. products and suppliers. The FAR implements this prohibition by requiring federal agencies to acquire only "U.S.-made or designated country end products or U.S. or designated country services" in acquisitions covered by the WTO GPA, subject to certain exceptions. A "substantial transformation" test is used to determine whether an end product originates in a particular country for purposes of the TAA when the product consists at least in part of materials from another country. Congress passed the TAA in part to implement the Government Procurement Code resulting from the Tokyo Round of international trade negotiations. The code contained nondiscrimination obligations with respect to government procurement similar to those now contained in the plurilateral WTO GPA. Currently, the WTO GPA generally requires that, whenever the value of an acquisition exceeds certain monetary thresholds, the United States grant a party's covered products, services, and suppliers national treatment—that is, treat them no less favorably than domestic goods, services, and suppliers—with respect to all laws, regulations, procedures, and practices regarding government procurement covered by the agreement. The WTO GPA also contains a most-favored-nation (MFN) treatment provision that requires the United States to treat a party's covered products, services, and suppliers no less favorably than the products, services, and suppliers of any other party to the agreement with respect to all laws, regulations, procedures, and practices covered by the agreement. Most U.S. free trade agreements also contain some form of nondiscrimination obligation pertaining to government procurement. Annexes to these free trade agreements include monetary thresholds that determine when the obligations in the agreements apply to an acquisition of covered products or services by a covered entity. If a WTO Member or country party to a U.S. free trade agreement considered a U.S. government procurement measure to violate the agreement, it could potentially challenge the measure in a dispute settlement proceeding. If an adverse decision were ultimately rendered, the United States would be expected to remove the offending measure or face the possibility of paying compensation to the complaining foreign country or being subject to trade retaliation. Such sanctions might include the suspension by the retaliating foreign country of nondiscriminatory treatment accorded to U.S. products, services, and suppliers in that country's procurements. So that the United States may comply with its obligations under these trade agreements, the Office of the United States Trade Representative (USTR) has waived the Buy American Act for eligible products from designated countries, making these products in a sense "subject to" the TAA rather than the Buy American Act. Part 25 of the FAR contains a list of countries designated by the USTR. This list includes (1) parties to the WTO GPA; (2) parties to most U.S. free trade agreements; (3) certain least developed countries; and (4) certain Caribbean Basin countries. Not all products and services from particular designated countries are eligible products for purposes of the TAA, however. Rather, only products and services covered for procurement by specified agencies of the United States under certain trade agreements are eligible. Annexes to the WTO GPA and U.S. free trade agreements indicate which products and services of a particular country are covered for procurement by the United States, often by including certain products and services within the coverage of the agreement or excluding them from coverage under the agreement. In addition, the international obligations contained in these agreements extend only to procurements by particular entities, such as certain federal agencies, that are listed in a country's annexes. Thus, it appears that products and services acquired by entities not listed in the relevant annexes to free trade agreements would not be eligible products under the TAA. An acquisition is subject to a TAA waiver or purchase restriction only when its value equals or exceeds certain monetary thresholds. These thresholds are initially established in annexes to particular trade agreements. However, the USTR revises the thresholds every two years and has currently set the threshold for supply contracts under the WTO GPA at $191,000 ($7.36 million for construction contracts). The FAR lists the monetary thresholds for each relevant trade agreement. It also contains instructions for calculating the estimated acquisition value. These instructions correspond to the rules for valuation of contracts contained in the WTO GPA. The TAA sets forth the test for determining whether an article originates in a particular country. Under this test, An article is a product of a country or instrumentality only if (i) it is wholly the growth, product, or manufacture of that country or instrumentality, or (ii) in the case of an article which consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed. Thus, for a product made at least in part from materials manufactured in another country to undergo "substantial transformation," it must acquire a new name, character, or use. To encourage additional countries to join the WTO GPA and to provide reciprocal competitive government procurement opportunities to U.S. products and suppliers, the TAA requires the President, with regard to acquisitions covered by the WTO GPA, to prohibit procurement of the products of nondesignated countries, subject to certain exceptions and waivers. When the value of the acquisition exceeds the relevant monetary threshold in the WTO GPA, the TAA's purchasing restriction applies. The purchasing restriction, as implemented in the FAR, requires federal agencies to acquire only "U.S.-made or designated country end products or U.S. or designated country services" in acquisitions covered by the WTO GPA, "unless offers for such end products or services are either not received or are insufficient to fulfill the requirements." Generally, a U.S.-made end product is a product "that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed." Essentially, designated country end products are products grown, produced, manufactured, or substantially transformed in a country that is party to the WTO GPA; party to a U.S. free trade agreement that contains procurement obligations; one of certain least developed countries; or one of certain Caribbean Basin countries. Pursuant to Subpart 25.4 of the FAR, the TAA does not apply to certain acquisitions, including 1. acquisitions set aside for small businesses; 2. acquisitions of arms, ammunition, or war materials, or purchases indispensable for national security or national defense purposes; 3. acquisition of end products for resale; 4. acquisitions from Federal Prison Industries, Inc., under Subpart 8.6 of the FAR, or from nonprofit agencies employing persons who are "blind or severely disabled" (commonly known as AbilityOne), under Subpart 8.7 of the FAR; or 5. other acquisitions not using full and open competition, authorized under Subparts 6.2 or 6.3 of the FAR, when the limitation of competition would preclude the use of the procedures of Subpart 25.4; or sole-source acquisitions justified in accordance with Subpart 13.501. When an acquisition is not subject to the TAA due to one of these exceptions, the Buy American Act or another domestic preference law may apply. The Berry Amendment has existed since the beginning of World War II and, historically, was included in yearly defense appropriations acts. However, it became permanent law in 1993, and was ultimately codified at 10 U.S.C. §2533a in 2002. Over the years, the scope of the amendment has changed, though its core purposes have remained constant: safeguarding the United States' national security interests and protecting the U.S. industrial base to enable it to meet defense requirements during times of need. Pursuant to the Berry Amendment, DOD cannot use appropriated or otherwise available funds to purchase a covered item unless that item is entirely grown, reprocessed, reused, or produced within the United States. In other words, the Berry Amendment requires a higher level of domestic content than is required under the Buy American Act, which permits manufactured items to qualify as "domestic" so long they are manufactured in the United States, and (1) the cost of components mined, produced, or manufactured in the United States exceeds 50% of the cost of all components, or (2) the items are COTS items. For purposes of the Berry Amendment, covered items include food, clothing, tents, certain textile fabrics and fibers, and hand or measuring tools. Until 2006, the Berry Amendment also included provisions addressing specialty metals, but this language has since been codified in 10 U.S.C. §2533b, discussed below. There are a number of exceptions within the Berry Amendment, permitting DOD to acquire covered items that are not entirely grown, reprocessed, reused, or produced within the United States when 1. the Secretary of Defense, or the secretary of a military department, determines that items of satisfactory quality or sufficient quantity cannot be acquired "as and when needed at United States market prices"; 2. the value of the purchase is below the simplified acquisition threshold (generally $150,000); 3. procuring items outside the United States in support of combat operations; or procuring food, or hand or measuring tools, outside the United States in support of contingency operations; 4. procuring food or hand or measuring tools in circumstances in which the unusual and compelling urgency of the need does not permit the use of competitive procedures; 5. vessels procure items in foreign waters; 6. conducting "emergency procurements," or establishments located outside the United States procure perishable foods for the personnel attached to that establishment; 7. acquiring items for commissary resale; 8. procuring food products (other than fish, shellfish, or seafood) processed or manufactured in the United States; 9. acquiring waste and byproducts of cotton and wool fiber for use in the production of propellants and explosives; or 10. procuring "chemical warfare protective clothing" produced outside the United States is necessary to comply with certain U.S. agreements with foreign governments. Even if an acquisition is exempt from the requirements of the Berry Amendment, it is potentially subject to the Buy American Act. However, if the Berry Amendment applies to an acquisition, the Buy American Act does not. Neither the Berry Amendment nor the specialty metals restriction, discussed below, have been waived pursuant to the TAA, and certain trade agreements of the United States expressly provide that they do not apply to procurements involving textiles, clothing, food, and "specialty metals." The specialty metals restriction first appeared in 1972, when it was added to the Berry Amendment during the Vietnam War. It remained part of the Berry Amendment until 2006, when the National Defense Authorization Act for FY2007 took effect, and moved the specialty metals restriction from the codification of the Berry Amendment in 10 U.S.C. §2533a to a separate section of the U.S. Code , 10 U.S.C. §2533b. Pursuant to the specialty metals restriction, DOD cannot buy any aircraft, missile and space system, ship, tank and automotive item, weapon system, ammunition, or any components thereof, containing a specialty metal that was not melted or produced in the United States. Further, DOD is prohibited from purchasing, either directly or through a contractor, any specialty metal not melted or produced in the United States. Specialty metals include certain types of steel; certain metal alloys made of nickel, iron-nickel, and cobalt; titanium and titanium alloys; and zirconium and zirconium alloys. The specialty metals restriction contains a number of exceptions identical to those that apply to the Berry Amendment, including for purchases below the simplified acquisition threshold; items deemed to be "non-available"; acquisitions conducted outside of the United States in support of combat or contingency operations; acquisitions made on a noncompetitive basis due to compelling urgency; and items purchased for commissary resale. However, there are also certain exceptions that are unique to the specialty metals restriction, and permit DOD to purchase specialty metals, or specified items containing (or whose components contain) such metals, that were not melted or produced in the United States. These exceptions apply when 1. acceptance of an end item containing noncompliant materials is "necessary" to the national security interests of the United States; 2. acquiring electronic components (unless the Secretary of Defense determines, based on the recommendation of the Strategic Materials Protection Board, that domestic availability of a particular electronic component is critical to national security); 3. acquiring certain COTS items, or fasteners that are commercial items purchased under a contract or subcontract with a manufacturer of such items, provided certain conditions are met; 4. purchasing items wherein the total weight of noncompliant specialty metals is less than 2% of the total weight of the item's specialty metals; 5. the acquisition is necessary to comply with or further certain agreements with foreign governments; 6. the Secretary of Defense, or the secretary of a military department, determines that items acquired under a prime contract are "commercial derivative military articles," and the contractor certifies that it and its subcontractors have entered into agreements for the purchase of specified amounts of domestically melted specialty metal; and 7. acquiring items produced, manufactured, or assembled in the United States prior to October 17, 2006, that contain noncompliant specialty metals, provided that (a) the contractor or subcontractor plans to comply with the specialty metals restriction in the future, (b) removing the noncompliant specialty metals would be impractical, and (c) the noncompliance was inadvertent. As with the Berry Amendment, acquisitions that are exempt from the specialty metals restrictions could potentially be subject to the Buy American Act; and the Buy American Act does not apply if the specialty metals restriction applies. The Buy America Act is the popular name for a group of domestic content restrictions that have been attached to specific funds administered by the Department of Transportation (DOT) and certain other federal agencies. These funds are used to make grants to states, localities, and other nonfederal government entities for various purposes, including transportation projects or for water-related infrastructure systems. The Buy American Act does not apply to these funds because, while the source of the money is federal, purchases are not made directly by the federal government. In other words, these purchases are not federal procurements for purposes of the Buy American Act. The various Buy America requirements have not been waived pursuant to the TAA, and certain U.S. trade agreements expressly exclude "non-contractual agreements or ... any form of [government] assistance," such as grants, from their coverage. Many domestic content restrictions related to the use of grant funds are placed on projects administered through agencies in DOT. This section describes some of these Buy America requirements, which differ among agencies. Section 313 of Title 23 of the U.S. Code prohibits the obligation of funds appropriated under Title 23 and administered by the DOT for a project "unless the steel, iron, and manufactured products used in such project are produced in the United States." Section 313's restriction on the use of foreign manufactured products only applies to manufactured products that consist predominantly of steel or iron, not all manufactured products. Raw materials used in the manufacturing processes may be imported. States expending Federal Highway Administration (FHWA) funds can satisfy the Buy America requirements by using only steel or iron produced in the United States, or including standard contract provisions that require domestic materials. Otherwise, the state may use alternate bid provisions, requiring each bidder to submit bids based on domestic materials and stating that the contract will be awarded to the bidder with the lowest total bid on domestic materials unless that bid exceeds the lowest total bid on foreign materials by more than 25%. Additionally, if the project includes steel and iron materials, the Buy America requirements do not prevent the minimal use of foreign steel and iron materials, not exceeding .1% of the total contract cost, or $2,500, whichever is greater. The FHWA is prohibited from creating funding restrictions that would prevent a state from imposing stricter Buy America requirements on projects carried out with Title 23 funds. The FHWA has issued nationwide waivers to the Buy America requirements for manufactured products other than steel or iron manufactured products; certain steel and iron materials used in ferryboat construction; and pig iron and processed, pelletized, and reduced iron ore. States may also be granted project- or material-specific waivers if the FHWA determines that applying the Buy America requirements is against public interest, or that the steel and iron materials and products needed are not produced in the United States in sufficient and reasonably available quantities of satisfactory quality. However, the FHWA is prohibited from issuing waivers for foreign products that come from a country that has an agreement with the United States, under which the Buy America requirements have been waived, if that country has violated the agreement in specified ways. Section 50101 of Title 49 of the U.S. Code prohibits the obligation of funds appropriated under certain provisions administered by the Federal Aviation Administration (FAA) for a project unless the "steel and manufactured goods used in the project are produced in the United States." This requirement may be waived if the FAA finds that applying the restriction is against the public interest; the necessary materials are not produced domestically in sufficient and reasonably available amounts or are not of satisfactory quality; or the use of domestic materials increases the overall project cost by more than 25%. Additionally, a waiver may be granted if funds available under certain provisions are used to procure a facility or equipment where the cost of components and subcomponents produced in the United States is more than 60% of the cost of all components, and the final assembly of the facility or equipment occurs in the United States. The FAA has issued nationwide waivers for certain commonly used products from specific manufacturers that often qualify for a waiver under the 60% domestic content provision. These nationwide waivers allow a product to be used in projects "without having to receive separate project waivers." Section 50101 does not include a prohibition on the issuance of waivers for foreign products from a country that has violated a trade agreement with the United States, as stated in other transportation-related Buy America provisions. Funding under Chapter 53 of Title 49 of the U.S. Code , administered by the Federal Transit Administration (FTA) for public transportation projects, may be obligated for a grantee project only if the "steel, iron, and manufactured goods used in the project are produced in the United States." This requirement applies to all construction materials made primarily of steel or iron and used in infrastructure projects, but does not apply to steel or iron used as components or subcomponents of other manufactured products or rolling stock. The FTA has not specifically defined "made primarily of steel or iron." In order for a manufactured product to satisfy the "produced in the United States" requirement, all of the manufacturing processes must take place in the United States. Additionally, all of the product's components must be of American origin, meaning that they must be manufactured in the United States; the origin of the component's subcomponents does not matter. The FTA may not impose any funding limitations that restrict a state from imposing "more stringent" Buy America requirements. The Buy America requirements may be waived for any Chapter 53 spending if the FTA finds that applying the restriction is inconsistent with the public interest; the materials needed are not produced domestically in sufficient and reasonably available amounts or are not of satisfactory quality; or using domestic materials will increase the cost of the overall project by more than 25%. Additionally, a waiver may be granted when funds are used to procure rolling stock if the cost of the components and subcomponents produced domestically represents a certain percentage of the cost of all components and subcomponents of the rolling stock, and final assembly of the rolling stock occurs in the United States. In 2015, Congress increased the threshold cost requirement for future fiscal years. For FY2016 and FY2017 funds, the cost of domestically produced components must be more than 60% of the cost of all components. In FY2018 and FY2019, the requirement increases to 65%, and in FY2020 and beyond the requirement increases to 70% . However, the FTA is prohibited from issuing waivers for foreign goods if the foreign country has a trade agreement with the United States that waives Buy America requirements and has violated that agreement in specified ways. Projects funded through spending authorized under the Passenger Rail Investment and Improvement Act of 2008 (PRIIA) are subject to Buy America requirements stated in 49 U.S.C. §24405(a) if project costs exceed $100,000. The statute states that funds may be obligated from appropriations enacted to carry out Chapter 244 "only if the steel, iron, and manufactured goods used in the project are produced in the United States." Manufactured goods are considered "produced in the United States" when the manufacturing processes for the end product take place in the United States, and all of the end product's components are of domestic origin. The origin of a component's subcomponents is not relevant to this determination. The Federal Railroad Administration (FRA) may not create any funding limitations that restrict a state from imposing "more stringent" Buy America requirements on projects funded under PRIIA. A waiver of the Buy America requirements may be granted if applying the restrictions is inconsistent with the public interest; domestically produced steel, iron, and manufactured goods are not produced in sufficient and reasonably available amounts or are not of satisfactory quality; domestic rolling stock or power train equipment cannot be purchased and delivered within a reasonable time; or the use of domestic materials increases the cost of the overall project by more than 25%. The FRA is prohibited from issuing waivers for goods produced in a foreign country if that country has an agreement with the United States, under which the Buy America requirements have been waived, and has violated that agreement in specified ways. In addition to the Buy America restrictions attached to funds administered by DOT, certain grant funding used for water-related infrastructure projects is subject to domestic content restrictions. Projects that receive funding through state water pollution control revolving funds, commonly known as the Clean Water State Revolving Fund (CWSRF) and the Drinking Water State Revolving Fund (DWSRF), are also subject to domestic content restrictions that require the use in the project of U.S.-produced iron and steel products. The CWSRF and DWSRF provide low-interest financing for water quality and public water system interest projects through loan programs administered by the states. At the federal level, these revolving funds are administered by the Environmental Protection Agency (EPA). Financing made available through the CWSRF or DWSRF may not be used for a project for the construction, alteration, maintenance, or repair of "treatment works" unless "all of the iron and steel products used in the project are produced in the United States." For projects funded through the DWSRF, this restriction also applies to financing for the construction, alteration, maintenance or repair of a "public water system." To be considered "produced in the United States," all manufacturing processes, with the exception of metallurgical processes involving refinement of steel additives, must take place in the United States. "[I]ron and steel products" are defined as the following items: lined or unlined pipes and fittings; manhole covers and other municipal castings; hydrants; tanks; flanges; pipe clamps and restraints; valves; structural steel; reinforced precast concrete; and construction materials—provided that these products are "made primarily of iron or steel[.]" Under EPA guidance, a product is made "primarily" of iron or steel if the cost of iron and steel constitutes more than 50% of the materials cost for the product. EPA may waive the domestic content restrictions if applying the restrictions would be inconsistent with the public interest; iron and steel products are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality; or inclusion of domestic iron and steel products would increase the cost of the overall project by more than 25%. The domestic content restrictions for CWSRF and DWSRF projects originated in the Consolidated Appropriations Act of 2014, which placed restrictions on the use of appropriated funds through the end of FY2014. For CWSRF projects, the restriction was made permanent through the Water Resources Reform and Development Act of 2014, and is now codified in the U.S. Code . The restriction has not been made permanent for DWSRF projects, but it was extended in FY2015 and FY2016 through appropriations legislation. Table 1 , below, summarizes key aspects of the four major domestic content regimes in federal law, in order to better highlight the similarities and differences among them. In addition to the four major domestic preference regimes previously discussed, there are also numerous other domestic content restrictions that apply in specific contexts and are intended to address perceived "gaps" left by the Buy American Act, in particular. In some cases, as with the Berry Amendment, these provisions require a higher level of domestic content than is required under the Buy American Act, which permits manufactured items to qualify as "domestic" so long as they are manufactured in the United States, and (1) the cost of components mined, produced, or manufactured in the United States exceeds 50% of the cost of all components, or (2) the items are COTS items. In other cases, as with the Buy America Act, these provisions apply to federal grants or other funds that are spent by entities that are not federal agencies, and thus not subject to the Buy American Act and other federal procurement laws. In yet other cases, the provision seeks to "encourage" procurement of domestic content by federal agencies or other entities without strictly mandating it. Listed below are the domestic content restrictions that have been codified, including in notes, in the U.S. Code . This listing is intended to be comprehensive. However, it is important to note that un-codified provisions—such as might appear in annual appropriations measures—are not included. Provisions are given in numerical order by the Title of the U.S. Code in which they appear. 3 U.S.C. §110: Directs that all furniture purchased for the use of the Executive Residence at the White House be, "as far as practicable," of domestic manufacture. 6 U.S.C. §453b: Prohibits the Department of Homeland Security from using funds appropriated or otherwise available to it to procure covered items unless the item was grown, reprocessed, reused, or produced in the United States, with certain exceptions. Covered items include (1) articles and items of clothing, and the materials and components thereof, other than sensors, electronics, or other items added to and not normally associated with clothing; (2) tents, tarpaulins, covers, textile belts, bags, protective equipment, sleep systems, load carrying equipment, textile marine equipment, parachutes, and bandages; (3) cotton and other natural fiber products, woven silk or silk blends, spun silk yarn for cartridge cloth, synthetic fabric or coated synthetic fabric, canvas products, and wool, and (4) any item of individual equipment manufactured from or containing such fibers, yarns, fabrics, or materials. 7 U.S.C. §612c note: Requires that Community Distribution Programs receiving certain federal funds purchase, "whenever possible," only "food products that are produced in the United States," with certain exceptions. 7 U.S.C. §903 note: Mandates that, as a condition of certain loans made for purposes of rural electrification, "to the extent practicable and the cost of which is not unreasonable," borrowers agree to use, in connection with the expenditure of borrowed funds, only (1) unmanufactured articles, materials, and supplies that have been mined or produced in the United States or an "eligible country" (i.e., a country with which the United States has certain trade agreements), or (2) manufactured articles that have been manufactured in the United States or an eligible country from articles, materials, or supplies mined, produced, or manufactured in the United States or an eligible country. 7 U.S.C. §1506(p): Expresses the sense of Congress that, "to the greatest extent practicable," all equipment and products purchased by the Federal Crop Insurance Corporation using funds available to the Corporation should be "American-made"; and that, in providing financial assistance to, or entering contracts with, entities for the purchase of equipment and products to carry out this subchapter, the Corporation, "to the greatest extent practicable," shall notify the entity of this policy. 7 U.S.C. §7012: Expresses the sense of Congress that, "to the greatest extent practicable," all equipment and products purchased using funds made available pursuant to Chapter 98 of Title 7—which addresses the Consolidated Farm Service Agency, the Rural Utilities Service, the Rural Business and Cooperative Development Service, and the Rural Development Disaster Assistance Fund—should be "American-made"; and that, in providing financial assistance to, or entering contracts with, entities for the purchase of equipment and products to carry out this subchapter, the Secretary of Agriculture, "to the greatest extent practicable," shall notify the entity of this policy. 10 U.S.C. §2302 note: Requires the Secretary of Defense to "encourag[e] increased domestic breeding," while ensuring that military working dogs are procured as efficiently as possible and at best value to the government. 10 U.S.C. §2436: Directs the Secretary of Defense to plan and establish an "incentive program" for contractors to purchase capital assets manufactured in the United States, in part with funds made available to DOD. 10 U.S.C. §2534: Prohibits DOD from procuring sonobuoys manufactured in a foreign country if U.S. firms that manufacture sonobuoys are not permitted to compete on an equal basis with foreign manufacturing firms for the sale of sonobuoys in that country, with certain exceptions. 10 U.S.C. §2534 note: Mandates that DOD incorporate clauses into any of its contracts that provide for photovoltaic devices to be (1) installed on DOD property or in a facility owned by DOD, or (2) reserved for the exclusive use of DOD in the United States for their full economic life, to require that any photovoltaic devices installed under the contract "be manufactured in the United States substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States." 10 U.S.C. §7291 note : Requires that any vessels constructed or converted under a program for the construction and conversion of cargo vessels incorporating features "essential for military use" incorporate (1) propulsion systems whose "main components (that is, the engines, reduction gears, and propellers)" are manufactured in the United States; and (2) bridge, machinery control systems, and interior communications equipment that are manufactured in the United States and have more than 50% of their value, in terms of cost, added in the United States, with certain exceptions. 12 U.S.C. §1735e-1: Directs the Secretary of Housing and Urban Development to encourage the use of materials and products mined and produced in the United States in the administration of housing programs. 14 U.S.C. §97: Prohibits the Coast Guard from procuring buoy chain that is not manufactured in the United States, or substantially all the components of which are not produced or manufactured in the United States, unless the price of buoy chain manufactured in the United States is "unreasonable" or emergency circumstances exist. 15 U.S.C . §631 note; 15 U.S.C. §661 : Requires the Administrator of Small Business, when providing financial assistance with amounts appropriated pursuant to certain amendments made to the Small Business Act in 1992, "when practicable," to give preference to small businesses which use or purchase equipment and supplies produced in the United States, and to encourage small businesses receiving assistance to purchase such equipment and supplies. 15 U.S.C. §2221( l ): Requires that the recipients of arson prevention grants under Chapter 49 (Fire Prevention and Control) of Title 15 purchase, when available and cost-effective, American-made equipment and products when expending grant funds. 20 U.S.C. §6067: Expresses the sense of Congress that no funds appropriated pursuant to Chapter 68 (National Education Reform) of Title 20 are to be expended by an entity unless the entity agrees to comply with the Buy American Act in expending the funds, and to purchase only "American-made equipment and products" in the case of any equipment or products that may be authorized to be purchased with financial assistance provided under Chapter 68. 22 U.S.C. §2354: Imposes a number of restrictions on procurements made outside the United States involving foreign assistance funds. Among other things, (1) funds may not be used to purchase, in bulk, any commodities at prices higher than the market price prevailing in the United States at the time of purchase (adjusted for differences in the cost of transportation to destination, quality, and terms of payment); (2) agricultural commodities or products available for distribution under the Food for Peace Act shall, "insofar as practicable," be procured within the United States unless such items are not available in the United States in sufficient quantities to supply emergency requirements of recipients; (3) commodities procured must generally be insured in the United States against marine risk with companies authorized to do a marine insurance business in any State of the United States; (4) funds made available under Chapter 32 of Title 22 may not be used to procure any agricultural commodity, or product thereof, outside the United States when the domestic price of such commodity is less than parity, with certain exceptions; and (5) funds may not be used to procure construction or engineering services from "advanced developing countries" which have attained a "competitive capability" in international markets for construction services or engineering services. 24 U.S.C. §225h: Requires the District of Columbia to comply with the Buy American Act in all procurements made under Subchapter III (Mental Health Service for the District of Columbia) of Chapter 4 of Title 24; and prohibits the award of contracts or subcontracts made with funds authorized under this Subchapter for the procurement of articles, materials, or supplies produced in countries whose government unfairly maintains in government procurement a "significant and persistent pattern or practice of discrimination" against U.S. products and services that results in identifiable harm to U.S. businesses. 25 U.S.C. §1638b: Requires that all procurements conducted with funds made available to carry out Subchapter III (Health Facilities) of Chapter 18 (Indian Health Care) of Title 25 comply with the Buy American Act. 31 U.S.C. §5111: Requires that the Secretary of the Treasury, in order to protect the national security through domestic control of the coinage process, acquire only articles, materials, supplies, and services for the production of coins that have been produced or manufactured in the United States, unless the Secretary (1) determines that doing so would be inconsistent with the public interest, or the cost is unreasonable, and (2) publishes a written notice stating the basis for this determination in the Federal Register. 31 U.S.C. §5114: Requires that articles, materials, and supplies procured for use in the production of currency, postage stamps, and other security documents for foreign governments be treated "in the same manner" as articles, materials, and supplies procured for public use within the United States under the Buy American Act. 31 U.S.C. §5114 note: Provides that none of the funds made available by the Treasury, Postal Service, and General Government Appropriations Act, 1989 ( P.L. 100-440 ), or any other act with respect to any fiscal year, may be used to contract for the manufacture of "distinctive paper" for U.S. currency and securities pursuant to 31 U.S.C. §5114 outside the United States or its possessions, with certain exceptions. 33 U.S.C. §1295: Prohibits the award of grants for the construction of water treatment works under Subchapter II (Grants for the Construction of Treatment Works) of Chapter 26 (Water Pollution Prevention and Control) of Title 33 unless only (1) unmanufactured articles, materials, supplies that have been mined or produced in the United States, and (2) manufactured articles, materials and supplies that have been manufactured in the United States "substantially all" from articles, materials, or supplies mined, produced, or manufactured in the United States, are used, with certain exceptions. 33 U.S.C. §2201 note: Expresses the sense of Congress that, "to the extent practicable," all equipment and products purchased with certain funds made available for water resources development be "American made." 38 U.S.C. §2301(h): Prohibits the Department of Veterans Affairs from procuring any burial flags that are not "wholly produced in the United States," unless the Secretary determines this requirement cannot reasonably be met, or that compliance with the requirement would not be in the national interest of the United States. 40 U.S.C. §3313: Requires that procurements carried out pursuant to this section (i.e., procurements promoting the use of energy-efficient lighting fixtures and bulbs in public buildings) comply with the Buy American Act. 42 U.S.C. §1760: Requires, with certain exceptions, that school food authorities participating in the National School Lunch Program purchase, "to the maximum extent practicable," "domestic commodities or products" (i.e., agricultural commodities produced in the United States, and food products processed in the United States "substantially using" agricultural commodities that are produced in the United States). 42 U.S.C. §5206: Prohibits the expenditure of funds appropriated under the Disaster Mitigation Act of 2000, or any amendment made by the act, by any entity unless that entity complies with the Buy American Act in expending the funds. 42 U.S.C. §6374: Requires that "preference" be given to vehicles that operate on alternative fuels derived from domestic sources when considering which types of alternative fuel vehicles to acquire in implementing the statutory requirement that "the maximum number practicable" of vehicles acquired annually for use by the federal government be alternative fueled vehicles. 42 U.S.C. §6705: Prohibits the award of grants under Chapter 80 (Local Public Works Employment) of Title 42 for local public works projects unless the project uses only (1) unmanufactured articles, materials, or supplies mined or produced in the United States, and (2) manufactured articles, materials, and supplies manufactured in the United States "substantially all" from articles, materials, and supplies mined, produced, or manufactured in the United States, with certain exceptions. 42 U.S.C. §13316: Requires that the U.S. Agency for International Development (USAID), in selecting projects for the renewable energy technology transfer program, consider, among other things, the degree to which the equipment to be included in the project is designed and manufactured in the United States; and ensure that, in carrying out projects, the "maximum percentage"—but in no case less than 50%—of the cost of any equipment furnished in connection with the project shall be attributable to the manufactured U.S. components of such equipment, as well as the "maximum participation" of U.S. firms. 42 U.S.C. §13362: Requires that USAID, in selecting projects for the innovative clean coal technology transfer program, consider, among other things, the degree to which the equipment to be included in the project is designed and manufactured in the United States; and ensure that, in carrying out projects, the "maximum percentage"—but in no case less than 50%—of the cost of any equipment furnished in connection with the project shall be attributable to the manufactured U.S. components of such equipment, as well as the "maximum participation" of U.S. firms. 42 U.S.C. §13387: Requires that USAID, in selecting projects for the innovative environmental technology transfer program, consider, among other things, the degree to which the equipment to be included in the project is designed and manufactured in the United States; and ensure that, in carrying out projects, the "maximum percentage"—but in no case less than 50%—of the cost of any equipment furnished in connection with the project shall be attributable to the manufactured U.S. components of such equipment, as well as the "maximum participation" of U.S. firms. 42 U.S.C. §16312: Requires that any agreement for U.S. participation in the International Thermonuclear Experimental Reactor (ITER) shall, at a minimum, ensure that the share of high-technology components of the ITER manufactured in the United States is "at least proportionate" to the U.S. financial contribution to the ITER, among other things. 42 U.S.C. §17353: Requires that International Clean Energy Foundation promote the use of American-made clean and energy efficient technologies, process, and services by giving preference to entities incorporated in the United States, or whose technology will be "substantially manufactured" in the United States, when making grants to promote projects outside the United States. 49 U.S.C. §24305: Requires Amtrak to buy unmanufactured articles, material, and supplies that are mined or produced in the United States, and manufactured articles, material, and supplies manufactured in the United States substantially from articles, material, and supplies that are mined, produced, or manufactured in the United States when the cost of articles, material, or supplies bought is at least $1 million.

Broadly understood, domestic content restrictions are provisions which require that items purchased using specific funds appropriated or otherwise made available by Congress be produced or manufactured in the United States. Federal law contains a number of such restrictions, each of which applies to different entities and supplies, and imposes somewhat different requirements. Some of these restrictions have, however, been waived pursuant to the Trade Agreements Act (TAA). The Buy American Act of 1933 is the earliest and arguably the best known of the major domestic content restrictions. It generally requires federal agencies to purchase "domestic end products" and use "domestic construction materials" on contracts exceeding the micro-purchase threshold (typically $3,500) performed in the United States. Unmanufactured end products or construction materials qualify as "domestic" if they are mined or produced in the United States. Manufactured ones are treated as "domestic" if they are manufactured in the United States, and either (1) the cost of components mined, produced, or manufactured in the United States exceeds 50% of the cost of all components, or (2) the items are commercially available off-the-shelf items. Agencies may, however, purchase "foreign" supplies in exceptional circumstances (purchase of domestic goods or use of domestic construction materials would be "impracticable"). The TAA permits the President to waive the application of domestic content restrictions that would discriminate against "eligible" products or suppliers from countries that have trade agreements with the United States or meet certain other criteria. The Buy American Act is one restriction that has been so waived. This means that certain federal agencies must generally treat end products or construction materials that have been wholly grown, produced, or manufactured in designated countries, or that have been "substantially transformed" into new and different articles within designated countries using materials from other countries, the same as domestic ones when acquiring goods or services whose value exceeds certain monetary thresholds. The Berry Amendment, as currently codified in 10 U.S.C. §2533a, requires that food, clothing, tents, certain textile fabrics and fibers, and hand or measuring tools purchased by the Department of Defense (DOD) using appropriated or other funds be entirely grown, reprocessed, reused, or produced within the United States, with certain exceptions (e.g., procurements by vessels in foreign waters). Until 2006, the Berry Amendment also required that any "specialty metals" (certain types of steel and metal alloys) contained in aircrafts, missile and space systems, ships, tank and automotive items, weapon systems, ammunition, or any components thereof, purchased by DOD be melted or produced in the United States, with certain exceptions. However, that prohibition has since been codified in 10 U.S.C. §2533b. The Buy America Act is the name commonly given to domestic content restrictions imposed on states, localities, and other nonfederal entities as a condition of receiving specific grant funds administered by the Department of Transportation (DOT) and certain other federal agencies. The nature of the restrictions can vary depending upon the funds involved. However, by way of example, 23 U.S.C. §313 generally requires recipients of Title 23 funding to use in funded projects steel and iron produced in the United States, as well as manufactured products consisting "predominantly" of steel and iron that were produced in the United States, with certain exceptions (e.g., materials needed are not produced in the United States in sufficient and reasonably available quantities of satisfactory quality). There are also a number of other domestic content restrictions that apply in specific contexts and, in many cases, are intended to address perceived "gaps" left by the four major domestic content regimes noted above.

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 measure reported, though they can prevent it (Rule XXVI, paragraph 7(a)(3)). Investigations and subpoenas. Each standing committees (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 week's 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, the "conduct of business" at a committee meeting typically refers to 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 such 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 kind 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 advanced 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, however, 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 114th Congress.

There has been increased concern over the size and sustainability of the United States' recent deficits and the country's long-run budget outlook. This concern has brought the issues of the federal government's revenue needs and fundamental reform of the tax system to the forefront of congressional debates. One place Congress may turn to address these issues is the set of tax benefits for homeowners. The Joint Committee on Taxation (JCT) has estimated that the cost to the federal government in terms of foregone revenue from these benefits will be approximately $136.3 billion annually between 2014 and 2017. Economists have identified the set of tax benefits for homeowners as one area in which reform may improve economic efficiency. This report focuses on the two largest federal tax benefits available to homeowners—the mortgage interest deduction and the deduction for state and local property taxes. The goals of this report are five-fold: (1) briefly summarize the trends in homeownership; (2) provide an overview of what tax benefits are available; (3) analyze the rationales commonly provided for offering such benefits; (4) analyze the effect of the mortgage interest deduction and property tax deduction on the homeownership rate, housing consumption, and the economy; and (5) present policy options. Until recently, the homeownership rate in this country had generally increased over time. In 1900 only 46.5% of Americans owned the home that they lived in. By 1950, the homeownership rate had increased to 55%, and to 67.4% by 2000. Homeownership peaked in 2004 at 69%, and today hovers around 65%. The most current data show that of 132.6 million homes in the United States, 75.0 million serve as principal residences. Another 39.7 million homes are renter-occupied, and the remaining 17.9 million are either for sale, for rent, or for seasonal use. The size of homes that Americans own has also generally trended upward over time, while family size has trended downward. In 1970 the median new home was around 1,385 square feet. By 2009, the median new home was roughly 2,135 square feet—an increase of 54%. Over this same time period the average family size decreased. In 1970 the average family size was 3.58 persons, while in 2009 the average family size was 3.15 persons. Thus, the increase in home size has been even larger after adjusting for family size. The fact is that Americans have tended to build bigger and bigger homes while tending to have smaller and smaller families. This trend can have important ramifications in terms of land use, energy use, transportation, and affordability. These long-term trends in homeownership behavior may be overshadowed by more recent trends in foreclosures. At the beginning of 2001, near the start of the housing boom, the national foreclosure rate on all mortgage loans was 1.24%. The foreclosure rate among riskier subprime borrowers was slightly higher at 3.58%. Foreclosures began to increase between 2007 and 2008, shortly after the turning point in the housing market. After peaking in late 2009 and early 2010, the foreclosure rate has gradually decreased. By the fourth quarter of 2013 the foreclosure rate on all loans stood at 2.86%, while foreclosures occurring among subprime borrowers stood at 10.43%. As of March of 2014, there were at least four significant tax incentives that directly or indirectly benefit homeowner-occupiers. The Joint Committee on Taxation (JCT) estimates these benefits will cost the federal government an average of $136.3 billion in foregone revenue annually between 2013 and 2017. These tax benefits and their associated budget impacts are listed in Table 1 . The three most expensive tax incentives in the JCT's estimate are the mortgage interest deduction ($77.3 billion annually), the itemized state and local property tax deduction ($31.5 billion annually), and the exclusion of capital gains on the sale of a principal residence ($26.5 billion annually). Some argue that another tax expenditure not included in official costs estimates—the exclusion of imputed rental income—should be included. Unofficial cost estimates place the foregone revenue generated by this exclusion at between $20 billion and $30 billion annually. The following overview focuses on the mortgage interest and property tax deductions. The exclusion of capital gains is not reviewed in detail because its effects on the housing decisions of taxpayers is fundamentally different than the effects of the deductions for mortgage interest and property taxes. A brief summary of the capital gains exclusions, as well as the other tax benefits, is provided at the end of this section. The largest and most well-known tax benefit that homeowners can take advantage of is the mortgage interest deduction. Specifically, homeowners are allowed to deduct the interest they pay on a mortgage that finances a primary or secondary residence as long as they itemize their tax deductions. For example, an itemizing homeowner who pays $10,000 in mortgage interest in a given year can deduct $10,000 from his or her adjusted gross income. If this individual is in the 25% marginal tax bracket, a $10,000 tax deduction reduces his or her income taxes by $2,500 ($10,000 multiplied by 25%). The value of the deduction generally increases with taxpayer income for two reasons. First, the marginal tax rate a homeowner faces increases with income. So an individual in the 35% marginal tax bracket, paying $10,000 in mortgage interest, would realize a reduction in taxes of $3,500 in comparison to a $2,500 reduction for someone in the 25% tax bracket. Second, higher-income individuals tend to purchase more expensive homes, which results in larger mortgage interest payments, and hence, a larger deduction. This relationship explains why most of the total dollar amount of mortgage interest claimed is done so by middle- and upper-income households. There are limits to the amount of mortgage interest that may be deducted. Only the interest paid on the first $1 million of mortgage debt that is incurred in the purchase, construction, or substantial improvement of a residence, and only the interest paid on up to $100,000 of home equity debt may be deducted. Home equity indebtedness is debt that is not incurred in the purchase, construction, or substantial improvement of a residence, but that is secured by the residence. Home equity debt may be used to finance personal expenditures (college education, vacations, etc.) unrelated to the home. Although many contend that the purpose of the mortgage interest deduction is to promote homeownership, this was not the deduction's original purpose. When laying the framework for the modern federal income tax code in 1913, Congress recognized the importance of allowing for the deduction of expenses incurred in the generation of income, which is consistent with traditional economic theories of income taxation. As a result, all interest payments were made deductible with no distinction made for business, personal, living, or family expenses. It is likely that no distinction was made because most interest payments were business related expenses at the time and, compared to today, households generally had very little debt on which interest payments were required—credit cards had not yet come into existence and the mortgage finance industry was in its infancy. Among those that did hold a mortgage, the majority were business farmers. For more than 70 years there was no limit on the amount of home mortgage interest that could be deducted. The Tax Reform Act of 1986 (TRA86; P.L. 99-514 ) eventually restricted the amount of mortgage interest that could be deducted and limited the number of homes for which the deduction could be claimed to two. Mortgage interest deductibility was limited to the purchase price of the home, plus any improvements, and on debt secured by the home but used for qualified medical and educational expenses. Subsequently, the Omnibus Budget Reconciliation Act of 1987 ( P.L. 100-203 ) resulted in the basic deduction limits that exist today. Not all homeowners claim the mortgage interest deduction. Some homeowners have no mortgage, and hence no interest to deduct. The most recent data (2011) show that this group accounts for 34% of homeowners. Among the 66% of homeowners with a mortgage, 73% claim the deduction. This implies that around 48% of all homeowners claim the mortgage interest deduction. The remaining 27% of mortgage holders (or 18% of homeowners) who do not claim the deduction are likely either (1) toward the end of their mortgage payments so that the deduction is not worth much, (2) live in a state with low state and local taxes and thus claim the standard deduction, or (3) live in a low-cost area and therefore have a relatively small mortgage. In terms of tax returns filed, the deduction is claimed on about 25% of all federal income tax returns and 78% of itemized returns. Homeowners also benefit from the ability to deduct state and local property taxes. In general, homeowners are allowed to claim an itemized deduction equal to the full amount of state and local property taxes paid. For example, an itemizing homeowner who pays $1,000 in property taxes can deduct $1,000 from his or her adjusted gross income. If this individual is in the 25% marginal tax bracket, a $1,000 tax deduction reduces his or her income taxes by $250 ($1,000 multiplied by 25%). As with the mortgage interest deduction, the value of the property tax deduction generally increases with taxpayer income for two reasons. First, the marginal tax rates that a homeowner faces increase with income, so an individual in the 35% marginal tax bracket paying $1,000 in property taxes would realize a tax savings of $350. Second, higher-income individuals tend to purchase more expensive homes, which results in higher property taxes, and therefore a larger deduction. Because there is no limit on the amount of property taxes that can be deducted—as there is with the mortgage interest deduction—the majority of property taxes claimed is done so by upper-middle- and upper-income households. The deduction for state and local property taxes was never intended to encourage homeownership. When the modern federal income tax code was created in 1913 almost all state and local taxes were deductible. A major rationale for providing the deduction was that the payment of the state and local taxes was compulsory and thus should be deducted when determining a taxpayer's ability to pay the federal income tax. Over the years Congress has gradually restricted the types of state and local taxes that could be deducted. Today, deductible taxes include real estate taxes, personal property taxes, income taxes, and sales taxes. The deduction for state and local sales taxes was only available through 2013, and may only be taken in lieu of the deduction for income taxes. In 2011, 54% of all homeowners claimed the deduction for state and local property taxes. The deduction was claimed on slightly over 28% of all federal income tax returns. Approximately 87% of those taxpayers who itemized their federal return claimed the property tax deduction—higher than the fraction of itemizers who claimed the mortgage interest deduction (see previous section). Following the mortgage interest deduction and property tax deduction, the next largest tax benefit is the exclusion of capital gains from the sale of a principal residence. A capital gain is realized when the sales price of a home exceeds the original cost of the home plus improvements. In general, a capital gain on the sale of a principal residence of up to $250,000 for single taxpayers, and $500,000 for married taxpayers filing jointly, may be excluded from taxable income. The capital gains exclusion probably has a rather small effect on the homeownership rate. This is likely due to the fact that the benefit of the exclusion cannot be realized until a taxpayer sells a house, while, as discussed later, the main barrier to homeownership is the upfront down payment. The tax treatment of capital gains on housing does have important effects on other aspects of the economy. A rather abstract tax benefit that homeowners receive, but one which is well-known in the academic community, is the exclusion of imputed rental income. To understand imputed rental income, consider that a homeowner is effectively both a rental property owner and a tenant (renter)—they own a home which they choose to rent to themselves instead of to someone else. Economic theories of taxation suggest that homeowners and rental property owners should therefore be taxed similarly. Currently, they are not. Rental property owners are taxed on their net rental income, which is their rental income after deducting the costs they incur in generating this income—mainly mortgage interest, taxes, insurance, maintenance, and depreciation. Homeowners, however, are allowed to deduct mortgage interest and taxes without having to pay taxes on the "rent" they pay themselves. Therefore, owner-occupied housing is subsidized relative to rental housing. There are a number of other smaller tax benefits that are currently available to homeowners or that recently expired. The interest on mortgage revenue bonds (MRBs) is tax exempt, which allows MRBs to finance below-market rate mortgages for potential homebuyers that meet certain criteria. Through 2013, certain homeowners who itemized their tax returns were able to deduct from their taxable income premiums paid for qualified mortgage insurance. Additionally, through 2013, homeowners whose mortgage debt was forgiven (wholly or partially) were able to exclude from taxable income the amount of forgiven debt. Historically, when an individual is granted debt forgiveness by a lender—be it credit card debt, a car loan, etc.—they must include the forgiven debt as taxable income. In addition to the numerous tax benefits that exist for homeowners, there are also a number of non-tax-related programs that either directly or indirectly assist homeowners. For example, homeownership is also subsidized by the favorable treatment of lending institutions that make home loans (federal home loan banks); by federal programs that insure lenders against losses on home loans which lowers the down payment homebuyers must make (FHA and VA); by federal programs that provide favorable loan terms to farmers (USDA); by guaranteeing certain federally charted financial institutions that assist in maintaining a viable secondary market for mortgages which enables mortgage financing to be more readily available (Fannie Mae, Freddie Mac, and Ginnie Mae); by establishing programs within HUD and USDA that fund agencies that counsel prospective homebuyers on obtaining and maintaining homeownership; and by funding grant programs that provide down payment and closing cost assistance to some homebuyers. A number of possible rationales for subsidizing homeownership have been put forth. First, a high homeownership rates may bestow certain benefits to society as a whole such as higher property values, lower crime, and higher civic participation, among others. Second, homeownership may promote a more even distribution of income and wealth, as well as establish greater individual financial security. And lastly, homeownership may have a positive effect on living conditions, which can lead to a healthier population. This section provides a review and analysis of these rationales. The analysis presented here is distinct from the analysis of the economic effects of the mortgage interest and property tax deductions, which is presented in the next section. Tax benefits for homeowners are most often rationalized on the basis that homeownership generates positive externalities. Positive externalities, also known as spillover benefits, occur when the actions of one individual benefit others in society. Because a given individual will tend to only consider his or her own (private) benefit from an activity, and not the total benefit to society, too little of the positive-externality-generating activity is undertaken from society's perspective. Governments, however, may intervene through the use of taxes and subsidies to align the interests of individuals with the interests of society to achieve a more economically efficient outcome. A concrete example of a positive externality, often cited by homeownership advocates, is the positive effect ownership is believed to have on property values in a community. The theory is that since homeowners have a larger financial stake in their homes than renters, they are more likely to make investments that raise surrounding property values. For example, a homeowner may be more inclined than a renter to paint the exterior of his or her home, fix a hanging gutter, or remove street debris outside his or her house. While the owner may be only seeking to improve the appearance and resale value of the house, he or she is also positively influencing the values of surrounding properties (the spillover effect). There is a long list of other externalities that proponents claim homeownership generates. Homeownership is believed by some to create neighborhood stability since owners are more inclined to remain in the community for a longer period of time than renters. Proponents also associate homeownership with a greater degree of social and political involvement due to the concern about one's property value. Homeownership is also believed by some to lead to lower neighborhood crime. It has also been suggested that homeownership fosters more responsible behavior among youths in the community, such as higher academic achievement and lower teen pregnancy rates, due to the monitoring mechanism put in place to maintain the attractiveness of a community. Economists have been able to establish that a correlation between homeownership and these positive neighborhood effects does exist. For example, Denise DiPasquale and Edward Glaeser found that homeowners are more likely than renters to belong to more non-professional organizations, know the head of their local school board and U.S. House Representative, vote in local elections, and garden. In separate investigations into the effects of homeownership on the academic performance of children, Richard Green and Michelle White, and later Donald Haurin, Toby Parcel, and R. Jean Haurin, reported statistical evidence that there is a positive relationship between homeownership and the educational performance of owners' children. And William Rohe and Leslie Stewart found that every one percentage point increase in an area's homeownership rate was correlated with an $800 increase in home values over a 10-year period. At the same time economists have found it difficult to establish causality (i.e., homeownership causes these positive effects). There are a number of reasons for this. First, there may be observable differences between owners and renters, that when not accounted for, may lead researchers to false conclusions. For example, Green and White (discussed above) did not account for differences in net worth, mobility, and home location when studying the effect of homeownership on a child's educational outcome. But these factors are likely strongly correlated with homeownership. Thus, by not accounting for these observable difference the authors may have been attributing the influence of these other factors on a child's educational outcome to homeownership. Second, there may be unobservable differences that exist between homeowners and renters that researchers may not be able to account for, which leads them to infer causality when it is not present. For example, certain traits or attitudes may lead some people both to homeownership and community activism. Statistical methods can be employed to overcome the problem of unobservable differences. These methods, however, are typically only reliable if particular assumptions hold. This limitation generates a great deal of debate among researchers as to whether the assumptions hold, and therefore whether the reported results are reliable. A third problem that researchers commonly face in determining causality is the possible existence of an interaction between homeownership and the positive outcome policymakers wish to promote. Take for example the claim that increased homeownership rates boost neighborhood property values. Determining causality is difficult because homeowners may prefer to purchase homes in neighborhoods where home values are rising. Statistical methods have been developed to determine causation when such interdependence exists. Again, however, particular assumptions must hold for these methods to produce reliable results, generating debate among researchers about findings. Because of these difficulties, a definitive answer to whether homeownership produces the purported externalities has eluded economists. This limitation, however, does not mean that homeownership does not result in positive externalities that justify housing subsidies. But one could argue that determining whether to provide subsidies for homeownership depends on establishing cause and effect. If homeownership does not generate the positive effects some believe it does, then the economic justification for subsidization is diminished. It has been even more difficult for researchers to determine the magnitude of the purported benefits of homeownership. Without accurate estimates of how large the social benefits are from homeownership, it is difficult to determine the amount of subsidization homeownership should receive. If the social benefits associated with homeownership are small then the current amount of subsidization, which some economists view as substantial, could have the unintended consequence of decreasing, not increasing, economic efficiency. This outcome is especially true if the social return to investment in other activities in the economy, such as education and other non-housing-related capital, are higher than the return to homeownership. In such a situation, reducing housing subsidies would free up resources for these more socially valuable investments. Often absent from the debate over the existence of positive externalities is the possibility that homeownership results in negative externalities. Negative externalities occur when the actions of one individual impose a cost on others in society. On the one hand, a higher concentration of homeowners may result in increased property values. On the other hand, the opposite may be true at times. If enough homeowners in a given community default and are foreclosed upon, the effect could be to reduce the value of surrounding properties in the neighborhood. This, in turn, could lead to more defaults and foreclosures, which reinforces the downward pressure on surrounding home values. In effect, the community's "portfolio" of homeowners and renters is undiversified, so that a negative economic shock to a small group of homeowners can be transmitted to a larger group. Homeownership may also result in less than desirable social and community involvement. The same incentive that is believed to lead homeowners to make investments that raise surrounding property values—mainly homeowners' financial stake in their property—may also lead homeowners to push for local initiatives that exclude certain groups of people from their communities. Zoning restrictions, for example, may be supported by homeowners if it prevents the construction of low-income rental housing that they fear could impact their property values. If the positive externalities outweigh the negative externalities, economic theory still suggests that subsidizing homeownership to generate socially desirable outcomes may not be the most efficient remedy. If landscaping, painting, and other exterior investments increase surrounding properties' values, it is not clear why subsidizing homeownership to generate this result is the ideal method. Theories of public finance and externalities suggest that a more efficient policy would be to subsidize the externality-generating activity directly. The government could offer a tax credit, deduction, or voucher for painting or landscaping one's house, for example. Renters and owners alike could then benefit from the incentive while producing the desired result—higher property values from more aesthetically pleasing neighborhoods. Directly subsidizing socially beneficial investment in one's home could also be more cost effective than indirect subsidization via homeownership incentives. Some contend that homeownership promotes economic equality. Data reveal that homeowners on average earn higher incomes and have higher savings than renters. In general, homeowners also have greater access to wealth via their home's equity which can be used to finance discretionary and emergency spending. In addition, homeowners may have greater access to credit to borrow for such things as a child's education, which can increase the child's income, and, in turn, increase his or her ability to become homeowners. Thus, because of these positive correlations, promoting ownership may be a tool used to achieve a more even distribution of income and wealth within and across generations. Again, economists confront the issue of distinguishing causation from correlation. Does homeownership positively influence one's income and wealth, or is the relationship reversed, and higher income and wealthier households are more inclined to become homeowners? Likewise, there may be some intergenerational wealth transmission mechanism that homeownership helps facilitate, but it could also have something to do with the general ability of higher-income households to invest in their children. If this is the case, more effective investment in education may be a more economically efficient way to achieve an equitable distribution of wealth. Homeownership is also often viewed as way to promote the accumulation of an individual nest egg. This argument has become more prominent over the past decade as personal saving rates in the United States have decreased. As long as home prices are stable or increasing, a homeowner, as opposed to a renter, automatically builds his or her net wealth (equity) with each successive mortgage payment. Home equity can be used to make improvements to the house, finance college expenses, or be converted into income for retirement later in life, among other things. Being a homeowner also allows individuals to build or improve their credit scores. As a result, a homeowner may have access to cheaper credit than a renter. Encouraging homeownership as a means of saving carries with it certain risks that policy makers and potential homeowners may want to consider. First, it is not clear that the financial return to homeownership is as high or as predictable as some believe. When viewed as an investment vehicle, there appears to be differences across income groups and regional markets that should be taken into account with a home that are not present with other assets. For example, there is evidence that lower-income households are less likely than higher-income households to claim the mortgage interest and property tax deductions, are more likely to pay higher "sub-prime" mortgage rates, and spend less on maintaining their homes—all behaviors which should lower their return to homeownership. At the same time, there is some evidence that homes in lower-income markets may experience greater home appreciation relative to homes in the higher-income markets. In addition, like all other investments, the financial return to homeownership depends on market conditions at the time the home is bought and sold and the expected return from alternative investments. Instead of purchasing a home, an individual could invest down-payment funds in financial instruments, such as stocks and bonds. Second, policies that promote homeownership may result in households holding relatively undiversified portfolios. To minimize risk, households should hold a portfolio containing a wide range of assets. Returns should not be too closely related so that if some assets in the portfolio fall, others may rise. But a home is an inherently large and practically indivisible asset. In fact, for those who are homeowners, their house is typically the largest asset in their portfolio. Committing such a large fraction of one's portfolio can complicate diversification. Also complicating diversification is the combination of a home with an individual's other largest asset, his or her human capital, the return to which is labor income. The recent housing boom and bust showed that the return to housing and the labor income of some workers in certain industries or certain age groups may be closely related. Areas with high unemployment also suffered high foreclosure rates which had a downward reinforcing effect. Thus, from a portfolio perspective, homeownership may not be a financially prudent decision for all Americans. Third, unlike most other assets in the typical household's portfolio, a home purchase is often financed using a substantial amount of debt. The use of mortgage debt to acquire a home increases the homeowner's exposure to fluctuations in home prices. Specifically, more mortgage debt causes greater changes in an owner's equity—the difference between a home's value and what is owed on the house—in response to a given price change. If prices fall enough, an individual can end up owing more on the house than it is worth—a scenario referred to as having negative equity, or being "underwater" on the mortgage. Selling a house also requires the owner to incur significant transaction costs, implying that a house is an "illiquid" asset, which further increases risk. Some believe homeownership bestows certain benefits exclusively to individual homeowners, including improved psychological wellbeing. The pride associated with owning one's home could lead to higher levels of self-esteem and overall life satisfaction. Self-esteem and satisfaction could also be lifted by the pleasure one takes in maintaining and improving his or her property. Homeownership could also promote a sense of individual security, stability, and control leading to less stress than being a renter. As the current economic environment has made clear, however, homeownership can also produce the opposite feelings if it becomes a struggle to make mortgage payments. In addition to the psychological benefits, some also point to the possible physical health benefits associated with homeownership. Homeownership may provide higher-quality living conditions which lead owners to be, in general, physically healthier than renters. Homeownership may also allow households to better cope with unforeseen health events by drawing on equity in the home and thus affecting the outcome of certain illnesses. Researchers studying the psychological and health benefits of homeownership have encountered the same problems as those studying homeownership externalities—primarily, distinguishing causation from correlation. Some economists have also noted that if these benefits of homeownership accrue to the individual and not to society, then widespread homeownership subsidy programs may be unwarranted. Economic theory generally predicts that when only private benefits exist (i.e., there are no externalities), the market will tend to allocate resources most efficiently. At the same time, one could argue that individual health and well-being are fundamental features of a prosperous society, and if owning a home contributes to one's health, society should subsidize homeownership. While some policy makers may or may not want to promote homeownership based on the reasons just discussed, a separate issue that arises is—what are the effects of the mortgage interest deduction and property tax deduction? In particular, do these two tax provisions actually increase homeownership as some argue? How do they affect other dimensions of homeownership, such as the quality and size of homes taxpayers purchase? And how does subsidizing owner-occupied housing affect the performance of the overall economy? This section analyzes these questions in turn. In order to have an effect on the homeownership rate, tax incentives must address the barriers that households on the verge of homeownership face. Economists have identified the high transaction costs associated with a home purchase—mostly resulting from the down payment requirement, but also closing costs—as the primary barrier to homeownership. Household income has also been found to influence the home-buying decision, although its effect on the decision to become a homeowner is smaller than the ability to finance a down payment. This finding is likely because those seriously considering making the transition from renter to owner already have sufficient income to rent. The effects of the mortgage interest deduction and property tax deduction on the homeownership rate are likely to be small because they are not well targeted toward lowering the down payment barrier. While the deductions lower the annual cost of homeownership, they do not provide any upfront benefit that can assist in completing a home purchase. Instead the deductions enable homeowners to have a greater after-tax income than they otherwise would. This may have an important effect on another aspect of homeownership—the size of home taxpayers purchase, or housing consumption. The next section elaborates on this issue. The deductions' effect on homeownership is also limited because the deductions are not well targeted toward the group of potential homebuyers most in need of assistance—lower-income households, which includes younger potential first-time buyers. The mortgage interest deduction and property tax deduction are not well targeted toward this group because homeowners must itemize their tax return to benefit, but lower-income households itemize their tax returns at a very low rate. Thus, very few lower-income households benefit from the mortgage interest deduction or property tax deduction. The academic community has debated the virtues of the mortgage interest deduction as a tool for promoting homeownership for some time. In the early 1980s two economics professors, Harvey Rosen and Kenneth Rosen, presented research that suggested that when taken together, the mortgage interest deduction, the deduction of property taxes, and the exclusion of imputed rental income explained one-fourth of the increase in the post-World War II homeownership rate. Their results suggest that if these three tax benefits were repealed, the homeownership rate in this country would fall about four percentage points. In the long term, the effect on the homeownership rate would depend on interaction between the supply and demand for rental housing and the supply and demand for owner-occupied housing. There are at least two problems with the researchers' approach. First, their results do not separate out the effect of each individual tax benefit, so it is not possible to determine, for instance, what would be the effect of only repealing the mortgage interest deduction, or only the property tax deduction. Second, and arguably more important, the model employed does not allow for changes in the rental market following the repeal of the tax benefits. As a result, their model may be overestimating the effect of repealing the tax benefits since in their model a lower homeownership rate would imply more renters. But in the short term, more renters would increase rental rates, providing an offsetting disincentive to become a renter. Over time increased rental rates would encourage the development of more rental housing, which should lower the cost of renting. The long-term effects of repeal may be uncertain. Economists Edward Glaeser and Jesse Shapiro have compiled research that partially refutes the findings of Rosen and Rosen. Glaeser and Shapiro undertook an empirical investigation concerning the effect of the mortgage interest deduction on the homeownership rate. The pair looked first at the relationship between inflation and the homeownership rate. The value of the mortgage interest deduction is positively related to inflation—when inflation is high, the value of the deduction correspondingly increases. Thus, if the mortgage interest deduction affects the homeownership rate, one should see homeownership change as inflation changes. But the inflation rate fluctuated considerably between 1965 and 2000 while the homeownership rate was relatively stable. Next the authors looked at the relationship between the itemization rate and the homeownership rate. If the mortgage interest deduction influences home buying, changes to the itemization rate should also result in changes in the homeownership rate. Again, no such relationship was found. Glaeser and Shapiro conclude, … the home mortgage interest deduction is really not a pro-homeownership policy in any meaningful sense. It subsidizes housing consumption, but its impact on the homeownership rate appears to be minimal. More recently, economists Matthew Chambers, Carlos Garriga, and Don Schlagenhauf examined the factors that best explain the increase in homeownership over the last decade. In a series of papers the authors present both empirical and theoretical evidence that suggests that the most influential factor was innovation in the mortgage markets, not tax policy. Mortgage market innovations reduced—sometimes to zero—the down payment requirement for constrained households, allowing more households to purchase a home. Tax policy, however, may have interacted with some of the innovative financial products to increase the attractiveness of using them—for example, the ability to deduct mortgage interest may have led some households to rely on interest-only mortgage products. Some economists have argued that the mortgage interest deduction and property tax deduction exert a non-trivial influence on the size of homes that taxpayers purchase. As was discussed above, the main factor that prevents renters from transitioning to homeownership is the down-payment barrier. But tax benefits—particularly the mortgage interest deduction and property tax deduction—increase the after-tax income of those households that are able to take advantage of them. And because the value of these benefits increase with taxpayer income and mortgage size, it is argued that they tend to encourage larger home purchases among higher-income households. In essence, they lower the effective annual price of homeownership. Individuals tend to consume more of a good or service when its price falls. The mortgage interest and property tax deductions could be capitalized into home prices, which would limit their effect on housing consumption. Because the deductions increase the after-tax income of homeowners, they may lead to home prices being bid-up higher than they otherwise would be. In theory, the disincentive provided by higher prices to purchase more home could be such that it exactly offsets the incentive provided by the deductions. In this case, there would be no effect on housing consumption. If tax policy does affect home size, it may also affect land use, energy use, and transportation. Larger homes generally require more land on which to be built, which, in densely populated areas, is typically found the furthest away from employment opportunities. The increased commuting distance may lead to greater carbon emissions. Traffic congestion may also increase if the transportation infrastructure is not enhanced to support the transition outward. And if taxpayers are building homes larger than they would otherwise, energy use may also increase as larger homes generally require more energy to heat and cool. The mortgage interest deduction may have exerted a larger effect on housing consumption during the recent housing boom than it historically has. Some homebuyers used mortgage products that required very low or interest-only payments, such as an interest-only adjustable rate mortgage (ARM). When home prices are rising and interest rates are low, these products can be attractive because the homeowner can refinance into a more traditional mortgage before the interest-only period is over. They are also attractive because the whole interest payment can be deducted due to the mortgage interest deduction, which frees up income for a larger mortgage payment. Of course, as is clear now, home prices do not always rise. Some of these borrowers were unable to refinance because prices fell to the point that their home was worth less than what they owed in mortgage debt. The mortgage interest deduction and property tax deduction can improve the long-term performance of the U.S. economy if the tax preferences promote homeownership, and if homeownership produces positive externalities or if other market failures exist. When externalities or market failures do exist, the free-market outcome will result in capital and labor being employed in sectors of economy where they generate relatively low returns compared to housing. Economic output and well-being will be below its potential. Providing preferential tax treatment for homeowners can improve the long-run performance of the economy by encouraging capital and labor to flow to the higher return producing housing sector. It is also true that providing homeowners with preferential tax treatment can also harm the long-run performance of the U.S. economy. If there are no externalities or market failures associated with homeownership, then providing preferential tax treatment to homeowners causes capital and labor to be diverted away from more productive employment in the non-housing sectors of the economy. The same result occurs if homeownership produces externalities, but the level of subsidization is greater than the external benefits produced. Although homeownership is often claimed to generate positive externalities, such benefits have not generally been measured; nor is there reason to believe that they justify such significant subsidies. Reducing the amount of tax preferences available to homeowners could also improve the long-run budgetary situation of the United States as federal tax revenues would increase, implying less reliance on deficits to finance spending. Housing tax policy can also exert an influence on the economy in the short term. Most economists agree that a combination of mortgage market innovations, loose lending standards, and low interest rates were the primary drivers of the run-up in home prices over the last decade. But housing tax policy may have reinforced these factors, making the economic expansion and subsequent contraction more acute than it otherwise would have been. The ability to deduct the interest on exotic mortgage products may have reinforced these products' influence on expensive home purchases. The ability to deduct interest on home equity loans may have reinforced the ability to withdraw equity to increase housing-related and non-housing-related consumption. More homeowners and larger home purchases required increasing levels of capital and labor from other areas of the economy. In 2005, The Economist estimated that "over two-fifths of all private-sector jobs created since 2001 have been in housing-related sectors, such as construction, real estate, and mortgage brokering." Attempting to encourage homeownership may also have the adverse consequence of slowing the economy's recover when it does fall into a recession. Most economic recoveries are characterized by an elevated unemployment rate. The more quickly workers can transition from the weaker sectors of the economy to the stronger sectors, the more quickly the economy can recover. Homeownership can slow this transition because it reduces the ability of workers to move. For example, an unemployed auto worker in Michigan may have to first sell his or her house to accept a job somewhere else in the country. This may be infeasible if the worker is unable or unwilling to sell his or her home. A renter, however, would at most be required to pay the remaining rent on their lease before moving and could therefore be expected to transition to another form of employment or location more quickly than a homeowner. As mentioned previously, a major rationale for providing the deduction for state and local property taxes is that such payments are compulsory and thus should be deducted when determining a taxpayer's ability to pay the federal income tax. In actuality, whether or not compulsory taxes should be deductible depends on what the taxpayer receives in exchange. If a taxpayer receives a benefit in exchange for paying local property taxes, deductibility may not be justified. Consider a homeowner who pays a private company for trash collection services every year. This homeowner would not be permitted to deduct such payment for tax purposes because the payments were to a private company in exchange for a benefit. But if the taxpayer's locality handled trash collection in exchange for property taxes, the homeowner would be permitted to deduct the taxes. Both homeowners are paying for trash collection, but one homeowner is better off simply because the service was provided by the local government. Therefore, one could argue that when property taxes are used to finance government services, the property tax deduction is not justified. It could still be argued that property taxes should be deductible even if a taxpayer receives a service because it is the local government, and not the taxpayer, that determines which services are provided. Thus, a taxpayer could be paying property taxes in exchange for services that he or she does not value at all—a childless homeowner who pays taxes in exchange for a public school system may be an example. Taxpayers, however, can still "vote with their feet" and choose a locality and state that provides services that are more consistent with their preferences. In reality, even when homeowners can vote with their feet they probably receive a mix of services that they do and do not desire in exchange for paying property taxes. Therefore, it may still be justified to provide at least a partial deduction for property taxes. One justification that has been offered for the mortgage interest deduction is that it promotes neutrality between homeowners who rely primarily on debt financing (borrowing) and homeowners who rely primarily on equity financing (one's own financial assets). Without the mortgage interest deduction, equity financing would be tax preferred. Since those who have enough assets to rely more on equity financing tend to earn higher income, the mortgage interest deduction promotes financing neutrality among homeowners of different income levels. Because equity would be tax preferred, absent the mortgage interest deduction, it could be expected that borrowers would tend to finance more of their home purchases with larger down payments (equity contributions). In light of the recent housing boom and subsequent bust, it could be argued that debt/equity neutrality is not necessarily a desired policy objective. Debt financing—also known as leveraging—increases a homeowner's exposure to home price fluctuations. When a taxpayer is highly leveraged, a relatively small decrease in home price can lead to owing more on his or her house then the house is worth. This can cause problems should the taxpayer need to move or sell their house unexpectedly. As was previously discussed, increased leveraging can also lead to costs being imposed on surrounding property owners if it increases the risk of foreclosure, which can negatively impact the value of neighboring homes. To the extent that this negative externality exists, economic theory suggests that debt/equity neutrality may be suboptimal. If Congress chooses to do so, there are a number of options at its disposal for changing the mortgage interest deduction and the state and local property tax deduction. This section discusses several of these options. Actual implementation of any of the options presented here would require careful consideration about how specifically to modify the parameters of the tax benefit(s) of interest. It appears that the two options that have generally received the most attention so far are converting the mortgage interest deduction into a credit, and limiting the deductibility of state and local property taxes. The list of options presented here is by no means exhaustive. One possible option would be to eliminate the mortgage interest and property tax deductions. Elimination of the deductions could be justified as a second-best policy alternative to taxing net imputed rental income. It was discussed earlier in this report that net imputed rental income is currently excluded from taxation. This is due in part to limited acceptance by non-economists of the idea that owning a home provides owners with implicit income that should be taxed, and in part to the practical difficulty of taxing such income. Little is known, for example, about the probable rental value of individual owner-occupied homes and available data on rental rates is of limited use because of the differences in size and quality of rental units as compared to owner-occupied properties. The impact on the economy and housing market would depend on how quickly the elimination of the deductions were phased in. Sudden elimination of the deductions could cause home purchases to decrease, leading to a decrease in home prices. The decrease in home prices would be more severe if the deductions are capitalized to some degree into current home prices. The decrease in home prices would impose capital losses on current owners and perhaps produce a lock-in effect—current homeowners could be reluctant to sell at a loss. In addition, the decrease in home prices could lead to a reduction in new home construction, a reduction in homeowner wealth, and the possibility of higher defaults since some homeowners could find themselves underwater on their mortgages. These three events could lead to the broader economy being negatively impacted in the short term. If elimination of the deductions were gradually phased in over time it could help mitigate the negative consequences for the economy and housing market. Researchers Steven Bourassa and William Grigsby propose eliminating the deductions over a 15- to 20-year period with a fixed date after which the deductions would no longer be available. For example, if January 1, 2034, were chosen as the cut-off date, taxpayers who buy a home in 2014 could claim the deductions for 20 years, buyers in 2015 could claim the deduction for 19 years, and so on. Bourassa and Grigsby postulate that there would be no effect on home demand or prices, although no modeling is done to complement their proposal. It is possible that gradually eliminating the deductions could simply delay the negative short-term consequences for the economy and housing market. This could happen if households do not anticipate the full effects of the deductions' elimination until closer to the chosen cut-off date. A net improvement in the long-term performance of the economy relative to today could be expected from elimination of the mortgage interest and property tax deduction if the deductions lead to distortions in the economy. A reduction in economic distortions would result in capital and labor being directed to more productive employment in the non-housing sectors of the economy. The resulting increase in federal revenue from the elimination of the deductions could also improve the long-term budgetary situation of the United States as federal tax revenues would increase, implying less reliance on deficits to finance spending. A ballpark estimate of the expected increase in federal revenue from eliminating these two deductions is equal to what these benefits currently cost the government— $108.8 billion annually. If the policy objective of Congress is to promote homeownership through the tax code, and Congress believes the mortgage interest and property tax deductions increase homeownership, then limiting the deductions to more effectively target the benefits is an option. Currently, the mortgage interest deduction may be claimed on interest paid on up to $1 million of mortgage debt that finances a primary or secondary residence, interest paid on up to $100,000 of home equity debt (which may be used to finance spending unrelated to the home), and is available every year the mortgage is in repayment. State and local property taxes are also fully deductible. It could be argued that the deductions provide a tax benefit to a large number of taxpayers that would become homeowners regardless if they existed or not. The mortgage interest deduction could be limited to interest paid on a mortgage amount that more closely resembles that of a first-time homebuyer. The Congressional Budget Office (CBO) has estimated the cost of gradually reducing the maximum mortgage amount on which interest can be deducted from $1.1 million to $500,000. The CBO proposal would not take effect until 2013 and would decrease the maximum mortgage amount by $100,000 annually until it reached $500,000. The CBO estimates this option would raise a total of $41.4 billion between enactment (2013) and 2019. Similarly, House Ways and Means Committee Chairman Dave Camp recently released a comprehensive tax reform draft that proposes limiting the size of mortgages eligible for the deduction. The proposal would reduce the eligible mortgage amount to $500,000 over a four-year period beginning in 2015. Interest on home equity debt incurred after 2014 would no longer be deductible. To lessen the impact on the housing market, the new limitations would only apply to new mortgage debt. Furthermore, the proposal includes a grandfather provision for refinanced debt if the original mortgage debt is incurred prior to the mortgage limits being reduced. Because of the comprehensive nature of Chairman Camp's proposal, the JCT grouped the revenue estimates for this proposal along with a number of other changes to itemized deductions. Another option would be to leave the maximum mortgage amount unchanged, but limit the amount of interest that could be deducted. For example, the amount of interest that a taxpayer may deduct could be limited to a percentage of their adjusted gross income (AGI), such as 10%, 12%, or 15%. The CBO has offered such an option for the deduction for all state and local property taxes. Specifically, the CBO presented the option of limiting the deduction for all state and local taxes to 2% of AGI. Their estimates suggest that such a proposal could raise $625.7 billion between 2010 and 2019. Since property taxes account for about 30% of all state and local taxes households pay, the CBO estimates suggest that limiting the property tax deduction could be an effective option for increasing revenue. Other options include limiting the mortgage interest or property tax deduction to interest and taxes paid on a taxpayer's first home. This could encourage first-time buyers to remain in their homes longer as the deductions would no longer be available if they moved. Another option would be to limit both deductions to a taxpayer's primary residence. Current law allows for the deduction of interest on a second residence and home equity loan, as well as the deduction of property taxes on every home a taxpayer owns. The deductions could also be limited to those homeowners below a certain income threshold. Currently the deductions are generally available to homeowners of all income limits, although there are some restrictions based on income as a result of limitations on the amount of itemized deductions some higher-income taxpayers may claim. The mortgage interest deduction and property tax deduction could be replaced with a tax credit. The current deductions tend to provide a proportionally bigger benefit to higher-income homeowners since they buy more expensive homes and are subject to higher marginal tax rates. The requirement that homeowners itemize their tax returns also limits the number of owners who receive the tax benefit. A tax credit for mortgage interest or property taxes could provide a benefit to more homeowners since itemization would no longer be required. Without the need to itemize, the burden of tax preparation on homeowners would be lessened. Depending on the design of the credit, it could create a more consistent rate of subsidization across homeowners. Making the tax credit refundable would serve to make it better targeted to lower-income homeowners. Over the years, several mortgage interest tax credit options have been proposed. Five of the more prominent ones are listed below. All five would limit the deduction to a taxpayer's principal residence. Four out of the five would allow a 15% credit rate. Three of the five credit options would be nonrefundable. Two of the options would limit the size of the mortgage eligible for the credit to $500,000, while one would limit eligible mortgages to no greater than $300,000 (with an inflation adjustment). Another option would limit the maximum eligible mortgage to 125% of the area median home prices. And still another would place no cap on the maximum eligible mortgage, but would limit the maximum tax credit one could claim to $25,000. The CBO, in its most recent Options for Reducing the Deficit report, presented the option of converting the mortgage interest deduction to a 15% nonrefundable tax credit. The credit would be restricted to a taxpayer's primary residence. No credit would be allowed for interest associated with home equity loans. Under this option, the deduction would still be available between 2014 and 2018 as the credit was phased in. Simultaneously, the maximum mortgage amount that would be eligible for the credit would be reduced by $100,000 during the phase in. From 2019 on, only the credit could be claimed on mortgage amounts up to $500,000. A similar option was presented by the CBO in 2009. The American Enterprise Institute's Alan Viard has proposed converting the deduction to a 15% refundable tax credit starting in 2015. The credit would be limited to the interest on the first $300,000 of mortgage debt (in 2013 dollars) associated with one's primary residence (second homes and home equity debt would be excluded). The qualifying mortgage amount would be adjusted annually for inflation. Homeowners could still claim the deduction but only at 90% of its current value, decreasing by 10% annually. A homeowner could switch to the tax credit regime at any time. President Obama's National Commission on Fiscal Responsibility and Reform (Fiscal Commission) has recently recommended replacing the mortgage interest deduction with a nonrefundable credit equal to 12% of the interest paid on mortgages of $500,000 or less. The credit would be restricted to a taxpayer's primary residence. No credit would be allowed for interest associated with home equity loans. The Bipartisan Policy Center's Debt Reduction Taskforce, co-chaired by former Senator Pete Domenici and Alice Rivlin, proposes a 15% credit for up to $25,000 of interest paid on a mortgage associated with a principal residence—interest paid on home equity loans and second homes would be ineligible. The tax credit would be refundable, which would ensure lower-income homeowners would be allowed to take advantage of the credit. The proposed credit would be administered via mortgage lenders who would apply for the credit and transfer it to homeowners by lowering their interest payments in an amount equal to the credit. In 2005, President George W. Bush's Advisory Panel on Federal Tax Reform (Tax Reform Panel) also proposed replacing the mortgage interest deduction with a credit. Specifically, the Tax Reform Panel proposed a tax credit equal to 15% of mortgage interest paid. Under the proposal, the credit would be restricted to a taxpayer's primary residence. The size of the mortgage eligible for claiming the interest credit would be limited to the average home price in the taxpayer's region. A similar option was presented by the Congressional Budget Office (CBO) in 2009. CBO's proposal called for a 15% credit for interest on mortgages of less than $500,000.

Concern has increased over the size and sustainability of the United States' recent budget deficits and the country's long-run budget outlook. This concern has brought the issues of the government's revenue needs and fundamental tax reform to the forefront of congressional debates. Congress may choose to address these issues by reforming the set of tax benefits for homeowners. According to the Joint Committee on Taxation, federally provided tax benefits for homeowners will cost approximately $136.3 billion annually between 2014 and 2017. Reducing, modifying, or eliminating all or some of the current tax benefits for homeowners could raise a substantial amount of revenue, while simultaneously simplifying the tax code, increasing equity among taxpayers, and promoting economic efficiency. This report focuses on the two largest federal tax benefits available to homeowners—the mortgage interest deduction and the deduction for state and local property taxes. While other tax benefits for homeowners exist, these two particular benefits are the most expensive in terms of forgone revenue to the federal government. Between 2014 and 2017 the mortgage interest deduction and property tax deduction are estimated to cost around $77.3 billion and $31.5 billion annually. Congress may therefore consider modifying these two tax benefits to raise revenue. The mortgage interest deduction and property tax deduction are also the two tax benefits proponents most often argue promote homeownership. Economists, however, have questioned this claim. The analysis presented in this report is structured along two dimensions. First, the analysis focuses on the rationales commonly offered for providing tax benefits for homeowners, mainly that homeownership (1) bestows certain benefits on society as a whole such as higher property values, lower crime, higher civic participation, among others; (2) is a means of promoting a more even distribution of income and wealth; and (3) has a positive effect on living conditions, which can lead to a healthier population. Although these benefits may exist, the analysis presented in this report highlights the difficulties that economists have encountered in attempting to establish their existence or magnitude. The analysis then turns to examining the effect that the mortgage interest deduction and state and local property tax deduction have on the homeownership rate, housing consumption, and the economy. The analysis in this report suggests that these tax incentives may have a larger effect on the size of homes purchased than on the decision to become a homeowner. The possibility that attempting to promote homeownership via the tax code may distort the allocation of capital and labor, which could hinder the performance of the economy in the short-run and long-run, is also raised. In the process of conducting the analysis, this report briefly summarizes the historical trends in homeownership and the more recent trends in foreclosures. The report concludes with policy options that Congress may find useful as it moves forward, including proposals made by House Ways and Means Chairman Dave Camp, President Obama's Fiscal Commission, President George W. Bush's Tax Reform Panel, and the Congressional Budget Office.

DOD in 2001 adopted a new approach for developing new weapon systems, called evolutionary acquisition with spiral development (EA/SD), as its preferred standard. EA/SD, which is referred to informally (though not entirely accurately) as spiral development, is an outgrowth of the defense acquisition reform movement of the 1990s, and is part of DOD's effort to make its acquisition system more responsive to rapid changes in threats, technology, and warfighter needs. It is also intended to increase DOD's control over program costs, DOD program-manager accountability, and participation of high-tech firms in DOD weapon acquisition programs. DOD's goals in using EA/SD are to: get useful increments of new capability into the hands of U.S. personnel more quickly; take better advantage of user feedback in refining system requirements and developing subsequent increments of capability; mitigate technical development risk in weapon programs that are to employ new or emerging technologies; and facilitate the periodic injection of new technology into weapons over their life cycles, so as to better keep pace with technological changes. Under DOD's previous weapon acquisition method, now known as single step to full capability (SSFC), DOD would first define a specific performance requirement to be met, and then work, usually for a period of more than 10 years in the case of a complex weapon system like an aircraft or ship, to develop and build a design that, upon first deployment, was intended to meet 100% of that requirement. The core idea of EA/SD is to set aside the quest for 100% fulfillment of the requirement in the initial version of the weapon and instead rapidly develop an initial version that meets some fraction (for example, 50% to 60%) of the requirement. Field experience with this initial version is then be used to develop later versions, or blocks, of the weapon that meet an increasing fraction of the requirement, until a version is eventually developed that meets the 100% standard. Figure 1 below details the process for each block. Each block includes four phases for conceiving, developing, producing, and sustaining (i.e., supporting) a weapon system. Each phase is governed by certain acquisition rules and regulations, including entrance and exit criteria, and is subject to the requirements process, including the Initial Capabilities Document (ICD) and Capability Development Document (CDD). Each block includes its own acquisition contracts and fully funded budgets for a defined time period. As shown in Figure 1 , spiral development occurs as the second phase within a block . Spiral development is an iterative process for developing a weapon system's capabilities in which the developer, tester, and user to interact with one another so as refine (i.e., spiral down to a specific understanding of) the system's operational requirements. Spiral interaction can change the course of a system's technology development. Although EA/SD differs from SSFC in its use of block development from the outset of a program, from a program-management perspective, EA/SD is similar in some areas to SSFC, including the development milestones and reviews that are used at each development stage. EA/SD, however, is intended to be more flexible than SSFC in terms of permitting changes in a program's requirements or development path resulting from changes in threats, technology, or warfighter needs. EA/SD is also intended to be more flexible than SSFC regarding entry points into the acquisition process. Under SSFC, the dominant entry point was the beginning. Under EA/SD, in contrast, programs can enter various phases of any block (A, B, or C in Figure 1 ), depending on the maturity of the program. Under EA/SD, the final desired capability of the system can be determined in two ways—at the beginning of the program, with the content of each deployable block determined by well-understood (i.e., mature) key technologies, or along the way, with the content of each block determined by success or failure in developing less-well-understood (i.e., emerging) technologies or the evolving needs of the military user. Applying EA/SD at the outset of large weapon acquisition programs, such as the ballistic missile defense program, can create significant initial uncertainty regarding the design and ultimate cost of the systems that will eventually be procured under the program, the number of systems to be procured, and the schedule for procuring them. Applying EA/SD to other programs, particularly those intended to develop more up-to-date subsystems for improving existing weapons such as the F-16 fighter or M-1 tank, can produce much less uncertainty regarding the program's ultimate outcome. Although DOD used EA/SD for years on a somewhat limited basis, DOD decided in 2001 that EA/SD would henceforth be the "preferred" (i.e., standard or default) acquisition strategy for all types of weapon acquisition programs—newly initiated programs, existing programs for developing new weapons, and programs for upgrading weapons already in existence. EA/SD was elevated in prominence that year when DOD announced that it was applying EA/SD to its ballistic missile defense program and that the Navy's program for a new family of surface combatants would be an EA/SD program. Several defense programs are now using EA/SD. The ballistic missile defense program is a more complex case than others because it includes multiple weapon systems, some existing and some in initial development, in different phases and blocks of development. In addition, although the ballistic missile defense program has embraced most of the EA/SD model (notably, the possible absence of ultimate cost and timeline projections), it differs from other programs being pursued under EA/SD because it operates under different oversight rules instituted in January 2002 by Defense Secretary Rumsfeld. A November 2003 General Accounting Office (GAO) report on EA/SD prepared at the direction of the Senate Armed Services Committee (see " Legislative Activity " section below) concluded the following: DOD has made major improvements to its acquisition policy by adopting knowledge-based, evolutionary practices used by successful commercial companies. If properly applied, these best practices can put DOD's decision makers in a better position to deliver high-quality products on time and within budget.... The next step is for DOD to provide the necessary controls to ensure a knowledge-based, evolutionary approach is followed. For example, the policy does not establish measures to gauge design and manufacturing knowledge at critical junctures in the product development process. Without specific requirements to demonstrate knowledge at key points, the policy allows significant unknowns to be judged as acceptable risks, leaving an opening for decision makers to make uninformed decisions about continuing product development. DOD was responsive to the requirements in the Defense Authorization Act for Fiscal Year 2003 [see " Legislative Activity " section below].... This [GAO] report makes recommendations that the Secretary of Defense strengthen DOD's acquisition policy by requiring additional controls to ensure decision makers will follow a knowledge-based, evolutionary approach. DOD partially concurred with our recommendations. DOD believes the current acquisition framework includes the controls necessary to achieve effective results, but department officials will continue to monitor the process to determine whether other controls are needed to achieve the best possible outcomes. DOD agreed it should record and justify program decisions for moving from one stage of development to next but did not agree with the need to issue a report outside of the department. EA/SD poses potential issues for Congress regarding DOD and congressional oversight of weapon acquisition programs. Some of these issues appear to arise out of uncertainty over how EA/SD differs from the SSFC approach; others appear to arise out of the features of EA/SD itself. One issue for Congress, addressed in the GAO report, is whether DOD has established adequate rules and regulations for conducting internal oversight of EA/SD programs. Some observers have expressed concern about this issue, particularly with regard to the spiral development phases of programs. In support of this concern, they have cited budget justification documents for the ballistic missile program, which have included some references to block development but have provided incomplete information on how much funding is spent for specific blocks, over what period of time, and on what progress has been made to date in each block. Supporters of EA/SD argue that DOD is fully aware of the need for adequate oversight and will take steps to ensure that it is provided. Potential questions for Congress include: How does DOD oversight for EA/SD programs compare to DOD oversight of SSFC weapon acquisition programs in terms of frequency and nature of reviews, information required to be submitted to reviewing authorities, and evaluation and reporting by reviewing authorities? Will DOD oversight procedures, and review bodies be the same for all EA/SD programs, or will they vary from program to program? Another issue for Congress is how to carry out its responsibility to allocate defense spending. EA/SD poses potentially significant issues for congressional oversight, particularly for newly initiated weapon acquisition programs, in three areas: Ambiguous initial program description. Programs initiated under EA/SD may not be well defined at the outset in terms of system design, quantities to be procured, development and procurement costs, and program schedule. These are key program characteristics that Congress in the past has wanted to understand in some detail before deciding whether to approve the start of a new weapon acquisition program. EA/SD can thus put Congress in the position of deciding whether to approve the start of a new a program with less information than it has had in the past. Lack of well-defined benchmarks. A corollary to the above is that Congress may not, years later, have well-defined initial program benchmarks against which to measure the performance of the military service managing the program or the contractor. Funding projections potentially more volatile. Although projections of future funding requirements for weapons acquisition programs are subject to change for various reasons, funding projections for EA/SD programs may be subject to even greater volatility due to each program's inherent potential for repeated refinements in performance requirements or technical approaches. As a result, any long-range projections of future funding requirements for EA/SD programs may be even less reliable than projections for systems pursued under the SSFC approach. Supporters of EA/SD argue that it can improve congressional oversight of DOD weapon acquisition programs because the information that DOD provides for a given program will focus on the specific block that is proposed for development over the next few years. This information, they argue, will be more reliable—and thus better for Congress to use in conducting its oversight role—than the kind of long-range information that used to be provided under the SSFC approach. Under SSFC, DOD provided information about the entire projected program, stretching many years into the future. Such information, supporters of EA/SD argue, may appear more complete, but is not very reliable because it requires projecting program-related events well into the future. DOD's history in accurately projecting such events, they argue, is far from perfect. As a result, they argue, information provided in connection with an SSFC weapon acquisition program can give Congress the illusion—but not the reality—of understanding the outlines of the entire program. On the other hand, critics of EA/SD contend that it has the potential for drawing Congress into programs to a point where extrication becomes difficult if not impossible, and without a clear idea of a program's ultimate objectives. Potential questions for Congress and DOD regarding congressional oversight of EA/SD programs include the following: What might be the impact, on congressional approval of new weapon acquisition programs and subsequent congressional oversight of those programs, of having limited initial detail in terms of system design, quantities to be procured, procurement schedules, and total costs? How might congressional oversight of weapon development programs be affected if program information with longer time horizons but potentially less reliability is exchanged for program information with potentially greater short-term reliability—but, without previously available, if imperfect, estimates of full program costs? To what extent might DOD's new preference for EA/SD be influenced, as some critics contend, by the knowledge that it might relieve DOD of the responsibility for providing specific answers to congressional questions regarding system architecture, effectiveness, time lines, long-term strategic implications and cost? Section 231 of H.R. 5122 / P.L. 109-364 (conference report H.Rept. 109-702 of September 29, 2006) would, among other things, require DOD to review and revise policies and practices on weapon test and evaluation in light of new acquisition approaches, including programs conducted pursuant to authority for spiral development granted in Section 803 of P.L. 107-314 (see below), or other authority for conducting incremental acquisition programs. In its report ( S.Rept. 108-46 of May 13, 2003, page 346) on S. 1050 , the Senate Armed Services Committee expressed support for incremental acquisition and directed GAO "to assess current acquisition policies and regulations and to determine whether: (1) the policies support knowledge-based, evolutionary acquisitions; (2) the regulations enforcing these policies provide the necessary controls to ensure the Department's intent is followed; and (3) the policies are responsive to concerns expressed by the committee in [ P.L. 107-314 ]." As discussed above, GAO submitted the required report in November 2003. Section 802 of the conference report ( H.Rept. 107-772 of November 12, 2002) on the FY2003 defense authorization act ( H.R. 4546 / P.L. 107-314 of December 2, 2002) required DOD to report on how it planned to apply to EA/SD programs certain statutory and regulatory requirements for major DOD acquisition programs. Section 803 set forth conditions to be met before a DOD acquisition program can be pursued as an EA/SD effort, and required DOD provide annual status reports for the next five years on each research and development program being pursued under EA/SD. Section 132 required the Air Force to submit to Congress a list of programs that it had designated as acquisition reform "pathfinder programs," set forth conditions under which those programs can proceed, and applied to them the requirement for filing status reports established under Section 803. These provisions are also discussed on pages 455-456 and 667-668 of the report. The Senate Armed Services Committee, in its report ( S.Rept. 107-151 of May 15 [legislative day, May 9], 2002) on the FY2003 defense authorization bill ( S. 2514 ), included similar provisions and commented extensively on the EA/SD process (see pages 94 and 333-335).

The Department of Defense (DOD) in 2001 adopted a new approach for developing major weapon systems, called evolutionary acquisition with spiral development (EA/SD), as its preferred standard. EA/SD is intended to make DOD's acquisition system more responsive to rapid changes in military needs. EA/SD poses potentially important challenges for Congress in carrying out its legislative functions, particularly committing to and effectively overseeing DOD weapon acquisition programs. This report will be updated as events warrant.

One long-standing policy question facing Congress is how to budget for and deal with the unexpected costs incurred in response and recovery from disasters. This question was raised in Congress periodically in the 112 th and 113 th Congresses (2011-2013) as part of larger discussions about how government funding decisions impact the economy, the budget deficit, and the national debt. The Budget Control Act (BCA, P.L. 112-25 ), passed in the first session of the 112 th Congress as part of a deal to raise the debt limit, literally changed the terms of the debate. The new law included provisions that outlined separate treatment for disaster relief, distinct from emergency funding. Furthermore, P.L. 112-25 redefined "disaster relief" as being federal government assistance provided pursuant to a major disaster declared under the Stafford Act, rather than assistance provided through the Disaster Relief Fund (DRF). Funding designated as disaster relief in future spending bills could be "paid for" by adjusting upward the discretionary spending caps. This allowable adjustment for disaster relief is limited, however, to an amount based on the 10-year rolling average of what has been spent by the federal government on relief efforts for major disasters. In May 2011, the House Appropriations Committee proposed offsetting $1 billion of emergency supplemental appropriations for the Federal Emergency Management Agency's (FEMA's) Disaster Relief Fund—the primary source of federal government assistance for people and communities affected by major disasters—which had been depleted at a faster rate than had been projected due to a number of major storms and floods earlier in the year. The House rescinded unspent money from another department's budget to pay for the additional funding, in a proposal that was ultimately not supported in the Senate's version of the bill. The issue of offsets for supplemental appropriations for the DRF returned to the debate as the House and Senate worked on stopgap funding legislation as FY2011 drew to a close. The Department of Homeland Security's (DHS's) congressional authorizing committees also debated whether disaster assistance funding should be offset as they marked up their bills. No resolution was reached on the issue, as the fiscal year ended and the DRF was replenished through a continuing resolution. Hurricane Sandy struck the United States on October 29, 2012. Beginning in November 2012 there were calls for supplemental appropriations for Hurricane Sandy relief efforts, as well as calls for offsets to pay for them. On December 7, 2012, the Administration released a request for $60.4 billion in supplemental appropriations in connection with Hurricane Sandy, including $11.5 billion for the DRF. The preamble to the request opposed offsetting the cost of the legislation, and amendments to offset the cost of the legislation in the House and Senate failed. The result of multiple rounds of congressional deliberations from 1990 through 2013 has been that while disaster assistance from other agencies has at times been funded through shifting resources from one program to another through appropriations legislation, the DRF has generally been given a priority status and been funded promptly in times of need, without offsets. This report outlines CRS's analysis of supplemental appropriations laws from FY1990 through FY2013, when the first disaster relief supplemental appropriations law was enacted under the terms of the BCA. CRS examined legislation with offsetting rescissions and provisions affecting the DRF, looking for connections between supplemental DRF funding and offsets. The analysis takes a detailed look at three cases where legislation affecting the DRF was fully offset, but ultimately finds that from FY1990 through FY2013, Congress fully offset supplemental funding for the DRF through cuts elsewhere in the budget only once. The report goes on to survey actions taken by Congress from 2011 through 2013 regarding offsetting funding for the DRF, as the BCA came into effect and Congress interpreted its provisions in funding disaster relief in the wake of Hurricane Sandy. It closes with an examination of issues surrounding offsetting disaster assistance and the use of special budgetary designations to accommodate disaster relief funding. This report will not be updated. In the context of appropriations debate, to "offset" is to use policy changes, additional revenue, spending cuts, or rescissions of previous appropriations to "pay for" all or part of the cost of a piece of legislation. Congress uses the Congressional Budget Office (CBO), which provides budgetary "scoring," to evaluate the costs of legislation and the value of any offsets. Legislation that is "fully offset" has no overall net cost in budget authority or outlays. When a bill is partially offset, it can be difficult to associate a given offset with the specific appropriation it may be intended to pay for. Offsetting provisions are not typically linked to other items in appropriations bills, but links may be identified through analysis of report language, other committee documents, or debate. For example, in S.Rept. 112-74 , which accompanied the Senate's version of the FY2012 Homeland Security appropriations bill, the Senate recommended $18.3 million to replace damaged Coast Guard helicopters. The Senate bill also included three rescissions totaling $18.3 million to offset that cost. As the rescissions and funding are both carried in Section 565 of the bill, it is clear that the three rescissions offset the specific additional appropriation. If, however, the aircraft replacement funding was carried in the Coast Guard portion of Title II of the bill, rather than in Title V in the same section as the rescissions, one might not link the rescissions to the additional funding, as there were more than $103 million of other rescissions that simply lowered the budgetary score of the bill and were not directly associated with any other appropriations provisions. Another such rare example of an overt linkage is in Title VI of the House-reported version of H.R. 2017 , the FY2012 Homeland Security Appropriations bill. The provision reads as follows: Sec. 601. Effective on the date of the enactment of this Act, of the unobligated balances remaining available to the Department of Energy pursuant to section 129 of the Continuing Appropriations Resolution, 2009 (division A of P.L. 110-329 ), $500,000,000 is rescinded and $1,000,000,000 is hereby transferred to and merged with 'Department of Homeland Security—Federal Emergency Management Agency—Disaster Relief': Provided , That the amount transferred by this section is designated as an emergency pursuant to section 3(c)(1) of H.Res. 5 (112 th Congress). This section was added as a single amendment in full committee markup of the legislation, and would have provided $1 billion of additional resources to the DRF, paying for it by transferring some resources and rescinding others. In the absence of these linkages, either in legislative language or explanatory debate, the only way one can authoritatively state that a given provision is offset by rescissions is if the entire appropriations measure is fully offset by such rescissions. Supplemental appropriations are budget authority provided by Congress over and above the budget authority in the annual appropriations bills. Supplemental appropriations can be made through stand-alone supplemental appropriations legislation, or as part of an annual appropriations bill. The terms "disaster relief" and "disaster assistance" are often used interchangeably to describe support provided to communities in the wake of a disaster. For the purposes of this discussion, "disaster relief" refers to resources provided through the Federal Emergency Management Agency (FEMA) Disaster Relief Fund (DRF). "Disaster assistance" is a broader category which includes other assistance funding for disaster-struck communities. These funds are managed not only through FEMA, but through many other federal agencies and departments. The core analysis of this report deals with supplemental disaster relief, rather than the broader disaster assistance category. According to CBO analysis, FEMA was the second-largest recipient of supplemental appropriations in the 1990s, behind only the Department of Defense. Most of these appropriations have been for disaster relief. Over the 24 fiscal years stretching from October 1, 1989, to September 31, 2013, there were 59 bills signed into law that included supplemental appropriations. As Figure 1 indicates, 31 of these measures included rescissions to offset some of the discretionary budget authority in the legislation—an analysis of these bills identified 18 that carried provisions affecting the DRF. None had provisions explicitly linking their rescissions to additional monies for the DRF. However, six of the bills with rescissions had discretionary spending reductions of such a size that the entire discretionary cost of the bill was offset. Three of those fully offset bills carried provisions affecting the DRF. CRS analyzed these three bills to see whether these were cases where supplemental disaster relief was paid for by offsetting cuts to other parts of the budget. The background on each of these three instances follows. As these analyses illustrate, supplemental disaster relief has only been fully offset once since 1990. Shortly after taking control of the U.S. Senate and House of Representatives in the 1994 midterm elections, the new Republican majority began to assemble a large rescissions package to cut previously approved spending for FY1995. The Clinton Administration submitted a package of rescissions and supplemental spending for FY1995 with their FY1996 budget legislation—a package that included $2.2 billion in rescissions and $10.4 billion in additional spending. The requested additional spending included $6.7 billion in funding for the DRF. Speaker Newt Gingrich wrote a letter to the White House, asking for offsets for the additional spending. Testifying before the House Appropriations Committee, Alice Rivlin, Director of the Office of Management and Budget at the time, declined to provide additional offsets, saying: "We believe our supplemental request should be treated as an emergency and not require offsets." We believe that the law established the authority for the President and the Congress to exempt genuine emergencies from the statutory caps, and the emergencies in question, which include the Northridge earthquake, are exactly the kinds of emergencies for which the authority was created. The Bush administration used the authority. This Administration has used the authority, with the concurrence of the Congress, for several emergencies over the past few years, including the Midwest floods, hurricanes, and other acts of God. So we believe that our supplemental request for additional spending on recovery from these emergencies should be treated as an emergency and should not require offsets. The House Appropriations Committee proposed cutting more than $17 billion in FY1995 spending while providing $5.4 billion for the DRF. The Senate Appropriations Committee developed a smaller $13.5 billion spending package, which funded the Administration's full $6.7 billion request for the DRF. While the bill was before the conference committee, an additional request from the Administration for $142 million in assistance related to the Oklahoma City bombing came to Congress. The initial conference agreement included $16.4 billion in rescissions, $6.7 billion for the DRF, and an additional $251 million for needs stemming from the bombing. Although both chambers passed the agreement, the President vetoed it largely in response to the makeup of the rescissions package. A new package was approved seven weeks after the original veto, containing $16.3 billion in rescissions, $6.6 billion for the DRF, and $290 million for needs stemming from the bombing (roughly one-half for Oklahoma City, one-half for anti-terrorism measures). In this case, the congressional majority clearly stated an intent to offset the Administration's supplemental budget requests, regardless of their emergency designation. Some Members criticized the creation of linkages between traditionally politically popular disaster assistance funding and more divisive spending reductions and tax legislation. Representative Anthony Beilenson, in the minority at the time, made these remarks in debate on the original House package: "Combining these two matters—emergency assistance and rescissions—into one piece of legislation leaves us with the unfair choice of voting either for emergency assistance and against adequate funding for a great many other programs we support, or against emergency assistance and for retaining existing funding for those other programs." Speaking for the majority, the chairman of the Appropriations Committee, Representative Robert Livingston, claimed the bill set a historic precedent, calling it "the first time an emergency supplemental has ever been paid for in history," although the House had already passed an emergency supplemental appropriations bill for the Department of Defense in February 1995 that had been offset. It is important to note that the new congressional majority had already announced their plan to bring forward a rescission package at the opening meeting of the House Appropriations Committee, where the chairman famously illustrated his intent by displaying a collection of large knives. While the deficit-reduction agenda outlined by Chairman Livingston prior to the supplemental request may have been the original motive for the rescissions package, P.L. 104-19 is a clear case where supplemental appropriations for the DRF were directly and fully offset by cuts to other parts of the budget. In February 1996, Congress was faced with resolving six appropriations bills in the wake of a budgetary standoff that had resulted in government shutdowns. That month, the Administration amended their budget request to provide additional resources for FY1996. H.R. 3019 would be the vehicle for the resolution of those six unfinished appropriations bills and the Administration's request for additional funds. The final conference agreement on those unfinished bills included $222 million for the base budget for the DRF, but rescinded $1 billion from the contingent disaster relief funding (a type of emergency funding that is contingent upon a request from the Administration) provided to the DRF just months earlier in P.L. 104-19 . This was the largest single offset to the funding provided in the bill. It is worth noting that part of the debate on H.R. 3019 addressed offsets for disaster assistance , which is generally considered to be a broader category of disaster funding, going beyond what is provided through the DRF to encompass disaster aid provided through other components of the federal government. The original House version of the bill included offsets for disaster assistance. During Senate consideration of the bill, several amendments were offered and withdrawn that proposed offsets for disaster assistance funding. None of these were brought to a vote. However, the conference report notes that Senate provisions calling for offsets for disaster assistance were dropped from the bill as unnecessary, as both the original House legislation and the conference agreement included adequate offsets for disaster assistance. While this legislation is an example of disaster assistance being offset, there are two primary reasons to exclude P.L. 104-134 as an example of supplemental appropriations for the DRF being offset. First, while the bill did include new budget authority for the DRF, this was not a supplemental—the new budget authority was the regular appropriation for the DRF for FY1996. Second, although the legislation is offset, the billion-dollar rescission taken from the DRF meant the DRF faced a net loss of $778 million from the legislation. Therefore, by not providing supplemental appropriations to the DRF and actually using DRF funds to pay for supplemental appropriations for other government elements, this legislation is not an example of supplemental funding for the DRF being offset. Hurricane Katrina struck the Gulf Coast on August 29, 2005. Ten days later, Congress had passed two laws that provided $60 billion in emergency funding to the DRF. Both measures were enacted one day after the requests were received. Preliminary cost estimates varied widely and lacked a basis in facts, which were still in short supply, as flood waters had yet to recede, preventing damage assessments and cost estimates from being made. After an initial spike in spending to meet emergency needs, as the recovery began to unfold, FEMA's rate of spending slowed. One month after passage, roughly two-thirds of the funds Congress had provided for disaster relief in the wake of the storm had yet to be allocated to hurricane relief work. Congress began to reallocate the unspent dollars from the DRF to other disaster assistance programs, first to the Community Disaster Loan Program, and then more broadly. The Administration requested a $17.1 billion reallocation from the DRF to shore up non-FEMA disaster assistance programs in October 2005, but in December 2005 Congress approved a larger reallocation package included with the FY2006 Defense Appropriations Act that drew $23.4 billion from previously appropriated DRF monies and distributed them to several other agencies with storm-response needs. The congressional response to Hurricane Katrina was atypical in terms of the speed of its passage and amount of funding involved. Congress passed the largest non-war supplemental to date in support of the relief efforts before the scope of the needs had been fully assessed. It is not surprising, then, that the initial allocation would be reformulated to meet the emerging challenges of the recovery. The redistribution of DRF resources to disaster assistance in later legislation is, as was the case with P.L. 104-134 , an example of disaster relief being used as an offset, rather than being paid for by an offset. In 2011, the House Appropriations Committee adopted an amendment that included an offset for $1 billion of additional DRF funding added to the Homeland Security appropriations bill. This offset was unusual in that it drew funding from the Department of Energy rather than the Department of Homeland Security —traditionally, offsets approved by the appropriations committees in the context of an annual appropriations bill have come from within the originating subcommittee's jurisdiction. This offset was debated on the House Floor during consideration of the H.R. 2017 , and again during debate on a continuing resolution intended to provide stopgap funding for government operations and to replenish the DRF, which came historically close to depletion at the end of FY2011. Ultimately, an agreement was reached in September 2011 on a continuing resolution that paid for continued government operations and funded the DRF at an annualized rate of $2.65 billion, but without a supplemental appropriation for FY2011 or an offset. In the months before Congress addressed the continuing resolution, however, it passed the Budget Control Act (BCA, P.L. 112-25 ). Signed into law on August 2, 2011, this legislation provided a legislative context for the appropriations work for the coming fiscal decade. In addition to setting discretionary spending caps and a means to enforce them, the BCA included provisions to allow the caps to be adjusted upward to make budgetary room for disaster assistance and emergencies. The bill passed the House by a vote of 269-161 and the Senate by a vote of 74-26. The bill came one Democratic vote short in the House of having support of the majority of both caucuses of both the House and Senate. Despite this relatively broad support, discussions concerning the spending caps and budget mechanisms established by the BCA—including the cap adjustment provisions for disasters—continued into the debates on wrapping up the FY2012 appropriations legislation. Toward the end of December 2011, the House of Representatives took up three pieces of legislation under a single rule for debate: a consolidated appropriations act ( H.R. 2055 , P.L. 112-74 ), a disaster assistance supplemental ( H.R. 3672 , P.L. 112-77 ), and an offset package ( H.Con.Res. 94 ). P.L. 112-74 provided $700 million for the DRF, P.L. 112-77 provided an additional $8.1 billion in disaster assistance (including $6.4 billion for the DRF), and the offset package would have provided a 1.83% across-the-board rescission to pay for the additional disaster assistance. While all three pieces of legislation passed the House, the Senate only passed the consolidated appropriations act and supplemental, rejecting the offset package by a vote of 43-56. Chairman Harold Rogers of the House Appropriations Committee clearly stated the purpose of H.Con.Res. 94 was to offset the $8.1 billion in additional disaster assistance. Ranking Member Norman Dicks indicated immediately thereafter that the minority opinion was that the resolution was unnecessary, but did not object to its provisions. The Senate did not address the resolution directly in floor debate, although several Senators noted that the disaster supplemental was within the flexibility provided under the BCA. Ultimately, despite this legislative activity, the first session of the 112 th Congress ended without offsets being applied to supplemental appropriations for the DRF. The first time the House and Senate voted on offsetting the costs of a catastrophic disaster after the BCA was in full effect was in the wake of Hurricane Sandy. On October 29, 2012, shortly after the beginning of FY2013, Hurricane Sandy made landfall in New Jersey. According to wire service reports a month afterward, the storm killed at least 125 people in the United States and had $62 billion in damage attributed to it. In late November and early December 2012, official estimates of the damage began to become public, and calls came from affected delegations for a supplemental appropriations package to provide assistance. Toward the end of November 2012, Senator Saxby Chambliss indicated that he expected disaster assistance to be offset, and House Majority Leader Eric Cantor indicated that disaster assistance should stay within the limits outlined by the BCA. On December 7, 2012, the Administration released a request for $60.4 billion in supplemental appropriations in connection with Hurricane Sandy, including $11.5 billion for the DRF. The preamble to the request noted that the request exceeded the allowable adjustment for disaster relief, and requested that funds not covered by the allowable adjustment be designated as emergency funding. The supplemental request also voiced the Administration's opposition to offsetting the cost of the legislation. On December 12, 2012, the Senate Appropriations Committee published a draft amendment to H.R. 1 on its website that would have provided $60.41 billion in supplemental appropriations in response to this request. The Senate ultimately amended the amendment, passed it by voice vote and then passed the underlying legislation ( H.R. 1 ) on December 28, 2012, by a vote of 62-32. Senator Leahy, speaking on behalf of Chairman Inouye of the Senate Appropriations Committee as the bill was being brought up, spoke in opposition to offsetting the cost of the bill: I have heard two arguments against moving to the emergency supplemental as quickly as possible. I have found them surprising. The first is that the cost of this bill should be offset with cuts to other programs. This is the same argument we heard last year when we needed emergency funding to respond to Hurricane Irene. Well, it made no sense a year ago. It makes no sense today. It will make no sense tomorrow. The suggestion that we should cut funding from base budgets of departments and agencies that are carrying out the essential functions of our government in order to pay for an unanticipated natural disaster—that is absurd. Mandating offsets means cutting funding from law enforcement to pay for replacing a vital roadway destroyed by Sandy. It means cutting funding for education through Head Start in order to provide clean drinking water to those who have been left with nothing in the wake of Sandy. The point is obvious: These are emergencies. That is why they are called emergencies. We do not do offsets to pay for emergencies. .... The President requested and the committee is recommending $60.4 billion to respond to this storm. The total budget authority for nondefense spending is about $500 billion a year. Using the logic that all emergency spending should be offset would cut the discretionary spending needs—if we see seven more disasters, well then I guess we eliminate every single agency, department, and program except the Pentagon. Senator Schumer spoke later that same day: First, should we have offsets to the monies that are proposed here? Now, we have not done that in the long history of disasters, for a good reason. You will never get the disaster money if you have to pit an existing Federal program against disaster money. We have always said that disaster is treated separately, and we would hope that would continue. It would not be fair or right to do this now. I would say to my colleagues, if we begin a pattern of offsetting now—there was some attempt to do it with Irene, but in a bipartisan way we rejected that in this body. If your whole area is hit next and you have to sit there and wait while Congress fights over offsets, what are you going to do? It would be an awful precedent to start that. As a side note, on December 21, a point of order was raised against the emergency designation for $3.4 billion in Army Corps of Engineers Construction appropriation for disaster mitigation projects. This point of order was sustained, eliminating the emergency designation for that particular appropriation. This meant that the $3.4 billion for the mitigation projects would count against the discretionary spending limits imposed by the Budget Control Act. It is relevant to note that at the time this legislation was being considered, the government was operating under the terms of a continuing resolution, as annual appropriations legislation for FY2013 had not been finalized. As the Budget Control Act had set limits on discretionary spending, counting these appropriations for mitigation against those limits reduced the amount of discretionary budget authority available for future FY2013 appropriations. Some observers considered this as mandating a precedent-setting offset for disaster assistance. Others considered this as including part of the cost of disaster preparedness within the discretionary budget. On December 28, the Senate debated an amendment to reduce the size of the bill to only pay for the amount of assistance to be obligated in FY2013, and to offset that with reductions in foreign assistance. The sponsor of the amendment, Senator Rand Paul, described the reasoning behind his amendment thusly (the justifications for his particular offset have been redacted): Mr. President, I rise in support of amendment No. 3410, which would take the spending for Sandy relief and spend only 1 year at a time and would offset that spending with spending cuts. Now, you ask, why would we want to do that? Well, if you have been watching Congress in recent years, you might understand that we are not very good with money up here. Each year we are spending $1 trillion that we do not have. To me, there is absolutely no objective evidence that we are very good with money up here, so you do not want to give Congress 3 years' worth of spending authority on Hurricane Sandy. Why don't we do it 1 year at a time and make sure there is correct oversight and make sure the money is not being wasted, make sure the money is not being abused.... So what I have asked is, let's just spend what you are going to spend next year. CBO says there is going to be $9 billion spent next year. That is what I allocate. I take the $9 billion from places where we are wasting it. I think we are wasting it by sending it overseas.... [W]e can't just say we are going to continue to print the money or borrow the money or simply raise taxes. There is not enough for all of this spending. What you need to do so is say: Some of the spending is wasteful, and we should not do it.... We have bridges and roads crumbling in our country. We have infrastructure that was damaged by Hurricane Sandy. They simply want to print more money and borrow it. People will stand and say: Oh, we have never offset emergency funding. Well, maybe that is why we have a $16 trillion deficit—because no one wants to cut any spending around here. If you want to help those affected by Hurricane Sandy, do it, but do it by taking the money from someplace where we are wasting it. The amendment was defeated by a vote of 3-91, and the bill went on to pass 62-32. However, the House did not act on the legislation before the end of the 112 th Congress, and it expired. The House took up a new supplemental appropriation bill at the beginning of the 113 th Congress. H.R. 152 , which included $17 billion of the Administration's supplemental appropriations request, was introduced on January 4, 2013, and an amendment was filed that same day that included further portions of the Administration's request. The House Appropriations Committee described H.R. 152 as including funding "to meet immediate and critical needs," and the amendment as including $33 billion "funding for longer-term recovery efforts and infrastructure improvements that will help prevent damage caused by future disasters." Several amendments were filed with the House Rules Committee proposing offsets for both parts of the legislative package, some including specific programmatic cuts and others including across-the-board cuts to discretionary spending. The House took up the legislation on January 15, 2013, under a structured rule which made in order a number of amendments, including one amendment to offset the cost of H.R. 152 with an across-the-board cut to discretionary appropriations for FY2013. The amendment failed by a vote of 162-248. The bill went on to pass the House without offsets by a vote of 241-180. The Senate took up the bill later that month. An amendment was offered to reduce spending by 0.5% over the next nine years through reducing the discretionary spending limits in the BCA to offset the cost of the legislation. The amendment was defeated by a vote of 35-62. The Senate passed the bill later that day 62-36, and it was signed into law by the President as P.L. 113-2 . As Congress looks to the future of how it budgets for disasters, it may find itself again considering whether or not to offset disaster relief. It may also find itself in the next few years considering whether to continue or modify the BCA provisions providing budgetary flexibility for disaster relief, or whether to take a different approach. With the one exception noted above ( P.L. 104-19 ), in the timeframe reviewed, Congress did not fully offset supplemental funding for the DRF, although it has provided some offsets at times for disaster assistance. However, the appropriations process for FY2012 and consideration of supplemental appropriations in FY2013 saw extensive debate on this topic. While Congress has provided a precedent for those asking how it would approach funding disaster relief under the BCA in response to a catastrophic disaster, funding the federal response to similar future events and ongoing concern about federal spending will likely continue to maintain congressional interest in this issue. In the timeframe assessed by this report, supplemental appropriations for disaster assistance, including those for the DRF, were requested after the disaster had struck and were on the scale of hundreds of millions to billions of dollars. Although initial emergency needs had usually been met before Congress provided funding, Congress faced political pressure to respond in a timely fashion to ensure needed relief resources are available beyond the immediate term. Adding the additional step to the process of identifying offsets would have extended the time it takes for Congress to respond. The most common types of offsets are spending cuts. During the debate on supplemental appropriations in the wake of Hurricane Sandy, amendments were offered proposing two types of offsets: specific programmatic cuts and across-the-board cuts. It would likely be difficult in a time of crisis to identify broadly acceptable single sources of cuts in the discretionary budget that could be used to offset billions of dollars of requested spending in response to a catastrophic disaster. Although across-the-board cuts can be relatively simple for Congress to calculate, it is possible that unintended consequences could result, potentially cutting programs important to the recovery of the area affected by the disaster. Offsets could also be made through raising additional revenues to cover costs from the disaster. However, raising revenues carries political implications for some Members of Congress, and there are significant obstacles in both the House and Senate to a combined revenue and appropriations bill. The House Ways and Means and Senate Finance committees are the committees of jurisdiction for revenue matters, while the House and Senate Appropriations committees have jurisdiction over discretionary spending of that revenue. The regular procedures of the House and Senate provide for separate consideration of revenue and appropriations legislation. Rule XXI in the House mandates that legislative provisions are barred from general appropriations bills. Most revenue-raising provisions would qualify as legislative and therefore would not be in order. The Senate's Rule XVI serves a similar purpose. In accordance with the Constitution, revenue provisions must begin in the House, further complicating any possible Senate effort to initiate the use of such provisions as offsets. While House rules are waived periodically, the appearance of revenue provisions in appropriations bills is rare. Based on the historical evidence presented, offsetting supplemental funding for the DRF would be a change in the standard practice of Congress. One of the first questions that then arises is whether or not the current situation warrants a change to this traditional pattern of action. The primary focus of the discussion thus far has been the relative severity of the present budgetary situation—Congress may consider how much our current practice of funding disaster needs contributes to the deficit and debt. One complicating factor in assessing this is the inherent unpredictability of disasters. Identifying emerging trends in events that cannot be accurately forecast in terms of timing, frequency, or magnitude, and then determining whether those trends warrant policy change, is extremely difficult. There is also a question of fairness—making a change to the way disaster assistance is approached by Congress may disadvantage those hit by disasters in the future compared to those hit by disasters in the past, either by adding constraints on the amount of aid provided or by incurring delays in the process due to the processes needed to identify and secure offsets. On the other hand, the government constantly changes policies and practices to save money and to improve efficiency, changing the availability or timing of assistance through a variety of other programs. While some may benefit or suffer as a result, that is in many cases not adequate justification in itself for not attempting to make needed reforms. As noted above, one potential impact of requiring a search for offsets in the immediate wake of a disaster is that it might delay the availability of federal relief funds. Opponents of offsets note that developing options to pay for disaster assistance may slow the delivery of that aid, especially as recent budget reductions have arguably thinned the availability of quickly agreeable offsets. Also, the urgency of the process may not permit the necessary careful review of programs facing sudden reductions. Proponents might well argue that given the initial failures to deliver aid in the wake of Hurricane Katrina, an accelerated timeline for congressional action does not, on its own, beget an effective, efficient response. What was a traditional pattern of using the supplemental appropriations process to cover the costs of major disasters may have changed with the enactment of the Budget Control Act and its allowable adjustment which can be used to cover the costs of major disasters under the Stafford Act. This allowable adjustment has allowed funding that in the past might have been provided through the supplemental appropriations process to move through the annual appropriations process without competing with the rest of the discretionary budget. Only two supplemental appropriations containing disaster relief have been enacted since the BCA went into effect: P.L. 112-77 , which moved in parallel with a consolidation annual appropriations act for FY2012, replenishing the DRF, and P.L. 113-2 , which passed in the wake of Hurricane Sandy. Each provided multiple billions of dollars in disaster assistance, including billions of dollars for the DRF. Emergency designations have been used in the past to provide additional funding without violating caps on discretionary budget authority established by congressional budget resolutions. Most supplemental disaster assistance in the past has been designated as emergency funding. One of the primary reasons that supplemental funding for the DRF had not been offset over the period of analysis used in this report is the simple fact that it has not had to be offset, given the availability of the emergency funding mechanism to work around the budget caps. Disaster relief is defined under the BCA as assistance provided pursuant to the declaration of a major disaster under the Stafford Act. This definition is made as part of creating an "allowable adjustment" to the discretionary budget caps for disaster relief. The BCA also says that "appropriations considered disaster relief under this subparagraph in a fiscal year shall not be eligible" for the unlimited adjustment available for emergencies. Initially, some observers took a broad reading of these provisions, and envisioned a future where disaster relief funding would be constrained by the size of the allowable adjustment (possibly in a year with multiple costly disasters) and the option of providing emergency funding for major disasters would no longer be on the table. However, the law makes no such explicit delineation—despite the creation of two adjustment mechanisms for emergencies and for disaster relief, there is no explicit statement that the emergency funding adjustment may not be used to pay for disaster assistance or relief. Additionally, it is worth noting that initially, no enforcement mechanisms were provided in the BCA to prevent broad application of disaster relief or emergency designations. Congress could have chosen to constrain itself from going beyond the allowable adjustment, requiring offsets for further disaster relief from the regular budget, or—in a more proactive step—simply funding a larger proportion of disaster relief in the base budget. The appropriate level of base funding for the DRF was a recurring issue over the time period examined. Instead, in the absence of an explicit prohibition on the practice as noted above, Congress chose to use emergency designations to fund disaster relief in excess of the allowable adjustment under the BCA. As House Appropriations Committee Chairman Rogers noted in debate opposing an across-the-board offset for disaster relief in the wake of Hurricane Sandy: I believe we can and should attempt to budget for disasters, as we did under the BCA. There are times when a disaster simply goes beyond our ability to offset. Hurricane Sandy is one of those times. In the current budgetary environment, using allowable adjustments or emergency designations in supplemental appropriations legislation results in additional deficit spending. Strictly conforming to the budget limits means that meeting unexpected demands for resources (such as for disaster relief) will likely result in unplanned reductions in other parts of the budget, reducing services available through other programs. In addition to the potential fiscal repercussions, the consequences of a political backlash from overuse of these special authorities should not be ignored. Overly broad use of emergency or disaster relief designations to cover spending not appropriate to those categories could lead to more strictly drafted budget control legislation in the future, reducing or eliminating flexibility that may otherwise be needed on short notice in dire circumstances. The budget constraints of the Budget Control Act will expire at the end of FY2021. Congress may choose to continue to set long-term limits on discretionary spending or take a new approach to the federal budget. As part of those discussions, Congress may consider a new approach to budgeting for major disasters, or extend the current system of discretionary spending caps and adjustments with modifications. To show the relative impact of offsets on supplemental spending and the DRF, Table A-1 provides a breakdown of all appropriations bills that have become law carrying both supplemental spending and rescissions from FY1990 through FY2013. The columns indicate the total amount of supplemental appropriations in the bill, the rescissions in the bill, and the amount of additional funding for the DRF. The table then notes whether there are provisions indicating that the funding for the DRF is offset. The table also notes when DRF funding has been used as an offset for other activities.

This report discusses the history of the use of offsetting rescissions to pay for supplemental appropriations to the Federal Emergency Management Agency's Disaster Relief Fund (DRF) from FY1990 through FY2013. As Congress debated the growing size of the budget deficit and national debt, efforts intensified to control spending and offset the costs of legislation. Several times between FY1990 and FY2013, the question of offsetting disaster relief spending became a focus of congressional debate. Usually, in the time reviewed, supplemental disaster relief funding was treated as emergency spending. This designation exempted it from counting against discretionary budget caps, and from needing an offset. However, supplemental spending measures at times have carried rescissions that have offset, to one degree or another, their budgetary impact. In some instances, supplemental spending measures have contained both appropriations for the DRF and offsetting rescissions, but without a specific link between the two. With the passage of the Budget Control Act (BCA), a new mechanism was created that altered the congressional pattern of funding the DRF in part through supplemental appropriations. The BCA included an "allowable adjustment" for the federal costs of major disasters declared under the Stafford Act, which generally resulted in larger appropriations for the DRF in annual appropriations bills, and a reduced reliance on supplemental appropriations. When Hurricane Sandy struck in 2012, calls for supplemental appropriations to help pay for recovery efforts (the cost of which exceeded the size of the allowable adjustment) were met with calls for offsets from some quarters. Congress ultimately chose to provide supplemental appropriations, including funding for the DRF, with a combination of the allowable adjustment and emergency funding. Several billion dollars of appropriations under consideration for mitigation projects had their emergency designation struck on a point of order, and therefore those appropriations counted against discretionary spending limits. In past debates over whether supplemental funding for the DRF should be offset, Congress discussed past precedents. Through independent research, CRS identified three specific incidences from FY1990 through FY2013 where bills that had an impact on the level of funding available in the DRF were fully offset, but only one case in which CRS can authoritatively state that supplemental funding for the DRF was completely offset by rescissions.

The United States is engaged in negotiations with Japan and 10 other countries to form a regional free trade agreement (FTA)—the Trans-Pacific Partnership Agreement (TPP). In the negotiations, the United States and the other TPP partner-countries seek to build "a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21 st century challenges." The TPP partners also envision the agreement to be a building block towards the establishment of a broader, Asian-Pacific regional FTA, sometimes referred to as the Free Trade Area of the Asia-Pacific (FTAAP). Of the 12 TPP countries, Japan is the most recent to join the negotiations. On March 15, 2013, Japanese Prime Minister Shinzo Abe announced that Japan would formally seek to participate in the negotiations to establish the TPP. The announcement followed an initial expression of interest in November 2011 by then-Prime Minister Yoshihiko Noda. In the intervening months, Japanese supporters of the TPP—including representatives of major companies—and TPP opponents—including representatives of the very vocal and politically influential agricultural sector—engaged in debate. In addition, parliamentary elections led to the formation of a new government under the Liberal Democratic Party (LDP) and Abe as prime minister. In his March 15 statement, Prime Minister Abe acknowledged the interests and sensitivities of the agricultural groups, but he also insisted that Japan needed to take advantage of "this last window of opportunity" to enter the negotiations, if it is to grow economically. On April 12, 2013, the United States announced its support for Japan's participation in the TPP. The announcement came after a series of discussions on conditions for U.S. support and outstanding bilateral issues. As a result of the discussions the two sides agreed on measures to address these issues during and in parallel with the main TPP negotiations. On April 20, the then-11TPP countries formally invited Japan to participate in the negotiations, and on July 23 Japan formally joined. Congress has a direct and oversight role in U.S. participation in the TPP. It must approve implementing legislation, if a final TPP agreement is to apply to the United States. Some Members of Congress have already weighed in on whether Japan should be allowed to participate in the TPP and under what conditions. More may do so as the process proceeds. The Obama Administration has been proceeding in negotiating the TPP as if trade promotion authority (TPA), which expired on June 30, 2007, were in force. TPA is the authority that Congress gives to the President to enter into trade agreements that can receive expedited legislative consideration. The Administration has been adhering to consultation requirements and notification deadlines that have been an integral part of previous TPA or fast-track statutes. On April 24, then-Acting USTR Demetrios Marantis notified Congress of the United States to begin negotiations with Japan as part of the TPP. The TPP is the leading U.S. trade policy initiative of the Obama Administration and a pillar of its efforts to "rebalance" U.S. foreign policy priorities toward the Asia-Pacific region by playing a more active role in shaping the region's rules and norms. As the second-largest economy in Asia, the third-largest economy in the world, and a key link in the global supply chain, Japan's participation would be pivotal to the credibility and viability of the TPP as a regional trade arrangement. The inclusion of Japan would expand the amount of U.S. trade and foreign investment that the TPP would cover if implemented. For Japan, participation in the TPP could potentially transform its economy by providing unprecedented access to the Japanese market for foreign exporters and investors. It could also force Tokyo to confront structural economic problems that have long impeded economic growth. It would also symbolize Japan's continued position as an economic power in East Asia, an image that has been tarnished by decades of economic stagnation and the growth of China. Japan's participation in the TPP has important implications for the U.S.-Japan relationship. For example, it already has renewed a focus on long-standing issues, such as access to Japan's markets for autos, agricultural products, and insurance, which have remained irritants in the relationship. New issues will undoubtedly also be raised in the process. The TPP is an evolving regional free trade agreement (FTA). It was originally formed as the Trans-Pacific Strategic Economic Partnership—an FTA now in effect among Singapore, New Zealand, Chile, and Brunei (the so-called "P-4"). In the fall of 2008, the United States, along with Australia, Peru, and Vietnam, joined the negotiations to accede to the arrangement. Malaysia joined as the ninth negotiating partner in October 2010. On November 14, 2009, President Obama committed the United States to engage with the TPP countries to transform the original P-4 pact into a regional arrangement with broad-based membership and "the high standards worthy of a 21 st century trade agreement." After several months of discussions, the nine partners announced a framework for the agreement in time for the ministerial meeting of the Asia-Pacific Economic Cooperation (APEC) forum in Honolulu, Hawaii, which was held November 8-13, 2011. The TPP partners conducted a series of rounds since that time and are aiming to complete the agreement by the end of 2013. As reflected in the framework, the TPP partners envision a comprehensive arrangement covering a broad range of trade and trade-related activities, similar in structure to a number of recently concluded U.S. FTAs. These activities include market access for goods and services; government procurement; foreign investment; technical barriers to trade; trade remedies; sanitary and phytosanitary measures; intellectual property rights; worker rights; and environmental protection. The TPP countries also agreed to pursue cross-cutting issues such as regulatory coherence, competitiveness, and business facilitation, also known as transnational supply and production chains; the participation of small and medium-sized companies; economic development; and potential disciplines on the state-owned enterprises (SOEs). The TPP participants also envision the TPP to go beyond typical FTAs by being: a regional agreement that facilitates trade by minimizing the "noodle bowl" effect that has been created by different sets of rules under the more than 100 bilateral and regional FTAs that exist in the Asia Pacific-region; an agreement that addresses trade challenges that are emerging in the 21 st century, for example, cloud computing and SOEs, that have not been addressed in previous FTAs nor fully in the World Trade Organization (WTO) because they did not exist or were considered not as important; and a "living agreement" that will not restrict its membership to the 11 countries but will be open to other countries acceding to it as long as they are willing to commit to its provisions and will take on new issues as they arise. Marantis's April 12, 2013, announcement followed a series of U.S.-Japanese discussions that began in February 2012. Regarding autos, as a result of these discussions Japan agreed that under the proposed TPP, U.S. tariffs imports of Japanese motor vehicles will be phased out over a period equal to the longest phase-out period agreed to under the agreement. Japan also agreed to increase the number of U.S.-made vehicles that can be imported into Japan under its Preferential Handling Procedure (PHP), from 2,000 per vehicle type to 5,000 per vehicle type. In addition, the two countries agreed to convene separate negotiations that will address issues regarding non-tariff measures (NTMs) pertaining to auto trade, including transparency in regulations, standards, certification, "green" and other new technology vehicles, and distribution. In addition, the parallel auto negotiations are to address the establishment of a special "safeguard" provision to deal with injurious surges in auto imports and of a special tariff "snap-back" mechanism to deal with a partner's failure to fulfill the commitments on auto trade. To address U.S. concerns regarding insurance, Japan announced that the government would not approve new or modified cancer insurance products and/or stand-alone medical insurance products for sale by Japan Post until it has been determined that a "level playing field" has been established in competition between private insurers and Japan Post. Furthermore, the two sides agreed to hold another separate set of bilateral negotiations, parallel to the TPP talks, to address issues regarding non-tariff measures (NTMs) in insurance, government procurement, competition policy, express delivery, and sanitary and phytosanitary (SPS) measures. The parallel negotiations are to achieve "tangible and meaningful" results by the completion of the main TPP negotiations and will be legally binding at the time a TPP agreement would enter into force. (Those parallel negotiations were launched on August 7.) The Administration notified Congress on April 24 of its intention to launch negotiations with Japan. Japan officially joined the negotiations on July 23 at the end of the 18 th round of negotiations A brief overview of U.S.-Japan economic ties can provide context for understanding U.S. and Japanese interests in the TPP and the potential implications from various perspectives. It could also shed light on opportunities and challenges presented by an FTA that includes the United States and Japan. A U.S.-Japan FTA is not a new idea, but it is a policy option that has failed to take hold in the past because of some fundamental issues which have been seemingly intractable. The United States and Japan are the world's first and third-largest economic powers. Together they account for over 30% of gross world product. The two countries remain very important economic partners, accounting for large shares of each other's foreign trade and investment, even though their relative economic significance to one another has declined over the last few years. In 1999, Japan slipped from being the second-largest U.S. trading partner to the third largest. In 2004, it slipped to number four, where it has remained. Until 2007, the United States was Japan's largest trading partner, but it slipped to number two since 2007. The global financial crisis and economic downturn added another dimension to the relationship as the two countries have grappled with the severe impact of the crisis on their respective economies, while working with their partners in the G-20 to coordinate a multilateral response. The impact of the March 11, 2011, earthquake and subsequent tsunami and nuclear accidents in northeast Japan also affected trade, although not as much as originally anticipated. U.S.-Japanese bilateral trade in goods and services declined significantly in 2009 over 2008 levels because of the global economic downturn but has picked up since. (See Table 1 and Table 2 .) Raw trade data likely underestimate Japan's importance because they do not readily measure Japan's role in the East Asian supply and production networks that produce goods exported to the United States. The two countries are also economically tied through investment flows. For example, Japanese investors are the second-largest group (next to China) of foreign holders of U.S. treasury securities and, therefore, U.S. government debt and of direct investments in the U.S. economy. In the 1980s and 1990s, the bilateral economic relationship was the centerpiece of U.S. and Japanese foreign economic agendas. Persistent and increasing U.S. merchandise trade deficits with Japan, sharp increases in Japanese exports to the United States of high-value manufactured products, such as cars, and large volumes of Japanese investments in the United States (including purchases of high-profile properties, such as the Empire State Building) stoked fears in the United States of Japan as an economic threat to the United States. Many scholarly and popular books and journal articles were written on the subject. However, since the mid-1990s, the trade relationship with Japan has been a lower priority for U.S. officials. One reason for the shift may be the rise of China as a global trade and economic power, and source of challenges and opportunities to U.S. trade policymakers. Symbolic of this rise are the relative merchandise trade balances with Japan and China. While U.S. merchandise trade deficits with Japan have remained relatively constant in recent years, the U.S. deficits with China have risen significantly. In 2012, the U.S. trade deficit with Japan was $76.3 billion, while the trade deficit with China was $315.1 billion. Another reason may have been that Japan's economic problems over the last two decades have made it seem less of a competitive "threat." In addition, the level of Japanese foreign direct investments in the United States has declined. Furthermore, security issues, such as North Korea's nuclear program (the United States and Japan are parties to talks on North Korea's fledgling nuclear program) and the relocation of U.S. troops in Japan, have overshadowed bilateral trade relations as a priority. Nevertheless, trade-related tensions remained, albeit below the surface. Over the years, U.S.-Japan economic relations have experienced degrees of friction, sometimes to the point of threatening the stability of the alliance. The United States dominated the economic relationship with Japan for many years after World War II. The United States was by far the largest economy in the world, and Japan was dependent on the United States for national security. The United States set the agenda, and the issues on the agenda were driven by the U.S. demands for Japan to curb exports to the United States and/or to remove barriers to U.S. exports and investments. In the 1960s and 1970s, the primary issues were Japan's perceived protectionist economic policies that it implemented through high tariffs and other border restrictions. As Japan's economy became more developed and competitive and as it negotiated reductions in its tariffs with other members of the General Agreement on Tariffs and Trade (GATT)—now the World Trade Organization (WTO)—the United States focused on non-tariff barriers, including "behind the border" measures, such as government regulations that, while not ostensibly protectionist, may be applied in a way that restricts trade. Certain measures are not covered by WTO agreements and are currently not readily addressed in trade negotiations since they serve non-trade functions. Examples of such measures include domestic taxes on car purchases and other regulations said to discriminate against sales of imported vehicles; a government contract bidding system that favors certain domestic providers of construction services; zoning regulations that discourage the establishment of large retail stores that are more likely to sell imported products than the smaller stores the regulations are designed to protect; government health insurance reimbursement regulations that discourage the purchase of newer, leading-edge pharmaceuticals and medical devices, many of which are imported; and government supplied subsidies for the production of semiconductors. To address these non-tariff barriers Japan and the United States employed, largely at the latter's instigation, special bilateral frameworks and agreements to conduct their government-to-government economic relations. These arrangements included the Market-Oriented Sector-Specific (MOSS) talks started in 1985; the Structural Impediments Initiative (SII), begun in March 1989; the United States-Japan Framework for a New Economic Partnership, begun in 1993; the Enhanced Initiative on Deregulation and Competition Policy (the Enhanced Initiative), begun in 1997; the U.S.-Japan Economic Partnership for Growth (The Economic Partnership) begun in 2001; and the United States-Japan Economic Harmonization Initiative, launched in 2010, which now operates as the primary bilateral forum for bilateral discussions. The two countries also concluded bilateral agreements or memoranda of understanding (MOUs), whereby Japan agreed to address U.S. concerns about its trading practices for specific products, including autos and semiconductors. These arrangements varied in their approaches. However, they shared some basic characteristics: they were bilateral; were designed to remedy U.S.-Japan trade problems by focusing on regulations and other fundamental barriers; and were typically initiated by the United States. However, these arrangements were only of limited success, judging by the fact that many of the issues they were supposed to address remain. Many of the issues that have continually irritated the U.S.-Japan economic relationship could be addressed within the TPP. U.S. policymakers and other stakeholders have identified three issues that, if resolved, would be considered "confidence-building measures" that could boost U.S. support of Japan's inclusion in the TPP. The issues relate to Japanese restrictions on imports of U.S. beef; market access in Japan for cars made by Detroit-based U.S. manufacturers; and preferential treatment for insurance and express delivery subsidiaries of state-owned Japan Post. In December 2003 Japan imposed a ban on imported U.S. beef (as did some other countries) in response to the discovery of the first U.S. case of bovine spongiform encephalopathy (BSE or "mad cow disease") in Washington State. In the months before the diagnosis in the United States, nearly a dozen Japanese cows infected with BSE had been discovered, creating a scandal over the Agricultural Ministry's handling of the issue (several more Japanese BSE cases have since emerged). Japan had retained the ban despite ongoing negotiations and public pressure from Bush Administration officials, a reported framework agreement (issued jointly by both governments) in October 2004 to end it, and periodic assurances afterward by Japanese officials to their U.S. counterparts that it would be lifted soon. In December 2005, Japan lifted the ban after many months of bilateral negotiations, but reimposed it in January 2006 after Japanese government inspectors found bone material among the initial beef shipments. The presence of the bone material violated the procedures U.S. and Japanese officials had agreed on. The then-U.S. Secretary of Agriculture Johanns expressed regret that the prohibited material had entered the shipments. In July 2006, Japan announced it would resume imports of U.S. beef from cattle 20 months old or younger. The first shipments arrived in August 2006. Members of Congress had pressed Japan to lift restrictions on imports of U.S. beef from even older cattle. U.S. officials met with Japanese agricultural officials September 14-15, 2010, for technical discussions but produced no clear indication of resolution of the issue. On August 4, 2011, a bipartisan group of Senators sent a letter to Secretary of Agriculture Vilsack and to USTR Ron Kirk, urging them to press Japan (and China) to end restrictions on imports of U.S. beef. In December 2011 Japan announced that it was reassessing its BSE-related restrictions with the objective to raise the maximum age of cattle from which U.S. beef can be exported to Japan. On February 1, 2013, the Japanese government loosened its restrictions on beef imports from the United States to allow beef from cattle 30 months or younger for the first time since December 2003. According to a joint press release from the Office of the United States Trade Representative and the Department of Agriculture, the Japanese government's Food Safety Commission would continue to monitor shipments of U.S. beef and would consider the possibility of allowing U.S. beef from cattle of any age to be imported into Japan. Auto and auto-parts-related trade and investment have been a very sensitive set of issues in the U.S.-Japan economic relationship. The issue has its roots in the late 1970s and early 1980s, when U.S. imports of Japanese-made vehicles surged as a result of the increase in U.S. consumer demand for smaller vehicles, largely in response to the rapid increase in gasoline prices, while demand for U.S.–manufactured cars plummeted. Facing pressure from the U.S. auto industry and pressure from Congress in the form of limits on imports of Japanese made cars, the Reagan Administration persuaded Japan to agree in 1981 to voluntary export restraints. Japanese manufacturers responded to the restraints by establishing manufacturing facilities in the United States and exporting high-valued, passenger cars. U.S. manufacturers asserted that Japan employed various measures to restrict sales of foreign-made cars in Japan and the use of U.S.-made parts in Japanese cars manufactured in the United States. These issues were the subject of bilateral negotiations and agreements through the 1990s. The agreements were mostly in the form of Japanese government pledges to ensure that government regulations did not impede the sale of U.S.-made cars in Japan and voluntary efforts on the part of Japanese manufacturers to increase the use of U.S.-made auto parts in cars made in the United States. The U.S. government pledged to implement programs to promote the export of U.S.-made cars in Japan. The intensity of the issue had subsided somewhat but has regained attention in the context of Japan's participation in the TPP negotiations. (See TPP discussion below.) The three Detroit-based car manufacturers—Chrysler, Ford, and General Motors—charge that Japanese government regulations continue to prevent them from obtaining their fair share of Japanese domestic vehicle sales. They cite the traditionally small share of total cars sales in Japan that consist of imported cars—6.7%. Japan is the world's second-largest insurance market, next to the United States. U.S.-based insurance providers have found it difficult to enter the market, especially in life and annuity insurance. They have been concerned about favorable regulatory treatment that the government gives to the insurance subsidiary Japan Post Insurance of Japan Post, the national postal system, which holds a large share of the Japanese domestic insurance market. Japan Post subsidizes the insurance operations from revenues from its other operations. Also, Japan Post Insurance is not subject to the same regulations as other, privately owned insurance providers, both domestic and foreign-owned. Similarly, U.S. express delivery providers have charged that Japan Post's express delivery company obtains subsides from the government-owned parent agency that gives it an unfair competitive advantage. On October 1, 2007, the Japanese government of then-Prime Minister Junichiro Koizumi introduced reforms to privatize Japan Post and a major objective of his administration. The Bush Administration and many U.S. companies, particularly insurance companies, supported these reforms. However, successor governments led by the Democratic Party of Japan (DPJ) have taken steps to roll back the reforms. On March 12, 2012, the government introduced, and on April 27, 2012, Japan's legislature passed, a bill into law to loosen regulatory requirements. According to industry reports and other commentaries, the bill reverses the reforms that the Koizumi government introduced. Among other things, the United States wants the Japanese government to refrain from allowing Japan Post to expand its coverage of services until a "level playing field" for competition between its services and those offered by privately owned providers. In addition, the U.S. government wants enhanced transparency in the development and implementation of regulations pertaining to Japan Post-provided services. The U.S. government and U.S.-based providers have had similar concerns about insurance services sold by cooperatives ( kyosai ) that are not subject to the same regulatory authorities as private insurers and have argued give them an unfair advantage over U.S. and other privately owned and operated companies. A possible issue that has emerged pertains to recent Japanese economic policies and their potential impact on U.S.-Japan trade. Prime Minister Abe has made it a priority of his administration to grow the economy and eliminate deflation, which has plagued Japan for many years. On assuming power, Abe's government announced a $122 billion stimulus package aimed at spending on infrastructure, particularly in areas affected by the March 2011 disasters. While the package is expected to boost growth somewhat, it will also add to Japan's already large public debt. In addition, the ostensibly independent Bank of Japan (Japan's central bank) announced a continued loose monetary policy with interest rates of 0% quantitative easing measures, and a target inflation rate of 2%. A likely by-product of these measures has been a depreciating yen. For the past five years, the yen had exhibited unprecedented strength in terms of the dollar. In January 2007 the yen's average value was ¥120.46=$1 during the month, but after rapid appreciation, it reached as high as ¥76.65=$1 in October 2011. The yen has now been depreciating, having gone down to ¥96.3 by August 9, 2013. The weaker yen makes Japanese exports cheaper and therefore more price competitive and imports more expensive. Some observers, including Japanese policymakers have argued that the weaker yen is a byproduct of the monetary easing and not the main objective of Japanese economic policies. Others have argued that weaker yen impedes U.S. exports to Japan and should be a subject of the TPP negotiations. Japan's entry into the TPP touches on a range of U.S. trade and foreign policy objectives. Acting USTR Demetrios Marantis greeted positively Prime Minister Abe's March 15, 2013, statement but stipulated: Since early last year, the United States has been engaged with Japan in bilateral TPP consultations on issues of concern with respect to the automotive and insurance sectors and other non-tariff measures, and also conducting work regarding meeting TPP's high standards. While we continue to make progress in these consultations, important work remains to be done. We look forward to continuing these consultations with Japan... The United States is also working with Japan on "gap issues," to make sure that Japan would be prepared to take steps to meet goals of the TPP in areas that Japan has not addressed in its previous FTAs. Japan's entry into TPP negotiations will likely expand U.S. trade and investment opportunities in Japan. The target for the United States would be to get Japan to liberalize non-tariff measures, such as certain government regulations, which have been a more significant irritant than tariffs in U.S.-Japan trade relations. The TPP, as envisioned and being negotiated by the 12 countries would cover at least some of these non-tariff measures that Japan maintains. The TPP negotiations provide the United States and Japan with a framework within which to address these long-standing market access issues. One drawback of bilateral frameworks that the United States and Japan have used in the past is that they have had no formal dispute settlement mechanism. For example, a number of trade disputes in the 1980s and 1990s—including on market access for U.S.-made autos and autoparts in Japan, Japanese trade practices in semiconductors and access to Japanese markets for construction services—became highly politicized with threats of U.S. unilateral action, potentially undermining the overall relationship. Disputes usually were resolved through brinkmanship but often did not produce meaningful changes in Japan's trade practices or a significant increase of U.S. exports of the products in question. The TPP would provide a set of mutually agreed-upon rules that go beyond the WTO but would likely use an impartial, multi-party dispute settlement mechanism like that used in the WTO that would reduce the role of one-on-one confrontations in resolving issues. Japan increases the economic importance of the TPP from the U.S. perspective. It increases the amount of U.S merchandise trade that the TPP covers from 34% (the original 11 countries) to 39% based on 2011 data, and increases trade in services and foreign investment activity within the TPP. (See Figure 1 .) Japan increases the share of the world economy accounted for by TPP countries (including Canada and Mexico), from around about 30% to about 38%. Japan's participation might strengthen the U.S. position on many issues within the TPP. The United States and Japan share some common objectives, including strong intellectual property rights protection; protection of foreign investment; clear rules of origin to facilitate trade; and market access for services. In addition to trade and investment interests, Japan's participation in the TPP could affect U.S. political and foreign policy interests. The U.S. entry into the TPP negotiations is part of the Obama Administration's foreign policy and military "rebalancing" to the Asia-Pacific—often referred to as the "pivot" to the Pacific—announced in 2011. The pivot refers to a series of diplomatic, military, and economic measures that the United States has taken or plans to initiate to influence the evolving rules and norms of the Asia-Pacific region. Many policymakers and analysts believe that China's pursuit of its own bilateral and multilateral economic arrangements has produced a competition of sorts over the shape of Asia's future economic architecture, in which the United States and several other countries in the Pacific are pushing for a deeper set of regional economic rules and expectations than Chinese leaders prefer. Japan's inclusion as the second-largest economy—and richest economy on a per capita basis—in East Asia could transform this struggle between alternative visions of regional trade rules. Additionally, U.S. and Japanese participation in the same free trade agreement could arguably be viewed as a means to reaffirm their alliance. The long-running bilateral relationship at times over the years has been overshadowed by U.S. and Japanese interests and concerns elsewhere in Asia, for example, China and the Korean Peninsula, and in other parts of the world. Underlying the arguments for Japan to join the TPP talks is a growing feeling among many Japanese that, after two decades of relatively sluggish growth, Japan's economic and political influence is waning in comparison with China and with middle powers such as South Korea. The rapid aging and gradual shrinking of Japan's population has added to a sense among many in Japan that the country needs to develop new sources of growth to maintain, if not increase, the country's living standards. Japanese proponents of TPP have called for joining the talks for a number of overlapping reasons, some defensive in nature, others more proactive: A desire to promote Japanese growth and prevent the hollowing out of Japan— that is, the relocation of Japanese companies to other countries—by expanding Japanese exports, especially to the fast-growing Asia-Pacific region. The decade-long stalemate in the WTO's "Doha Round" of trade talks, plus the explosion in bilateral and multilateral FTAs over the past decade, has led Japan to cautiously pursue its own FTAs. As noted earlier, Japan is an important link in Asia's global supply chains, and the TPP could facilitate operations within the supply chain. Conversely, greater trans-Pacific economic integration could potentially erode Japan's place in these manufacturing and export networks. In his March 15, 2013, press conference announcing his decision to seek entry into the TPP negotiations, Prime Minister Abe spoke of the multiple commercial benefits Japan would derive from joining, and how doing so would help "leave to our children and our children's children a strong Japan...." A feeling that Japan is being left behind in negotiating FTAs. Although Japan has signed 13 FTAs—what it calls Economic Partnership Agreements (EPAs)—it has none with a major economic power, with the possible exception of the 2011 Japan-India EPA, and many of them exclude agricultural trade. (See Table 3 .) In contrast, South Korea, the country many Japanese now compare themselves to, has signed FTAs with the United States and the European Union (EU), and in 2012 opened negotiations with China. If Japan is left behind in the FTA race, the feeling runs, its companies will be left at a competitive disadvantage. Japan has belatedly tried to make up for the gap in 2013 by launching FTA negotiations with the EU and with China and South Korea on a trilateral FTA. A desire to help shape the rules of economic activity in the Asia-Pacific and beyond. In his announcement of Japan's bid to participate, Prime Minister Abe said that the TPP would likely serve as "a basis for rule-making" in other multilateral trade negotiations. If Japan waited any longer to join the talks, in his view, it would be too late to help write the TPP's rules. "Now is our last chance," Abe said, "Losing this opportunity would simply leave Japan out from the rule-making in the world. Future historians will no doubt see that "the TPP was the opening of the Asia-Pacific Century." A belief that entering the TPP will help promote economic reforms inside Japan. Over the years, many experts and government officials have argued that Japan needs structural reform to spur its economy. A number of Japanese commentators and officials believe that one way to overcome resistance to reform from vested interests is through negotiating a comprehensive, high-standard FTA such as the TPP, which will help reform-minded groups and individuals by giving them political cover. Also, negotiating the TPP could potentially enable Japan to gain benefits by trading structural reforms for concessions from negotiating partners. A hope that entering the TPP will help Japan's strategic situation in Asia. Joining the TPP would complement Japan's moves in recent years to augment the U.S.-Japan alliance by strengthening Tokyo's relationships with middle powers in and around the Asian region. Behind this push is a concern that China's rise is diminishing Japan's influence and jeopardizing its security and economic interests. Since leading his party to power in late 2012, Prime Minister Abe has made one of his top priorities restoring Japanese standing, through revitalizing its economy and strengthening relations with the United States. Until Abe's March 2013 announcement, the frequent turnover among Japanese prime ministers—Abe is the seventh premier in as many years—failed to produce the leadership that might unify the pro-TPP camps across the two parties. These political weaknesses exacerbated the traditional institutional limitations of the prime minister's powers, making it easier for motivated interests to effectively veto government action and stymie the efforts of Abe's two predecessors from unambiguously trying to enter the talks. For the moment, Abe appears to have surmounted these obstacles, in part by using his high popularity ratings as leverage against opponents in his LDP and by centralizing decision-making on TPP issues in the prime minister's office. The latter move could blunt opposition to the TPP within the LDP. Abe came to power in December 2012 after leading the LDP to victory in national elections, ending the DPJ's roughly three-year reign. Japan's powerful agricultural institutions, most notably the nationwide agricultural cooperative organization (JA), have been the most vocal opponents of joining the TPP, as has been true of virtually all trade liberalization agreements that Japan has pursued for the past 40-50 years. JA has called for over 800 farm items to be exempt from tariff elimination. Japan's farm sector has taken advantage of the fact that Japan's rural areas are over-represented in the Diet. As a result, farm lobbies have significant sway in both the ruling LDP and opposition DPJ and have supported an array of policies that benefit the agricultural sector. For example, many farm products remain protected behind high tariff barriers such as rice (778%) and wheat (252%). (For others, see Table 4 .) Additionally, a range of other policies ensure that Japanese farming remains small scale, performed increasingly by aging and part-time farmers, and generally unproductive compared to farms in most other countries. The Japanese government provides around ¥1 trillion (about $12 billion) annually in direct income to farming households. The Abe government and the LDP reportedly are considering a new subsidy package that could be offered to Japan's farm sector to compensate for losses that would be expected if a TPP agreement is reached. JA has allied with a variety of other powerful interest groups to mount an aggressive campaign against entering the TPP. The most significant of these other groups may be the Japan Medical Association, which argues that TPP will erode if not eliminate Japan's universal healthcare insurance system because it will be forced to pay higher prices for medicines and medical equipment. Many experts argue that until Abe's March 2013 announcement, Japan's traditional agriculture interests, medical lobby, and other TPP opponents successfully controlled the debate about TPP inside Japan. They have gained the support of scores of lawmakers, including over 200 LDP members (over half the LDP's parliamentary caucus) that prior to Abe's decision joined a group calling for Japan not to join the TPP. Nonetheless, in mid-March, after considerable internal debate the LDP formally announced it supported Abe's decision. Around the same time, an LDP panel on the TPP designated five product lines—rice, sugarcane/sugar products, wheat, dairy products, and beef—as "important items" that must be protected. In 2012, prior to the elections that swept Abe into power, the Abe-led LDP had said it opposed entering the negotiations unless the final agreement allowed for some exemptions, a position that many interpreted as designed to appeal to anti-TPP voters. At the time, the LDP also objected to some investor-state dispute settlement requirements that might be agreed to in the TPP, and argued that government procurement and financial services must have their basis in Japan's "special characteristics." It is unclear to what extent these views have or will become Japanese government positions. The reservations about TPP among many LDP members indicate that as Japan participates in the TPP, the Abe government may face difficulties gaining domestic support for making painful concessions, particularly if Abe's public approval ratings decline. In a December 7, 2011, Federal Register notice, the Office of the USTR solicited the views of private sector stakeholders on whether Japan should be included in the TPP. USTR received over 100 responses. Around 40% of the responses were from agricultural firms, another 25% came from manufacturing firms, 15% from services providers, and the remainder from various non-government organizations (NGOs) and business associations. Some of the responses came from Japanese companies or associations representing Japanese companies. In a few cases, the respondents expressed outright opposition to Japan's participation. One of the most notable members of this group is the American Automotive Policy Council (AAPC). The AAPC represents the three Detroit-based auto manufacturers—Chrysler, Ford, and General Motors. In its statement, the AAPC said: The AAPC opposes Japan joining the Trans-Pacific Partnership negotiations at this time.... Japan's trade barriers in the auto sector cannot be addressed easily or quickly, and will needlessly slow down the negotiations. To date Japan has not indicated a willingness to change its decades-long practice of maintaining a closed automotive market. Given the systemic trade imbalance and lack of willingness to reform, a U.S. free trade agreement with Japan would only lock-in the already one-way trade relationship that Japan's closed auto market has created, and significantly delay, if not prevent proceeding with a high quality TPP trade agreement with other more compatible trade partners in the important and rapidly growing Pan-Pacific region. The AFL-CIO also opposed Japan's participation in the TPP, having stated: Given the numerous unknowns about the yet unfinished Trans-Pacific FTA, it is difficult to provide significant technical advice or even formulate well-grounded opinion with respect to the possible impacts on working families of Japan's accession to the Trans-Pacific FTA. As such, the AFL-CIO has serious concerns regarding the premature expansion of the Trans-Pacific FTA negotiations to include Japan or any other nation before US negotiators first demonstrate an ability to successfully negotiate an agreement that will produce genuine benefits for American workers and increase domestic production. [Japan's] markets are notoriously closed to foreign goods, and this is not the result of high tariff barriers.... To gain significant and substantial market access to Japan, the United States Trade Representative (USTR) would have to adopt a new and revolutionary approach.... If USTR is not willing to 'think outside the box' and abandon its currently slavish approach to free trade, it is difficult to see how Japan's accession to the Trans-Pacific FTA can benefit American working families. In some cases, respondents expressed strong support for Japan's inclusion in the TPP. For example, Caterpillar, Inc. argues that the TPP would be the vehicle for addressing Japan's remaining non-tariff barriers. The U.S. Chamber of Commerce and the U.S.-Japan Business Council, in separate submissions, also expressed support for Japan's participation in the TPP negotiations. However, each group asserted that Japan would have to address issues that have plagued relations with member companies, including regulatory barriers, favored treatment of insurance and express delivery subsidiaries of Japan Post, and government procurement, among others. Some Members of Congress have weighed in on the issue. For example, in a November 8, 2011, bipartisan letter to USTR Ron Kirk, the chairmen and ranking Members of the House Ways and Means Committee and the Senate Finance Committee stated that Japan's participation "would represent an opportunity for much needed change in Japan's approach to international trade." They assert that, while Japan is a long-time U.S. ally and friend in Asia, paramount considerations in evaluating a request relating to a trade agreement must be whether Japan is willing and able to meet the high standard commitments inherent in U.S. free trade agreements and whether inclusion would truly open this historically closed market to the benefit of our companies, workers, and farmers. These comments and others from stakeholders suggest that the debate within the United States and negotiations with Japan on the TPP will be difficult and complex. The legacies of a sometimes contentious bilateral economic relationship have carried over into the TPP negotiations. Japan's participation in the TPP negotiations represents a major change in the shape and dynamic of the U.S.-Japan economic relationship. Over the years, trade policymakers, business representatives, and regional specialists in both countries had floated the concept of a U.S.-Japan FTA. Until the TPP talks began in earnest, the idea had not gained traction because the hurdles—Japanese agricultural policy, problems in auto trade, government regulations and practices—have been too high to overcome. These same hurdles still must be overcome if Japan and the United States are able to work successfully in the TPP. The TPP presents opportunities and challenges for the United States and Japan. On the one hand, if successful, it could reinvigorate an economic relationship that has remained steady but stagnant, by forcing the two countries to address long-standing, difficult issues and allowing them to raise their relationship to a higher level. On the other hand, failure to do so could indicate that the underlying problems are too fundamental to overcome and could set back the relationship. It could signify the failure of the United States and/or Japan to deal with domestic opposition to a more open trade relationship. The implications for the overall U.S.-Japanese alliance are less certain. While the TPP would likely be viewed as strengthening the alliance and failure of the negotiations could be considered a setback, the alliance is also built on common national security concerns, such as North Korea's nuclear program and the economic and military advancement of China, which could well trump trade problems. Furthermore, Japan's entry into the TPP is largely viewed, on the one hand, as an important step in forming a wider Asia-Pacific regional trade arrangement. On the other hand, the absence of Japan could undermine the credibility of the TPP as a viable regional trade arrangement and a setback for Asia-Pacific economic integration.

On July 23, 2013, Japan formally joined negotiations to establish a Trans-Pacific Partnership (TPP) becoming the 12 participant, including the United States. Japan's membership in the TPP with the United States would constitute a de facto U.S.-Japan FTA. On April 12, 2013, the United States announced its support for Japan's participation in the TPP. The announcement came after a series of discussions on conditions for U.S. support and outstanding bilateral issues. As a result of the discussions the two sides agreed on measures to address these issues as part of, and in parallel with, the main TPP negotiations. On April 20, the then-11 TPP countries formally invited Japan to participate in the negotiations. On April 24, then-Acting USTR Demetrios Marantis notified Congress that the United States intended to begin negotiations with Japan as part of the TPP thus beginning a 90-calendar-day consultation period with Congress. The TPP would be a free trade agreement (FTA) among Japan, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The United States and its TPP partners envision the agreement as "a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st century challenges." Congress has a direct and oversight role in the issue of U.S. participation in the TPP. It must approve implementing legislation, if the TPP is to apply to the United States. Some Members of Congress have already weighed in on Japan's in the TPP and under what conditions. More may do so as the process proceeds. The TPP is the leading U.S. trade policy initiative of the Obama Administration and a core component of Administration efforts to "rebalance" U.S. foreign policy priorities toward the Asia-Pacific region by playing a more active role in shaping the region's rules and norms. As the second-largest economy in Asia, the third-largest economy in the world, and a key link in global supply/production chains, Japan's participation would be pivotal to enhancing the credibility and viability of the TPP as a regional free trade arrangement. A large segment of the U.S. business community has expressed support for Japanese participation in the TPP, if Japan can resolve long-standing issues on access to its markets for U.S. goods and services. However, the Detroit-based U.S. auto industry and the UAW union have expressed strong opposition. The TPP presents both risks and opportunities for the United States and Japan. On the one hand, if successful, it could reinvigorate a bilateral economic relationship that has remained steady but stagnant, by forcing the two countries to address long-standing, difficult issues, and allowing them to raise their relationship to a higher level. On the other hand, failure to do so could indicate that the underlying problems are too fundamental to overcome and could set back the relationship. It could signify the failure of the United States and/or Japan to deal with domestic opposition to a more open trade relationship. In bringing Japan into the TPP talks, Prime Minister Abe has had to confront influential domestic interests that argued against the move. Among the most vocal have been Japanese farmers, especially rice farmers, and their representatives. Abe has acknowledged these domestic sensitivities, but also insisted that Japan needed to take advantage of "this last window of opportunity" to enter the negotiations, if it is to grow economically. Other Japanese business interests, including manufacturers, strongly support the TPP.

On January 7, 2011, President Obama signed P.L. 111-383 , including a provision expressing the sense of Congress regarding recreational fishing on military installations. On January 4, 2011, President Obama signed (1) P.L. 111-348 , including provisions (a) amending the MSFCMA to modify language related to prohibiting shark finning and (b) allowing the United States-Canada Transboundary Resource Sharing Understanding to be considered an international agreement so that federal fisheries managers could extend stock rebuilding deadlines for New England groundfish and scallop fisheries covered under the bilateral agreement, and (2) P.L. 111-353 , including provisions (a) directing the Secretary of Health and Human Services to update the Fish and Fisheries Products Hazards and Control Guidance to take into account advances in technology and (b) requiring a report by the Food and Drug Administration on the post-harvest processing of raw oysters. On December 22, 2010, President Obama signed (1) P.L. 111-322 , including provisions to further extend the authority to make expenditures from the Highway Trust Fund and other trust funds, including various programs under the Sport Fish Restoration and Boating Trust Fund, through March 4, 2011, and (2) P.L. 111-335 , authorizing a single fisheries cooperative for the Bering Sea Aleutian Islands longline catcher processor subsector for Pacific cod. On December 22, 2010, the Senate passed H.R. 6523 . On December 17, 2010, the House passed H.R. 6523 . On December 17, 2010, the Senate Committee on Commerce, Science, and Transportation reported (1) S. 3597 (amended), including provisions (a) authorizing the Coast Guard and the National Oceanic and Atmospheric Administration (NOAA) to identify U.S. areas where special navigational measures are warranted to reduce the risk of oil spills and potential damage to natural resources, including commercial fisheries and aquaculture facilities, (b) seeking to improve the ability of NOAA, the Coast Guard, and coastal states to sustain healthy ocean and coastal ecosystems relative to oil spills, and (c) amending and reauthorizing the Coral Reef Conservation Act of 2000 through FY2014; (2) S. 3566 (amended), including a provision authorizing the Maritime Administration to establish a Green Ships Program to identify, evaluate, demonstrate, or improve technologies for control of aquatic invasive species; and (3) S. 2870 , amending various statutes implementing international fishery agreements to deter and combat illegal, unreported, and unregulated (IUU) fishing. On December 14, 2010, President Obama signed P.L. 111-307 ( S. 1421 ), amending the Lacey Act to add bighead carp to the list of injurious species that are prohibited from being imported or shipped interstate. On December 14, 2010, the House passed S. 1609 , authorizing a single fisheries cooperative for the Bering Sea Aleutian Islands longline catcher processor subsector for Pacific cod. On December 10, 2010, the Senate Committee on Commerce, Science, and Transportation reported S. 1748 (amended), establishing a research program for the recovery of the southern sea otter. On December 8, 2010, the House passed H.R. 3082 (amended), including the language of food safety legislation ( S. 510 ) in Division D, including provisions (1) directing the Secretary of Health and Human Services to update the Fish and Fisheries Products Hazards and Control Guidance to take into account advances in technology and (2) requiring a report by the Food and Drug Administration on the post-harvest processing of raw oysters. (Members and staff may request e-mail notification of new CRS reports on marine and freshwater fisheries, aquaculture, and marine mammal issues by contacting Gene Buck at [email address scrubbed] and requesting to be added to the notification list.) Increasing use of coastal and marine resources is driving proposals for Congress and the Administration to alter current relationships between environmental protection and sustainable resource management. Recent reports note declines in marine resources and shortcomings in what are perceived as fragmented and limited approaches to resource protection and management in federal and state waters. A further concern is the increasing pressures and conflicts that arise from economic activity associated with continued human population growth in coastal areas. A common concern is habitat loss or alteration, due both to natural processes, such as climate variation, and to development, changes in land management practices, competition from invasive species, and other factors, nearly all related to economic, political, or social interests. Congress faces the issue of how to balance these diverse interests (which may fall on various sides of any given controversy) while promoting the sustainable management of fishery and other marine resources and protection of the marine environment. Congress last reauthorized and extensively amended the Magnuson-Stevens Fishery Conservation and Management Act (MSFCMA) in the 109 th Congress ( P.L. 109-479 ); the current funding authorization expires on September 30, 2013. The Marine Mammal Protection Act was last reauthorized in 1994 by P.L. 103-238 , and funding authorization expired on September 30, 1999. Historically, coastal states managed marine sport and commercial fisheries in nearshore waters, where most seafood was caught. However, as fishing techniques improved, fishermen ventured farther offshore. Before 1950, the federal government assumed limited responsibility for marine fisheries, responding primarily to international fishery concerns and treaties (by enacting implementing legislation for treaties, e.g., the Northern Pacific Halibut Act in 1937) as well as to interstate fishery conflicts (by consenting to interstate fishery compacts, e.g., the Pacific Marine Fisheries Compact in 1947). In the late 1940s and early 1950s, several Latin American nations proclaimed marine jurisdictions extending 200 miles or further offshore. This action was denounced by those within the United States and other distant-water fishing nations who sought to preserve access for far-ranging fishing vessels. Beginning in the 1950s (Atlantic) and 1960s (Pacific), increasing numbers of foreign fishing vessels steamed into U.S. offshore waters to catch the substantially unexploited seafood resources. Since the United States then claimed only a 3-mile jurisdiction (in 1964, P.L. 88-308 prohibited fishing by foreign-flag vessels within 3 miles of the coast; in 1966, P.L. 89-658 proclaimed an expanded 12-mile exclusive U.S. fishery jurisdiction), foreign vessels could fish many of the same stocks caught by U.S. fishermen. U.S. fishermen deplored this "foreign encroachment" and alleged that overfishing was causing stress on, or outright depletion of, fish stocks. Protracted Law of the Sea Treaty negotiations in the early and mid-1970s as well as actions by other coastal nations provided impetus for unilateral U.S. action. The enactment of the Fishery Conservation and Management Act (FCMA); later renamed the Magnuson Fishery Conservation and Management Act and more recently the Magnuson-Stevens Fishery Conservation and Management Act (MSFCMA; 16 U.S.C. §§ 1801 et seq.), ushered in a new era of federal marine fishery management. The FCMA was signed into law on April 13, 1976, after several years of debate. On March 1, 1977, marine fishery resources within 200 miles of all U.S. coasts, but outside state jurisdiction, came under federal jurisdiction, and an entirely new multifaceted regional management system began allocating fishing rights, with priority given to domestic enterprise. Primary federal management authority was vested in the National Marine Fisheries Service (NMFS, also popularly referred to as NOAA Fisheries) within the National Oceanic and Atmospheric Administration (NOAA) of the U.S. Department of Commerce. The 200-mile fishery conservation zone was superseded by a 200-mile Exclusive Economic Zone (EEZ), proclaimed by President Reagan on March 10, 1983 (Presidential Proclamation 5030). Eight Regional Fishery Management Councils were created by the FCMA. Council members are appointed by the Secretary of Commerce from lists of candidates knowledgeable about fishery resources, provided by coastal state governors. The councils prepare fishery management plans (FMPs) for those fisheries that they determine require active federal management. After public hearings, revised FMPs are submitted to the Secretary of Commerce for approval. Approved plans are implemented through regulations published in the Federal Register . Together these councils and NMFS have developed and implemented 40 FMPs for various fish and shellfish resources, with 9 additional plans in various stages of development. Some plans are created for an individual species or a few related ones (e.g., FMPs for red drum by the South Atlantic Council and for shrimp by the Gulf of Mexico Council). Others are developed for larger species assemblages inhabiting similar habitats (e.g., FMPs for Gulf of Alaska groundfish by the North Pacific Council and for reef fish by the Gulf of Mexico Council). Many of the implemented plans have been amended (one over 30 times), and three have been developed and implemented jointly by two or more councils. The MSFCMA was reauthorized in the final hours of the 109 th Congress by P.L. 109-479 , the Magnuson-Stevens Fishery Conservation and Management Reauthorization Act of 2006. The authorization of appropriations in Section 7 of the act expires at the end of FY2013. Today, individual states manage marine fisheries in inshore and coastal waters, generally within 3 miles of the coast. Interstate coordination occurs through three regional interstate marine fishery commissions (Atlantic, Gulf, and Pacific) created by congressionally approved compacts. Beyond state waters, out to 200 miles, the federal government manages fish and shellfish resources for which FMPs have been developed under the MSFCMA. Individual states manage fishermen operating state-registered vessels under state regulations consistent with any existing federal FMP when fishing in inshore state waters and, in the absence of a federal FMP, wherever they fish. Under initial FCMA authority, a substantial portion of the fish catch from federal offshore waters was allocated to foreign fishing fleets. However, the 1980 American Fisheries Promotion Act (Title II of P.L. 96-561 ) and other FCMA amendments orchestrated a decrease in foreign catch allocations as domestic fishing and processing industries expanded. Foreign catch from the U.S. EEZ declined from about 3.8 billion pounds in 1977 to zero since 1992. Commensurate with the decline of foreign catch, domestic offshore catch in federal EEZ waters increased dramatically, from about 1.6 billion pounds (1977) to more than 6.3 billion pounds in 1986-1988. Since this peak, annual landings have hovered around 6 billion pounds ( Figure 1 ). In 2009, U.S. commercial fishermen landed slightly more than 6.0 billion pounds of edible, unprocessed fish and shellfish from combined state, federal, and international waters, worth more than $3.7 billion at the dock. Imports of mostly processed products supplied 5.2 billion pounds, worth $13.1 billion. U.S. consumers spent an estimated $75.5 billion on edible seafood in 2009, with $50.3 billion of that amount spent in restaurants and other food service establishments. In addition, marine recreational anglers caught an estimated 391 million fish in 2009, of which the retained catch was about 212 million pounds. In 2006, a nationwide survey estimated that recreational anglers spent more than $40 billion each year pursuing their sport. NMFS reports annually on the status of fish stocks managed under the MSFCMA. For 2009, NMFS made determinations for 250 fish stocks and complexes, finding that 38 (15%) of them were subject to overfishing and 212 (85%) were not. In addition, NMFS made determinations for 203 stocks and complexes, finding that 46 (23%) were overfished and 157 (77%) were not. These numbers reflect a slight decline in the overfishing percentage compared to 2008 (when 16% were subject to overfishing) as well as a stable overfished percentage compared to that year (when 23% were overfished). In addition, NMFS developed a Fish Stock Sustainability Index (FSSI) in 2005 as a performance measure to evaluate progress nationwide in addressing overfishing. Out of a possible maximum FSSI of 920, this index of success in curbing overfishing has increased from 481.5 (third quarter of calendar year 2005) to 580.5 (second quarter of calendar year 2010). The MSFCMA was reauthorized in the 109 th Congress in 2006 by P.L. 109-479 , the Magnuson-Stevens Fishery Conservation and Management Reauthorization Act of 2006. Some of the major issues addressed by this comprehensive measure included modifying requirements for the appointment and training of members of regional councils as well as the conduct of business by regional council committees and panels to enhance transparency of the regional council process; setting a firm deadline to end overfishing by 2011 and modifying how depleted fisheries are to be rebuilt; increasing the consideration of economic and social impacts in fishery management; modifying research programs and improving data collection and management; increasing protection for deep sea corals and bottom habitat; implementing a pilot program of ecosystem-based management; promoting new gear technologies to further reduce bycatch; establishing national guidelines for individual fishing quota (limited access privilege) programs; modifying regional council fishery management plan procedures, including better coordinating environmental review under the National Environmental Policy Act (NEPA; 42 U.S.C. §§ 4321, et seq.); and strengthening the role of science in fishery management decision-making. NMFS has summarized various tasks associated with implementing P.L. 109-479 . On January 13, 2009, NMFS released its first report to Congress on implementing Title IV of P.L. 109-479 , relating to better control of illegal, unreported, and unregulated (IUU) fishing activities. On January 15, 2009, NMFS issued final guidance amending the guidelines for National Standard 1, designed to end overfishing in response to provisions in P.L. 109-479 providing new requirements for annual catch limits and other accountability measures. Section 602 of P.L. 111-281 amended the American Fisheries Act to modify provisions for vessel rebuilding and replacement, vessel exemptions, and fishery cooperative exemptions. P.L. 111-335 authorized a single fisheries cooperative for the Bering Sea Aleutian Islands longline catcher processor subsector for Pacific cod. P.L. 111-348 amended the MSFCMA to (1) modify language related to prohibiting shark finning, and (2) allow the United States-Canada Transboundary Resource Sharing Understanding to be considered an international agreement to create an exemption allowing federal fisheries managers to extend stock rebuilding deadlines for certain New England fisheries. On October 27, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held an oversight hearing on implementation of the MSFCMA. The House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held two hearings on catch shares (1) as a fishery management option (March 16, 2010) and (2) regarding the community perspective (April 22, 2010). In addition, the 111 th Congress considered several bills that would have amended the MSFCMA: H.R. 1584 and S. 1255 would have amended the MSFCMA to extend the authorized time period for rebuilding certain overfished populations. S. 3594 and H.R. 6316 would have amended the MSFCMA to (1) modify conditions under which certain fish may be harvested in a multispecies fishery where other species are overfished, (2) establish an economic assistance program for recreational and commercial fishery participants, fishing industries, and fishing communities significantly affected by a prohibition on the retention of stocks to end or prevent overfishing or rebuild overfished stocks, (3) clarify emergency authority, and (4) require additional fishery studies and reports. H.R. 3307 and S. 3046 would have directed the Secretary of Commerce to study the South Atlantic red snapper fishery and limited the Secretary's authority to promulgate any interim rule that prohibits fishing in this fishery. H.R. 4723 and S. 3045 would have directed the Secretary of Commerce to study the Gulf of Mexico red snapper fishery and limited the Secretary's authority to promulgate any interim rule that prohibits fishing in this fishery. Section 704 of H.R. 3534 would have prohibited regional fishery management councils from implementing offshore aquaculture through fishery management plans and their amendments and invalidated any such action already taken. On September 16-17, 2009, and June 30, 2010, the House Committee on Natural Resources held hearings on this measure. On July 28, 2010, the House Committee on Natural Resources reported (amended) this measure ( H.Rept. 111-575 ). The House passed this measure on July 30, 2010, after amending this bill to remove the aquaculture provision. H.R. 4634 would have limited the authority of the Secretary of Commerce to implement certain fishery closures unless the Secretary certified that closure is the only option available for maintaining a fishery at a sustainable level. H.R. 5668 would have amended the MSFCMA to require sums received as fines, penalties, and forfeitures of property for violations of that act or other marine resource laws to be used to reduce the federal deficit and debt. H.R. 6075 would have amended the MSFCMA to require payment of costs, fees, and expenses incurred by prevailing parties in proceedings under the MSFCMA from sums received as fines, penalties, and forfeitures. H.R. 5155 would have prohibited the Secretary of Commerce from regulating incidental fisheries by catch until a report on aerial assessment of sea turtle populations was submitted to Congress. S. 918 / H.R. 3270 would have amended the MSFCMA to add New York to the New England Fishery Management Council. H.R. 1379 would have prohibited the commercial harvesting of Atlantic striped bass in coastal waters and the EEZ. H.R. 5180 would have established an ombudsman office within NMFS; the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on this bill on July 27, 2010. Section 4 of H.R. 5863 would have prohibited the approval of oil and gas exploration and/or development/production plans unless the Secretary certifies MSFCMA compliance; in addition, Section 5 would have required consultation for any of these oil and gas activities for their potential effect on fish habitat in federal waters. Section 3 of S. 3826 would have required congressional review of any agency rulemaking that establishes, modifies, opens, closes, or conducts a regulatory program for a commercial activity related to fishing. H.R. 6316 would have amended the MSFCMA to mitigate the economic impact of transition to sustainable fisheries on fishing communities. S. 4014 would have provided for the replacement or rebuilding of a vessel for the non-American Fisheries Act trawl catcher-processors that comprise the Amendment 80 fleet. Steelhead trout and five species of salmon spawn in Pacific coastal rivers and lakes, after which juveniles migrate to North Pacific ocean waters where they mature before returning to the same freshwater rivers and lakes to spawn. Management is complicated because these fish may cross several state and national boundaries during their life spans, and their different subpopulations/stocks intermingle on fishing grounds. In addition to natural environmental fluctuations, threats to salmon include hydropower dams that block rivers and create reservoirs, sport and commercial harvests, habitat modification by competing resource industries and other human development, and hatcheries seeking to supplement natural production but sometimes unintentionally causing genetic or developmental concerns. In response to declining salmon populations in Washington, Oregon, Idaho, and California, discrete population units have been listed as endangered or threatened species under the Endangered Species Act. On September 13, 2006, a San Joaquin River Restoration Settlement Agreement was announced, ending an 18-year legal dispute over the operation of Friant Dam in California. This agreement provides for river channel improvements and water flow to sustain Chinook salmon upstream (south) from the confluence of the Merced River tributary while reducing or avoiding adverse water supply impacts to Friant Division long-term water contractors that may result from restoration flows provided in the agreement. To address some of their concerns about Pacific salmon management, the United States and Canada negotiated a bilateral agreement on Pacific salmon in 1985. However, by the mid-1990s, controversy stalled renegotiations to adjust cooperative management of these fish. This deadlock was resolved in June 1999 when a new accord was concluded. Annex IV of this bilateral agreement outlines, in detail, the fishery regimes to be followed by Canada and the United States in cooperatively managing the six species of anadromous Pacific salmon and steelhead trout. Annex IV was recently renegotiated and took effect on January 1, 2009. Language in the "construction" account for the U.S. Fish and Wildlife Service in P.L. 111-8 permanently rescinded all unobligated balances under the authority of the Anadromous Fish Conservation Act. Title X, Subtitle A, of P.L. 111-11 authorized the implementation of the San Joaquin River Restoration Settlement providing for the reintroduction of Chinook salmon. The 111 th Congress considered several additional bills relating to Pacific salmon: H.R. 1080 would have amended the Pacific Salmon Treaty Act to strengthen enforcement mechanisms to stop illegal, unreported, and unregulated fishing; on March 19, 2009, the House Natural Resources, Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on this bill, and on July 24, 2009, the House Committee on Natural Resources reported this measure, amended ( H.Rept. 111-228 ). The House passed H.R. 1080 (amended) on September 22, 2009. S. 2870 would have amended the Pacific Salmon Treaty Act of 1985 and the Northern Pacific Anadromous Stocks Act of 1992 to deter and combat illegal, unreported, and unregulated fishing. On December 17, 2010, the Senate Committee on Commerce, Science, and Transportation reported S. 2870 ( S.Rept. 111-388 ). Section 603(e) of S. 2971 , as reported (amended) by the Senate Committee on Foreign Relations on September 23, 2010, would have authorized that as much as $15 million annually from appropriations for "International Fisheries Commissions" be used to fulfill U.S. Pacific Salmon Treaty obligations to Canada ( S.Rept. 111-301 ). H.R. 1672 and S. 668 would have directed county marine resources committees to assist in identifying local implications, needs, and strategies associated with the recovery of Puget Sound salmon. On October 20, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 1672 . On October 21, 2009, the Senate Committee on Commerce, Science, and Transportation reported (amended) S. 668 ( S.Rept. 111-90 ). On December 7, 2009, the House Committee on Natural Resources reported (amended) H.R. 1672 ( H.Rept. 111-354 ), and the House subsequently passed this measure (amended). On March 31, 2009, the House Committee on Natural Resources held an oversight hearing on the California drought and actions by federal and state agencies to address impacts on lands, fisheries, and water users. H.R. 2977 would have directed the Bureau of Reclamation to enter into an agreement with the National Academy of Sciences to study sustainable water and environmental management in the Sacramento-San Joaquin Delta, California. H.R. 3794 would have amended the Central Valley Project Improvement Act to assist in efforts to avoid losses of juvenile anadromous fish. S. 817 and H.R. 2055 would have established a Salmon Stronghold Partnership program to protect wild Pacific salmon; on June 16, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 2055 . On April 15, 2010, the Senate Commerce, Science, and Transportation Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard held a hearing on S. 817 . On November 17, 2010, the Senate Committee on Commerce, Science, and Transportation reported S. 817 ( S.Rept. 111-348 ). Section 201 of H.R. 4347 would have amended Title IV of the Indian Self-Determination and Education Assistance Act relating to funding agreements with the Hoopa Valley Tribe for restoring the Trinity River fishery and with the Quinault Indian Nation for the National Salmon Hatchery located on the Quinault Reservation. H.R. 3503 would have required a scientific analysis of federal salmon recovery efforts by the National Academy of Sciences and authorized removal of the four lower Snake River dams by the Army Corps of Engineers. H.R. 3999 would have directed the Commissioner of the Bureau of Reclamation to initiate ESA consultations on the Central Valley Project and the California State Water Project. Section 1886 of P.L. 111-5 broadened the basis for determining import increases relating to trade adjustment assistance for fishing and aquaculture to include wild-caught fish and seafood in addition to farm-raised fish and seafood. Several other bills in the 111 th Congress dealt with assistance to the fishing industry: S. 533 and H.R. 2548 would have amended the Coastal Zone Management Act to establish a grant program to ensure waterfront access for aquaculture operators and commercial fishermen. On October 20, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 2548 . H.R. 3583 would have provided a subsidy to sellers and buyers of fish directly delivered to American Samoa from vessels with U.S. fisheries endorsements. On November 4, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on this measure. Section 208 of S. 2731 would have required a report to Congress providing information on economic injury disaster declarations under Section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) based on a fishery resource disaster declaration from the Secretary of Commerce. S. 3337 and Section 10 of S. 3763 would have provided technical assistance grants to fisheries organizations for assisting individuals and businesses affected by the Deepwater Horizon oil spill in the Gulf of Mexico to file claims. H.R. 1983 would have recodified Title 53 (Small Business) of the U.S. Code, including disaster assistance programs applicable to commercial fishermen and aquaculture operations. H.R. 4914 and S. 3528 would have promoted coastal jobs creation in activities that promote sustainable fisheries and fishing communities and revitalize waterfronts. On July 27, 2010, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 4914 . Section 9 of H.R. 5676 would have amended the Oil Pollution Act of 1990 to treat fishermen as a separate category in processing claims for loss of income. Section 9107 of P.L. 111-11 ( H.R. 146 ) amended P.L. 106-392 to extend the authorizations for the Upper Colorado and San Juan River Basin endangered fish recovery programs through FY2023. On July 27, 2010, the Senate Environment and Public Works Subcommittee on Water and Wildlife held an oversight hearing to assess the natural resource damages resulting from the BP Deepwater Horizon disaster. Other measures were introduced: H.R. 790 and S. 851 would have prohibited federal oil or natural gas leases in any marine national monument or national marine sanctuary or Georges Bank. H.R. 204 would have prohibited oil and gas leasing off the coast of Mendocino, Humboldt, and Del Norte Counties in the state of California. H.R. 1696 and S. 783 would have prohibited offshore drilling on the outer Continental Shelf in the Mid-Atlantic and North Atlantic planning areas. H.R. 1906 would have prohibited oil and gas leasing off the California coast. H.R. 2439 would have prohibited oil and gas leases on portions of the outer continental shelf located off the coast of New Jersey. H.R. 5213 and S. 3358 would have prohibited offshore drilling on the outer continental shelf off California, Oregon, and Washington. H.R. 5287 would have prohibited offshore drilling on the outer continental shelf in the Atlantic Ocean and Gulf of Mexico. H.R. 5248 would have prohibited oil, gas, or mineral leasing on the entire U.S. outer continental shelf. H.R. 5358 would have prohibited oil and gas leasing on the outer continental shelf off the Florida coast. H.R. 5607 would have prohibited oil and gas leasing in the North Atlantic Planning Area. H.R. 2288 / S. 1453 would have amended P.L. 106-392 to maintain annual base funding for the Upper Colorado and San Juan fish recovery programs through FY2023. The Senate Energy and Natural Resources Subcommittee on Water and Power held a hearing on S. 1453 on July 23, 2009. On September 22, 2009, the House Natural Resources Subcommittee on Water and Power held a hearing on H.R. 2288 . On May 18, 2010, the House Committee on Natural Resources reported (amended) H.R. 2288 ( H.Rept. 111-481 ), and the House passed this measure (amended) on the same date. On March 2, 2010, the Senate Committee on Energy and Natural Resources reported S. 1453 ( S.Rept. 111-142 ). S. 1252 would have amended and reauthorized the Oceans and Human Health Act through FY2014; on September 20, 2010, the Senate Committee on Commerce, Science, and Transportation reported (amended) this measure ( S.Rept. 111-296 ). Section 605 of H.R. 3534 would have created an Ocean Resources Conservation and Assistance Fund to support activities that promote and protect ocean ecosystem health and biodiversity. On September 16-17, 2009, the House Committee on Natural Resources held hearings on H.R. 3534 . On July 28, 2010, the House Committee on Natural Resources reported (amended) H.R. 3534 ( H.Rept. 111-575 ), and the House passed this amended measure on July 30, 2010. On May 11, 2010, the Senate Environment and Public Works Subcommittee on Oversight and Subcommittee on Water and Wildlife held a joint oversight hearing on the Environmental Protection Agency's role in protecting ocean health. H.R. 1672 and S. 668 would have amended and reauthorized the Northwest Straits Marine Conservation Initiative Act. On October 20, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 1672 . On October 21, 2009, the Senate Committee on Commerce, Science, and Transportation reported (amended) S. 668 ( S.Rept. 111-90 ). On December 7, 2009, the House Committee on Natural Resources reported (amended) H.R. 1672 ( H.Rept. 111-354 ), and the House subsequently passed this measure (amended). H.R. 2565 and S. 1214 sought to conserve fish and aquatic communities through partnerships that foster fish habitat conservation; on June 16, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 2565 . On December 3, 2009, the Senate Environment and Public Works Subcommittee on Water and Wildlife held a hearing on S. 1214 . On May 17, 2010, the Senate Committee on Environment and Public Works reported (amended) S. 1214 ( S.Rept. 111-190 ). S. 1311 would have amended the Federal Water Pollution Control Act (Clean Water Act) to enhance cooperative efforts to monitor, restore, and protect water quality and marine ecosystems of the Gulf of Mexico. On November 9, 2009, the Senate Environment Subcommittee on Water and Wildlife held a hearing on this measure. H.R. 6112 and Title VIII of H.R. 3534 , as reported by the Committee on Natural Resources on July 28, 2010, would have established a Gulf of Mexico Restoration Program ( H.Rept. 111-575 , Part I). The House passed H.R. 3534 , amended, on July 30, 2010, with the Restoration Program in Title V. S. 1601 , S. 3387 , and H.R. 5362 would have provided for the release of water from the Ruedi Reservoir for the benefit of endangered fish habitat in the Colorado River. On June 9, 2010, the Senate Energy and Natural Resources Subcommittee on Water and Power held a hearing on S. 3387 . Section 106 of S. 684 , Section 208 of S. 3597 , Section 208 of H.R. 6292 , and Section 627 of S. 3663 would have authorized the Coast Guard and NOAA to identify U.S. areas where special navigational measures are warranted to reduce the risk of oil spills and potential damage to natural resources, including commercial fisheries. The Senate Committee on Commerce, Science, and Transportation reported S. 3597 (amended) on December 17, 2010. H.R. 5344 and S. 3382 would have authorized the Secretary of the Interior, through the Coastal Program of the U.S. Fish and Wildlife Service, to work with willing partners to assess, protect, restore, and enhance coastal areas that provide fish habitat. H.R. 2977 would have directed the Bureau of Reclamation to enter into an agreement with the National Academy of Sciences to study sustainable water and environmental management in the Sacramento-San Joaquin Delta, California. S.Res. 247 and H.Res. 710 expressed support for the objectives of "National Estuaries Day" (September 26, 2009). On September 10, 2009, the Senate agreed to S.Res. 247 ; the House agreed to H.Res. 710 on October 6, 2009. S.Res. 596 designated September 25, 2010, as "National Estuaries Day"; the Senate agreed to this measure on August 3, 2010; H.Res. 1503 expressed support for the objectives of "National Estuaries Day" (September 25, 2010); the House agreed to H.Res. 1503 on September 22, 2010. Section 15 of H.R. 2120 would have authorized expenditures for monitoring and management of fish and their habitat related to energy and minerals development on federal onshore and offshore lands. H.R. 3622 would have amended the Internal Revenue Code of 1986 to allow a credit for the construction of ponds for recreational fishing and conservation of aquatic habitat. Section 312 of S. 3280 would have amended the Sikes Act to provide funding for fish habitat management on state-owned National Guard installations. H.Res. 1458 would have celebrated the diversity of marine fisheries and the biological richness of marine ecosystems. H.R. 6276 would have authorized the Secretary of the Interior to identify and declare wildlife (defined to include fish) disease emergencies and to coordinate rapid response. H.R. 6315 would have reauthorized and amended the Marine Debris Research, Prevention, and Reduction Act. H.R. 5735 and S. 3587 would have established a Renewable Energy Mitigation and Fish and Wildlife Fund to mitigate effects of wind and solar energy development on fish habitat on federal lands. A number of bills in the 111 th Congress proposed to address various water quality and aquatic/marine ecosystem restoration issues more generally; for more information on these issues, see CRS Report R40098, Water Quality Issues in the 111th Congress: Oversight and Implementation , by [author name scrubbed], and CRS Report RL34329, Crosscut Budgets in Ecosystem Restoration Initiatives: Examples and Issues for Congress , by [author name scrubbed] and [author name scrubbed]. Title XII, Subtitle D, of P.L. 111-11 ( H.R. 146 ) directed the Secretary of Commerce to establish an ocean acidification program within NOAA, and to establish an interagency committee to develop an ocean acidification research and monitoring plan. On April 22, 2010, the Senate Commerce, Science, and Transportation Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard held a hearing on the environmental and economic impacts of ocean acidification. Several additional bills dealt with climate change and fisheries: H.R. 2192 ; Title IV, Subtitle E, Part 1, Subpart C, of H.R. 2454 / H.R. 2998 ; Division A, Title III, Subpart C, of S. 1733 ; and S. 1933 would have established and funded an integrated federal program to protect, restore, and conserve natural resources in response to the threats of climate change. The House Committee on Energy and Commerce held hearings on H.R. 2454 on May 18-21, 2009, and reported this measure (amended) on June 5, 2009 ( H.Rept. 111-137 , Part I). On June 26, 2009, the House passed H.R. 2454 (amended). The Senate Committee on Environment and Public Works held a hearing on S. 1733 on October 27-29, 2009, and reported this bill (amended) on February 2, 2010 ( S.Rept. 111-121 ). Section 6(c)(1)(N) of S. 2877 would have provided funds for climate change and ocean acidification mitigation and adaptation projects, activities, and research to increase the resilience of fish and wildlife and ecosystems. S. 3641 would have established a National Endowment for the Oceans, authorizing funding for analyses of climate change and ocean acidification. H.Res. 989 would have expressed the sense of the House that the United States should adopt national policies and pursue international agreements to prevent ocean acidification, to study the impacts of ocean acidification, and to address the effects of ocean acidification on marine ecosystems and coastal economies. On June 9, 2010, the House failed to agree to this measure under suspension of the rules. Section 4 of S. 810 would have directed NOAA and EPA to establish four regional Institutes for Ocean and Coastal Adaptation to Climate Change and Ocean Acidification, to conduct research, planning, and related efforts to assess, prepare for, and adapt to the ongoing and expected impacts of climate change and ocean acidification. Section 13002 of P.L. 111-11 ( H.R. 146 ) reauthorized (through FY2015) and amended the Fisheries Restoration and Irrigation Mitigation Act of 2000. Section 15 of H.R. 2120 authorized expenditures for monitoring and management of fish and their habitat related to energy and minerals development on federal onshore and offshore lands. Section 160 of P.L. 111-68 extended the division of appropriations for various programs under the Sport Fish Restoration and Boating Trust Fund through October 31, 2009. Section 3513 of P.L. 111-84 ( H.R. 2647 ) modified the authorization for applications to the Secretary of Transportation for obsolete vessels to be used as artificial reefs. A number of enactments extended the authority to make expenditures from the Highway Trust Fund and other trust funds, including various programs under the Sport Fish Restoration and Boating Trust Fund: Section 1008(a) of P.L. 111-118 (through February 28, 2010), Section 4(a) of P.L. 111-144 (through March 28, 2010), P.L. 111-147 (through December 31, 2010), and finally P.L. 111-322 (through March 4, 2011). Section 3001(a)(4) of P.L. 111-227 extended the temporary suspension of duty on lug-bottom boots for use in fishing waders. P.L. 111-383 included a provision expressing the sense of Congress regarding recreational fishing on military installations. Several additional bills contained provisions related to sport and recreational fisheries: Section 19(b) of H.R. 1108 and Section 21(b) of H.R. 2120 would have amended the Outer Continental Shelf Lands Act to direct the Secretary of the Interior to issue regulations permitting the use of decommissioned offshore oil and gas platforms as artificial reefs, and to require a study of how the removal of offshore oil and gas platforms and other outer continental shelf facilities might affect existing fish stocks and coral populations. H.R. 2430 would have directed the Secretary of the Interior to continue stocking fish in certain lakes in the North Cascades National Park, Ross Lake National Recreation Area, and Lake Chelan National Recreation Area; the House agreed to this measure on June 2, 2009. The Senate Energy and Natural Resources Subcommittee on National Parks held a hearing on H.R. 2430 on July 22, 2009. On September 27, 2010, the Senate Committee on Energy and Natural Resources reported (amended) this bill ( S.Rept. 111-324 ). Section 9(b)(2)(B) of S. 503 would have made a portion of adjusted bonus, rental, and royalty revenues from federal oil and gas leasing and operations in the western Arctic coastal plain of Alaska available for federal sport fish restoration grants. S. 297 / S. 477 would have authorized charter boat operators and recreational fishermen to form associations to catch and market aquatic products, implement vessel capacity reduction programs, and undertake research. H.R. 5672 would have protected the use of traditional fishing equipment on federal lands and prevented certain restrictions on the implements and equipment used by fishing communities. H.R. 3622 would have amended the Internal Revenue Code of 1986 to allow a credit for the construction of ponds for recreational fishing and conservation of water-based wildlife habitat. H.Res. 1282 would have expressed the sense of the House of Representatives that the promotion of recreational fishing and boating should be a national priority. H.R. 2717 and S. 1205 would have exempted guides for hire and other operators of uninspected vessels on Lake Texoma from Coast Guard and other regulations. H.R. 3749 and S. 1770 sought to promote opportunities for recreational fishing, hunting, and shooting on federal public lands. On July 30, 2010, the House passed H.R. 3534 , amended to include Section 403(a) requiring that at least 1.5% of the Land and Water Conservation Fund each year be expended toward securing recreational public access to federal lands under the jurisdiction of the Secretary of the Interior for hunting, fishing, and other outdoor recreation. H.R. 1379 would have prohibited the commercial harvesting of Atlantic striped bass in coastal waters and the EEZ. H.R. 6092 would have amended the Atlantic Striped Bass Conservation Act to allow recreational fishing for Atlantic striped bass in the Block Island Sound transit zone. Section 2(5) of S. 3850 / H.R. 6284 would have exempted sport fishing equipment (including lead weights) from regulation by the Environmental Protection Agency under the Toxic Substances Control Act. Section 3 of S. 3826 would have required congressional review of any agency rulemaking that establishes, modifies, opens, closes, or conducts a regulatory program for a recreational activity related to fishing. P.L. 111-117 appropriated funds for international fisheries commissions at $53.976 million for FY2010. On July 14, 2010, the Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness held an oversight hearing on "Marine Wealth: Promoting Conservation and Advancing American Exports." Additional measures were introduced but were not enacted. Section 103(4) of H.R. 2410 would have authorized appropriations for International Fisheries Commissions at $12.608 million for FY2010 and such sums as may be necessary for FY2011; on June 4, 2009, the House Committee on Foreign Affairs reported this measure ( H.Rept. 111-136 ), amended to authorize the Administration's request of $43.576 million for international fisheries commissions for FY2010 and such sums as may be necessary for FY2011. On June 10, 2009, the House passed H.R. 2410 (amended). Section 103(4) of H.R. 2475 would have authorized appropriations for international fisheries commissions at $29.925 million for FY2010 and such sums as might be necessary for FY2011. S. 2870 would have amended various statutes implementing international fishery agreements to deter and combat illegal, unreported, and unregulated (IUU) fishing. On December 17, 2010, the Senate Committee on Commerce, Science, and Transportation reported S. 2870 ( S.Rept. 111-388 ). S. 2871 would have made technical corrections to the Western and Central Pacific Fisheries Convention Implementation Act and the Pacific Whiting Act of 2006; on September 20, 2010, the Senate Committee on Commerce, Science, and Transportation reported this measure ( S.Rept. 111-297 ). Section 110 of S. 2971 would have amended the Fishermen's Protective Act to extend the period for reimbursement of seized commercial fishing vessels through FY2013; on September 23, 2010, the Senate Committee on Foreign Relations reported (amended) this measure ( S.Rept. 111-301 ), including also authorization in Section 603(e) for appropriations for "International Fisheries Commissions" of $43.6 million for FY2011. Section 101(b)(3) of S. 3508 / H.R. 4959 would have directed that a comprehensive plan of action under an International Conservation Strategy consider increased surveillance and enforcement to address IUU fishing in 10 developing countries where fish stocks are severely depleted and regional fishing economies are threatened. On July 29, 2010, the Senate Committee on Appropriations reported S. 3676 , providing $51.5 million for international fisheries commissions for FY2011 ( S.Rept. 111-237 ). H.Res. 1608 would have condemned North Korea's detention of a South Korean fishing vessel. On September 22, 2010, the House Foreign Affairs Subcommittee on Asia, the Pacific, and the Global Environment held an oversight hearing on renegotiating the South Pacific tuna treaty. Under the Immigration and Nationality Act and for the employment of non-immigrants, Section 444 of S. 3932 would have transferred workers in fishing occupations to the H-2A agricultural worker program. P.L. 111-148 included provisions authorizing grants to commercial fishing industry organizations to provide information on qualified health benefit plans and identifying fishing as a high-risk profession affecting the cost of employer-sponsored health coverage. Additional bills were introduced but were not enacted. Section 2(a) of H.R. 2607 , Section 112(a) of S. 1240 , Section 232(a) of H.R. 3400 , Section 121(a) of H.R. 3713 , Section 502(a) of H.R. 3889 , Section 201(a) of H.R. 4038 , Section 132(a) of H.R. 4529 , and Section 501(a) of H.R. 5421 would have amended the Employee Retirement Income Security Act of 1974 (ERISA; P.L. 93-406 ; 29 U.S.C. §§ 1001, et seq.) to authorize fishing industry associations to provide health care plans for association members. Section 4(b) of P.L. 111-207 combined separate Coast Guard reports on fisheries enforcement plans and foreign fishing incursion into a single report. On March 2, 2010, the House Oversight and Government Reform Subcommittee on Domestic Policy held an oversight field hearing in Gloucester, MA, on problems with NOAA's fishery law enforcement. On March 3, 2010, the Senate Commerce, Science, and Transportation Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard held an oversight hearing on NOAA's fisheries enforcement programs and operations. On March 3, 2010, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held an oversight hearing on improving NOAA law enforcement programs and operations. Additional measures were introduced but were not enacted. H.R. 1080 would have amended various fishery statutes to strengthen enforcement mechanisms to stop illegal, unreported, and unregulated fishing; on March 19, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on this bill, and on July 24, 2009, the House Committee on Natural Resources reported this measure, amended ( H.Rept. 111-228 ). The House passed H.R. 1080 (amended) on September 22, 2009. S. 2870 would have amended various statutes implementing international fishery agreements to deter and combat illegal, unreported, and unregulated (IUU) fishing. On December 17, 2010, the Senate Committee on Commerce, Science, and Transportation reported S. 2870 ( S.Rept. 111-388 ). H.R. 5668 would have amended the MSFCMA to require sums received as fines, penalties, and forfeitures of property for violations of that act or other marine resource laws to be used to reduce the federal deficit and debt. Section 4 of H.R. 5770 would have required a Coast Guard assessment of the need for additional prevention and response capability, including fisheries enforcement, in the high-latitude regions. P.L. 111-215 extended the date on which the Environmental Protection Agency and applicable states might require permits for discharges from fishing vessels to December 18, 2013. P.L. 111-281 amended the American Fisheries Act to modify provisions for vessel rebuilding and replacement and vessel exemptions (Section 602) and amended various provisions of Title 46 relating to fishing vessel safety (Section 604). Several additional bills contained provisions relating to commercial fishing vessels: S. 1124 , Section 605 of S. 1194 , and Section 2 of H.R. 2652 would have amended Title 46, United States Code , to modify the vessel size limit eligibility criteria for a fishery endorsement. On December 3, 2009, the House Committee on Transportation and Infrastructure reported (amended) H.R. 2652 ( H.Rept. 111-351 ). On October 30, 2009, the Senate Committee on Commerce, Science, and Transportation reported (amended) S. 1194 ( S.Rept. 111-95 ). H.R. 3583 would have provided for a subsidy to sellers and buyers of fish directly delivered to American Samoa from vessels with U.S. fisheries endorsements; on November 4, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on this measure. S. 532 would have amended the Internal Revenue Code to provide a business credit against income for the purchase of fishing safety equipment. S. 3276 would have provided for an election to terminate certain Capital Construction funds without penalty. Section 2 of S. 3755 would have made certain claims for personal injury or wrongful death on fishing vessels subject to the limitation in the amended Limitation of Shipowners' Liability Act of 1851; Section 4(c) of this bill specified that amendments to the Death on the High Seas Act were inapplicable to fishing vessels. Section 3001(a)(4) of P.L. 111-227 extended the temporary suspension of duty on lug-bottom boots for use in fishing waders. On July 14, 2010, the Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness held an oversight hearing on "Marine Wealth: Promoting Conservation and Advancing American Exports." Additional measures contained trade provisions but were not enacted. Section 4(b)(1) of S. 730 would have eliminated the duty on lug-bottom boots for use in fishing waders. S. 2273 and Section 2001(a)(194) of H.R. 4380 would have extended the temporary suspension of duty on oysters (other than smoked), prepared or preserved; the House passed H.R. 4380 on July 21, 2010. H.R. 5804 and S. 3812 would have prohibited all trade in certain billfish, excluding swordfish. P.L. 111-307 ( S. 1421 ) amended the Lacey Act to add bighead carp to the list of injurious species that are prohibited from being imported or shipped interstate. On February 9, 2010, the House Transportation and Infrastructure Subcommittee on Water Resources and Environment held an oversight hearing on Asian carp and the Great Lakes. On February 25, 2010, the Senate Energy and Natural Resources Subcommittee on Water and Power held a hearing to examine the science and policy behind efforts to prevent the introduction of Asian carp into the Great Lakes. On July 14, 2010, the Senate Energy and Natural Resources Subcommittee on Water and Power held an oversight hearing to examine the federal response to the discovery of Asian carp in Lake Calumet, Illinois. A number of additional bills were introduced with provisions relating to invasive species issues. H.R. 51 would have directed the U.S. Fish and Wildlife Service to study the feasibility of various approaches to eradicating Asian carp from the Great Lakes watershed. H.R. 4472 and S. 2946 would have directed the Secretary of the Army to take action with respect to the Chicago Area Waterway System to prevent the migration of bighead and silver carp into Lake Michigan. H.R. 4604 would have directed the Secretary of the Army to prevent the spread of Asian carp in the Great Lakes and their tributaries. H.R. 5625 and S. 3553 would have required the Army Corps of Engineers to provide a study of how to separate the Great Lakes and Mississippi River Basins, to be completed in 18 months; to identify modes of shipping that would not compromise hydrological separation; and to detail the environmental benefits and costs of options for achieving hydrological separation. Section 3013 of H.R. 5892 would have amended the authorization for the Chicago Sanitary and Ship Canal dispersal barriers; on September 29, 2010, the House Committee on Transportation reported (amended) this measure ( H.Rept. 111-654 ). H.R. 4001 and S. 2724 would have amended the Lake Tahoe Restoration Act to direct that certain activities be undertaken to address aquatic invasive species concerns in the Lake Tahoe Basin; on February 24, 2010, the Senate Environment and Public Works Subcommittee on Water and Wildlife held a hearing on S. 2724 , and on June 21, 2010, the committee reported (amended) this bill ( S.Rept. 111-211 ). Title I of H.R. 500 / S. 237 would have amended the Nonindigenous Aquatic Nuisance Prevention and Control Act of 1990 to require vessels to have aquatic invasive species plans for ballast water management; the remainder of this title focuses on improving coordination among various national and international efforts to control invasive species and authorizes various research programs to address invasive species concerns. Section 7(a) of S. 3566 would have authorized the Maritime Administration to establish a Green Ships Program to identify, evaluate, demonstrate, or improve technologies for control of aquatic invasive species; the Senate Committee on Commerce, Science, and Transportation reported this bill (amended) on December 17, 2010. H.R. 669 would have directed the Secretary of the Interior to promulgate regulations that establish a process for assessing the risk of non-native species proposed for importation into the United States, including lists of approved and unapproved species; the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held hearings on this measure on April 23, 2009. Section 2(g) of H.R. 4715 , as amended in and passed by the House on April 15, 2010, would have amended the National Estuary Program to promote research on monitoring of pathways and ecosystems to track the introduction and establishment of nonnative species. On September 16, 2010, the Senate Committee on Environment and Public Works reported (amended) this measure ( S.Rept. 111-293 ). S. 3063 and H.R. 4782 would have directed the Secretary of the Interior to provide loans to certain organizations in certain (primarily western) states to address and prevent invasive species expansions. Section 103(b) of H.R. 3481 would have given priority to funding projects that monitor the distribution of or study means of reducing or eliminating quagga mussels in the Lower Colorado River. S. 3073 would have prioritized funding non-federal partners in a Great Lakes Restoration Initiative for invasive species prevention and mitigation and restoration of invasive species impacts. P.L. 111-348 amended the MSFCMA and the High Seas Driftnet Fishing Moratorium Protection Act to increase sanctions on nations that permit shark finning. H.Res. 1420 would have expressed the sense of the House urging parties to the Convention on International Trade in Endangered Species of Wild Fauna and Flora to adopt stronger protections for sharks at the 16 th meeting of the Conference of the Parties in 2013. P.L. 111-353 included provisions (1) directing the Secretary of Health and Human Services to update the Fish and Fisheries Products Hazards and Control Guidance to take into account advances in technology and (2) requiring a report by the Food and Drug Administration on the post-harvest processing of raw oysters. A number of other bills were introduced in the 111 th Congress to address various seafood safety and nutrition issues: S. 92 would have directed the Secretary of Health and Human Service to refuse entry of certain seafood imports and to specify actions to be taken on rejected shipments. Section 102 of H.R. 875 and H.R. 6552 would have consolidated food safety and inspection programs, including seafood inspection. H.R. 1370 and S. 3928 would have directed the Secretaries of Commerce and of Health and Human Services to strengthen programs to better ensure that seafood in interstate commerce is fit for human consumption. S. 1252 would have amended and reauthorized the Oceans and Human Health Act through FY2014; on September 20, 2010, the Senate Committee on Commerce, Science, and Transportation reported (amended) this measure ( S.Rept. 111-296 ). Section 4 of S. 2913 would have established a national monitoring program of mercury levels in fish and their habitat. S. 2934 would have amended the Federal Food, Drug, and Cosmetic Act to ensure the safety of imported seafood and authorizes cooperative inspection programs by individual states. Section 2(b)(5) of S. 3569 and Section 611(d)(2)(E) of S. 3663 would have required NOAA to review the effect of subsea hydrocarbons on seafood safety; in addition, Section 623 of S. 3663 and Section 204 of H.R. 6292 would have revised requirements and guidance for opening and closing fishing grounds following an oil spill. Section 2 of H.R. 6017 would have established a Gulf Coast Health Monitoring and Research Program, including a focus on the safety of Gulf Coast seafood. Several bills included provisions related to coral and coral reefs: H.R. 860 and S. 2859 would have amended and reauthorized the Coral Reef Conservation Act of 2000 through FY2014; the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 860 on February 25, 2009. On July 10, 2009, the House Committee on Natural Resources reported (amended) H.R. 860 ( H.Rept. 111-196 ). The House passed H.R. 860 (amended) on September 22, 2009. On November 17, 2010, the Senate Committee on Commerce, Science, and Transportation reported S. 2859 ( S.Rept. 111-349 ). On December 17, 2010, the Senate Committee on Commerce, Science, and Transportation reported S. 3597 (amended) with the Coral Reef Conservation Act reauthorization and amendments in Title IV. Title IX of S. 3663 would have amended the Coral Reef Conservation Act of 2000 to clarify prohibited activities and enforcement. H.Res. 989 would have expressed the sense of the House that the United States should adopt national policies and pursue international agreements to prevent ocean acidification, to study the impacts of ocean acidification, and to address the effects of ocean acidification on marine ecosystems and coastal economies. H.R. 52 / S. 345 would have amended the Tropical Forest Conservation Act of 1998 to provide debt relief to developing countries that protect coral reefs and associated coastal marine ecosystems; on July 16, 2009, the Senate Committee on Foreign Relations reported S. 345 ( S.Rept. 111-49 ). Section 19(b) of H.R. 1108 and Section 21(b) of H.R. 2120 would have amended the Outer Continental Shelf Lands Act to require a study of how the removal of offshore oil and gas platforms and other outer continental shelf facilities might affect existing coral populations. H.R. 4914 and S. 3528 would have promoted coastal jobs creation in activities that implement local strategies developed by state or federal agencies to conserve coral reef ecosystems. On July 27, 2010, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 4914 . On April 2, 2009, the House Foreign Affairs Subcommittee on Asia, the Pacific, and the Global Environment held an oversight hearing on the South Pacific Tuna Treaty. On September 22, 2010, the House Foreign Affairs Subcommittee on Asia, the Pacific, and the Global Environment held an oversight hearing on renegotiating the South Pacific Tuna Treaty. On November 9, 2009, the Senate agreed to S.Res. 346 , expressing the sense of the Senate regarding the U.S. position at the 21 st Regular Meeting of the International Commission on the Conservation of Atlantic Tunas relative to Atlantic bluefin tuna. Several bills contained provisions related to tuna and tuna fisheries: H.Res. 1180 would have expressed the sense of the House of Representatives regarding U.S. policy on wild animals at the Conference of the Parties of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), including support for the proposal to include bluefin tuna in CITES Appendix I. H.Res. 1420 would have expressed the sense of the House urging parties to CITES to adopt stronger protections for bluefin tuna at the 16 th meeting of the Conference of the Parties in 2013. H.R. 3583 would have provided for a subsidy to sellers and buyers of fish directly delivered to American Samoa from vessels with U.S. fisheries endorsements; on November 4, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on this measure. S. 2871 would have made technical corrections to the Western and Central Pacific Fisheries Convention Implementation Act; on September 20, 2010, the Senate Committee on Commerce, Science, and Transportation reported this measure ( S.Rept. 111-297 ). S. 2870 would have amended various statutes implementing international tuna agreements to deter and combat illegal, unreported, and unregulated (IUU) fishing; in addition, Title IV of this measure would have amended the Tuna Conventions Act of 1950 to implement the Antigua Convention. On December 17, 2010, the Senate Committee on Commerce, Science, and Transportation reported S. 2870 ( S.Rept. 111-388 ). H.R. 1309 would have redefined terms used in the Harmonized Tariff Schedule of the United States relating to tuna products to lower duties on imported tuna loins used in U.S. tuna canneries. Section 6 of S. 878 and Section 13 of H.R. 2093 (as reported) would have required the EPA Administrator to complete a study on the impact of algae blooms on coastal recreation waters; the Senate Committee on Environment and Public Works reported S. 878 (amended) on April 20, 2010 ( S.Rept. 111-170 ). The House Committee on Transportation reported (amended) H.R. 2093 on July 20, 2009 ( H.Rept. 111-214 ). On July 29, 2009, the House passed H.R. 2093 (amended). S. 952 and H.R. 3650 would have authorized a comprehensive national strategy to address harmful algal blooms and hypoxia; on February 4, 2010, the Senate Committee on Commerce, Science, and Transportation reported (amended) S. 952 ( S.Rept. 111-125 ), and on January 13, 2010, the House Committee on Science and Technology reported (amended) H.R. 3650 ( H.Rept. 111-396 , Part I). On March 12, 2010, the House passed H.R. 3650 (amended). S. 1252 would have amended and reauthorized the Oceans and Human Health Act through FY2014; on September 20, 2010, the Senate Committee on Commerce, Science, and Transportation reported (amended) this measure ( S.Rept. 111-296 ). On September 17, 2009, the House Science and Technology Subcommittee on Energy and Environment held a hearing on formulating an action plan to address harmful algal blooms and hypoxia. Section 2 of H.R. 1771 / S. 1224 would have required the Director of NOAA's Chesapeake Bay Office to establish a Chesapeake Bay coastal living resources management and habitat program to support coordinated management, protection, characterization, and restoration of priority habitats and living resources. The House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 1771 on July 8, 2009. The House Committee on Natural Resources reported H.R. 1771 (amended) on September 29, 2009 ( H.Rept. 111-271 ), and the House passed this measure (amended) on September 30, 2009. On February 23, 2010, the Senate Committee on Commerce, Science, and Transportation reported (amended) S. 1224 ( S.Rept. 111-126 ). S. 1816 included provisions (1) authorizing a study on the impacts of the commercial harvesting of menhaden on the water quality of the Chesapeake Bay and (2) prohibiting the introduction of Asian oysters into Chesapeake Bay; on November 9, 2009, the Senate Environment and Public Works Subcommittee on Water and Wildlife held a hearing on S. 1816 . On September 28, 2010, the Senate Committee on Environment and Public Works reported (amended) S. 1816 ( S.Rept. 111-333 ). Section 7(b)(2)(h) of H.R. 223 / S. 212 would have promoted cooperative research and education efforts with commercial fishermen operating within the Gulf of the Farallones National Marine Sanctuary and the Cordell Bank National Marine Sanctuary; on August 4, 2009, the Senate Committee on Commerce, Science, and Transportation reported (amended) S. 212 ( S.Rept. 111-64 ). H.R. 790 and S. 851 would have prohibited federal oil or natural gas leases in any marine national monument or national marine sanctuary or Georges Bank. H.R. 4493 would have enhanced visitor services, fish and wildlife research, and marine and coastal resource management related to the Marianas Trench Marine National Monument; on May 18, 2010, the House Committee on Natural Resources reported this bill, amended ( H.Rept. 111-484 ). H.R. 3511 would have authorized the Secretary of the Interior to establish and operate a visitor facility for the Marianas Trench Marine National Monument; this measure was reported (amended) by the House Committee on Natural Resources on May 18, 2010 ( H.Rept. 111-483 ). H.R. 115 would have amended the Internal Revenue Code to provide for tax-exempt qualified small issue bonds to finance fish processing facilities. S. 532 would have amended the Internal Revenue Code to provide a business credit against income for the purchase of fishing safety equipment. H.R. 3622 would have amended the Internal Revenue Code of 1986 to allow a credit for the construction of ponds for recreational fishing and conservation of water-based wildlife habitats. H.R. 509 would have reauthorized the Marine Turtle Conservation Act of 2004 through FY2014; the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on this bill on May 5, 2009. On July 10, 2009, the House Committee on Natural Resources reported this measure, amended ( H.Rept. 111-200 ). The House passed H.R. 509 (amended) on July 28, 2009. On December 3, 2009, the Senate Environment and Public Works Subcommittee on Water and Wildlife held a hearing on this measure. On April 26, 2010, the Senate Committee on Environment and Public Works reported H.R. 509 ( S.Rept. 111-173 ). H.R. 5155 would have directed the Secretary of Commerce to conduct an aerial assessment of sea turtle populations in U.S. waters. Section 131 of H.R. 759 and Section 201 of H.R. 2749 would have amended the Federal Food, Drug, and Cosmetic Act to require labeling as a color additive whenever carbon monoxide is used to treat meat, poultry, and seafood. On July 29, 2009, the House Committee on Energy and Commerce reported H.R. 2749 ( H.Rept. 111-234 ), amended to remove the section relating to carbon monoxide. On July 7, 2009, the Senate Committee on Appropriations reported S. 1406 , with report language encouraging the Food and Drug Administration to more aggressively combat fraud in parts of the seafood industry ( S.Rept. 111-39 ). Section 7 of H.R. 6434 would have established a Gulf of Mexico Seafood Marketing Program, with funding provided in Section 3(c)(3). As reported by the Senate Committee on Commerce, Science, and Transportation ( S.Rept. 111-95 ), Section 901 of S. 1194 would have required the NOAA Administrator to take certain actions relative to determining the homeport of the fisheries research vessel HENRY B BIGELOW . H.R. 5672 would have protected the use of traditional fishing equipment on federal lands and prevented certain restrictions on the implements and equipment used by fishing communities. Aquaculture is broadly defined as the farming or husbandry of fish, shellfish, and other aquatic animals and plants, usually in a controlled or selected environment. The diversity of aquaculture is typified by such activities as fish farming, usually applied to freshwater commercial aquaculture operations (e.g., catfish and trout farms); shellfish and seaweed culture; net-pen culture, used by the salmon industry, wherein fish remain captive throughout their lives in marine pens built from nets; and ocean ranching, used by the Pacific Coast salmon industry, whereby juvenile salmon are cultured, released to mature in the open ocean, and caught when they return as adults to spawn. Fish hatcheries can be either publicly or privately operated to raise fish for recreational and commercial stocking as well as to mitigate aquatic resource and habitat damage. The U.N. Food and Agriculture Organization (FAO) has characterized aquaculture as one of the world's fastest-growing food production activities. World aquaculture production more than doubled in 10 years, from about 10 million metric tons in 1984 to 25.5 million metric tons in 1994; by 2002, global aquaculture production had reached almost 40 million metric tons. By mid-2006, FAO estimated that 43% of all fish consumed by humans came from aquaculture. FAO has projected that aquaculture will surpass wild-harvested seafood as the source of more than half of global seafood consumption in 2008. In addition, FAO predicts that world aquaculture production could exceed 130 million metric tons by 2030. U.S. aquaculture, until recently and with a few exceptions, has been considered a minor industry. The U.S. Department of Agriculture's 2005 Census of Aquaculture reported that U.S. sales of aquaculture products had reached nearly $1.1 billion, with more than half this value produced in Alabama, Arkansas, Louisiana, and Mississippi. Despite considerable growth, the domestic aquaculture industry faces strong competition from imports of foreign aquacultural products, from the domestic poultry and livestock industries, and from wild harvests. With growth, however, aquaculture operations face increasing scrutiny for habitat destruction, pollution, and other concerns. The major statute affecting U.S. aquaculture is the National Aquaculture Act of 1980, as amended (16 U.S.C. §§ 2801 et seq.). The purpose of this act is to ensure coordination of various federal programs and policies affecting the aquaculture industry, and to promote and support aquaculture research and development. In October 2007, NOAA released a 10-year plan for its marine aquaculture program. Legislation to modify the regulatory environment and promote the development of U.S. offshore, open-ocean aquaculture was introduced in the 110 th and 111 th Congresses, but was never considered by either chamber. P.L. 111-5 contained language in (1) Section 103(d) providing as much as $50 million in total assistance to aquaculture producers for losses associated with high feed input costs during the 2008 calendar year; and (2) Section 1886 broadening the basis for determining import increases relating to trade adjustment assistance for fishing and aquaculture to include wild-caught fish and seafood in addition to farm-raised fish and seafood. P.L. 111-205 became law after Senate action deleted a provision that would have provided emergency disaster assistance to aquaculture producers for losses associated with high feed input costs during the 2009 calendar year. Section 1501 of P.L. 111-240 amended the Small Business Act to authorize certain disaster assistance to aquaculture enterprises that are small businesses. A number of additional measures were introduced but not enacted. S. 533 and H.R. 2548 would have amended the Coastal Zone Management Act to establish a grant program to ensure waterfront access for aquaculture operators and commercial fishermen; on October 20, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 2548 . Section 106 of S. 684 , Section 208 of S. 3597 , Section 208 of H.R. 6292 , and Section 627 of S. 3663 would have authorized the Coast Guard and NOAA to identify U.S. areas where special navigational measures are warranted to reduce the risk of oil spills and potential damage to natural resources, including aquaculture facilities; the Senate Committee on Commerce, Science, and Transportation reported S. 3597 (amended) on December 17, 2010. H.R. 1983 would have recodified Title 53 (Small Business) of the U.S. Code, including disaster assistance programs applicable to commercial fishermen and aquaculture operations. Section 205 of S. 2731 would have deleted aquaculture from the definition of "agricultural enterprises" for Small Business Administration disaster recovery funds. H.R. 4177 and S. 2810 contained language that would have directed the Secretary of Agriculture to provide assistance to any applicant that produces catfish. S. 3337 and Section 10 of S. 3763 would have provided technical assistance grants to certain aquaculture organizations for assisting individuals and businesses affected by the Deepwater Horizon oil spill in the Gulf of Mexico to file claims. P.L. 111-5 contained language including National Fish Hatcheries as eligible for $165 million in resource management funding as well as $115 million in construction funding for the U.S. Fish and Wildlife Service. A number of additional measures were introduced but not enacted. Section 8 of S. 313 / H.R. 1065 would have addressed the relationship between the Department of the Interior and the White Mountain Apache Tribe (WMAT) for the operation and maintenance of the Alchesay-Williams Creek National Fish Hatchery Complex and the WMAT Fishery Center; on January 21, 2010, the Senate Committee on Indian Affairs reported (amended) S. 313 , eliminating the hatchery provisions while authorizing the WMAT Settlement Fund for use in fish production, including hatcheries ( S.Rept. 111-119 ). On January 12, 2010, the House Committee on Natural Resources reported (amended) H.R. 1065 , eliminating the hatchery provisions while authorizing the WMAT Settlement Fund for use in fish production, including hatcheries ( H.Rept. 111-391 ); the House passed this amended measure on January 21, 2010. Section 201 of H.R. 4347 would have amended Title IV of the Indian Self-Determination and Education Assistance Act relating to funding agreements with the Quinault Indian Nation for the National Salmon Hatchery located on the Quinault Reservation. H.R. 6115 and S. 3781 would have directed the Secretary of the Interior to convey the McKinney Lake National Fish Hatchery to the state of North Carolina. P.L. 111-80 provided $3.9 million for regional aquaculture centers, $6.56 million for aquaculture pest and disease management (including $5.188 million for viral hemorrhagic septicemia), and $13.913 million in congressionally directed appropriations for aquaculture research and development (including $1.238 million for viral hemorrhagic septicemia and $465,000 for cormorant control) for FY2010. Additional measures were introduced but not enacted. S. 3606 , reported by the Senate Committee on Appropriations on July 15, 2010 ( S.Rept. 111-221 ), would have provided $3.928 million for regional aquaculture centers, $6.57 million for aquaculture pest and disease management, and $4.245 million in congressionally directed appropriations for aquaculture research and development (including $500,000 for viral hemorrhagic septicemia and $465,000 for cormorant control) for FY2011. As reported (amended) by the Senate Committee on Environment and Public Works on September 20, 2010 ( S.Rept. 111-298 ), Section 4 of S. 3119 would have authorized aquaculture of suspension-feeding shellfish or algae for a nutrient bioextraction pilot project in Long Island Sound. Section 124 of Title I, P.L. 111-88 authorized the Secretary of the Interior to extend Drake's Bay Oyster Company's Reservation of Use and Occupancy and associated special use permit within Drake's Estero at Point Reyes National Seashore. P.L. 111-353 required a report by the Food and Drug Administration on the post-harvest processing of raw oysters. Additional measures were introduced but not enacted. H.R. 3852 and S. 1816 included a provision that would have amended Section 117 of the Federal Water Pollution Control Act to prohibit the introduction of Asian oysters in Chesapeake Bay; on November 9, 2009, the Senate Environment and Public Works Subcommittee on Water and Wildlife held a hearing on S. 1816 . On September 28, 2010, the Senate Committee on Environment and Public Works reported (amended) S. 1816 ( S.Rept. 111-333 ). S. 2273 and Section 2001(a)(194) of H.R. 4380 proposed to extend the temporary suspension of duty on oysters (other than smoked), prepared or preserved. H.R. 4022 , S. 2735 , and S. 2752 would have prohibited additional requirements for the control of Vibrio vulnificus applicable to the post-harvest processing of oysters; in addition, S. 2752 would have required an education campaign to increase awareness of the risks associated with consuming raw oysters. Section 901(c) of P.L. 111-281 authorized the U.S. Coast Guard to issue waivers to permit nonqualified vessels to perform aquaculture support operations relating to treating or protecting aquaculture fish from disease, parasitic infestation, or other threats to their health when no suitable U.S. vessel is available. P.L. 111-307 amended the Lacey Act to add bighead carp to the list of injurious species that are prohibited from being imported or shipped interstate. P.L. 111-353 , included provisions (1) directing the Secretary of Health and Human Services to update the Fish and Fisheries Products Hazards and Control Guidance to take into account advances in technology and (2) requiring a report by the Food and Drug Administration on the post-harvest processing of raw oysters. Additional measures were introduced but not enacted. H.R. 1370 and S. 3928 would have directed the Secretaries of Commerce and of Health and Human Services to strengthen programs to better ensure that fish in interstate commerce is fit for human consumption. On July 7, 2009, the Senate Committee on Appropriations reported S. 1406 , with report language strongly encouraging the Food and Drug Administration to develop a program for increasing the inspection of imported shrimp for banned antibiotics ( S.Rept. 111-39 ). Section 2 of H.R. 1771 / S. 1224 would have required the Director of NOAA's Chesapeake Bay Office to establish a Chesapeake Bay coastal living resources management and habitat program to support various activities, including native oyster restoration, fish and shellfish aquaculture, and submerged aquatic vegetation propagation. The House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 1771 on July 8, 2009. The House Committee on Natural Resources reported H.R. 1771 (amended) on September 29, 2009 ( H.Rept. 111-271 ), and the House passed this measure (amended) on September 30, 2009. On February 23, 2010, the Senate Committee on Commerce, Science, and Transportation reported (amended) S. 1224 ( S.Rept. 111-126 ). H.R. 3852 and S. 1816 included a provision that would have amended Section 117 of the Federal Water Pollution Control Act to prohibit the introduction of Asian oysters in Chesapeake Bay. On November 9, 2009, the Senate Environment and Public Works Subcommittee on Water and Wildlife held a hearing on S. 1816 . On September 28, 2010, the Senate Committee on Environment and Public Works reported (amended) S. 1816 ( S.Rept. 111-333 ). On September 9, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held an oversight hearing on offshore aquaculture. Section 704 of H.R. 3534 would have prohibited regional fishery management councils from implementing offshore aquaculture through fishery management plans and their amendments and invalidates any such action already taken; on September 16-17, 2009, the House Committee on Natural Resources held hearings on this measure. On July 28, 2010, the House Committee on Natural Resources reported (amended) H.R. 3534 ( H.Rept. 111-575 ); the House passed this measure on July 30, 2010, after further amendment to remove the aquaculture provision. H.R. 4363 would have established a regulatory system and research program for sustainable offshore aquaculture in the U.S. EEZ. S. 3417 would have prohibited offshore aquaculture until three years after the submission of a report on its impacts. S. 1250 , Section 1306 of H.R. 2300 / H.R. 2828 , Section 2 of H.R. 3460 , H.R. 3985 , H.R. 4168 , and H.R. 5142 would have amended the Internal Revenue Code to provide benefits for production of algae-based fuel; on September 28, 2010, the House passed H.R. 4168 (amended). Section 2 of H.R. 3460 , Section 2 of S. 1250 , Section 3 of H.R. 5142 , Section 503 of S. 3601 and H.R. 6564 , Section 502 of S. 3738 , and Section 601 of S. 3935 would have included algae-based biofuel in the definition of cellulosic biofuel, thus extending tax credits to algae-based biofuel production. Section 131 of H.R. 759 would have amended the Federal Food, Drug, and Cosmetic Act to require labeling as a color additive whenever carbon monoxide is used to treat meat, poultry, and seafood. H.R. 6264 , S. 3969 , and Section 301 of H.R. 6325 would have amended the Federal Food, Drug, and Cosmetic Act to require labeling of genetically engineered fish. H.R. 6265 and S. 3971 would have amended the Federal Food, Drug, and Cosmetic Act to prevent the approval of genetically engineered fish. Section 4 of H.R. 856 would have authorized the Secretary of the Interior to enter into a cooperative agreement with the state of California to establish a fish hatchery program for Delta smelt in the Sacramento-San Joaquin Delta. In 1972, Congress enacted the Marine Mammal Protection Act (MMPA; 16 U.S.C. §§ 1361 et seq.), due in part to the high level of dolphin mortality (estimated at more than 400,000 animals per year) in the eastern tropical Pacific tuna purse-seine fishery. While some critics assert that the MMPA is scientifically irrational because it identifies one group of organisms for special protection unrelated to their abundance or ecological role, supporters note that the MMPA has accomplished much by way of promoting research and increased understanding of marine life as well as encouraging attention to incidental bycatch mortalities of marine life by the commercial fishing and other maritime industries. The MMPA established a moratorium on the "taking" of marine mammals in U.S. waters and by U.S. nationals on the high seas. It also established a moratorium on importing marine mammals and marine mammal products into the United States. The MMPA protected marine mammals from "clubbing, mutilation, poisoning, capture in nets, and other human actions that lead to extinction." It also expressly authorized the Secretary of Commerce and the Secretary of the Interior to issue permits for the "taking" of marine mammals for certain purposes, such as scientific research and public display. Under the MMPA, the Secretary of Commerce, acting through NMFS, is responsible for the conservation and management of whales, dolphins, and porpoises (cetaceans), and seals and sea lions (pinnipeds). The Secretary of the Interior, acting through the Fish and Wildlife Service (FWS), is responsible for walruses, sea and marine otters, polar bears, manatees, and dugongs. This division of authority derives from agency responsibilities as they existed when the MMPA was enacted. Title II of the MMPA established an independent Marine Mammal Commission (MMC) and its Committee of Scientific Advisors on Marine Mammals to oversee and recommend actions necessary to meet the requirements of the MMPA. Prior to passage of the MMPA, states were responsible for marine mammal management on lands and in waters under their jurisdiction. The MMPA shifted marine mammal management authority to the federal government. It provides, however, that management authority, on a species-by-species basis, could be returned to states that adopt conservation and management programs consistent with the purposes and policies of the MMPA. It also provides that the moratorium on taking can be waived for specific purposes, if the taking will not disadvantage the affected species or population. Permits may be issued to take or import any marine mammal species, including depleted species, for scientific research or to enhance the survival or recovery of the species or stock. The MMPA allows U.S. citizens to apply for and obtain authorization for taking small numbers of mammals incidental to activities other than commercial fishing (e.g., offshore oil and gas exploration and development) if the taking would have only a negligible impact on any marine mammal species or stock, provided that monitoring requirements and other conditions are met. The MMPA moratorium on taking does not apply to any Native American (Indian, Aleut, or Eskimo) who resides in Alaska near the coast of the North Pacific (including the Bering Sea) or Arctic Ocean (including the Chukchi and Beaufort Seas), if such taking is for subsistence or for creating and selling authentic Native articles of handicrafts and clothing, and is not done wastefully. The MMPA also authorizes the taking of marine mammals incidental to commercial fishing operations. In 1988, most U.S. commercial fish harvesters were exempted from otherwise applicable rulemaking and permit requirements for a five-year period, pending development of an improved system to govern the incidental taking of marine mammals in the course of commercial fishing operations. This exemption expired at the end of FY1993, and was extended several times until new provisions were enacted in 1994 by P.L. 103-238 , which reauthorized the MMPA through FY1999. The eastern tropical Pacific tuna fishery was excluded from the incidental take regimes enacted in 1988 and 1994. Instead, the taking of marine mammals incidental to that fishery is governed by separate provisions of the MMPA, and was substantially amended in 1997 by P.L. 105-42 , the International Dolphin Conservation Program Act. Section 319 of P.L. 108-136 amended the MMPA to provide a broad exemption for "national defense" activities. This section also amended the definition of "harassment" of marine mammals, as it applies to military readiness activities, to require greater scientific evidence of harm, and the consideration of impacts on military readiness in the issuance of permits for incidental takings. The Navy's use of mid-frequency sonar and its possible effects on marine mammals has been the focus of much controversy and litigation. The MMPA was reauthorized by P.L. 103-238 , the Marine Mammal Protection Act Amendments of 1994; the authorization for appropriations expired on September 30, 1999. The 1994 amendments indefinitely authorized the taking of marine mammals incidental to commercial fishing operations and provided for assessing marine mammal stocks in U.S. waters, for developing and implementing take-reduction plans for stocks that have been reduced or are being maintained below their optimum sustainable population levels due to interactions with commercial fisheries, and for studying pinniped-fishery interactions. A December 2008 study by the Government Accountability Office (GAO) found that limitations in information available make it difficult for NMFS to accurately determine which marine mammal stocks meet the statutory requirements for establishing take reduction teams. GAO found that NMFS did not have a human-caused mortality estimate or a maximum removal level for 39 of 113 marine mammal stocks, making it impossible to determine their strategic status in accordance with MMPA requirements. For the remaining 74 stocks, NMFS data have significant limitations that call into questions their accuracy. NMFS contends that funding constraints limit their ability to gather sufficient data. In addition, NMFS has not established take reduction teams for 14 marine mammal stocks for which NMFS data show them to be strategic and interacting significantly with commercial fisheries. In 111 th Congress on April 27, 2010, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held an oversight hearing on marine mammals in captivity and what constitutes meaningful public education. No bills were introduced in the 111 th Congress to reauthorize the MMPA. In the 111 th Congress, a number of bills were introduced proposing to amend the MMPA: H.R. 1054 and S. 1395 would have amended the MMPA to allow imports of polar bear trophies taken in sport hunts in Canada before the date the polar bear was listed as a threatened species under the Endangered Species Act; on September 22, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 1054 . H.R. 1055 would have amended the MMPA to allow imports of polar bear trophies taken in sport hunts in Canada. Section 4 of H.R. 5863 would have prohibited the approval of oil and gas exploration and/or development/production plans unless the Secretary certifies MMPA compliance; Section 6 of this measure would have required the Secretary to consider cumulative effects on marine mammal stocks and their subsistence use. Section 101 of H.R. 5899 would have declared that the draft OCS leasing program for 2010-2015 fully complies with the MMPA. H.R. 4914 and S. 3528 would have promoted coastal jobs creation in activities including cooperative research to collect data to improve, supplement, or enhance marine mammal stock assessments. On July 27, 2010, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 4914 . H.R. 844 and S. 859 would have reauthorized and amended MMPA provisions relating to the John H. Prescott Marine Mammal Rescue Assistance Grant Program; the House passed H.R. 844 on March 2, 2009, and the Senate Committee on Commerce, Science, and Transportation reported S. 859 on August 6, 2009 ( S.Rept. 111-70 ). H.R. 843 would have amended the MMPA to repeal the long-term goal for reducing the incidental mortality and serious injury of marine mammals to zero in commercial fishing operations, and to modify the goal of take reduction plans for reducing such takings. Section 30 of H.R. 1108 would have directed the Secretary of the Interior to establish regional OCS Joint Permitting Offices, with expertise in MMPA consultations and preparation of documents. H.R. 6394 would have amended the MMPA to allow transport, purchase, sale, and export of pelts of Southcentral and Southeast Alaska northern sea otters that are taken for subsistence. H.R. 2029 would have authorized the Marine Mammal Commission to establish a national research program to fund basic and applied research on marine mammals. H.R. 2455 and S. 3116 would have amended the Whale Conservation and Protection Study Act to promote international whale conservation, protection, and research. On May 6, 2010, the House Foreign Affairs Subcommittee on International Organizations, Human Rights, and Oversight and Subcommittee on Asia, the Pacific, and the Global Environment held a joint hearing on H.R. 2455 . H.R. 2955 would have amended the Whaling Convention Act of 1949 to require that the United States Commissioner to the International Whaling Commission be a federal employee. H.R. 4137 would have authorized the Secretary of the Interior to provide preservation and interpretation assistance to the New Bedford Whaling National Historical Park in Massachusetts. H.Res. 1390 would have expressed the sense of the House that the United States should use its position of global leadership to strengthen whale conservation efforts and to ensure that commercial, scientific, and other lethal whaling does not occur for any purpose other than aboriginal subsistence. S. 1252 would have amended and reauthorized the Oceans and Human Health Act through FY2014; on September 20, 2010, the Senate Committee on Commerce, Science, and Transportation reported (amended) this measure ( S.Rept. 111-296 ). S. 3584 and H.R. 6292 would have directed NOAA to research oil spill prevention and response in the Arctic waters, including assessment of impacts on Arctic marine mammals. In addition, H.R. 6292 , along with S. 3597 and Title VI of S. 3663 , sought to improve the ability of the National Oceanic and Atmospheric Administration, the Coast Guard, and coastal states to sustain healthy ocean and coastal ecosystems relative to oil spills; the Senate Committee on Commerce, Science, and Transportation reported S. 3597 (amended) on December 17, 2010. Section 225 of H.R. 3534 , as passed by the House on July 30, 2010, and Section 6 of H.R. 5863 would have amended the Outer Continental Shelf Lands Act to require an assessment of the cumulative impacts of OCS oil and gas exploration and development on marine mammal stocks and subsistence use. H.R. 556 and S. 1748 would have established a research program for the recovery of the southern sea otter; the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on H.R. 556 on May 5, 2009. The House Committee on Natural Resources reported H.R. 556 (amended) on June 23, 2009 ( H.Rept. 111-175 ), and the House passed this measure (amended) on July 28, 2009. On December 10, 2010, the Senate Committee on Commerce, Science, and Transportation reported (amended) S. 1748 ( S.Rept. 111-362 ). H.R. 6394 would have amended the MMPA to allow transport, purchase, sale, and export of pelts of Southcentral and Southeast Alaska northern sea otters that are taken for subsistence purposes. H.R. 2192 ; Title IV, Subtitle E, Part 1, Subpart C, of H.R. 2454 / H.R. 2998 ; Division A, Title III, Subpart C, of S. 1733 ; and S. 1933 would have authorized funding for efforts to strengthen and restore habitat to improve the ability of wildlife to adapt successfully to climate change. The House Committee on Energy and Commerce held hearings on H.R. 2454 on May 18-21, 2009, and reported this measure (amended) on June 5, 2009 ( H.Rept. 111-137 , Part I). On June 26, 2009, the House passed H.R. 2454 (amended). The Senate Committee on Environment and Public Works held a hearing on S. 1733 on October 27-29, 2009, and reported this bill (amended) on February 2, 2010 ( S.Rept. 111-121 ). H.R. 1080 would have amended the Dolphin Protection Consumer Information Act to strengthen enforcement mechanisms to stop illegal, unreported, and unregulated fishing; on March 19, 2009, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held a hearing on this bill, and on July 24, 2009, the House Committee on Natural Resources reported this measure, amended ( H.Rept. 111-228 ). The House passed H.R. 1080 (amended) on September 22, 2009. H.R. 5379 would have delisted the polar bear as a threatened species under the Endangered Species Act. H.Res. 1420 would have expressed the sense of the House urging parties to the Convention on International Trade in Endangered Species of Wild Fauna and Flora to adopt stronger protections for the polar bear at the 16 th meeting of the Conference of the Parties in 2013. S.Res. 84 and H.Res. 1314 urged (1) Canada to halt its commercial seal hunt and (2) other countries to prohibit trade in seal products; on May 7, 2009, the Senate agreed to S.Res. 84 after it had been reported by the Senate Committee on Foreign Relations. H.R. 6276 would have authorized the Secretary of the Interior to identify and declare wildlife disease emergencies and to coordinate rapid response, with marine mammals identified for priority attention. H.R. 672 would have restricted the use of military and national security exemptions to MMPA restrictions on marine mammal taking. On February 1, 2010, the Obama Administration released its FY2011 budget request, including about $973 million for NMFS. (See Table 1 .) The FY2011 request for NMFS funding within NOAA's Operations, Research, and Facilities (OR&F) Account was $3.238 million (+0.4%) more than funding enacted for FY2010. Total NMFS funding was proposed to decrease by $11.412 million (-1.2%) from that enacted for FY2010, primarily due to a proposed reduction of $15 million for the Pacific Coastal Salmon Recovery Fund. On February 24, 2010, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held an oversight hearing on NOAA's FY2011 budget request. On March 3, 2010, the Senate Commerce, Science, and Transportation Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard held an oversight hearing on NOAA's FY2011 budget request. On July 22, 2010, the Senate Committee on Appropriations reported S. 3636 , recommending about $909 million for NMFS within NOAA's OR&F Account for FY2011 ( S.Rept. 111-229 ); the Senate Committee recommendation is $4.49 million (+0.5%) more than the FY2010 appropriation and $1.252 million (+0.1%) more than the FY2011 Administration request. The Senate Committee recommended that total NMFS funding be increased by $4.84 million (+0.5%) from that enacted for FY2010. As FY2011 began, a number of enactments provided continued funding at FY2010 levels, including P.L. 111-242 (through December 3, 2010), P.L. 111-290 (through December 18, 2010), and P.L. 111-322 (through March 4, 2011). On June 12, 2009, the House Committee on Appropriations reported H.R. 2847 , recommending FY2010 appropriations of almost $916 million for NMFS ( H.Rept. 111-149 ). The House recommendation was about 4.2% greater than the FY2009 enacted level and about 0.5% larger than the FY2010 Administration request. The House passed this measure on June 18, 2009. On June 25, 2009, the Senate Committee on Appropriations reported (amended) H.R. 2847 , recommending FY2010 appropriations of more than $952 million for NMFS ( S.Rept. 111-34 ). The Senate recommendation was about 8.4% greater than the FY2009 enacted level, about 4.5% more than the FY2010 Administration request, and about 4.0% larger than the House FY2010 recommendation. The Senate passed H.R. 2847 (amended) on November 5, 2009. A conference report on H.R. 3288 (an omnibus measure including the material formerly in H.R. 2847 ) was filed on December 8, 2009 ( H.Rept. 111-366 ), including more than $984 million for NMFS and related programs. President Obama signed P.L. 111-117 into law on December 16, 2009. P.L. 111-212 (emergency supplemental appropriations; H.R. 4899 ) provided (1) $5 million for expenses related to commercial fishery failures as determined by the Secretary of Commerce in January 2010; (2) $13 million for responding to economic impacts on fishermen and fishery-dependent businesses; (3) $7 million for scientific investigations and sampling as a result of the incidents related to the discharge of oil and the use of oil dispersants in 2010 after the explosion and sinking of the mobile offshore drilling unit Deepwater Horizon; (4) $15 million for fisheries disaster relief under Section 312 of the MSFCMA related to a fishery resource disaster in the Gulf of Mexico that resulted from the Deepwater Horizon oil discharge; (5) $10 million to conduct an expanded stock assessment of the fisheries of the Gulf of Mexico; and (6) $1 million for the National Academy of Sciences to study of the long-term ecosystem service impacts of the Deepwater Horizon oil discharge. The FWS budget account for "fisheries and aquatic resource conservation" includes funding for the National Fish Hatchery operations, aquatic invasive species programs, and marine mammal programs. These programs employ about 800 individuals, located at 70 National Fish Hatcheries, 65 Fish and Wildlife Conservation Offices, one historic National Fish Hatchery, nine Fish Health Centers, and seven Fish Technology Centers. On February 1, 2010, the Obama Administration released its detailed budget request for FY2011, including about $142.5 million for FWS fisheries and aquatic resource conservation programs, which is about $5.7 million (-3.9%) less than was enacted for FY2010. Most of the reductions in funding occur in the line items for National Fish Hatchery operations and aquatic invasive species. Table 2 summarizes recent fisheries and aquatic resource conservation funding for FWS. On March 4, 2010, the House Natural Resources Subcommittee on Insular Affairs, Oceans, and Wildlife held an oversight hearing on the FY2011 FWS budget. As FY2011 began, a number of enactments provided continued funding at FY2010 levels, including P.L. 111-242 (through December 3, 2010), P.L. 111-290 (through December 18, 2010), and P.L. 111-322 (through March 4, 2011).

Fish and marine mammals are important resources in open ocean and nearshore coastal areas; many federal laws and regulations guide their management as well as the management of their habitat. Commercial and sport fishing are jointly managed by the federal government and individual states. States generally have jurisdiction within 3 miles of the coast. Beyond state jurisdiction and out to 200 miles, the federal government manages fisheries under the Magnuson-Stevens Fishery Conservation and Management Act (MSFCMA) through eight regional fishery management councils. Beyond 200 miles, the United States participates in international agreements relating to specific areas or species. The 111th Congress enacted numerous measures, including P.L. 111-5, broadening the basis for determining import increases relating to trade adjustment assistance for fishing to include wild-caught fish and seafood in addition to farm-raised fish and seafood; P.L. 111-11 authorizing implementation of the San Joaquin River Restoration Settlement providing for the reintroduction of Chinook salmon; P.L. 111-215, extending the date on which the Environmental Protection Agency and applicable states might require permits for discharges from fishing vessels to December 18, 2013; P.L. 111-281, amending the American Fisheries Act to modify provisions for vessel rebuilding and replacement as well as vessel and fishery cooperative exemptions; P.L. 111-348, allowing a bilateral United States-Canada Understanding to be considered an international agreement to allow federal fisheries managers to extend stock rebuilding deadlines for certain New England fisheries; and P.L. 111-353, directing the Food and Drug Administration to update the Fish and Fisheries Products Hazards and Control Guidance to take into account advances in technology. Aquaculture—the farming of fish, shellfish, and other aquatic animals and plants in a controlled environment—is expanding rapidly abroad, with more modest growth in the United States. In the United States, important species cultured include catfish, salmon, shellfish, and trout. The 111th Congress enacted several measures, including P.L. 111-5, providing as much as $50 million in total assistance to aquaculture producers for losses associated with high feed input costs during the 2008 calendar year; P.L. 111-240, amending the Small Business Act to authorize certain disaster assistance to aquaculture enterprises that are small businesses; P.L. 111-307, amending the Lacey Act to add bighead carp to the list of injurious species that are prohibited from being imported or shipped interstate; and P.L. 111-353, requiring a report by the Food and Drug Administration on the post-harvest processing of raw oysters. Marine mammals are protected under the Marine Mammal Protection Act (MMPA). With few exceptions, the MMPA prohibits harm or harassment ("take") of marine mammals, unless restrictive permits are obtained. It also addresses specific situations of concern, such as dolphin mortality, primarily associated with the eastern tropical Pacific tuna fishery. Other than annual appropriations, the 111th Congress did not enact any legislation related to marine mammals.

The federal government owns significant amounts of land and resources. These assets are exempt from state and local taxation. Congress has established a plethora of payments as compensation for this tax-exempt status. Some payment programs are based on the number of Indian children or children of federal employees, some on federal receipts, and some on federal acreage. In addition, some of the payments are permanently authorized and have mandatory spending authority, while others require periodic reauthorization and/or annual appropriations. The mandatory spending authority for the Secure Rural Schools and Community Self-Determination Act (SRS Act) program expired at the end of FY2011, and that for the Payments in Lieu of Taxes (PILT) program will expire at the end of FY2012. As Congress debates reauthorization of the SRS Act, the mandatory spending authority of the PILT program, and other payment programs, it might consider the broader questions of what is fair and consistent compensation to state and local governments for the tax-exempt status of federal lands. The U.S. Constitution generally prohibits state and local governments from imposing any tax on the federal government, absent Congress's clear consent. This prohibition is rooted in the Supremacy Clause, which states that the Constitution and federal laws are "the supreme Law of the Land." While the clause does not expressly declare that the federal government is immune from state and local taxation, the U.S. Supreme Court has long recognized that it implicitly provides for such protection. As the Court explained in one of its earliest decisions, "the power to tax involves the power to destroy," and therefore state taxation of the federal government is inconsistent with the theory of federal supremacy required by the clause . This immunity is implicated when the tax's legal incidence (who must pay) falls on the U.S. government. While some argue that the federal government cannot and/or should not own land, the federal government does, in fact, own about 640 million acres of land in the United States, about 28% of all land in the country. If these lands were privately owned, the states and local governments would receive tax payments of various sorts from the lands and the economic activity that is generated from the lands—property taxes, sales taxes, income taxes, and more. The question is: does the federal government have a responsibility to compensate state and local governments for the tax-exempt status of its lands and resources? This report describes existing state and local taxation, presents basic information on issues of fairness and consistency for possible federal compensation, and summarizes existing federal payment programs. State and local governments provide a wide variety of services—education, social services, public safety, transportation facilities, utilities, and much more. In 2008, total state and local government expenditures exceeded $2.8 trillion, divided nearly equally between state and local expenditures. The various levels of government emphasize different services. State governments spent the most on public welfare (20.4%), higher education (10.8%), and highways (5.2%). In contrast, local governments emphasized elementary and secondary education (35.0%), utilities (electricity, water, sewerage, and solid waste; 10.3%), and public safety (police, fire, and correctional facilities; 9.0%). State and local governments fund these services in many ways. The federal government provides significant funding—$481 billion (nearly 20%) in 2008. Other funding is from various fees and other charges, such as college tuition, utility revenues, and more. Half of total state and local government funding (50.01% in 2008) comes from taxes—property taxes, sales taxes, income taxes, and other taxes. In 2008, property taxes provided 72.3% of local government tax revenues. In contrast, individual income taxes provided 35.6% of state tax revenues, while general sales taxes provided 30.8% of state tax revenues. For a discussion of the various types of state and local taxes, see Appendix A . State and local taxation patterns vary widely across the country, as shown in Table 1 . Property taxes are the most important in aggregate, but vary widely, ranging from 11% of state and local taxes collected in Alaska to more than 61% of state and local taxes collected in New Hampshire. General sales taxes and income taxes each provided nearly 23% of state and local taxes collected in 2008, but their importance in each state differs substantially. Four states (Delaware, Montana, New Hampshire, and Oregon) have no general sales taxes, while 48% of state and local taxes in Washington were from general sales taxes. Similarly, seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) have no income taxes, while more than 40% of state and local taxes collected in Maryland are from income taxes. Other taxes, including excise and severance taxes, also vary widely, accounting for less than 20% of taxes collected in many states, but nearly 87% of taxes collected in Alaska. State and local tax rates also vary widely across the country, as shown in Table 2 . Property taxes are the most important for local governments, but rates vary widely, ranging from 0.40% of assessed value in Hawaii to 2.57% in Texas. Similarly, state and local sales taxes vary substantially, with four states (Delaware, Montana, New Hampshire, and Oregon) having no general sales taxes, and Tennessee's rate the highest at 9.43%; in most states, the average general sales tax rate is between 6% and 9%. State income tax rates also vary, with seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) having no income taxes, and the highest marginal income tax rate at 11% in Hawaii and Oregon. Many have discussed whether the federal government should compensate state and local governments for the tax-exempt status of federal lands, and if so, how. Two primary approaches have been proposed: (1) tax equivalency, and (2) cost basis. Private lands owned by some nonprofit organizations are also exempt from state and local taxation, raising questions about the need and legitimacy of federal compensation for the tax-exempt status of federal lands. Two additional issues affecting federal payments also are discussed in this section: consistency in payments, and the lands for which payments might be made. Many have suggested that federal payments should approximate what private landowners would have paid in taxes. Most of the suggestions focus exclusively on property taxation. In 1979, the U.S. General Accounting Office (GAO, now the Government Accountability Office) reviewed the existing federal land payment programs and concluded that the then-existing payments were inconsistent and inequitable, and provided payments significantly greater than equivalent tax payments. GAO then recommended tax equivalency to replace the existing payment programs. Another study was conducted in 1999 by U.S. Forest Service researchers at the request of the Department of the Interior. This study reported that federal payments were significantly less than equivalent property taxes overall, although the payments equaled property taxes in 62% of the counties examined. In 2010, an independent research group offered tax equivalency as an option for replacing expiring federal payment programs; it found that total property tax-equivalent payments would increase total payments, but that two-thirds of the counties would actually receive lower payments. Under a complete tax equivalency system, federal payments would replace the state and local taxes that a private landowner would have made. This would best reflect the theoretical economic opportunity costs to state and local governments of federal, as opposed to private, ownership of lands. However, there are four major, interrelated difficulties or limitations to providing federal tax-equivalent payments to state and local governments. One difficulty in determining tax equivalency is the multiplicity and variability in taxes among jurisdictions. Property taxes seem most relevant for federal lands, since income and sales are not particularly relevant to federal government operations, and tax equivalency recommendations have typically focused on property taxes. However, as shown in Table 1 and Table 2 , property tax rates and collections vary greatly, with tax rates ranging from 0.4% (HI) to 2.57% (TX) and tax collections ranging from 11.0% of total taxation (AK) to 61.6% of total taxation (NH). Furthermore, the method of valuing property for tax purposes varies. The three most common valuation approaches are replacement cost, sales comparison, and income, and some lands are taxed under current use (e.g., agricultural lands), while others are taxed at their current market value (e.g., residential property), and still others are taxed at their "highest and best" potential use (e.g., development properties). Thus, determining property tax equivalency is difficult, and calculating complete tax equivalency is substantially more complicated. A related difficulty in determining tax equivalency is called the "fiscal blood pressure." This idea captures two variable aspects of taxation: tax capacity and tax tolerance. One aspect is the variability among the citizens of different states and localities in their tolerance of higher taxes to provide for more public goods and services. Citizen demands for public goods and services vary among the states, and in some places, citizens are willing to bear higher taxation to provide those goods and services. In addition, the types of taxes citizens are willing to bear vary, depending on perceptions of fairness. The second aspect of fiscal blood pressure is that the different states and localities vary in their capacity to collect taxes that are based on the personal income of their citizens and in their ability to "export" taxes to other states through special situations (e.g., significant oil production or other conditions that allow for special uses, such as desirable tourist destinations or certain agricultural products). States and localities where incomes are low or without "exportable" taxes have less capacity to impose and collect taxes. This second aspect of fiscal blood pressure raises a question for tax equivalency: Is it "fair" that states with less tax capacity (lower incomes) be compensated at lower levels—comparable to their lower capacity—than "richer" states with greater tax capacity? Another related difficulty is estimating what state and local tax collections would be if the federal lands were privately owned. This is especially difficult for income, general sales, and excise taxes, since private landowner sales and income from the lands would be highly uncertain. Even for property and severance taxes, this approach is problematic, because the federal lands often do not reasonably approximate private lands. Some federal lands were reserved from transfer to the private sector because they are unique and irreplaceable; the potential private value of Yellowstone National Park, for example, would be difficult to calculate. Many other federal lands are the lands left over after private investors or settlers chose other lands. For example, the 1897 law governing use of lands reserved for the national forests directed that the lands "found better adapted for mining or for agricultural purposes may be" available for homesteading and other disposal to private landowners. Similarly, most eastern national forests were established on cut-over forest land that was abandoned because of private landowner tax delinquency. In addition, management of the federal lands often emphasizes ecological services that are not traded in markets and that private landowners generally cannot sell or otherwise profit from. Thus, it is not clear whether private land values or resource disposals would appropriately approximate taxable values of federal lands. Finally, a limitation to using property tax equivalency is that assessing federal lands would be a major, costly undertaking. The federal government owns about 640 million acres of land, about 28% of all land in the United States. While in some areas, federal land assessments would be a modest increase in local government tax assessment costs, in other areas the cost would likely be substantial: in California, Oregon, and Wyoming, the total area being assessed would double, while nearly tripling in Alaska, Idaho, and Utah, and quintupling in Nevada. In addition, local tax assessors would have an incentive to produce relatively high values for federal lands, to increase local payments at the expense of federal taxpayers. Alternatively, federal tax assessors would have an incentive to estimate relatively low values for federal lands; GAO has issued numerous reports over the past decade on the undervaluation of federal lands and properties for land acquisition and exchanges, mineral royalties, and fees for special use permits (e.g., ski areas telecommunication sites). Some argue that federal payments to state and local governments should be based on the out-of-pocket costs imposed on or avoided by state and local governments due to the presence of federal lands. For example, federal employee housing on agency lands may require local public utility services (power, water, solid waste disposal, wastewater treatment) and employees may have children in public schools. Some costs, such as utility operating costs, might be captured through user fees or charges, rather than through local taxation. Alternatively, federal lands may allow local governments to avoid the investment costs of providing roads, utilities, and educational services to distant parts of the county, because there are no private landowners who must be served. The 1999 Forest Service research study discussed earlier found that local government officials noted higher costs for search and rescue, law enforcement, and road maintenance associated with federal lands, but also benefits from the use of federal lands, fire protection, and road construction, as well as federal payments to the county. The study also found that local officials assessed that, with some exceptions, the additional costs and the cost savings directly associated with federal lands were generally small. The local officials also noted moderate indirect benefits of having federal lands: places to hunt and fish, recreational facilities, watershed protection, and more. Others, however, have reported that many federal lands harm local economies. The cost basis approach typically relies on actual state and local governmental expenses or savings, in contrast to tax equivalency, which estimates the opportunity costs associated with federal lands. The principal advantage of the cost approach to payments is that it reimburses the actual operating and investment costs paid by state and local governments. For direct services, such as utilities and roads, this approach is precise. It sometimes could be implemented through more site-specific user fees, or possibly through local agreements/memoranda of understanding on appropriate federal payments for state and local services provided. An alternative for implementing this approach might be to apportion state and local governmental costs on some type of pro rata basis. Apportionment could be based on property acreage (federal lands as a percent of total land in the county), property value (the value of federal lands as a percent of total land value or total property value in the county), population (federal workers and dependents as a percent of county population), or some other basis. However, apportionment has some of the same difficulties as tax equivalency. The primary difficulty with the cost approach is that many state and local services apply generally, benefitting everybody or providing special assistance to those who cannot pay; examples include police and fire protection, public education, and many social services. The tax systems of state and local governments arguably reflect their decisions about how the citizenry should pay for general social goods and services, including how the relatively well-to-do should support the needy (i.e., how progressive the state and local tax systems are). State and local governments generally seek consistency and predictability in their revenue programs, both from taxes and from inter-governmental payments. Counter-cyclical revenues (rising revenues during poor economic times) are generally preferred, because many state and local assistance programs expand during recessions, although stable revenues (constant revenues, regardless of economic conditions) are also desirable, since tax revenues (especially sales and income taxes) decline during recessionary periods. Property taxes are more likely to be relatively stable, unless a recession is sufficiently prolonged to lower property values for tax assessments. For federal payment programs, consistency and predictability have usually meant fixed, annual payments. The only mechanism for guaranteeing this is mandatory spending authority/permanent appropriation. A statute with such a provision means that the payment is made, based on the guidance in the law (e.g., at a fixed level or as a percent of specified federal receipts), without any further action by Congress. Payments made under such an authority are only modified if Congress acts to amend the payment authority. There are two problems for establishing payments with mandatory spending authority. One is that mandatory spending programs are often labeled with a potentially pejorative term: "entitlement." Those receiving such payments typically believe they are, or should be, entitled to the payments; others suggest that payments should be earned or deserved, and that payments should be balanced against other federal spending priorities annually. The second and more significant problem is that enacting new programs with mandatory spending authority faces significant congressional hurdles. In general, new mandatory spending programs require a budget offset (typically within the same committee's jurisdiction) to fund the guaranteed payments. Issues include finding a source of the money, and determining how much money is needed. Another issue for federal payments to state and local governments is what lands to include for the payment program. Federal lands are administered by a broad array of agencies for a wide variety of purposes. The vast majority of federal lands—about 615 million acres, about 95% of the total—are administered by the four land management agencies: the National Park Service (NPS), Fish and Wildlife Service (FWS), and Bureau of Land Management (BLM) in the Department of the Interior (DOI), and the Forest Service (USFS) in the Department of Agriculture (USDA). Department of Defense (DOD) agencies—Army, Navy, Air Force, and Marines—also administer substantial lands, about 19 million acres, in both active and inactive bases, ranges, and other units. Various other agencies administer modest amounts of land, although these can be significant locally; these include the DOI Bureau of Reclamation, the U.S. Department of Energy, the National Aeronautics and Space Administration, other USDA agencies, the U.S. Postal Service, and a host of federal sites administered by the General Services Administration. It would be easiest to simply include all federal lands in a payment program. However, this is not as easy as it might appear. In many instances, the federal government has less than fee simple ownership of the land—having only a partial ownership interest in the lands (e.g., lands administered under easements; surface lands owned, lacking mineral rights, or vice versa). While each agency has data on the lands it administers, the data sets do not always match precisely. In some situations, multiple agencies have jurisdiction over some lands, and each may report these as the agency's lands, leading to double counting. Another example is the current Payments in Lieu of Taxes (PILT) program, which provides payments to counties for certain federal agency lands—the acreage reported in PILT documents often differs (typically by modest amounts) from the data of those agencies for the same lands. Some have observed that the federal government lacks a coordinated system of property records—a land parcel database describing the location, acreage, rights, interests, and value of federal and other property. Thus, data on the total federal area and the specific location of federal lands are not as accurate as might be needed for a comprehensive payment system. One particular classification of lands leads to additional complications: Indian lands. There are multiple categories of Indian lands, some individually owned and other collectively owned, and many exempt from state and local taxation. Some Indian lands are administered by the DOI Bureau of Indian Affairs as trust lands for the tribes. None of the lands are federally owned and administered, but the U.S. government established many of these lands by treaty. Some suggest that, because of the treaties, the federal government should be responsible for payments from these lands, which can be significant in many locations. Others argue that the Indians themselves, either individually or by tribes, should be responsible for any state and local payment programs. Beginning more than a century ago, Congress has created numerous programs to provide funds to state and local governments because of the tax-exempt status of federal lands and resources. Impact aid payments are made to local educational agencies because of the financial burdens resulting from federal activities (e.g., educating children residing on tax-exempt federal lands). Many programs were funded with receipts from the sale or lease of federal resources. Others have been based on the acreage of federal lands, on some tax-like arrangement, or some combination of options. Impact Aid compensates local educational agencies (LEAs) for the "substantial and continuing financial burden" resulting from federal activities. These activities include federal ownership of certain lands, as well as the enrollments in LEAs of children whose parents work or live on federal land (e.g., children of parents in the military and children living on Indian lands). The federal government provides compensation because these activities deprive LEAs of the ability to collect property or other taxes from these individuals (e.g., members of the Armed Forces living on military bases) or their employers, even though the LEAs are obligated to provide free public education to their children. Thus Impact Aid is intended to compensate LEAs for the resulting loss of tax revenue available to the schools. Administered by the U.S. Department of Education (ED), the Impact Aid program is one of the oldest federal education programs, dating from 1950. The program is currently authorized under Title VIII of the Elementary and Secondary Education Act (ESEA). Annual discretionary appropriations are provided through the Labor, Health and Human Services, and Education, and Related Agencies Appropriations Act. In recent years, total annual funding for the program has been about $1.3 billion. Several types of payments to LEAs authorized under the Impact Aid program are relevant for this report. Section 8002 provides payments to LEAs for certain federal land ownership. Section 8003 provides payments to LEAs for enrolling "federally connected" children—children who reside with a parent who is a member of the Armed Forces living on or off federal property; reside with a parent who is an accredited foreign military officer living on federal property; reside on Indian lands; reside in low-rent public housing; or reside with a parent who is a civilian working or living on federal land. Section 8003(b) payments are "basic support payments" for federally connected children, and Section 8003(d) payments are for certain federally connected children with disabilities. Section 8007 provides funds for construction and facilities upgrading to certain LEAs with high percentages of children living on Indian lands or children of military parents, partly by formula and partly by competitive grants. Appendix B provides more details on Impact Aid payments. The earliest payment programs were created before the establishment of federal income taxes, and thus needed a source of funds. Typically these programs were based on a share of receipts from selling or leasing federal resources, since this provided funds for the payments. Moreover, because this was a continuing source of funds, these receipt-based payment programs were almost always created with mandatory spending authority for a portion of the receipts. Federal receipt-sharing payments to state and local governments from federal lands and resources vary widely. Certain federal lands and/or resources provide no receipt-based payments to state and local governments—notably, National Park System lands and hardrock/locatable minerals. For many other federal lands and resources, the federal government pays state and/or local governments a portion of receipts. In some instances, this is a portion of gross receipts; in others, the portion is of net receipts (after deducting administrative costs). Table B -1 in Appendix B identifies the payment shares under 13 receipt-sharing programs; also, as explained in detail in the table notes, there are several modifications in these 13 programs for specific sites and/or resources. The payment rates vary widely—from 4% in many cases to as much as 90% for oil and gas leasing in Alaska. Some are geographically quite narrow (e.g., 37½% of oil royalties from the south half of the Red River Indian reservation in Oklahoma), others quite broad (e.g., 25% of gross revenues from all national forest lands). Furthermore, some payments are made to the states (e.g., mineral leasing payments) while others are made directly to counties (e.g., USFS national grassland payments) or other recipients. All of the payments shown in Table B -1 in Appendix B were originally created with mandatory spending authority, since there was a natural source of funds for the payments. Two particular payment programs have historically accounted for the majority of the receipt-based payments: USFS payments to states, and BLM payments to certain counties. The USFS payments have been 25% of gross receipts to the states for roads and schools in the counties where the national forests are located; the states cannot keep any of the funds, but can decide which road and schools programs are to be funded. The BLM payments are 50% of gross receipts to the counties for the O&C lands—about 2.6 million acres of forest in western Oregon that were granted for railroad construction, but returned to federal ownership for failure to fulfill the terms of the grant. The USFS payments exceeded $300 million annually at their peak, while the O&C payments were more than $100 million annually. However, both were based largely on timber receipts, and USFS and BLM timber harvests declined substantially since about 1990. Thus, these programs have been supplanted temporarily with the Secure Rural Schools and Community Self-Determination Act, discussed below under "Other/Combination Payments." With the expiration of that legislation at the end of FY2011, the historic receipt-sharing programs will become effective again, albeit with substantially lower payments in many areas. The one payment program based solely on federal acreage is the Payments in Lieu of Taxes (PILT) program, enacted in 1976 and administered by the Department of the Interior. Two other programs include acreage as a component in determining payments; these are discussed below under "Other/Combination Payments." PILT authorizes payments per acre of eligible lands (called "entitlement" lands in the statute), they are specifically identified in the statute and listed in "Payments in Lieu of Taxes" in Appendix B . PILT specifies a fixed payment per acre for eligible lands—$2.42 per acre in FY2011—adjusted annually for inflation. It also contains a complex formula to reduce the authorized payments in counties with low populations and in counties receiving certain other federal land payments (some of the payments shown in Table B -1 of Appendix B ). PILT also includes a minimum payment per acre for eligible lands—$0.33 per acre in FY2011—adjusted annually for inflation and subject to the population ceilings. In contrast to the receipt-based payments described above, as enacted, PILT required annual appropriations. In the early years, the annual appropriations were generally sufficient to cover the calculated payments. However, the PILT act was amended in 1994 ( P.L. 103-397 ) to adjust the fixed and minimum authorized payments for 18 years of inflation and to index them for future inflation. From FY1995 through FY2007, the differences between each year's authorized payment and its appropriations were substantial—appropriations averaged about 60% of the authorized levels, ranging from 41% (FY1999) to 77% (FY1995). Congress enacted mandatory spending authority of 100% of the authorized level for PILT for FY2008-FY2012. Thus, total PILT payments increased by more than $100 million in FY2008, and have remained at these higher levels. If the mandatory spending authority is not extended, future (FY2013 and beyond) PILT payments will again depend on annual appropriations. There are two payment programs that provide tax-like payments for the counties containing certain federal lands: the Coos Bay Wagon Road lands (OR), and certain forest lands in the Boundary Waters Canoe Area (MN). A third, the National Wildlife Refuge Fund (originally called Refuge Revenue Sharing Payments), includes tax-like payments as one of the options for county payments. (These payments are discussed below, under "Other/Combination Payments.") The Coos Bay Wagon Road (CBWR) lands are an 1869 grant for building a military wagon road between Coos Bay and Roseburg, OR. Years later, the builder was sued for violating the terms of the grant, and in 1919, Congress enacted a law terminating the litigation and "reconveying" the lands to federal ownership. These CBWR lands are commonly included with the O&C lands, because the more extensive O&C lands surround them, and both the CBWR and O&C lands are generally administered under the 1937 O&C Act. However, the CBWR lands were not included in the receipt-sharing provision of the 1937 act. In 1939, Congress enacted a separate payment program for the CBWR lands. The program paralleled the O&C payments (shown in Table B -1 of Appendix B ): the counties effectively receive 50% of receipts. However, the 1939 act also directed that the payments "be computed by applying the same rates of taxation as are applied to privately owned property of similar character in such counties." Thus, the actual payments are the county tax bills, up to 50% of the receipts from the CBWR lands. In 1948, Congress enacted a special payment for certain USFS lands in Minnesota. The lands in question were to be acquired for the Superior National Forest. A sizable portion of the forest had been established as a wilderness administratively in 1926. Because of concerns about potential resort-style developments on private lands within the wilderness (later named the Boundary Waters Canoe Area Wilderness), in 1948 Congress enacted the Thye-Blatnik Act to authorize the acquisition of the private lands within the area. The prohibition on logging in wilderness areas led to concerns about receipts for the 25% USFS payments to the states for county roads and schools (discussed above and shown in Table B -1 of Appendix B ). Congress chose to include a provision recommended by USDA to pay the counties 0.75% of appraised value of the lands, based on local private farm land tax rates. Two payment programs combine two or more of the payment bases discussed above for calculating their payments: National Wildlife Refuge Fund payments, and payments under the Secure Rural Schools and Community Self-Determination Act of 2000. The National Wildlife Refuge Fund (NWRF; originally the Refuge Revenue Sharing Program) includes several different payment options. For FWS lands reserved from the public domain, the payments are 25% of net receipts (shown in Table B -1 of Appendix B ); these lands are also eligible for PILT payments. For acquired refuge lands, NWRF pays counties the highest of three alternative payment approaches: 25% of net receipts; $0.75 per acre of FWS land (equal to the original PILT fixed payment); or 0.75% of the fair market value of the land. Acquired FWS lands are not eligible for PILT payments. The NWRF program (for both public domain and acquired lands) has mandatory spending authority to the extent of receipts, and annual appropriations are authorized to supplement the calculated payments. Since 2000, receipts plus annual appropriations have fallen from 58% of the authorized total payment to 22% of the payment in 2010. The Secure Rural Schools and Community Self-Determination Act of 2000 (SRS; P.L. 106-393 ), as originally enacted, was a temporary (six-year), optional payment program for the USFS national forests (not all USFS lands) and the O&C lands based exclusively on historic payments. (Counties could choose to continue payments under the current 25% or 50% receipts-sharing, shown in Table B -1 of Appendix B .) Counties receiving payments greater than $100,000 were required to use 15%-20% of the payments for projects (called "reinvestment") on the federal lands, rather than for roads and schools (national forests) or for county purposes (O&C lands). Some additional funds were also authorized for the counties to use for other, specified purposes. As it was reauthorized for four additional years in 2008, these optional payments were calculated using a complex formula that was half based on historic payments and half based on national forest and O&C land acreage, both as a proportion of the total of all counties opting for the SRS payments, and both adjusted for per capita personal income in the county relative to per capita income for all counties opting for the SRS payments. The reauthorization also included three years of optional transition payments for eight states. The multiple steps in the formula are shown under "Secure Rural Schools and Community Self-Determination Act" in Appendix B . The SRS Act has expired, with the last payments made for FY2011. When established, most of the federal payment programs were justified as compensation for the tax-exempt status of federal lands. However, comparing existing payment programs with state and local taxation is a difficult task, at best. One difficulty is deciding whether the comparison should assess tax equivalency or cost recovery. As discussed above, each approach has advantages and limitations. Each has theoretical justifications and advocates, but neither is clearly superior or preferable. The plethora of federal payment programs were enacted by various congressional committees over the past century. The differences and distinctions among the programs, as well as the complicated formulae used in some programs, has led to confusion, inconsistency, and probably inequality, among recipients. As shown in the few comparative studies over the years, some counties have probably been "compensated" at levels greater than private taxation would have yielded, while others doubtless have received less than would have been paid by private landowners. The perpetuation of these inconsistent and probably inequitable programs is likely the result of two factors. One is differences in committees of jurisdiction over the various programs. Many of the programs were reported by the House Committee on Natural Resources and Senate Committee on Energy and Natural Resources, or their predecessors, the Committees on Interior and Insular Affairs (and possibly all the way back to the Committees on Public Lands). However, programs enacted at any particular point are likely a reflection of the leadership and membership of these committees, which has shifted over time. Some significant programs, such as Forest Service 25% Payments to States and Impact Aid, were reported by other committees—notably the Committees on Agriculture for the Forest Service payments, and the Committees with jurisdiction over education programs. The second reason for the perpetuation of the plethora of programs is that many, especially the vast number of revenue-sharing payments, were enacted with mandatory spending authority. Thus, the payments continue to be made, year after year, without any additional action by Congress. Such payments are only stopped or modified if Congress acts to change the payments. Hence, the inertia of ongoing permanent programs may be a cause for many of the programs being continued. The other principal difficulty in comparing federal payment programs with state and local taxation is the plethora of state and local taxes—both types and levels. As described above, state and local governments pay for the variety of goods and services they provide to their citizenry with many types of taxation, including income taxes, sales taxes, property taxes, excise and severance taxes, and more. Different states rely on different taxation approaches—some have no sales taxes, others have no income taxes, and the tax rates used in different states and localities vary widely. Furthermore, local governments typically rely heavily on property taxes, although the importance of property taxation also varies widely. Finally, states and localities differ in their "fiscal blood pressure"—the ability and willingness of their citizens to tax themselves to provide the desired government goods and services. Impact aid, the largest of the federal payment programs, pays local educational agencies for students associated with tax-exempt lands. It is unclear whether the annual appropriations for Impact Aid provide payments that approximate the tax payments for education that would have been obtained from such lands if they were taxable. It is also unclear how the payments compare to the cost of providing education to those students. These uncertainties reflect both the wide variation in property tax rates—the principal tax source of local education funding—and differences in local educational costs per pupil. For example, the highest average state property tax rate (Texas) is more than 6 times higher than the lowest average state property tax rate (Hawaii). Many federal programs provide payments to state and local governments from a share of revenues from some federal activity. Revenue-sharing payments are probably most closely akin to severance or yield taxes, but as noted above, both severance/yield tax rates and revenue-sharing proportions vary widely, making it exceedingly difficult to compare. Furthermore, severance and yield taxes are typically state taxes, while most revenue-sharing programs provide funding for county-provided services. Some payment programs are based on acreage or on appraised land value. These programs are probably most similar to property taxes. The acreage-based PILT payments are specified amounts per acre, regardless of the value or use of the land, and thus have no real parallel among state and local taxes. PILT payments are reduced by revenue-sharing payments, which is similar to the effect on property taxes of severance or yield tax payments in many places. For two of the three tax-like federal payment programs, the rate is a fixed 0.75% of appraised values; this is relatively low, but within the range of the average property tax rates shown in Table 2 , above. The mandatory spending authority for two relatively large payment programs—the Secure Rural Schools and Community Self-Determination Act (SRS) Program and the Payments In Lieu of Taxes (PILT) Program—expire at the end of FY2011 and FY2012, respectively. These two programs have provided payments of about $750 million annually for hundreds of counties throughout the country. As Congress debates the reauthorization of the SRS Act and the mandatory spending authority of the PILT Program, and possibly of other payment programs, it might consider the broader questions of what is fair and consistent compensation to state and local governments for the tax-exempt status of federal lands. Appendix A. Details on State and Local Taxation As described briefly in the text, there are several types of state and local taxes imposed in the various states. These are discussed in more depth below. Property Taxes Property taxes are one of the few taxes based on wealth—the value of assets at a given point in time. Other taxes are almost always linked to a flow of income or are triggered by a market transaction within a given time frame, usually one year. Many observers suggest that property taxes are intended to reflect the property owner's benefit received from government services. A common measure of the benefit received at the local level is the value of property at its highest and best use, not necessarily current use. For example, the "market value" of property is defined by the State of New Jersey as: The highest price in terms of money which a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Relevant market transactions, such as a recent sale or exchange of the property, are generally preferred for assessing property values. Absent recent transactions, various jurisdictions typically use one of three valuation methods to establish market value: (1) the replacement cost approach; (2) a sales comparison approach; or (3) an income approach. The replacement cost method is uniquely suited for structures, whereas the sales and income methods can be adapted for many different types of property. Typically, local governments separately assess farm land, residential property, and commercial property. That valuation is then split between the land and the improvements to that land (e.g., structures). In many jurisdictions, different rates (or assessment ratios) apply to land and structures and to residential and commercial property. Farmland, in contrast to other types of property, is usually valued at current agricultural use and not its potential "highest and best" use. As depicted in Table 1 , above, the importance and collections of property taxes vary considerably among the states. Although not shown in the table, property taxes are much more important for local governments than for state governments; property taxes accounted for $397 billion (72.3%) of local tax collections in 2008, but only $13 billion (1.6%) of state tax collections. The multiple base definitions, rates, exemptions, administration, assessment practices, and state specific constraints all contribute to wide variation in the collection of property taxes. As shown in Table 2 , these variations in implementation result in significant differences in average property tax rates. Table 2 shows the average property tax rates ranging from 0.4% in Hawaii to 2.57% in Texas. Sales and Use Taxes Sales and use taxes are collected when a business sells a product to a consumer or another business. All but four states levy a sales tax and local governments in 35 states levy a separate local sales tax. (One state—Alaska—has no state sales tax, but has average local sales taxes of 1.74%.) The average state statutory rate is 5.05%, and for those states with sales taxes, average state and local sales taxes range from 4.35% in Hawaii to 9.43% in Tennessee, as shown in Table 2 . Further complicating discussions of state and local sales taxation is that some items (e.g., prescription drugs) are exempt from many state sales, for other items (e.g., food) are exempt or taxed at a lower rate. General sales taxes are generally more significant for state governments than for local governments, accounting for $241 billion (30.8%) of state tax collections and for $63 billion (11.6%) of local tax collections in 2008. Mail-order, catalog, and internet sales raise questions and issues over the collection of state and local sales taxation. In addition, some jurisdictions have use taxes—taxes determined and received by the jurisdiction where the products will be used (e.g., building materials), rather than at the point of sale (prior to transport for use). This differs from a user fee, such as is common for utilities, where the user pays for the good or service (e.g., water, sewage, or solid waste disposal) actually provided by the state or local government. Income Taxes Income taxes are collected on income earned in the state. Generally, the state where the taxpayer works, not the taxpayer's home state, is entitled to tax that income. Many states, however, enter into so-called reciprocal agreements whereby the states agree not to levy state income taxes on nonresidents (commuters) from a neighboring state. As of 2011, 44 states and the District of Columbia levied income taxes; two—New Hampshire and Tennessee—levy taxes on dividend and interest income, but not wage and salary income. As shown in Table 2 , the highest marginal income tax rate for individual taxpayers varies widely among states that levy income taxes, ranging from 4.54% in Arizona to 11.0% in Hawaii and Oregon. Individual and corporate income taxes accounted for $278 billion (35.6%) and $51 billion (6.5%), respectively, of state tax collections in FY2008; local income tax collections were only $26 billion (4.8%) from individuals and $7 billion (1.3%) from corporations in 2008. Other Taxes As shown in Table 1 , other state and local taxes are quite significant, accounting for 23.4% of all state and local tax collections. The primary other state and local taxes are excise taxes and severance taxes, although a variety of other taxes and fees can be significant. Excise taxes are essentially sales taxes on particular products. States, and sometimes local governments, commonly impose excise on several products—gasoline, tobacco products, alcoholic beverages, hotel and motel accommodations, restaurant meals, and more. Because excise taxes are sometimes used to deter consumption of particular goods (notably tobacco and alcohol), they are occasionally referred to as "sin taxes" or "sumptuary taxes." Some excise taxes are used to generate revenues for particular purposes, such as gasoline taxes for maintaining roads and highways. While some excise taxes (e.g., tobacco and gasoline) are imposed in most states, the rates vary widely; for example, in 2010, cigarette excise tax rates ranged from $0.07 per pack in South Carolina to $3.46 per pack in Rhode Island, while gasoline taxes varied from 8¢ per gallon in Alaska to 46.6¢ per gallon in California. In 2008, sales of motor fuel, alcoholic beverages, and tobacco products accounted for $58 billion (7.4%) of state tax collections and for $2 billion (0.4%) of local tax collections. Other selective sales taxes accounted for another $60 billion (7.6%) of state tax collections and another $24 billion (4.4%) of local tax collections. Severance taxes are excise taxes based on natural resource extraction. Severance taxes are almost exclusively state taxes and are most commonly collected on minerals, oil and gas (or petroleum), coal, and timber. The tax can be levied on a per-unit basis or as a percentage of the market value (ad valorem) of the extracted resource. Severance taxes are relatively insignificant in most states. Twelve do not levy a severance tax, and collections are less than 1% of total state taxation in another 22 states. On the other hand, severance taxes can be substantial in resource rich states, especially those with extensive oil or natural gas deposits. In 2007, severance taxes accounted for 64% of state tax collections in Alaska and 40% in Wyoming, and generated more than $2 billion in collections in Texas. Because some severance taxes are per-unit and others are ad valorem, and because different resources may be taxed differently even in the same state, it is not possible to summarize the nature and average levels of severance taxes. Charges and Fees State and local governments also rely on various charges and fees to fund the goods and services they provide. In 2008, charges and fees provided more than 30% of state and local revenues (excluding intergovernmental transfers from the federal government and from states to local governments). These charges, which commonly cover a portion of the cost, are for a broad array of goods and services, such as hospital services, higher education institutions (e.g., college tuition), publicly owned utilities (e.g., electricity, water supply, sewage treatment, solid waste disposal), and transportation (e.g., highways, airports, port facilities, parking). Appendix B. Details on Existing Federal Payments to State and Local Governments As summarized above in "Existing Payment Programs," there are many federal programs that provide payments to state and local governments associated with federal lands. Some payments are based on numbers of children associated with tax-exempt lands, many on receipts from selling or using federal lands and resources, others on federal acreage, while a few are tax-like payments, and some combine these approaches. This appendix provides details on the Impact Aid program, on the many receipt-based programs, and on two complicated programs that either are due to expire (at the end of FY2012) or have expired (at the end of FY2011): one is the acreage-based PILT program, and the other is a combination program under the Secure Rural Schools and Community Self-Determination Act of 2000. Impact Aid Impact Aid compensates local educational agencies (LEAs) for the "financial burden" resulting from tax-exempt federal land ownership and the enrollment of certain individuals (e.g., children of parents in the military and children living on Indian lands). The Impact Aid program dates from 1950, and is administered by the U.S. Department of Education (ED), under Title VIII of the Elementary and Secondary Education Act (ESEA). Several types of payments to LEAs are authorized, and each receives a separate annual discretionary appropriation. For the purposes of this report, the most relevant payments are those made under Section 8002, Section 8003(b), Section 8003(d), and Section 8007. The majority of Impact Aid funds are provided to LEAs through the Section 8003(b) payments. Section 8002 Section 8002 compensates LEAs for the federal ownership of certain property. To qualify for compensation, the federal government must have acquired the property, in general, after 1938, and the property had an assessed value at the time it was acquired of at least 10% or more of (1) all real property in the LEA at the time the federal property was acquired, or (2) the greater of all real property as assessed in the first year preceding or succeeding the acquisition of the property, if the property was not assessed at the time it was acquired and state law requires an assessment of property acquired. Payments are generally used by LEAs for general operating expenses (e.g., teacher salaries, books, supplies, and utilities). Section 8003(b) and (d) Section 8003 compensates LEAs for enrolling "federally connected" children. These are children who reside with a parent who is a member of the Armed Forces living on or off federal property; reside with a parent who is an accredited foreign military officer living on federal property; reside on Indian lands; reside in low-rent public housing; or reside with a parent who is a civilian working or living on federal land. Two payments are made under Section 8003: (1) "basic support payments" for federally connected children (§8003(b)) and (2) payments for certain federally connected children with disabilities (§8003(d)). Section 8003(b) authorizes "basic support payments" for federally connected children. To be eligible for an 8003(b) payment, an LEA must have at least 400 federally connected children, or such children must represent at least 3% of an LEA's average daily attendance (ADA). Impact Aid funds provided under Section 8003(b) are not limited to specified uses (such as improving the educational achievement of disadvantaged students). While funds are generally used for current local education expenditures, they may also be used for capital expenditures. In addition, the funds provided under Section 8003(b) need not be spent just on federally connected children. Finally, because Impact Aid payments are not aimed at specific educational goals, accountability requirements for the use of funds or for specific outcomes are minimal. Section 8003(d) authorizes additional payments to LEAs based on the number of certain federally connected children with disabilities who are eligible to receive services under the Individuals with Disabilities Education Act (IDEA). More specifically, payments are limited to IDEA-eligible children, whose parents are members of the Armed Forces (residing on or off military bases) or who reside on Indian lands. Unlike basic support payments, LEAs receiving 8003(d) payments must use the funds to meet the needs of the federally connected children with disabilities for whom they received the payments. In addition, the funds must be used to provide a free appropriate public education to these children in accordance with the provisions of IDEA. Section 8007 Section 8007 provides funds for construction and facilities upgrading to certain LEAs with high percentages of children living on Indian lands or children of military parents. These funds are used to make formula and competitive grants. Under current law, 40% of the funds appropriated under Section 8007 are used to make construction payments by formula to LEAs receiving Section 8003 payments and in which either students living on Indian land constitute at least 50% of the LEA's total student enrollment or military students living on or off base constitute at least 50% of the LEA's total student enrollment. The funds available for construction payments are divided equally between these two groups of LEAs (20% of the total §8007 appropriation going to each group). The remaining 60% of Section 8007 appropriations are used to make school facility emergency and modernization competitive grants. Emergency grants must be used to repair, renovate, or alter a K-12 public school facility to ensure the health and safety of students and staff. Modernization grants may be used to relieve overcrowding or upgrade facilities to support a "contemporary educational program." Statutory language requires that emergency grants be given higher priority than modernization grants in the grant competition. Receipt-Based Payment Programs Table B -1 provides a list of existing federal payments to state and local governments from federal receipts derived from the sale or use of federal lands and resources. Certain federal lands and/or resources provide no receipt-based payments to state and local governments—notably, National Park System lands and hardrock/locatable minerals. For most other federal lands and resources, the federal government pays state and/or local governments a portion of receipts. The payment rates vary widely—from 4% in many cases to as much as 90% for oil and gas leasing in Alaska. Some are geographically quite narrow (e.g., 37½% of oil royalties from the south half of the Red River Indian reservation in Oklahoma), others quite broad (e.g., 25% of gross revenues from all national forest lands). All of the payments shown in Table B -1 were created with mandatory spending authority, since there was a natural source of funds for the payments. Payments in Lieu of Taxes The Payments in Lieu of Taxes (PILT) program was enacted in 1976 and is administered by the Department of the Interior. PILT authorizes payments per acre of "entitlement" (also called eligible or qualifying) lands identified in the statute. The authorized payments are based on a complicated formula that reflects eligible acreage, fixed payments per acre that are offset by specified receipt-sharing payments (some of the payments shown in Table B -1 , above), minimum fixed payments per acre, and a population-based ceiling on total PILT payments to a county. The lands eligible for PILT payments are the majority of federal lands, but do not include all federal lands. As presented in 31 U.S.C. §6901(1), "entitlement" lands include federal land: (A) that is in the National Park System or the National Forest System, including wilderness areas and lands described in §2 of the Act of June 22, 1948 (16 U.S.C. §577d), and §1 of the Act of June 22, 1956 (16 U.S.C. §577d-1) [specified acquired national forest lands in Minnesota]; (B) that the Secretary of the Interior administers through the BLM [Bureau of Land Management]; (C) that is dedicated to the use of the government for water resource development projects [i.e., Bureau of Reclamation and U.S. Army Corps of Engineers lands]; (D) on which are located semi-active or inactive installations (except industrial installations) that the Secretary of the Army keeps for mobilization and for reserve component training; (E) that is a dredge disposal area under the jurisdiction of the Secretary of the Army [Corps of Engineers]; (F) that is located in the vicinity of Purgatory River Canyon and Piñon Canyon, CO, and acquired after December 23, 1981, by the U.S. Government to expand the Fort Carson military installation; (G) that is a reserve area (as defined in §401(g)(3) of the Act of June 15, 1935 (16 U.S.C. §715s(g)(3))) [i.e., National Wildlife Refuge System lands reserved from the public domain ]; or (H) acquired by the Secretary of the Interior or the Secretary of Agriculture under §5 of the Southern Nevada Public Land Management Act of 1998 [P.L. 105-263] that is not otherwise described in subparagraphs (A) through (G). Lands not eligible for PILT payments include acquired lands in the National Wildlife Refuge System, active military installations, and lands administered by other agencies (e.g., NASA, Department of Energy). As originally enacted, PILT payments required annual appropriations. In 2008, Congress provided mandatory spending authority for the PILT Program for five years—FY2008-FY2012. Unless this provision is reauthorized, the last mandatory PILT payments will be for FY2012, and payments for FY2013 will require annual appropriations in the Interior, Environment, and Related Agencies appropriations act. Secure Rural Schools and Community Self-Determination Act The Secure Rural Schools and Community Self-Determination Act of 2000 (SRS) was reauthorized in 2008. These optional payments were based on a complex formula that included each county's share, among all the counties opting for SRS payments, of historic payments and of Forest Service (USFS) and O&C land acreage and adjusted for relative per-capita personal income in the county. The specific steps were: Step 1. Determine the three highest revenue-sharing payments between FY1986 and FY1999 for each eligible county, and calculate the average of the three. Step 2. Calculate the proportion of these payments in each county (divide each county's three-highest average [Step 1] by the total of three-highest average in all eligible counties, with separate calculations for USFS lands and O&C lands). Step 3. Calculate the proportion of USFS and O&C lands in each eligible county (divide each county's USFS and O&C acreage by the total USFS and O&C acreage in all eligible counties, with separate calculations for USFS lands and O&C lands). Step 4. Average these two proportions (add the payment proportion [Step 2] and the acreage proportion [Step 3] and divide by 2, with separate calculations for USFS lands and O&C lands). This is the base share for counties with USFS lands and the 50% base share for counties with O&C lands. Step 5. Calculate each county's income adjustment by dividing the per capita personal income in each county by the median per capita personal income in all eligible counties. Step 6. Adjust each county's base share [Step 4] by its relative income (divide each county's base share or 50% base share by its income adjustment [Step 5]). Step 7. Calculate each county's adjusted share or 50% adjusted share as the county's proportion of its base share adjusted by its relative income [Step 6] from the total adjusted shares in all eligible counties (divide each county's result from Step 6 by the total for all eligible counties [USFS and O&C combined]). The reauthorization included a total ("full funding") payment, declining by 10% annually over four years (FY2008-FY2011), to be allocated among the counties opting for the SRS payments under the formula. (Counties could choose payments under the historic USFS 25% payments to states or O&C 50% payments to counties, shown above in Table B -1 .) In addition, counties in eight states—California, Louisiana, Oregon, Pennsylvania, South Carolina, South Dakota, Texas, and Washington—could receive a transition payment (higher than the calculated payments) for the first three years of the reauthorization (FY2008-FY2010). The reauthorization also continued the requirement to spend ("reinvest") 15%-20% of the payments on the federal lands and the authority to use some of the payments for other, specified purposes. The payments under this program expired at the end of FY2011 (i.e., the final payment was for FY2011). At this time, unless the SRS Act is reauthorized, USFS payments will revert to 25% of gross receipts and O&C payments to 50% of gross receipts for FY2012 and beyond.

The federal government owns significant amounts of land and resources that are exempt from state and local taxation. State and local governments provide a wide variety of services—education, social services, public safety, transportation facilities, utilities, and much more. These services are funded through intergovernmental transfers (federal grants to state governments and federal and state grants to local governments), user fees, and state and local levied taxation—property taxes, income taxes, sales and use taxes, excise taxes, severance taxes, and more. Congress has established programs to compensate state and local governments for the tax-exempt status of federal lands. Some propose that "fair" compensation would provide payments that are equivalent to the taxes that would be paid if the lands were privately owned. Assessing such tax equivalency, however, is difficult because of the substantial variability in state and local reliance on and rates for the various types of taxes. Others suggest that "fair" compensation would provide payments that offset the costs imposed on state and local governments from the federal lands, although this would exclude payments for governmental services that are not paid by the beneficiaries (e.g., social services). Providing consistent payments is a challenge; permanent appropriations are the most stable, but are difficult to establish and create permanent obligations. Finally, which lands to include for federal payments may seem straightforward, but lack of precise data on the federal lands might compromise accuracy of payments, and federal responsibility for tax-exempt Indian lands is unclear. A plethora of federal payment programs exist, enacted at various times and for various reasons over the past century. Some payment programs are based on numbers of Indian children or children of federal employees (about $1.3 billion annually), some on federal receipts (about $0.5 billion annually), and some on federal acreage (about $0.4 billion annually). Some of the receipt- and acreage-based payments are broad, covering many federal lands, while others are quite narrow (e.g., based on sales of a particular resource within a limited area). Some are permanently authorized, and have mandatory spending authority (payments without annual action by Congress). Others require periodic reauthorization, annual appropriations, or both. Although most of the federal payment programs were justified as compensation for the tax-exempt status of federal lands, the programs poorly reflect state and local tax equivalency or state and local costs of providing governmental services. In some places, the payments probably exceed what a private landowner would pay; in others, the payments fall short of what many might consider "fair" compensation. These possibly inequitable results likely occur from differences in the congressional committees of jurisdiction over various lands and programs and over time, and because only some programs were established with mandatory spending authority. The mandatory spending authority for two relatively large payment programs—the Secure Rural Schools and Community Self-Determination Act (SRS Act) program and the Payments in Lieu of Taxes (PILT) program—expired at the end of FY2011 and will expire at the end of FY2012, respectively. As Congress debates the reauthorization of the SRS Act, the mandatory spending authority of the PILT program, and other payment programs, it might consider the broader questions of what is fair and consistent compensation to state and local governments for the tax-exempt status of federal lands.

The United States and almost 200 other countries are negotiating under the United Nations Framework Convention on Climate Change (UNFCCC) to address climate change cooperatively beyond the year 2012. Parties agreed to complete those negotiations by the 15 th meeting of the Conference of the Parties (COP-15), held December 7-18, 2009, in Copenhagen. President Obama and leaders of many other nations are attending, hoping to produce "a comprehensive and operational accord." Rather than a new treaty containing quantitative, legally binding GHG obligations, many predict the outcome will be a political mandate for pursuit of a later, more inclusive and enforceable agreement. Pivotal discussions include: whether measurable commitments to reduce greenhouse gas (GHG) emissions will include all major emitting countries and how deep reduction commitments would be; whether countries will agree to transparency and accountability regarding their commitments through robust measuring, reporting, and verification (MRV) requirements; how much financing may be available for capacity building, GHG reductions, avoiding deforestation and forest degradation, technology cooperation, and adaptation to climate change in developing countries through private sector mechanisms and public finance, and what institutions may oversee such flows; what means of technology cooperation would help to develop and deploy advanced, low- or no-emitting technologies, as well as to assist adaptation to climate impacts; and what mechanisms and resources would assist the most vulnerable countries to adapt to projected climate change. Negotiations had lagged through 2008. In December 2008, the then-incoming Obama Administration stated its policy to reduce U.S. emissions to 14% below 2005 levels by 2020. Optimism among many grew that the U.S. Congress would pass GHG control legislation before the Copenhagen meeting, providing guidance to the executive branch negotiators regarding the elements of a treaty that the Senate would ultimately consent to ratify. The Obama 14% reduction policy and passage by the U.S. House of Representatives of H.R. 2454 (the American Clean Energy and Security Act (ACES), or the "Waxman-Markey" bill) have led to reinvigorated hopes of some people that consensus among countries could be found by December 2009 on a comprehensive Copenhagen agreement with quantified commitments. As the Copenhagen meeting opened, the United States had formally offered neither a GHG target nor specific amounts of financial assistance, although on the eve of the conference, the White House announced that President Obama intends to offer a "provisional" GHG target for the United States of 17% below 2005 levels by 2020, ultimately to be brought "in line" with energy and climate legislation, if passed. China also announced a voluntary, domestic goal of reducing its carbon intensity (carbon dioxide emissions per unit of economic output) by 40%-45% below 2005 levels by 2020, which could hold emissions approximately to current levels. India followed suit with a domestic goal to reduce its emissions intensity by 20-25% below 2005 levels by 2020. Some stakeholders consider that neither the U.S. target nor the Chinese and Indian approach is sufficiently aggressive. It also is unclear that several major non-Annex I country emitters would agree within an international accord to verifiable and significant GHG reduction commitments—which they have strongly resisted. Smaller countries, concerned about the impacts of climate change on their welfare and economies, and looking to the United States and other large, wealthy countries for leadership on climate change, have become increasingly frustrated. Lack of strong political agreements has led to recent demonstrations in as many as 4,500 locations in 170 countries. More are planned during the Copenhagen meeting. It has become increasingly uncertain whether it will be possible in Copenhagen to reach comprehensive and detailed agreement to address climate change in the period beyond 2012, when the Kyoto Protocol's first period of GHG commitments expires (discussed in " Background " below). Without a new detailed accord, alternative outcomes are possible. One alternative could be a "framework" decision among high-level officials that spells out a plausible mandate for a future treaty—an outline more likely than the current one to gain broad consensus among nations. Another alternative could be a breakdown of negotiations. While all Parties may contribute to a potential breakdown, many people would blame the United States. Resulting anger could spill over into other international issues, influencing other U.S. foreign policy objectives. The climate change issue has become politically significant internationally and domestically, with major legislation to control greenhouse gases passed by the House ( H.R. 2454 ) and under development in the Senate ( S. 1733 among others). Domestic legislation will interplay with any commitments made internationally, and actions taken by other countries to address climate change will likely have an impact on the United States. Congress will decide whether the United States becomes a Party to any agreement. If the President submits an agreement as a treaty, the Senate must give its consent to ratification for the treaty to be legally binding on the United States. Alternatively, both chambers of Congress would have to approve any agreement that the President submits before such agreement becomes binding on the United States. Consequently, the U.S. Congress has taken an interest in what the U.S. delegation may offer and oppose in Copenhagen. Members may also have interest in how the United States and its allies handle diplomatic and public reactions coming out of the Copenhagen meeting, whatever its outcome. The UNFCCC was adopted in 1992 and has been ratified by 192 countries, including the United States. Its objective is " stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system ." The UNFCCC contained many commitments of all Parties, though few were quantified and there were no sanctions for failing to meet commitments. Most Parties conclude the objective requires avoiding a 2 o Celsius increase of global mean temperature from pre-industrial values and reducing GHG emissions by 50% by 2050 from 1990 levels. Many argue that the industrialized countries' share should be an 80-95% reduction by 2050 from 1990 levels. The UNFCCC principle of "common but differentiated responsibilities" among Parties permeates debate about obligations of different forms, levels of effort, and verifiability. Because nations agreed the UNFCCC objective could not be met by voluntary efforts alone, the 1997 Kyoto Protocol established enforceable, quantified GHG reductions for Parties listed in Annex I of the UNFCCC in the period 2008 to 2012. The United States signed the Kyoto Protocol in 1997, but President Clinton never submitted it to the Senate for consent. President Bush in 2001 announced that the United States would not become a party to the Kyoto Protocol, because of (1) uncertainty of the science; (2) potentially high cost of GHG abatement; and (3) lack of GHG commitments from non-Annex I countries. The first "commitment period" for meeting GHG emission targets runs from 2008 to 2012. It had been envisioned that GHG commitments for one or more subsequent periods would be made before 2008. But commitments beyond 2012 have been delayed, in part because the United States is neither a Party to the Kyoto Protocol nor has shown interest in engaging in future commitments under it, in part because of difficulty in gaining a mandate for negotiations among all UNFCCC Parties. A mandate to negotiate among all Parties was achieved in 2007 in the "Bali Action Plan." The negotiations currently are running on two tracks, one under the Kyoto Protocol and the other under the UNFCCC's "Bali Action Plan" of 2007. The Kyoto Protocol's first commitment period runs from 2008 to 2012, during which wealthier ("Annex I") countries agreed to reduce their GHG emissions to an average of 5% below 1990 levels. In 2007, Kyoto Protocol Parties (not the United States) began negotiating under the Kyoto Protocol on what commitments would ensue beyond 2012. This is the "Kyoto Protocol" track. However, because neither the United States nor developing (non-Annex I) countries are bound to measurable GHG reduction commitments under the Kyoto Protocol, another negotiating mandate was established to include the United States and to address several broader commitment issues. Under the 2007 "Bali Action Plan," all countries seek to reach agreement in Copenhagen on (1) a "shared long-term vision" (aggregate GHG targets for 2050); (2) GHG mitigation (GHG targets for each major Party for 2020 or earlier); (3) adaptation to climate change; (4) financial assistance; (5) technology cooperation; and (6) enhancing carbon sequestration in forests. This became the "Long-Term Cooperative Agreement" track. Each issue is described in later sections. One current dispute is whether the two negotiating tracks should result in two accords or converge into a single treaty. The European Union (EU) and other Annex I countries do not want to amend the Kyoto Protocol without including U.S. commitments, though the United States is unlikely to agree to join the Kyoto Protocol. The Kyoto Protocol Parties also do not wish to abandon their agreement and the progress they made in establishing implementing rules and procedures (e.g., reporting requirements and compliance reviews) under the Protocol. Nonetheless, the Annex I countries have all urged that these two tracks converge by Copenhagen into one agreement that includes commitments of all Parties. Most non-Annex I Parties believe certain advantages exist in maintaining the Kyoto Protocol and a separate agreement for them. They argue that the Kyoto Protocol is for quantified, enforceable GHG obligations for developed countries only. The G-77 and China have so far blocked even discussion of accession of current non-Annex I Parties to quantified GHG commitments under the Kyoto Protocol track. They maintain that non-Annex I commitments should be of a different form and legal nature, embodied in the Bali Action Plan track, and resist any disaggregation of non-Annex I Parties. They perceive any proposal to disaggregate "developing" countries into smaller sub-groupings, based on magnitude of emissions or financial capacity, as an effort to pull additional countries onto a track of quantifiable GHG commitments. Despite the stating of voluntary domestic emissions targets in some countries, the G-77 and China have, thus far, successfully blocked any formal discussion of how this could happen; some delegations walked out of the Bangkok negotiations in October 2009 after a proposal was articulated to merge the negotiations onto one track. In the UNFCCC, all Parties agreed to "common but differentiated" responsibilities, with differentiation based on a number of implied factors, including financial and technical capacity, and historical responsibility for climate change. The differentiation has been made primarily, though not exclusively, between Annex I (wealthier) and non-Annex I (less wealthy) countries, with quantified GHG reductions so far spelled out only for the Annex I Parties. The UNFCCC also spelled out that commitments from non-Annex I Parties would depend on leadership from the wealthiest ("Annex II") Parties to meet GHG and financial commitments. Circumstances have evolved since the UNFCCC was signed in 1992, especially with the growth of China and other large emerging economies. Recognition has crystallized that the objective to halt growth of GHG concentrations in the atmosphere requires slowing then reversing growth of GHG emissions by all major countries. Despite these facts, most countries argue that the Annex I countries have not fully met their UNFCCC and Kyoto Protocol obligations to reduce GHG emissions and assist developing countries (with the United States especially criticized). Although non-Annex I Parties now discharge most of current GHG emissions, the Annex I Parties continue to be responsible for the majority of the increase since the Industrial Revolution of atmospheric GHG concentrations linked to climate change. Thus, most countries argue, the wealthiest countries continue to have the greatest historic responsibility to cut GHG emissions. As the Copenhagen meeting opens, it remains unclear whether the fundamental obstacle of the number and form of agreement(s) can be surmounted. At the negotiations held in Bangkok in early October, "substantial" progress was made in reducing text on the negotiating table and on certain topics: adaptation, technology cooperation, and capacity building. Nonetheless, negotiators in Copenhagen face many contentious issues regarding substantive commitments, described below. Many hope that major changes in stance by key negotiators could change the dynamic and lead to a "dominoes" chain of responses by other negotiators, permitting resolution of remaining issues. On November 26, 2009, the Secretariat of the UNFCCC released a document as the foundation for further negotiations by the Ad Hoc Working Group on Long-Term Cooperation (AWG-LCA). It presents the ideas of the Chair, including that possibilities of agreement are emerging on a shared long-term vision, adaptation, technology cooperation and capacity-building, and (to a lesser degree) on financial resources and investment. The Chair notes less "clarity" on enhanced action on GHG mitigation. He notes in particular that connections need better articulation between actions and support on GHG mitigation and adaptation. He also notes a need to clarify the role of market mechanisms in this track of negotiations under the Bali Action Plan. Finally, the Chair notes that there remains a wide range of views on the legal form that the AWG-LCA outcomes should take, from a package of decisions by the COP to adoption of a new legally binding instrument, and proposed that by December 15 the products be delivered to the COP as a "comprehensive and balanced set" of COP decisions, without prejudice to the form and legal nature of the COP outcome. Each of the topics of the Bali Action Plan is summarized below. The Bali Action Plan provided for negotiation of a vision (i.e., to 2050) for long-term cooperative action (LCA) among Parties. Many countries viewed this as the setting of a long-term target for avoiding global temperature increases, stabilizing atmospheric GHG concentrations, and/or setting global GHG reduction targets relative to a base year (typically 1990 or 2005). Some Parties have not viewed this as a major element in the negotiations, and some have opposed any kind of quantified vision. Other Parties have viewed a quantified vision as a hook for pulling all Parties into a common, global commitment to reduce GHG emissions. The EU and many Parties have proposed cutting global GHG emissions to 50% below 1990 levels by 2050, to limit global warming to 2 o C. Avoiding 2 o C of global warming has been estimated by some as consistent with stabilizing GHG atmospheric concentrations at 450 parts per million (ppm). Some scientists, activists, and vulnerable countries call for a long-term target below 350 ppm. Others consider the 350 ppm target to be politically, and possibly economically, infeasible. The EU further proposes that Annex I countries should cut their GHG emissions by 80%-95% by 2050 to meet the 450 ppm vision, and that global emissions drop by 50% from 1990 levels. President Obama's policy is that the United States should reduce its emissions by 80%-83% from 2005 levels by 2050 and support the 50% global emission reduction. These have not been offered as legally binding commitments in the Copenhagen negotiations, however. In the recent Barcelona negotiations, the U.S. delegation called on China to halve its GHG emissions by 2050, which would allow modest growth for poorer countries. China, among others, has blocked an explicit long-term and global target, although it recently pledged a voluntary, domestic target. World-wide emission targets consistent with, for example, 450 ppm, would require China to reduce its emissions strongly from past growth trajectories, as well as from current levels over several decades. Mitigation obligations remain among the most contentious topics of the negotiations. Aspects of mitigation include the forms and depth of commitments for Annex I and non-Annex I Parties, mechanisms to promote compliance with mitigation commitments, methods to address deforestation emissions, options for sectoral or other sub-national targets, and GHG trading schemes or other "cost-containment," and financing mechanisms. All Parties to the UNFCCC agreed to the principle of "common but differentiated" responsibilities. They also agreed that the Annex I Parties should demonstrate the lead, as most have under the Kyoto Protocol (but not the United States or Canada). The two primary negotiating questions regarding mitigation for Copenhagen are (1) when and how additional countries will take on specific GHG mitigation commitments, and (2) how to "differentiate" the commitments among Parties ("comparability"). So far, China and most other non-Annex I Parties have blocked discussion of new commitments for them, though Mexico and South Africa have announced their own quantitative and conditioned targets. While China has pledged a quantified domestic target to reduce the growth of GHG emissions, its negotiating position has firmly opposed discussing any quantitative commitment internationally. The EU proposes that developing countries set and quantify "low carbon development strategies" as a prerequisite to financial assistance. Such strategies would need to be measured, reported and verified (MRV). Climate activists and some Parties especially vulnerable to climate change have called for Annex I countries to reduce their GHG emissions to 25%-40% below 1990 levels by 2013-2017. The EU has passed a law to reduce its GHG emissions by 20% below 1990 levels by 2020, or by 30% if other countries make comparable commitments. Japan's new president has pledged a commitment of 25% below 2005 levels by 2020, while the Australian legislature may pass a bill to achieve as much as 25% below 2000 levels by 2020. In late May, China called for developed country Parties to take on targets of 40% below 1990 levels by 2020—at the most stringent level of the range it had previously advocated—although many observers consider the Chinese statement to be positioning in the negotiations as it comes under greater pressure to take on a quantified target. Other countries, including Canada, continue to emphasize that the EU's and non-Annex I countries' proposals are too stringent and do not consider costs or other circumstances. The United States has also indicated that these proposals are not under consideration nationally. The Obama Administration in November 2009 stated that it is prepared to offer to reduce U.S. GHG emissions to around 17% below 2005 levels by 2020, to be made consistent with future energy and climate legislation (e.g., S. 1733 and H.R. 2454 ). This would be equivalent to approximately 4% below 1990 GHG emission levels. Some Obama Administration officials have suggested that the former Obama -14% target and the EU proposals were comparable, in that both Parties would reduce emissions approximately 1.4% annually through 2020. Table 1 provides a summary of some proposals for GHG reduction targets, unilateral or for groups of countries, by 2020. Only the EU's target has been enacted into law. Many targets are proposed unilateral commitments by Parties for themselves, sometimes conditioned on what other Parties would commit. Most proposals are for 2020, although a few Parties propose a commitment period of 2013-2017 or 2013-2020. Some commitments would be contingent on technical issues regarding creditable GHG reductions regarding land use emissions, flexibility mechanisms, and others. One issue raised frequently by the European Union is the question of whether Russia and other former Soviet and Eastern European countries would be allowed surplus "assigned amounts" (AAUs), which are GHG targets higher than their actual emissions. These surplus AAUs were accepted under the Kyoto Protocol as an incentive to participation by those countries, although some in the EU have often referred to them as "hot air" and argued that they undermine the environmental integrity and fair burden-sharing of the international framework. Russia and several other countries seek to retain and expand their surplus of AAUs in a new agreement beyond 2012. The United States, the EU, and many other Annex I countries insist that a Copenhagen outcome be a comprehensive framework for action by all Parties. They propose alternate versions of differentiated, quantified emission limits for Annex I Parties, with key issues including the form, nature and depth ("comparability") of GHG mitigation commitments. Furthermore, Annex I Parties propose differentiated commitments for non-Annex I Parties to establish strategies that would reduce their current GHG growth trajectories, as well as Nationally Appropriate Mitigation Actions (NAMAs), to delineate specific actions that they would submit to be inscribed into an internationally measured schedule or registry. Eligibility for countries to receive financial or technological assistance would be incumbent upon taking and reporting such GHG mitigation programs. The Bali Action Plan included ambiguous language regarding mitigation commitments by developing countries. Its key phrase was: consideration of mitigation actions that would include: ... (ii) Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity building, in a measurable, reportable and verifiable manner; China and many large developing countries continue to resist the idea that any non-Annex I countries might take on quantitative and enforceable commitments. Though China, India and other non-Annex I Parties have announced voluntary, domestic GHG goals, few have shown willingness even to discuss embedding these in an international agreement or registry or to submit progress toward them to independent review. By mid-2009, however, some non-Annex I countries favored beginning to differentiate among the non-Annex I country Parties. Uganda, speaking for the Least Developed Countries (LDCs), expressed the position that all countries will need to take actions, including the LDCs. Such proposals, and those of the United States and EU, are strongly opposed by many non-Annex I countries, especially Brazil, India and China—among the non-Annex I Parties most pressured to take on quantified GHG commitments in an international agreement. They contend that these proposals seek to erase the differentiation between Annex I and developing countries embodied in the UNFCCC. These countries also oppose "Measuring, Reporting, and Verification" (MRV) proposals that would make all countries more accountable for their mitigation commitments. For low-income countries, many of which have the populations most vulnerable to climate and climate change, near-term assistance to adapt is as high a priority as mitigating long-term climate change. Key issues include how much financial assistance might be provided; how to measure, report and verify (MRV) whether wealthier countries meet their commitments; and through what mechanisms financial aid would flow. The G-77/China and Africa Groups wish to establish quantified commitments for financial transfers by the wealthier countries. Some argue for payments as "compensation" for unavoidable climate change impacts, though the UNFCCC mentions only "consideration" of actions (not compensation). Non-Annex I countries voice concern over access to financing, conditions imposed on receiving assistance, criteria to judge "vulnerability," and the burdens of processes and mechanisms, among additional issues. The United States has proposed a framework for adaptation action, with the UNFCCC acting as catalyst and the countries as key implementers, assisted by a variety of international institutions. In this plan, adaptation action would be common among all Parties, but roles would be differentiated among countries. The United States and all other Parties to the UNFCCC committed to promoting adaptation, cooperation to develop and deploy new technologies, and a host of additional but unquantified obligations. The wealthier countries (including the United States) also committed to provide financial and technical assistance to underpin developing countries' efforts to meet their obligations. In the current negotiations, developing countries are calling for financial resources that will be "new, additional, adequate, predictable and sustained," for mitigation, adaptation, and development and transfer of technologies, to flow through UNFCCC specialized funds. They call for the resources to be publicly financed (not private) and to be provided on a grant or concessional basis. In addition, some are proposing new "monitoring, reporting, and verification" mechanisms to apply to financial obligations as well, beyond the reporting already required for Annex I Parties' national communications. One of the more likely outcomes of the Copenhagen meeting is agreement on "quick start" funding for the period from 2010 until any new agreement—and its financial provisions—takes effect. (The Obama budget request for FY2010 included $1.2 billion for international financing.) Financial assistance—its amount, predictability, and "conditionality"—ties into all other aspects of the Copenhagen negotiations. Deep divisions exist among Parties over four proposals now in the negotiating text: one or more funds established under the UNFCCC Conference of the Parties (COP), managed by one or more Trustees, with funds generated through levies on international maritime transport and aviation; a share of proceeds from accessing international emissions trading; assessed contributions from Parties; and voluntary contributions from Parties and other donors; OR assessed contributions from Annex I Parties as a percent of Gross National Product; a World Climate Change Fund or Green Fund under the authority and guidance of the UNFCCC COP, administered by an existing financial institution, with funding from assessed contributions from all Parties except the Least Developed Countries (LDCs); a Global Fund for Climate (U.S. proposal) as an operating entity of the (existing) financial mechanism (the World Bank's Global Environment Facility), funded by multiyear, voluntary contributions of all Parties except LDCs; and use of existing financial institutions, such as the Global Environment Facility (GEF), multilateral development banks, etc., with a Facilitative Platform under the authority and Guidance of the COP to register and link needs to support, and to monitor and evaluate the information in the registry. A variety of international institutions and non-governmental organizations have tried to estimate the costs of adaptation to developing countries and the associated needs for public funding. Definitions and scopes of adaptation in these studies vary, accounting for some of the differences. In particular, some studies consider "all" costs of adaptation to climate change and remaining damages (although none are comprehensive); some include just large-scale adaptation costs (i.e., not most private measures taken by individuals); and some try to discern just the need for public financing for adaptation. As a result, figures range from $4 billion to several hundreds of billions of dollars annually by the year 2030. The United Nations Development Programme estimated that an additional US$86 billion per year would be needed in 2015; the UNFCCC Secretariat estimated that US$29 billion per year would be needed in 2030. For adaptation alone, the World Bank updated a previous study in September 2009, now estimating the average adaptation cost from 2010 to 2050 to be $75 billion to $100 billion annually. For GHG mitigation, the International Energy Agency's World Energy Outlook 2009 concludes that, in a scenario to stabilize atmospheric GHG concentrations at 450 ppm, "the energy sector in non-OECD countries would need around $200 billion of additional investment in clean energy and efficiency in 2020—including $70 billion for nationally appropriate mitigation actions (NAMAs) and a similar amount to achieve sectoral standards in transport and industry." The extra investments would be more than offset in the industry, transport, and buildings sectors, says IEA, by savings from energy efficiency improvements. Differences among scopes and methods for estimating incremental financial needs explain part of the range among estimates; no study has been considered definitive. Heads of State in the European Union (the European Council) propose that 5 to 7 billion euros of public financing, particularly for least developed countries, should be provided in each year of 2010 to 2012, as a "fast-start" in the context of a Copenhagen agreement. The European Council has concluded that 100 billion euros annually by 2020 will be necessary to help developing countries to mitigate and adapt to climate change. Some non-Annex I countries (e.g., China) call for amounts of public financing that many view as unrealistic—up to 1% of GDP on top of other Overseas Development Assistance. Countries differ on the appropriate sources of funds. The G-77 and China argue that developed nations' governments should provide public funds as the main source of climate change financing for mitigation, adaptation, technology cooperation, and capacity building. Annex I nations, however, underscore the importance of private sector finance through GHG trading mechanisms and other investments, with public funds as smaller and more targeted shares. The United States and the EU agree that some public financing should be provided, in particular for capacity building and adaptation, but seek mechanisms for most of the financing to flow from the private sector through market incentives. (For example, GHG "offsets" that would be authorized by S. 1733 , the Clean Energy Jobs and American Power Act, the "Kerry-Boxer" bill.) European Union heads of state concluded that the net incremental costs of up to 100 billion euros by 2020 in developing countries should be met through a combination of non-Annex I countries' own efforts, the international carbon market and international public finance. They propose that the international public finance portion may be in the range of 22 to 50 billion euros per year, but subject to a "fair burden sharing" among Parties to the UNFCCC, agreement on how to manage the funds, and application of the funds to "specific mitigation actions and ambitious Low Carbon Development Strategies/Low Carbon Growth Plans." (See section on mitigation commitments of non-Annex I countries.) They conclude that all Parties except the least developed should contribute to the public financing, with assessments based heavily on emission levels, as well as on Gross Domestic Product. EU leaders have stated they will provide their "fair share" of this amount, though they have not specified a precise amount. Their contribution will be conditioned on other countries' offers. Public finances have been proposed to come from a variety of levies, including charges on maritime and aviation fuels, a percentage of GHG offsets internationally (such as exists now under the Kyoto Protocol's Clean Development Mechanism), contribution of a share of national allowances to auction, etc. To support private sector financing, proposals diverge on whether to retain and revise existing GHG trading mechanisms as vehicles for private investment in GHG mitigation: The non-Annex I countries seek to retain the mechanisms of the Kyoto Protocol, while the EU and United States press for new, more efficient mechanisms than, for example, the Clean Development Mechanism has thus far been. Many different proposals for new mechanisms have surfaced, including crediting for GHG reductions in Nationally Appropriate Mitigation Actions (NAMAs) below business-as-usual trajectories (Korea); NAMA-based emissions trading (New Zealand); and sectoral crediting and trading (EU). Besides the magnitude and terms of financing available, substantial disagreement continues over appropriate mechanisms that would manage publicly provided financing under a new agreement. Much assistance passes through bilateral arrangements, although some countries complain that these are difficult to verify and may represent a shift in funding, not additional funding. Multilaterally, an array of mechanisms is available to help finance capacity building, technology cooperation, GHG mitigation policy development and measures, and adaptation analysis, planning, and actions. Such mechanisms include the Global Environment Facility (GEF) as the financial mechanism of the UNFCCC; the Special Climate Change Fund; and funds for specialized activities (e.g., the Adaptation Fund of the Kyoto Protocol) or groups of countries (e.g., the Least Developed Countries Fund of the Kyoto Protocol). In 2008, multilateral development banks with several governments and stakeholders established the Climate Investment Funds (CIF) under management of the World Bank. Many additional sources of funding, such as through other MDBs, are active. Their processes, terms, and responsiveness vary. Some countries are concerned about the plethora of funds, administrative and management costs, and strategic provision of funds to maximize the effectiveness of the monies. Many non-Annex I countries complain that much financing is managed bilaterally or through the Multilateral Development Banks, particularly the World Bank, which some believe are not as responsive to the priorities of the recipient countries. These critics prefer financing to be managed by institutions created under the UNFCCC, in which they have "one-country, one-vote," or at least equal regional representation as the industrialized nations. Also, while Annex I Parties generally prefer and promote means for the private sector to finance mitigation and adaptation investment, many non-Annex I countries prefer more "predictable" public sector flows. The four proposals in the current negotiating text contain the main alternatives for mechanisms for publicly provided financing: one or more funds managed by one or more Trustees of the UNFCCC Conference of the Parties (COP); a new fund under the authority and guidance of the COP but managed by an existing international institution; a new fund under the authority and guidance of the COP but managed by the existing financial mechanism of the UNFCCC (i.e., the GEF); and the use of existing financial institutions (i.e., no new mechanisms). On December 7, 2009, U.S. officials indicated that they would support a new fund, likely to operate under the World Bank, because of its existing expertise, operating standards, and internal oversight of financial operations. The fund would have its own governance structure, however. The fund would receive public financing and leverage private and other public sector investments in energy efficiency, regulate electricity, improve institutional capacity, and adaptation to climate change, and an array of other possible projects. It would not be the exclusive mechanism for financial flows under an agreement. The issue of mechanism may not be among the most difficult to resolve in the negotiations. Although the U.S. delegation provided a proposal for a new financing mechanism in the October 2009 negotiations in Bangkok, it has proposed neither overall multilateral levels of funding under a new agreement nor an amount that the United States might offer. Some Members of Congress and U.S. constituents have pressed for provisions in climate change legislation to provide for funding to assist adaptation in developing countries, and to support cooperation on clean technology and capacity building. In June 2009, the House passed H.R. 2454 , the American Clean Energy and Security Act, with provisions to allow up to 1 billion emissions offsets to come from international sources, which could provide a many-billion-dollar stream of private finance for projects in developing countries. The bill also would provide funds internationally to help tropical deforestation prevention, capacity building, clean technology cooperation, and international adaptation. A parallel bill, S. 1733 and the Chair's Mark, contains similar provisions. Some Members of Congress and advocates have sought to increase allocation of allowances and/or appropriations, to $2 billion to $38 billion for international adaptation as well. A new U.S. coalition of religious organizations has called for at least $3.5 billion per year to help poor populations respond to potential floods, natural disasters and droughts associated with warming temperatures. The United States participates in the financing deliberations with impaired credibility, being almost $170 million in arrears for its assessed contribution to the Global Environment Facility (the financial mechanism of the UNFCCC and other treaties). The Bush Administration helped establish a new Clean Technology Fund under the World Bank, but the U.S. Congress declined to appropriate the first payment of $400 million requested for FY2009. Treasury requested $500 million for FY2010. The Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) permitted up to $10 million for the Least Developed Countries Fund, under the UNFCCC, to support grants for climate change adaptation programs. To receive the funds, the Global Environment Facility (GEF) must annually report on the criteria it uses to select programs and activities that receive funds, how funded activities meet such criteria, the extent of local involvement in these activities, the amount of funds provided, and the results achieved. In the House appropriations bill for foreign operations for FY2010 ( H.R. 3081 , as placed on the Senate calendar), $75 million would be appropriated for the multilateral Strategic Climate Fund, $225 million for the Clean Technology Fund, $86.5 million for the GEF (a minor portion of which supports the UNFCCC), $180 million for bilateral GHG mitigation programs under U.S. Agency for International Development, as well as other monies that could be used to support GHG mitigation and climate change adaptation. The United States is constrained in offering a quantitative financial pledge, including the proposed increases, without a legislated means to assure predictable private and public financing for international assistance (e.g., by GHG trading mechanisms for private flows, and allocation of GHG allowances for public funds). This has frustrated most other delegations, and may weaken U.S. leverage regarding the financial mechanisms. Because achieving deep GHG reductions would require radical technological change from current patterns, Parties generally agree to cooperate to advance and deploy new technologies. The United States and the EU agree that some public financing for technology is needed but that the private sector is better able to achieve the necessary advances and deployment. Many non-Annex I countries consider private investment too unreliable and not necessarily in their developmental interests. They want most funding to be public and managed by a new organization directed by the UNFCCC. After years of stalled talks regarding technology cooperation, Bangkok saw discussions open up on a wide range of issues including enhanced action on technology, capacity building and enabling environments; greater cooperation on research, development, demonstration, and deployment (RDD&D); technology innovation centers and other institutional arrangements; and financing. Divisions remain among Parties. Annex I Parties call for enhanced action among all Parties to implement the Convention's provisions. The European Union resists creation of any new institutions, calling for reliance on existing financial organizations. The United States proposes a new voluntary fund to which all Parties but the least developed would contribute, and from which all could draw. The G-77 countries and China propose creation of new institutional arrangements, funded by the wealthiest Parties for any of the non-Annex I Parties to use. Some convergence may be evolving around uses for RDD&D, capacity building, policy frameworks and enabling environments. Three components articulated as critical by some Parties are accelerated global openness to environmentally sound technologies; increased access to technology information and know-how; and high-quality technology roadmaps for low-carbon economic growth. In October 2009, the U.S. delegation proposed a "hub and spokes" framework (now "hub and corps") as a new mechanism to support technology cooperation. It would rely on regional centers of excellence, linked through a professional Climate Technology Corps, to a Climate Technology Hub. The U.S. delegation indicates this would increase availability, capacity, and information exchange related to technology. The Hub would be staffed by full-time clean technology experts who would develop and maintain critical analytic tools. The Corps would consist of modeling, policy, finance, system design, and workforce training experts drawn from national development agencies, Multilateral Development Banks, and academia, to assist country-driven programs. The proposal seemed to straddle the competing ambitions of various Parties by directly responding to the stated interest for new institutions while offering a possible way forward in negotiations. One remaining challenge is the handling of intellectual property rights (IPR). Common arguments arise between the importance of IPR as incentives to innovate versus barriers to technology transfer. Four options regarding IPR, covering a wide range of views, remain in the negotiating draft: Technology development, diffusion and transfer would occur cooperatively with patent sharing and/or intellectual property free for renewable energy and energy efficiency technologies. Financial support would be provided to buy down the full or partial cost of technologies for developing country Parties, taking into account the ability to pay, and provided by the financial mechanism under the UNFCCC. Negotiation to constrain limits on access to technologies that help mitigation and adaptation by establishing "global technology pools," and using the full flexibilities contained in the World Trade Organization's agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), differential pricing, limited or time restricted patents, etc. Compulsory licensing of specific technologies for mitigation and adaptation to climate change, where it can be demonstrated that those patents and licenses act as a barrier to technology transfer and prevent the deployment or diffusion of that technology in a specified country. Immediate exclusion of new—and revocation of existing—patents in developing countries on essential technologies required to address mitigation and adaptation. Some of these options are non-negotiable for the U.S. and other delegations. Deforestation accounts for about one-fifth of global carbon dioxide emissions, and poses further ecological risks. Until recently, most non-Annex I countries and many environmental groups opposed addressing forests or giving credits for improving resource management: many feared it was a distraction from abating fossil fuel emissions, while others focused on the environmental integrity challenges of credible measurement and monitoring of GHG reductions in the forest and resource sectors. Forested countries also feared any undermining of national sovereignty, including their management of resources. Widespread agreement has emerged to address carbon sequestration in forests, but with differences over how financial assistance for measures should be provided—through public funding or through GHG trading, or both. There is no G-77 coordinated position on how to reduce deforestation and forest degradation, as well as improved conservation of natural resources ("REDD+"). Disagreements are apparent over the level of safeguards and the definition of what would be considered "sustainable management of forests." Nevertheless, most see value in ensuring that all land use activities are recognized as viable mitigation options for both Annex I and non-Annex I countries. The U.S. remains prepared to press for REDD to be integrated into developing country NAMAs and low carbon strategies. The European Union generally agrees, and emphasizes performance-based mechanisms that recognize verified emission reductions. Measuring, reporting and verification (MRV) responsibilities would provide transparency and accountability for other commitments undertaken in a Copenhagen agreement. The practice of measurement, reporting, and verification also assists Parties in building their indigenous capacities and fulfilling their commitments. The UNFCCC included commitments from all Parties to certain actions that would be included under effective MRV provisions, including national GHG inventories, reporting ("national communications") of national plans and actions taken, modeling of GHG results, etc. Only Annex I Parties, however, have agreed to annual GHG inventories according to UNFCCC guidance and to periodic national communications, while some non-Annex I Parties (notably China) have resisted rules that would regularize their reporting. Given concerns about capacities, transparency, and confidence among Parties, MRV is arguably an essential part of the multilateral architecture under negotiation. Under the Bali Action Plan, Parties agreed to paragraphs 1b(i) and 1b(ii): (b) Enhanced national/international action on mitigation of climate change, including, inter alia, consideration of: (i) Measurable, reportable and verifiable nationally appropriate mitigation commitments or actions, including quantified emission limitation and reduction objectives, by all developed country Parties, while ensuring the comparability of efforts among them, taking into account differences in their national circumstances; (ii) Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity-building, in a measurable, reportable and verifiable manner (UNFCCC, 2007a). While the current negotiations include some dispute about appropriate interpretation of that language, most Parties agree that "measurable, reportable, and verifiable" should apply to three sets of actions: (1) GHG actions and quantified commitments by developed country Parties; (2) Nationally appropriate mitigation actions (NAMAs) by developing country Parties; and (3) technology, financing, and capacity building for developing country Parties (although it is unclear whether MRV would regard the receipt of these, or the provision of these, the effects of these or all of these options). Additionally, MRV is part of negotiations to reduce emissions from deforestation and forest degradation, and conservation (REDD+) in developing countries. Most Parties agree that new commitments should build on the existing frameworks under the UNFCCC and, when appropriate, the Kyoto Protocol. MRV proposals under negotiation toward Copenhagen include: reporting of all nationally appropriate mitigation actions by developing countries, or only those that receive international support; requirements for all Parties to provide comparable information and detail in their reporting; mechanisms and magnitude of financial and technical assistance to countries that are not (yet) capable of meeting the requirements; setting out timing, according to each Party's circumstances, for annual GHG inventory and regular national communications obligations to become binding; results-based mechanisms for distributing available resources to improve MRV in developing countries; mechanisms for transparency and independent review of reports, whether through international expert panels (as in place under the UNFCCC for Annex I Parties) or through agreed, independent mechanisms within Parties; rules and procedures for MRV in Parties that allow them to take part in GHG trading mechanisms (including project-based offsets) to protect environmental integrity; linkages between the quality of MRV of a Party and crediting of GHG reductions; and methods for quantifying "technology, financing, and capacity-building" provided by Annex I countries and received by developing countries, and for reporting outcomes and effectiveness. Some non-Annex I Parties likely resist proposals because MRV ties them into more rigorous compliance assurance systems under the international regime. There are a number of multilateral and bilateral initiatives that have demonstrated progress in improving developing countries' capacities and willingness to report and have their reporting independently verified. (As examples, the United States supported dozens of "Country Studies" aimed at this in the early to mid-1990s; the World Bank has financed and assisted many Parties' communications; and Australia, for instance, has assisted Indonesia to design and begin to establish a national system for MRV of REDD.) Most observers conclude that the efforts have yielded useful results, but that the level and consistency of resources have constrained more widespread progress. The U.S. delegation has indicated that its position builds on the commitments of all Parties under the UNFCCC. It argues that MRV is required of all Parties. New requirements would cover (1) enhanced reporting (annually for all but the Least Developed Countries); development, implementation, and reporting of low carbon strategies and of actions that would be "inscribed internationally," (2) independent expert reviews; and (3) public peer reviews conducted in sessions with all Parties, to promote transparency and accountability. Sub-elements of the MRV system would, however, apply differently to countries, such as to the Least Developed Countries versus those non-Annex I Parties with greater responsibilities and capabilities. The U.S. proposal would include financial support to countries that are not capable of carrying the costs of their MRV obligations. Some non-Annex I Parties have protested that the U.S. proposal does not include enough differentiation among Parties. Some of the Parties to the Kyoto Protocol have indicated that they seek a stronger compliance and enforcement system, potentially retaining the procedures agreed under the Kyoto Protocol.

The United States and almost 200 other countries are negotiating under the United Nations Framework Convention on Climate Change (UNFCCC) to address climate change cooperatively beyond the year 2012. Parties agreed to complete the negotiations by the 15th meeting of the Conference of the Parties (COP-15) from December 7-18, 2009, in Copenhagen. However, some nations' leaders have indicated that the Copenhagen outcome is likely to be a political agreement providing a mandate for a later legally binding, comprehensive agreement. The negotiations are intended to decide the next steps toward meeting the objective of the UNFCCC, to stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Most Parties conclude the objective requires avoiding a 2oCelsius increase of global mean temperature from pre-industrial values and reducing global greenhouse gas (GHG) emissions by 50% by 2050 from 1990 levels, with industrialized countries' share to be an 80-95% reduction. The UNFCCC principle of common but differentiated responsibilities among Parties permeates debate about obligations of different forms, levels of effort, and verifiability. Key disagreements remain among Parties: GHG mitigation: Some countries, including the United States, seek GHG actions by all Parties; many developing countries argue that differentiation should exclude them from quantified and verifiable GHG limitations. Many vulnerable countries are alarmed that GHG targets proposed by wealthy countries are inadequate to avoid 2oC of temperature increase and associated serious risks. Adaptation to climate change: Many countries, including the United States, wish to use bilateral and existing international institutions, with incremental financial assistance, targeted at the most vulnerable populations; many developing countries seek a fully financed, systemic, and country-determined effort to avoid damages of climate change, to which they have contributed little. Financial assistance to developing countries: Many wealthy countries, including the United States, propose private sector mechanisms, such as GHG trading, along with investment-friendly economies, as the main sources of financing, with a minor share from public funds; many developing countries argue for predictable flows of unconditioned public monies, with direct access to an international fund under the authority of the Conference of the Parties. Technology: Many countries, including the United States, maintain that private sector mechanisms are most effective at developing and deploying the needed advanced technologies, enabled by balanced trade and intellectual property protection; some countries seek new institutional arrangements and creative mechanisms to share technologies to facilitate more effective technology transfer. Negotiators face a complex array of proposals. Many delegations, including the United States, approach Copenhagen with unresolved climate agendas at home. President Obama has announced an intention to offer a "provisional" GHG target for the United States in the range of 17% below 2005 levels by 2020, ultimately to be brought "in line" with energy and climate legislation. The U.S. delegation negotiates without clear signals as to what the Congress would support. U.S. influence in the negotiations may also be impaired by having signed but not ratified the Kyoto Protocol, and by being almost $170 million in arrears in contributions to the multilateral Global Environment Facility.

On October 23, 2015, the U.S. Environmental Protection Agency (EPA) released the final version of its regulations to reduce greenhouse gas (GHG) emissions from existing power plants (also referred to as electric generating units or EGUs). Since carbon dioxide (CO 2 ) from fossil fuel combustion is the primary source of GHG emissions, and fossil fuels are used for the majority of electric power generation, reducing CO 2 emissions from power plants plays a key role in the Administration's climate change policy. CO 2 emissions are linked to anthropogenic climate change, and the EPA cites the Obama Administration's intent to address climate change concerns. Under the provisions of the Clean Power Plan (CPP), most existing fossil fuel-fired electric power generation plants will be subject to state-specific targets to reduce carbon emissions. The combined state targets are expected to result in reducing CO 2 emissions from power generation in the United States approximately 32% by 2030 as compared to 2005 levels. To meet CPP goals, EPA has established a national CO 2 emissions performance rate for fossil fuel-fired electric steam generating units (generally, coal- and oil-fired power plants), and for stationary combustion turbines (generally, natural gas-fired combined cycle generating units). EPA is also giving each state a specific CO 2 emissions rate based on these national performance rates and the state's existing power generation portfolio. EPA believes that the CPP will "protect human health and the environment by reducing CO 2 emissions from fossil fuel-fired power plants in the U.S." Mandatory compliance with the CPP begins in 2022, with final compliance with state CO 2 emissions or emission rate targets set for 2030. This report presents an analysis of EPA's Clean Power Plan in the context of the electric power sector. The full implications of implementing the CPP are unlikely to be known until after the states file their compliance plans, which are due by September 6, 2016 (although an extension to 2018 is available to allow for the completion of stakeholder and administrative processes). The discussion of issues for Congress in this report will be focused on the implications of the CPP on electric power system reliability, the costs of electric power to customers, and the future structure of the electric utility industry which could result from implementation of state compliance plans. Burning fossil fuels to produce electricity results in the release of CO 2 , and represents the largest source of GHG emissions in the United States. As shown in Figure 1 , fossil fuel combustion was responsible for approximately 68% of electric power generation as of 2012. Coal was the fuel most used. Coal is also the fossil fuel which emits the most carbon dioxide per unit of electric power produced, averaging 216 pounds of carbon dioxide per million British thermal units (mmBTUs) of energy produced. By comparison, natural gas combustion releases about half the carbon emissions at 117 pounds of carbon dioxide per mmBTU of energy produced. In a 2007 decision, the Supreme Court found in Massachusetts vs. EPA that GHG emissions were air pollutants which could be regulated under the Clean Air Act (CAA). EPA then moved in 2009 to declare that GHGs were a threat to public health and welfare in an "endangerment" finding, which served as a basis for subsequent actions from the agency. With regard to stationary sources of GHGs, EPA proposed new source performance standards (NSPS) in September 2013 for the control of CO 2 emissions from new electric power plants burning fossil fuels under CAA Section 111(b) regulations. These standards were finalized in October 2015. With the NSPS promulgated in October 2015, EPA issued guidelines under CAA Section 111(d) for the control of CO 2 emissions from existing power plants burning fossil fuels. The standard of performance for existing sources is to reflect the degree of emissions limitation achievable through the application of the best system of emission reductions (BSER) that is "adequately demonstrated" and available to reduce pollution. The provisions under CAA 111(d) allow EPA to set goals, and gives states the responsibility for creating compliance plans which meet EPA's guidelines. EPA's Clean Power Plan establishes interim and final CO 2 emission performance rates for fossil fuel-fired steam electric generating units and natural gas-fired combined cycle electric generating units. Based on these performance rates, EPA calculated for each state a rate-based CO 2 emissions goal (measured in pounds of CO 2 per Megawatt-hour (lbs CO 2 /MWh)) and a mass-based state goal (measured in total short tons of CO 2 ). A state must implement an EPA-approved plan to ensure that power plants individually, in aggregate, or in combination with other measures undertaken by the state, achieve the equivalent of the interim CO 2 emissions performance rates (over the "glide path" period of 2022 to 2029), and the final CO 2 performance rates, rate-based goals or mass-based goals by 2030. EPA outlines goals in the CPP for CO 2 reduction by establishing its best system of emissions reduction. The BSER is based upon three "building blocks" which EPA says are available to all affected EGUs, either through direct investment or operational shifts or through emissions trading. Building Block 1 : Improving the heat rate at affected coal-fired steam EGUs. Building Block 2 : Substituting increased generation from lower-emitting existing natural gas combined cycle (NGCC) units for reduced generation from higher-emitting (primarily coal-fired) affected steam generating units. Building Block 3 : Substituting increased generation from new zero-emitting renewable energy generating capacity for reduced generation from affected fossil fuel-fired generating units. All three building blocks are based on "inside the fence line" (i.e., EGU-focused) actions to reduce CO 2 emissions or emissions rates. EPA used the building blocks to create national performance rates for two subcategories of affected EGUs: fossil fuel-fired electric utility steam generating units and stationary combustion turbines. For fossil fuel-fired (i.e., mostly coal- and oil-fueled) steam generating units, an emission performance rate of 1,305 pounds of CO 2 per Megawatt-hour (lbs CO 2 /MWh) is established. For stationary combustion turbines (identified by EPA as NGCC units), the performance rate is 771 lbs CO 2 /MWh. EPA believes that a transition period from 2022 to 2029 will allow for states to achieve these final performance rates by 2030. In turn, EPA used the national performance rates to establish specific CO 2 reduction targets for each state based on each state's "historical blend" of fossil-fueled steam and NGCC generation. EPA believes that the ranges of CO 2 emissions reduction at coal, oil, and gas power plants can be achieved at a "reasonable cost" by application of the building blocks to a state's power generation portfolio. EPA is allowing states to choose how to meet their CO 2 emissions compliance goals, using rate-based goals (measured in lbs CO 2 /MWh) or mass-based goals (measured in total short tons of CO 2 ). In addition, states can meet their goals using an emission standard plan or a state measures plan. The "emissions standard approach" is based on the EGU-specific requirements so that all affected EGUs will meet their emission performance rates or equivalent mass-based goals. States can also choose a "state measures approach" using a mixture of state-enforceable measures (such as a renewable electricity standard and programs for improvement of energy efficiency) to achieve (on aggregate) equivalent emissions or emission rate reductions. If a state measures approach is chosen, the plan must also include a "contingent backstop of federally enforceable emission standards for affected EGUs that fully meet the emission guidelines and that would be triggered if the plan failed to achieve the required emission reductions on schedule." States will also be able to formulate their own plans to reduce CO 2 emissions (as opposed to using the BSER), and can use an integrated resource plan (IRP) or other method. However, if they choose to implement their own plan they will have to include a timeline and process for reporting to ensure that the state's affected EGUs achieve the equivalent of the interim and final CO 2 emission performance rates between 2022 and 2029 and by 2030. States can also join existing or form new regional emission trading programs with other states for compliance purposes. EPA has promulgated each state's goal as a specific CO 2 mass goal as a way for states to implement mass-based trading. Some states have expressed a view that mass-based trading has significant advantages over rate-based trading. States must decide whether to allow emissions trading, or require EGUs to meet specific CO 2 emission performance rates or a state "portfolio" measure, which can be rate- or mass-based. Depending on what the state plan allows, the owners of EGUs may be responsible for deciding how these requirements will be met (i.e., by application of the BSER or purchase of emission allowances). EPA encourages investments in renewable electricity projects and demand-side energy efficiency (DSEE) in lower-income communities in 2020 and 2021. Under the Clean Energy Incentive Program (CEIP), established in the CPP final rule, EPA can award (a limited number of) matching allowances for renewable electricity projects that begin construction after participating states submit their final implementation plans. Energy efficiency projects in low-income communities are also eligible under the CEIP for double credits. Through this program ... states will have the opportunity to award allowances and [emissions rate credits (ERCs)] to qualified providers that make early investments in [renewable energy (RE)], as well as in demand-side [energy efficiency (EE)] programs implemented in low-income communities. Those states that take advantage of this option will be eligible to receive from the EPA matching allowances or ERCs, up to a total for all states that represents the equivalent of 300 million short tons of CO 2 emissions. Participation in the CEIP must be a part of the initial state CPP compliance submitted to EPA by September 6, 2016. This submission must outline all of the programmatic milestone steps necessary to achieve a state's compliance goals. The final state CPP implementation plan must be filed by September 6, 2018, with compliance with EPA-approved plans beginning in 2022. EPA has the authority to prescribe an implementation plan for any state that does not submit a plan or if EPA disapproves a state plan. Electric power generation in the United States differs regionally, and largely reflects local resources, fuel costs, and availability of fuel supplies. EPA recognizes that it will take time to implement compliance solutions to meet its proposed carbon pollution reduction plan. EPA is attempting to provide flexibility for state compliance with the CPP. States will have the flexibility to choose from a range of plan approaches and measures, including numerous measures beyond those considered in setting the CO 2 emission performance rates, and this final rule allows and encourages states to adopt the most effective set of solutions for their circumstances, taking account of cost and other considerations. While 2005 has been mentioned in broader U.S. policy terms for reductions in GHG emissions to 2030, it is not the year that EPA has used in its emissions reduction calculation. EPA chose 2012 as the year from which to establish a baseline for emissions reduction since that was the year for which it has the most complete state emissions, net generation, and capacity data for all affected EGUs. Some regard this as beneficial for many states since U.S. GHG emissions from EGUs have dropped 15% between 2005 and 2012, while others think it is not beneficial as early actors on clean energy do not get credit for CO 2 reductions in the timeframe from 2005 to 2012. Key elements of the CPP's approach and the potential implications for the electric grid are discussed in the following sections. EPA has modeled opportunities for coal plant heat rate improvement, dispatch of more NGCC and fewer coal-fired power plants, and increased renewable electric power generation. The agency designated the three building blocks as the best system of emission reduction, and used the BSER to develop national EGU performance rates for steam and NGCC units. EPA recognizes that increasing power plant efficiency by equipment upgrades and heat rate improvements is a way for EGUs to reduce CO 2 emissions, and quantifies what it estimates is possible on a U.S. regional interconnection-wide basis (see Figure 2 ). EPA has determined that a "conservative estimate of the potential heat rate improvements ... that EGUs can achieve through best practices and equipment upgrades is a 4.3-percent improvement in the Eastern Interconnection, a 2.1-percent improvement in the Western Interconnection and a 2.3-percent improvement in the Texas Interconnection. Using less fossil fuel to generate the same amount of electricity at a facility will generally reduce its carbon emissions. Those affected EGUs which have done the most to reduce their heat rate will tend to be closer to EGU's CO 2 performance emission rate. These heat rate improvement measures include best practices such as improved staff training, boiler chemical cleaning, cleaning air preheater coils, and use of various kinds of software, as well as equipment upgrades such as turbine overhauls. These are measures that the owner/operator of an affected coal-fired steam EGU may take that would have the effect of reducing the amount of CO2 the source emits per MWh ... These heat rate improvements are a low-cost option that fit the criteria for the BSER, except that they lead to only small emission reductions for the source category. EPA expects that many coal-fired EGUs operating in 2030 will have made the investments required to improve unit heat rates. The majority of existing coal boilers are projected to adopt the aforementioned heat rate improvements. Of the 183 GW of coal projected to operate in 2030, EPA projects that 99 GW of existing coal steam capacity (greater than 25 MW) will improve operating efficiency (i.e., reduce the average net heat rate) under the rate-based approach by 2030. Under the mass-based approach, EPA projects that 88 GW of the 174 GW of coal projected to operate in 2030 will improve operating efficiency by 2030. The New Source Review P.L. 94-163 (NSR) program was designed to prevent the degradation of air quality from the construction of new facilities or modification of existing facilities which have potentially harmful emissions. Efficiency improvements to power plants that reduce regulated pollutants theoretically should not trigger NSR requirements, unless the improvements result in an increase in emissions (e.g., because the modified, more efficient plant operates for more hours). EPA recognizes that CPP compliance plans could lead to an affected EGU making physical or operational changes. These changes could result in the unit being dispatched (i.e., scheduled for operation) more often, and cause an increase in the unit's annual emissions, possibly triggering NSR. However, EPA expects this to be a rare occurrence. The EPA is also aware of the potential for "rebound effects" from improvements in heat rates at individual EGUs. A rebound effect could occur if an improvement in an EGU's heat rate caused a reduction in variable operating costs. This would make the EGU more competitive relative to other EGUs, resulting in the EGU's generating more power. Nonetheless, EPA believes that a combined approach utilizing all three building blocks would alleviate the concern. Combining building block 1 with the other building blocks addresses this [rebound effect] concern by ensuring that owner/operators of affected steam EGUs as a group would have appropriate incentives not only to improve the steam EGUs' efficiency but also to reduce generation from those EGUs consistent with replacement of generation by low- or zero-emitting EGUs. While combining building block 1 with either building block 2 or 3 should address this concern, the combination of all three building blocks addresses it more effectively by strengthening the incentives to reduce generation from affected steam EGUs. An increase in CO 2 emissions associated with an EGU's increase in generation output could offset the reduction in the EGU's CO 2 emissions caused by the decrease in its heat rate and rate of CO 2 emissions per unit of generation output. The extent of the offset would depend on the extent to which the EGU's generation output increased (as well as the CO 2 emission rates of the EGUs whose generation was displaced). EPA states that more frequent use of power plants that produce fewer CO 2 emissions (per MWh) will result in less carbon pollution. Dispatching higher efficiency, less carbon-intensive natural gas combined cycle units more would accomplish this goal. EPA also states that existing NGCC dispatch could be augmented with an increase in NGCC utilization rates, concluding that an annual average utilization rate of 75% on a net summer basis is "a conservative assessment of what existing NGCC plants are capable of sustaining for extended periods of time." The increase in the utilization rate essentially would be accomplished over a glide path of annual increases in NGCC dispatch over the interim period from 2022 to 2029. EPA concludes that the existing natural gas pipeline supply and delivery system would be capable of "supporting the degree of increased NGCC utilization potential" needed for this building block. However, others might disagree with this conclusion, noting that in areas which use natural gas for residential and commercial heating, there could be competition on existing lines for natural gas delivery. EPA considers the phased increase in utilization of existing NGCC capacity to be a less expensive option to conversion of coal power plants to natural gas. Similarly, EPA is not emphasizing the construction of new NGCC units due to costs compared to other BSER options. In the context of the BSER, EPA views construction and operation of zero-emitting renewable electric generating capacity as a preferable alternative to new NGCC. New NGCC would also result in additional CO 2 emissions (compared to other BSER options). It should be noted that Building Block 2 incorporates reduced generation from steam EGUs, while Building Block 3 incorporates reduced generation from all fossil fuel-fired EGUs. Reducing power generation from coal-fired EGUs and replacing the capacity with power from lower- or zero-emitting EGUs is a way to reduce CO 2 emissions from the utility power sector. EPA states that renewable energy technologies have been deployed in increasing amounts over the last few years. Many affected EGUs are already planning on deploying significant amounts of RE according to their integrated resource plans (IRPs). Electric utilities use [integrated resource planning (IRP)] to plan operations and investments over long time horizons. These plans typically cover 10 to 20 years and are mandated by public utility commissions (PUCs). EPA quantified potential renewable energy levels in 2030 in terms of the three interconnection regions. EPA modeled the potential for renewable energy technologies to be deployed in increasing amounts during the interim period (2022 to 2029) based on historical deployment levels to replace fossil-fired EGU capacity. Assumptions were made to include projected future capacity factors for renewable electric generation, and increased potential for future deployment based on historical five-year bands of average capacity changes. As a result, EPA projects that implementation of the CPP may result in renewable energy making up 28% of total generating capacity by 2030 (in both the mass-based and rate-based scenarios) as compared to its base case projection of 25% renewables. As regards the potential for power generation, EPA's analysis projects that this increased renewable capacity (hydro and non-hydro) will represent 20% of projected total electricity generation (for both the rate- and mass-based scenarios) in 2030, as compared to 18% in the base case. This represents relatively small increases from the RIA based case in 2020, wherein renewables (hydro and non-hydro) represent approximately 17% of total generation in all cases (base case and the rate- and mass-based scenarios). EPA acknowledges that the intermittency and variability of some renewable electric technologies are seen as a potential hindrance to large-scale deployment, but states there is adequate time to build infrastructure (potentially including new pipelines and fast ramping natural gas units) to back up renewable generation. However, unlike some, EPA does not consider the need for large-scale electricity storage as essential for the growth of renewable electricity to levels comparable to utility-scale fossil or nuclear generation. The phase-in period would allow for additional time to complete potential infrastructure improvements (e.g., natural gas pipeline expansion or transmission improvements) that might be needed to support more use of existing natural gas-fired generation, and provides states with the increased ability to coordinate actions taken under building block 2 with actions taken under building block 3 (deployment of new renewable capacity). ... Storage can be helpful but is not essential for the feasibility of RE deployment because there are many sources of flexibility on the grid. DOE's Wind Vision and many other studies have found an array of integration options (e.g., large balancing areas, geographically dispersed RE, weather forecasting used in system operations, sub-hourly energy markets, access to neighboring markets) for RE beyond storage. Storage is a system resource, as its value for renewables is a small share of its total value. Increasing regional coordination between balancing areas will increase operational flexibility. Nevertheless, EPA expects states and utilities will encounter few if any problems in connecting the expected increase in amounts of (variable or intermittent) renewable electricity into the grid. EPA concedes, however, that operational and technical upgrades (including new transmission lines) may be needed for non-dispatchable renewable energy technologies. Grid operators are reliably integrating large amounts of RE, including variable, non-dispatchable RE today-.... Operational and technical upgrades to the power system may be required to accommodate high levels of variable, non-dispatchable RE like wind and solar over longer time periods ; however, the penetration levels cited above have been achieved without negative impacts to reliability due in large part to low-cost measures such as expanded operational flexibility and effective coordination with other regional markets. ( Emphasis added . ) The potential range of new transmission construction is within historical investment magnitudes ... Incremental grid infrastructure needs can be minimized by repurposing existing transmission resources. Transmission formerly used to deliver fossil-fired power to distant loads can – and is – being used to deliver RE without new infrastructure. Additional concerns have been raised that the expected retirement of many older coal plants will impact the provision of ancillary services. Ancillary services are those that ensure reliability and support the transmission of electricity from generation sites to customer loads. Such services may include load regulation [i.e., the ability to maintain a constant voltage level], spinning reserve [i.e., generating capacity held in reserve which is running and synchronized to the electric system but not exporting power to the system], non-spinning reserve [i.e., generating capacity not currently running but capable of providing power to the system within a specified time], replacement reserve [i.e., generation held in reserve that requires a longer start-up time], and voltage support [i.e., generators providing reactive power to help move electricity over distances in alternating current systems]. EPA asserts that some renewable energy technologies are capable of filling this gap, with the assistance of appropriate regulatory measures. New variable RE generators can provide more electrical power grid support services beyond just energy. Modern wind turbine power electronics allow turbines to provide voltage and reactive power control at all times. Wind plants meet a higher standard and far exceed the ability of conventional power plants to "ride-through" power system disturbances, which is essential for maintaining reliability when large conventional power plants break down. Xcel Energy sometimes uses its wind plants' exceedingly fast response to meet system need for frequency response and dispatchable resources. Utility-scale PV can incorporate control systems that enable solar PV to contribute to grid reliability and stability, such as voltage regulation, active power controls, ramp-rate controls, fault ride through, and frequency control. Solar generation is capable of providing many ancillary services that the grid needs but, like other generators, needs the proper market signals to trade energy generation for ancillary service provision. EPA recognizes that renewable energy and nuclear generating capacity, as sources of lower- or zero-CO2 emission power, can potentially replace more carbon-intensive generation from affected EGUs. Therefore, EPA had originally considered including nuclear generation (from nuclear units under construction) in the CPP, and considered incentives to help existing nuclear generation which may be at risk of early retirement due to electricity market prices. But, in the final CPP, EPA chose not to include generation from units under construction in the BSER because such generation does not actually reduce existing levels of CO 2 emissions from affected EGUs. EPA has also chosen not to include a BSER component in the final CPP to help preserve existing at-risk nuclear generation. EPA acknowledges that while existing generation helps make current CO 2 emissions lower, existing generation "will not further lower CO 2 emissions below current levels." EPA points to the potential for other options to reduce CO 2 emissions from affected EGUs. There are numerous other measures that are available to at least some affected EGUs to help assure that they can achieve their emission limits, even though the EPA is not identifying these measures as part of the BSER. These measures include demand-side [energy efficiency] implementable by affected EGUs; new or uprated nuclear generation; renewable measures other than those that are part of building block 3, including distributed generation solar power and off-shore wind; combined heat and power and waste heat power; and transmission and distribution improvements. EPA concludes that, in comparison to renewable electricity generating technologies, "investments in new nuclear units tend to be individually much larger and to require longer lead times." EPA will, however, allow "emission reductions attributable to generation from the units to be used for [CPP] compliance." EPA conceived of national uniform standards for existing EGUs, in part, to facilitate emissions trading as a CPP compliance choice. EPA views emissions trading as a cost-effective means of compliance with the CPP, and while rate-based trading is possible, it has designed mass-based state goals specifically to facilitate trading. In general, while in some cases it may be cheaper to build new units than buy emissions credits, economic studies indicate that emissions trading can potentially create a financial incentive to reduce emissions by affording owners of affected EGUs the opportunity to buy or sell emissions products (e.g., rate-based emission credits or mass-based emission allowances ) to or from other affected EGUs. With emissions trading, an affected EGU whose access to heat rate improvement opportunities, incremental generation from existing NGCC units, or generation from new RE generating capacity is relatively favorable can overcomply with its own standard of performance and sell rate-based emission credits or mass-based emission allowances to other affected EGUs. Purchase of the credits or allowances by the other EGUs represents cross-investment in the emission reduction opportunities, and such cross-investment can be carried out on as wide a geographic scale as trading rules allow. The regions we have determined to be appropriate for the regionalized approach in the final rule are the Eastern, Western, and Texas Interconnections. With the CPP, EPA provides support for a regional (or possibly a national) comprehensive CO 2 market to develop with these new credits and allowances, alongside or including other commodities such as renewable energy credits (which result from prior investments in CO 2 reduction technologies). In particular, in its federal plan proposal, EPA included "model rules" for both rate- and mass-based programs so that states have the option to adopt a consistent approach to emissions trading. EPA affirms that it will support states in tracking emissions (and allowance and credit programs) in order to ensure the validity of CO 2 emission reduction strategies. Emissions trading was originally developed in the 1970s to address sulfur dioxide emissions, and a program to address climate change is already active in the nine states that comprise the Regional Greenhouse Gas Initiative (RGGI). As the nation's first mandatory cap-and-trade program for GHG emissions, the RGGI cap-and-trade system applies only to CO 2 emissions from electric power plants with capacities to generate 25 MW or more. The RGGI emissions cap took effect January 1, 2009, based on an agreement signed by the governors of states participating in RGGI in 2005, and is generally considered to be an effective program. Those that favor a cap-and-trade system argue that, among other features, it is preferable to a carbon tax or other means of regulation, because of the potential flexibility of the system and the certainty of the amount of pollution that is avoided. Others have criticized cap-and-trade programs because some features may limit the fairness or effectiveness of the program, such as the issuance of free emissions permits to large emitters, or the use of emissions offsets to allowances for pollution reduction projects in developing countries. In the CPP, EPA presents potential answers to questions on CO 2 reduction the electric power sector might ask with respect to timeframe, timeline, and choices that are available for compliance by EGUs. The CPP thus sets out a vision for a greater proportion of electric power production coming from natural gas and renewable energy generation, and less from coal-fired power plants, with specific goals for carbon emissions reduction proposed for 2030. However, some outstanding issues remain with regard to potential implementation of the CPP. EPA addresses concerns as to how the CPP might affect electric grid reliability by including several provisions to help assure system reliability. With the inclusion of a "safety valve" provision, EPA recognizes that there may be a need for a power plant to continue operations resulting in "excess emissions" if an emergency situation arises which could compromise electric system reliability. EPA therefore allows a 90-day reprieve from CO 2 emission limits, but only in an emergency situation. Such emergency situations are not expected to include severe weather, as EPA states in the CPP that extreme weather events are of "short duration and would not require major—if any—adjustments to emission standards for affected EGUs or to state plans." EPA has also implemented a formal memorandum of joint understanding on maintaining electric system reliability with the Department of Energy and the Federal Energy Regulatory Commission so as to coordinate efforts while the state compliance plans are developed and implemented. The memorandum expresses the joint understanding of how the agencies will cooperate, monitor, implement, share information, and resolve difficulties that may be encountered. The transmission system itself is aging and in need of modernization. The grid is stressed in many regions because the system is being used in a manner for which it was not designed. More transmission capacity will likely be needed to handle potentially more transmission transactions under the EPA proposal. Much of the transmission system was built by individual electric utilities to serve their own power plants. New power plants or increased utilization of existing NGCC capacity may require upgraded transmission facilities and potentially new natural gas infrastructure to provide fuel. Increased dependence on renewable generation will likely require new transmission lines, and many of today's transmission projects awaiting regulatory approvals are intended to serve renewable electricity projects. It can take anywhere from 3 to 10 years to get the federal, state, and local permits in place to build a major electric transmission line. If additional transmission capacity is required, planning would likely need to begin soon to get new lines in place for when they would be needed in the early 2020s. The Federal Energy Regulatory Commission (FERC) has identified public policy requirements (such as state renewable portfolio standards) as drivers which should be elevated to the level of reliability when it comes to approving new transmission projects in its Order No. 1000, Transmission Planning and Cost Allocation . Such treatment is essentially intended to shorten the time for transmission line approval and permitting across multiple state jurisdictions. Actual implementation of regional Order No. 1000 compliance plans will demonstrate whether the regime for transmission planning and cost sharing will achieve FERC's goals. Arguably, a central focus of the EPA's CPP proposal is on coal-fired power plants, with each of the three building blocks centering on either coal plant efficiency, reduced coal unit dispatch to lower emissions, or displacement of coal with renewable generation. The age and condition of coal-fired power plants are key considerations in a decision to upgrade or modify plants, or retire plants. Power plants in Regional Transmission Organization (RTO) regions operate in competitive environments where a power plant's operating and maintenance costs are not guaranteed recovery. Additional costs for plant upgrades may not be cost-effective under RTO electricity market regimes or prices, and state implementation plans for EPA's CPP may also result in differing requirements within RTO regions for competitive generators. Capacity markets designed to incentivize the construction of new generation in regions with competitive markets have had mixed results. New power plants will most likely be built in regions of the country with traditional regulation using tools like integrated resource planning, and rules allowing cost recovery from ratepayers for approved investments. EPA's CPP could potentially mean increased natural gas consumption under two of the three legs of the BSER stool. Building Block 2 would shift the dispatch of power generators to lower-emitting sources by increasing the scheduled operation of higher efficiency natural gas combined cycle units. Scheduling these plants more often would be expected to result in higher natural gas consumption. In addition, Building Block 3 requires the use of more zero-emitting renewable generation sources, which in many parts of the United States may require more natural gas consumption in fast-ramping power plants to make variable renewable electric generation more firm (i.e., provide power as renewable electric generation ebbs). However, increasing the use of natural gas for power generation raises some concerns, as deliverability and price volatility issues have emerged as recently as this past winter with the demand spikes associated with the Polar Vortex cold weather events. Recovery of costs from the Polar Vortex of January 2014 proved to be an issue for some utilities. FERC is working to improve coordination between the electricity and natural gas industries. Major pipelines or local distribution companies have firm deliveries usually scheduled during nomination cycles, and often release unused natural gas to secondary markets. Electricity generators in competitive markets, where dispatch of generation is not certain, frequently obtain their natural gas from secondary markets. The utilization of more NGCC capacity (especially in the competitive markets) may require changes in the way fuel is obtained so that power generation can be guaranteed. More cost-effective, natural gas storage facilities may be required for electric power production purposes, if greater natural gas use for power generation is expected. However, the regulatory regime (i.e., Regional Transmission Organization markets or traditional regulation) in place will likely have a bearing on what choices are available to natural gas generators with regard to gas storage options or contracting for firm capacity vs. the "just-in-time" manner of natural gas deliveries traditionally available to power generators. The electric utility industry values diversity in fuel choice options since reliance on one fuel or technology can leave electricity producers vulnerable to price and supply volatility. EPA expects additional retirements of coal-fired power plants, with some new NGCC capacity likely built to replace retiring coal capacity. Nuclear power plants are also aging. Some plants expected to be in operation in the 2020 to 2030 timeframe could face premature retirement for a variety of reasons ranging from plant age to competitive electricity market fundamentals (wherein cost recovery is not guaranteed) or other conditions. Unless electricity storage capacity is increased or other concepts developed, natural gas will likely be used to smooth the variable output of some renewable electricity technologies. The developing potential for a heavier reliance on natural gas for power generation is a concern for many in the power sector. EPA, for its part, states that its CPP can help preserve fuel diversity goals. The agency has modelled potential implications of the CPP in its Regulatory Impact Analysis (RIA) for the Clean Power Plan Final Rule. The RIA presents two scenarios designed to achieve these goals (which it calls the "rate-based" illustrative plan approach and the "mass-based" illustrative plan approach), which are designed to reflect state and affected EGU approaches to CPP compliance. However, in both the rate-based and mass-based scenarios, each plan is assumed to have identical levels of demand-side energy efficiency (DSEE) (represented as megawatt-hour (MWh) demand reductions and associated costs). Each scenario assumes that affected EGUs within each state comply with state goals without exchanging a compliance instrument (i.e., emission rate credits or allowances) with sources in any other state. EPA therefore expects that DSEE will be a major tool in CPP compliance strategies, even though it is not a part of the BSER. The RIA applies its "illustrative DSEE" assumptions to the rate- and mass-based scenarios to arrive at electricity demand reductions. As a result, EPA is expecting DSEE to lead to a significant reduction in electricity demand, resulting in a moderation of potential CPP compliance costs. Figure 3 illustrates the generation mix in EPA's RIA scenarios. Total power generation declines relative to the base case in both scenarios due to DSEE by 5% in 2025, and 8% in 2030. The scenarios thus present a case for a reduced overall need for power generation infrastructure relative to the RIA's base case. EPA projects in 2030 that: under the rate-based scenario , coal-fired power generation could decline 23% from the base case, while existing NGCC increases by 18%, with non-hydro renewable electric generation increasing by 9% in 2030, and under the mass-based scen a rio , coal-fired generation is projected to decline 22% from the base case in EPA's RIA, while existing NGCC generation increases 5% relative to the base case. Relative to the base case, generation from non-hydro renewables increases 8% in 2030. EPA's RIA modeling estimates from 29 GW (under the rate-based scenario) to 38 GW (under the mass-based scenario) of coal-fired units could be rendered "uneconomic to maintain" and potentially retire by 2030 relative to the base case, representing between 14% and 19% of existing coal capacity. The expected reduction in energy demand from DSEE will also slow installation of new natural gas combined cycle generation, with only new non-hydro renewable generation expected to grow. EPA's RIA looks at the implications to electricity prices and impacts on electricity rates in the context of its mass-based and rate-based scenarios. Under the Energy Policy Act of 2005 ( P.L. 109-58 ), economic dispatch is defined in Section 1234 as "the operation of generation facilities to produce energy at the lowest cost to reliably serve consumers, recognizing any operational limits of generation and transmission facilities." EPA's CPP recognizes that security constrained economic dispatch assures reliable and affordable electricity. While some dispatch of renewable generation is prioritized in some markets (assuming the resource is available), economic dispatch is generally the rule. Dispatch of intermittent renewables may also require the operation of higher cost natural gas units to firm up power (and thus compensate for the ebb and flow of the wind or solar resource). Moreover, in competitive markets, power plants are generally scheduled to operate under an economic dispatch regime whereby the generating units with the lowest electricity price offers are dispatched first, subject to reliability, security, and environmental considerations. However, some observers say that EPA's CPP essentially proposes an environmental dispatch regime for power plant operation under Building Blocks 2 and 3. The primary goal of environmental dispatch is to prioritize use of "cleaner" power generating units (i.e., which emit the least pollutants) by scheduling these plants to operate as much as possible to serve load demands. This could result in changes to the rules for dispatch order in some markets based first on emissions and then on other criteria, in perhaps a "security constrained environmental dispatch" regime. Cost could potentially be relegated to a tertiary role under a "clean and reliable electricity" system. The increased availability of natural gas has recently resulted in lower prices for wholesale electricity, with a general expectation that wholesale prices will remain relatively low for the next few years. However, there is concern that shifting to an environmental dispatch regime could potentially result in increased electricity prices to consumers, depending on the generation resource mix employed. Under the CPP, without regional plans or agreements, RTOs may be faced with decisions on generator dispatch that take into account various state plans for meeting emissions targets rather than the lowest acceptable offers to serve load. EPA, for its part, says that states and affected EGUs are essentially free to embark on any strategy (in addition to the BSER) to reduce CO 2 emissions in meeting CPP emissions reduction requirements. EPA views emissions trading as a cost-effective means of compliance with the CPP, and has designed mass- and rate-based state goals specifically to facilitate trading as a compliance strategy. It views the RIA scenario analysis emphasizing DSEE as presenting a conservative estimate of potential CPP compliance costs, as it does not include emissions trading. In its RIA for the CPP final rule, EPA assumes DSEE levels attained by the top state achievers are a model for what can be reasonably achieved by other states. For the illustrative demand-side energy efficiency plan scenario, electricity demand reductions for each state for each year are developed by ramping up from a historical basis to a target annual incremental demand reduction rate of 1.0 percent of electricity demand over a period of years starting in 2020, and maintaining that rate throughout the modeling horizon. Nineteen leading states either have achieved, or have established requirements that will lead them to achieve, this rate of incremental electricity demand reduction on an annual basis. Based on historic performance and existing state requirements, for each state the pace of improvement from the state's historical incremental demand reduction rate is set at 0.2 percent per year, beginning in 2020, until the target rate of 1.0 percent is achieved. EPA thus expects that any increase in natural gas combined cycle capacity and thereby natural gas consumption will be muted by a projected decrease in energy demand (under the RIA DSEE illustrative scenario): the use of natural gas as a power generation fuel is expected to decrease about 1% in 2025 and 2030 (under the rate-base scenario), and as much as 4.5% (under the mass-based scenario) by 2030. EPA's model indicates that the decline in electricity demand shown by its RIA scenario analysis will lead to a reduction in average electricity bills. EPA asserts that the combination of reduced electricity rates, reduced electric system costs, and lower demand from its RIA analysis will translate directly into reduced consumer electricity bills by 2030. The electricity price changes ... combine with the significant reductions in electricity demand applied in the illustrative approaches to affect average electricity bills. Under the illustrative rate-based plan scenario, EPA estimates an average monthly bill increase of 2.7 percent in 2020 and an average bill decrease of 3.8 percent in 2025 and 7 percent in 2030. Under the mass-based scenario, EPA estimates an average bill increase of 2.4 percent in 2020 and an average bill decrease of 2.7 percent in 2025 and 7.7 percent in 2030. These reduced electricity bills reflect the combined effects of changes in both average retail rates (driven by compliance approaches taken to achieve the state goals) and lower electricity demand (driven by demand-side energy efficiency). However, electricity prices are affected by a number of factors which vary regionally across the country based on power generation mix, fuel costs, fuel availability, regulatory regime (i.e., competitive market or traditional rate setting by a state or local body), and adequacy and age of infrastructure to name a few factors. While EPA expects changing such price determinants will have an impact on electricity prices, EPA does not expect that these impacts will be significant. When averaged across regions, EPA projects an increase under the mass-based scenario "in the national average (contiguous U.S.) retail electricity price of 2 percent in 2025 and 0.01 percent in 2030." State decisions on the design and availability of DSEE programs will be crucial to attaining the levels of subscribership necessary to achieve the cost reductions projected in EPA's RIA analysis. The development of further national standards for energy efficient appliances promulgated by DOE standards may help achieve the levels of DSEE seen by the RIA as a low-cost CPP compliance option. For some states, attaining the levels of cost-effective DSEE projects needed to reduce CPP compliance costs may be a challenge. For the top tier of states engaged in DSEE, the challenge may be where to look for the next increment of cost-effective projects. EPA has quantified the projected annualized costs of its illustrative DSEE scenario at $2.1 billion to $2.6 billion in 2020, $16.7 billion to $20.6 billion in 2025, rising to between $26.3 billion and $32.5 billion in 2030. EPA understands that a large portion of the costs for DSEE programs are likely to be passed back to electric utility customers in electricity rates. EPA also recognizes that measurement and verification of DSEE programs will be critical to achieving real reductions in electricity demand, and has issued draft guidelines for public input. Given the CPP's focus on the three legs of the BSER (representing potential actions by EGUs inside the fence line), the EPA's inclusion of demand-side energy efficiency (representing actions outside the fence line) in the RIA does not clarify the costs of the BSER. One might expect EPA to focus its estimate of CPP compliance costs in the RIA using the "best system of emissions reduction." EPA lists the BSER options, states that DSEE is no longer a part of the BSER (since it is not something that EGUs can effect inside the fence line), and then includes DSEE in its RIA to show how CPP compliance costs can be managed and minimized by states and EGUs. EPA does not analyze the cost or other implications of BSER implementation without concomitant DSEE implementation. For example, Building Block 3 replaces affected EGU capacity with renewable electricity. EPA projects an increase in renewables will result under the CPP, rising to an estimated 28% of total generation capacity by 2030. The mechanism for much of the past growth in renewable electric capacity has been state Renewable Portfolio Standard (RPS) requirements. While EPA observes that the cost of renewable electricity is declining in many areas, increasing renewable energy may require a continuation or expansion of state RPS policies which require a mandate for load-serving electric utilities to procure renewable electric generation. In most state jurisdictions, these electric utilities pass the costs of procuring renewable energy through to electric rate payers. Expanding renewable energy may therefore be a challenge in some state jurisdictions, if this means an increase in costs for ratepayers. In some states, utilities are excused from RPS requirements if these costs exceed specified limits. EPA's RIA nominally addresses the cost questions associated with new renewables deployment, implying that DSEE is a lower cost option to Building Block 3 of its BSER. Some state authorities may need to revisit RPS policies to allow for harmonization with state CPP policies. EPA has estimated overall annualized compliance costs (in the electricity demand reduction framework of the RIA illustrative rate-based vs. mass-based scenario analysis) as ranging from $1.4 billion to $2.5 billion in 2020, $1.0 billion to $3.0 billion in 2025, and $5.1 billion to $8.4 billion in 2030. However, the actual overall costs of CPP compliance will not begin to be known until after state compliance plans are filed and implemented. EPA states throughout its analysis of CPP compliance costs that it has focused on what it considers the least expensive options. EPA now considers previously discussed alternatives, such as carbon capture and storage, conversion from coal to natural gas firing, and coal gasification, as too costly compared to other measures (i.e., DSEE or possibly emissions trading). Specifically, as described in the proposal, the EPA also considered co-firing (including 100 percent conversion) with natural gas, a measure that presented itself in part because of the recent increase in availability and reduction in price of natural gas, and the industry's consequent increase in reliance on natural gas.... The EPA also considered implementation of carbon capture and storage (CCS).... The EPA found that some of these co-firing and CCS measures are technically feasible and within price ranges that the EPA has found to be cost effective in the context of other GHG rules, that a segment of the source category may implement these measures, and that the resulting emission reductions could be potentially significant. However, these co-firing and CCS measures are more expensive than other available measures for existing sources. EPA states "[f]or this rulemaking, we were only able to quantify the climate benefits from reduced emissions of CO 2 and the health co-benefits associated with reduced exposure to PM 2.5 and ozone," projecting annual health- and climate-related benefits of $34 billion to $54 billion by 2030. EPA cites potential CPP benefits in reducing asthma attacks and potential premature deaths by reducing air pollution. EPA's major push for CO 2 emissions reduction is to address climate change, with emissions from power plants constituting the largest source of U.S. CO 2 emissions. The purpose of this rule is to protect human health and the environment by reducing CO2 emissions from fossil fuel-fired power plants in the U.S. These plants are by far the largest domestic stationary source of emissions of CO2, the most prevalent of the group of air pollutant GHGs that the EPA has determined endangers public health and welfare through its contribution to climate change. Thus, the goal of the CPP is to establish standards for existing power plants in order to significantly reduce CO 2 emissions. However, the potential for the CPP to affect climate change factors such as global temperature or sea-level rise is open to debate. It is unclear how the EPA's estimated economic benefits of the CPP are represented in terms of physical climate change factors. There are potential implementation issues associated with the CPP. For example, state-specific compliance plans geared to individual state needs may complicate the interstate coordination necessary for reliability purposes. The individual state compliance plans required by EPA's CPP may have to be submitted to multiple entities and jurisdictions (i.e., state public utility commissions, Regional Transmission Organizations, the North American Electric Reliability Corporation, and FERC) at a number of deliberative levels before a compliance plan can be finalized. This may result in delays to compliance filings. Implementation may also be affected by EGU retirements. Many fossil-fueled power plants do more than just generate electricity. Many coal power plants likely to face retirement decisions provide ancillary services such as voltage support and frequency regulation to the grid. EPA recognizes that some renewable energy technologies are capable of filling this gap, with the assistance of appropriate regulatory measures. However, additional retirements of coal-fired capacity may also affect reserve margins, potentially impacting reliability during weather-related outages or periods of temperature extremes. Some renewable electricity technologies face performance challenges in periods of sub-optimal weather, but when employed in a distributed generation configuration, they may add a measure of resiliency to the grid. Another concern may be inclement weather. Incidents of more extreme weather appear to be occurring, and will need to be planned for when considering the types of future generation which may need to be built to assure electric system reliability. EIA recently estimated that a total of 60 GigaWatts of coal capacity would retire by 2020, with 90% of these retirements taking place by 2016 "coinciding with the first year of enforcement for the Mercury and Air Toxics Standards." Much of this capacity scheduled for retirement was dispatched during the recent Polar Vortex, adding concern from some on how the grid will meet power demands in future weather extremes. Yet another concern may be the ability of states and electric utilities to acquire the levels of (utility-scale) renewable electricity in EPA's projections. EPA's CPP proposal arguably relies on state-implemented renewable portfolio standards and energy efficiency resource standards going forward. However, many state renewable portfolio standards and goals are scheduled to expire in the 2015 to 2020 timeframe, with more expired by 2025. And many state RPS policies with mandatory requirements have cost caps to ensure that the targets can be met cost-effectively. Similarly, many state energy efficiency resource standards are expiring by 2020, and may need to be revisited by state authorities to harmonize goals with state CPP plans. Several bills have recently been introduced in Congress specifically addressing the EPA's Clean Power Plan or GHG restrictions from coal-fired power plants in general. H.R. 3056 , the "Stop the EPA Act of 2015," would, among other actions, amend the Congressional Review Act ( P.L. 104-121 ) to require congressional approval of major rules issued by EPA. The bill would also nullify EPA's existing major rules unless EPA resubmits them for congressional approval, and would lower the annual economic threshold from $100 million to $50 million for a rule to be deemed a major rule. The Government Accountability Office would be required to estimate the economic cost imposed by EPA's rules. H.R. 2637 , the "Coal Country Protection Act" or the "Protecting Jobs, Families, and the Economy from EPA Overreach Act," would, among other actions, prevent the EPA from promulgating any regulation limiting or prohibiting CO 2 emissions from a new or existing power plant, and would prevent any such regulation or guidance from having any force or effect until the U.S. Labor Department has certified the event will not result in job losses; the Congressional Budget Office has certified no loss in the U.S. gross domestic product will result; the EIA has certified there will not be a resultant increase in electricity rates; and, FERC and North American Electric Reliability Corporation will certify the reliability of electricity delivery under the regulation or guidance. H.R. 2042 , the "Ratepayer Protection Act of 2015," would, among other actions, relieve states from requirements to adopt or submit a state plan, and shield states from becoming subject to a federal plan that addresses CO 2 emissions from fossil fuel-fired electric utility generating units. The governor would be required to notify EPA that implementing such a plan would have a "significant adverse effect" on the state's residential, commercial, or industrial electricity ratepayers, or have a " significant adverse effect" on the reliability of the state's electricity system. Any deadlines for mandatory compliance with such provisions would be subject to an extension period beginning 60 days after the notice of promulgation of a final rule in the Federal Register , ending after the date any judicial review or judgment becomes final and is no longer subject to further appeal or review in all actions. The bill passed in the House on June 26, 2015. H.J.Res. 71 , a resolution of congressional disapproval under the Congressional Review Act (CRA), was advanced by the House Committee on Energy and Commerce, Energy and Power Subcommittee on November 3, 2015, regarding the EPA's NSPS (published at 80 Federal Register 64510 on October 23, 2015) stating that "such rule shall have no force or effect." H.J.Res. 72 , a resolution of congressional disapproval under the CRA, was advanced by the House Committee on Energy and Commerce, Energy and Power Subcommittee on November 3, 2015, regarding the EPA's CPP (published at 80 Federal Register 64662 on October 23, 2015) stating that "such rule shall have no force or effect." S. 1324 , the "Affordable Reliable Electricity Now Act of 2015," would, among other actions, require the EPA to establish separate standards of performance for GHG emissions from coal-fired and natural gas-fired electric utility power plants. Such standards of performance must have been achieved by commercially operating plants, on average, for at least one continuous 12-month period (excluding planned power outages) by "each of at least 6 units within that category" (exclusive of results from demonstration units). Before EPA could issue, implement, or enforce any proposed or final rule for CO 2 emissions from existing fossil fuel-fired electric utility generating units, EPA would be required to issue state-specific model plans demonstrating "with specificity" how each state can meet the required GHG emissions reductions under the rule. States would not be required to adopt or submit a state plan, or become subject to a federal plan for any such proposed or final CO 2 emissions reduction plan from fossil fuel-fired electric utility generating units, if the governor of a state notifies the EPA that implementing such a plan would have a "negative effect" on the state's electricity ratepayers, on the reliability of the state's electricity system or on the "economic growth, competitiveness, and jobs in the State." The bill was reported in the Senate by the Environment and Public Works Committee on October 29, 2015. S.J.Res. 24 , a resolution of congressional disapproval under the CRA, was introduced and referred to the Senate Committee on the Environment and Public Works on October 26, 2015, regarding the EPA's CPP (published at 80 Federal Register 64662) stating that "such rule shall have no force or effect." EPA declares in the CPP that states and affected EGUs can use whatever methods they choose to meet the applicable CO 2 emissions or emission rate reductions in the timeframes proposed. In so doing, EPA creates a plan that, according to EPA, allows most states and affected EGUs to be able to comply within the timeframe allowed. States and electric utilities already using integrated resource planning may choose to stay with this methodology. Larger, vertically integrated utilities generally have options within all three BSER Building Blocks. They tend to have large and, as a general matter, somewhat diverse generation fleets. For their higher-emitting units, they have opportunities to use measures which reduce unit CO 2 emission rates via heat rate improvements, co-firing, or fuel switching. EPA's modeling results suggest that fuel diversity can be maintained under the RIA scenario analysis while increasing the amount of power generation from zero-emission renewable electricity technologies. While the CPP could further diversify the national fuel generation mix by increasing generation from renewable electricity (including hydro) to 28% of capacity, EPA recognizes that even companies that have traditionally depended upon coal to supply the majority of their generation are already diversifying their fleets, increasing their opportunities for re-dispatch. Going forward, EPA CO 2 regulations may provide a basis for the evolution of the U.S. electric power sector. EPA recognizes that the grid and many of its fossil-fueled power plants are aging and provides input via the CPP as to how a future national system focused on cleaner energy choices could be powered. Further technologies may emerge in the CPP compliance timeframe to increase power generation options, and some of these technologies may have the potential to lower the costs of producing and delivering electricity. Meeting the goals of EPA's CPP may, in effect, require less power generation from coal-fired power plants, or perhaps outright retirements of coal-fired generation. Considering the average age of the coal-fired power plant fleet, more retirements are likely when the costs of efficiency improvements or upgrades are weighed against other options in compliance plans. In its final rule, EPA has largely calculated the CPP compliance obligations based on increasing renewable generation as the technology of choice for new power generation, emphasizing less fossil-fueled generation (including generation fueled by natural gas). This focus on renewables may, by its nature, eventually lead to a grid composed of distributed generation "cells" functioning in a cellular, interconnected manner with traditional transmission lines as its backbone. Such a design may be inherently more reliable than today's power plant-to-transmission-to-distribution model, as it focuses on serving smaller service areas whose characteristics can be designed for, and minimizes large-scale outages. Implementing compliance plans will not come without real costs or making hard choices for the states and electric utilities who will have to work together to find an acceptable compromise. Some states and electric utilities may potentially face challenges in complying with CPP goals. The potential implications for reliability and the ultimate financial costs of the CPP will become clearer as state compliance plans are filed, and implementation plans become known.

On October 23, 2015, the Environmental Protection Agency (EPA) released the final version of regulations to reduce greenhouse gas (GHG) emissions from existing power plants (also referred to as electric generating units or EGUs by EPA). Since carbon dioxide (CO2) from fossil fuel combustion is the largest source of U.S. GHG emissions, and fossil fuels are used for the majority of electric power generation, reducing CO2 emissions from power plants plays a key role in the Administration's climate change policy. Under the provisions of the Clean Power Plan (CPP), states must prepare plans that reduce either total CO2 emissions or emission rates at affected EGUs. When implemented, EPA projects the state plans will reduce CO2 emissions from U.S. power generation approximately 32% by 2030 compared to 2005 levels. EPA prepared state-specific CO2 emissions rates based on newly established national performance standards and the state's existing power generation portfolio. A state must implement an EPA-approved plan to ensure that power plants individually, in aggregate, or in combination with other measures undertaken by the state, achieve the equivalent of the interim CO2 emissions performance rates (over the "glide path" period of 2022 to 2029), and the final CO2 performance rates, rate-based goals, or mass-based goals by 2030. EPA based the national performance standards in the CPP on the best system of emissions reduction (BSER). In the final rule, BSER includes three ("inside the fence line") Building Blocks (BBs): BB 1 involves improving the heat rate (i.e., efficiency) of coal-fired steam EGUs. BB 2 substitutes generation from (lower-emitting) existing natural gas combined cycle (NGCC) units for generation from (higher-emitting) steam generating units. BB 3 has generation from new (zero-emitting) renewable energy generating capacity replacing generation from fossil fuel-fired generating units. EPA has modeled potential implications of the CPP in its Regulatory Impact Analysis (RIA), and emphasizes demand-side energy efficiency (DSEE) as a potential low-cost option. While DSEE is not a part of the BSER (and is an "outside the fence" activity), EPA's RIA assumes DSEE can lower electricity demand and reduce electric system costs, thereby offsetting estimated electricity price increases. As a result, EPA projects lower average electricity bills nationally by 2030. EPA's RIA also estimates reduced electricity demand will lower natural gas consumption, even as more NGCC capacity may be called upon to back up increased intermittent and variable renewable electric generation. Increased dependence on renewable generation may require new transmission lines. Many of today's transmission projects awaiting regulatory approvals are intended to serve renewable electricity projects. It can take from 3 to 10 years to get the federal, state, and local permits to build a major electric transmission line; planning may need to begin now so that new lines will be in place for when they may be needed in the early 2020s. State decisions on the design and availability of DSEE programs may be crucial to attaining the levels of subscribership necessary to achieve the demand reductions projected in the RIA. For some states, attaining the levels of cost-effective DSEE projects needed to reduce CPP compliance costs may be a challenge, while for the top tier of states currently engaged in DSEE, the challenge may be identifying the next increment of cost-effective projects. Going forward, EPA's GHG regulations may provide a basis for the evolution of the U.S. electric power sector. EPA has based the CPP on increasing renewables as the technology of choice for new power generation. EPA declares in the CPP that states and affected EGUs can essentially use whatever methods they choose to meet CO2 emissions and emission-rate reductions in timeframes proposed, and in so doing, creates a plan it believes most states and affected EGUs may be able to comply with in the timeframe allowed. The overall costs of CPP compliance will not begin to be known until after state compliance plans are filed and implemented.

The unemployment insurance (UI) system has two primary objectives: (1) to provide temporary, partial wage replacement for involuntarily unemployed workers; and (2) to stabilize the economy during recessions. In support of these goals, several UI programs may currently provide benefits for unemployed workers. In general, when eligible workers lose their jobs, the joint federal-state Unemployment Compensation (UC) program may provide up to 26 weeks of income support through the payment of regular UC benefits. UC benefits may be extended in two ways: (1) for up to 47 weeks by the temporarily authorized Emergency Unemployment Compensation (EUC08) program; and (2) for up to 13 or 20 weeks by the Extended Benefit (EB) program if certain economic situations exist within the state. The joint federal-state UC program, authorized by the Social Security Act of 1935 (P.L. 74-271), provides unemployment benefits for up to a maximum of 26 weeks. Former U.S. military servicemembers may be eligible for unemployment benefits through the unemployment compensation for ex-servicemembers (UCX) program. The Emergency Unemployment Compensation Act of 1991 ( P.L. 102-164 ) provides that ex-servicemembers be treated the same as other unemployed workers with respect to benefit levels, the waiting period for benefits, and benefit duration. Although federal laws and regulations provide broad guidelines on UC benefit coverage, eligibility, and benefit determination, the specifics regarding UC benefits are determined by each state. This results in essentially 53 different programs. Generally, UC eligibility is based on attaining qualified wages and employment in covered work over a 12-month period (called a base period) prior to unemployment. All states require a worker to have earned a certain amount of wages or to have worked for a certain period of time (or both) within the base period to be monetarily eligible to receive any UC benefits. The methods states use to determine monetary eligibility vary greatly. Most state benefit formulas replace approximately half of a claimant's average weekly wage up to a weekly maximum. The UC program is financed by federal taxes under the Federal Unemployment Tax Act (FUTA) and by state payroll taxes under the State Unemployment Tax Acts (SUTA). The 0.6% effective net FUTA tax paid by employers on the first $7,000 of each employee's earnings ($42 per worker per year) funds both federal and state administrative costs, loans to insolvent state UC accounts, the federal share (50% under permanent law, 100% temporarily under current law) of EB payments, and state employment services. SUTA taxes on employers are limited by federal law to funding regular UC benefits and the state share (50% under permanent law, 0% temporarily under current law) of EB payments. Federal law requires that the state tax be on at least the first $7,000 of each employee's earnings (it may be more) and requires that the maximum state tax rate be at least 5.4%. Federal law also requires the state tax rate to be based on the amount of UC paid to former employees (known as "experience rating"). Within these broad requirements, states have great flexibility in determining the SUTA structure of their state. Generally, the more UC benefits paid out to its former employees, the higher the tax rate of the employer, up to a maximum established by state law. Funds from FUTA and SUTA are deposited in the appropriate accounts within the Unemployment Trust Fund (UTF). On June 30, 2008, President George W. Bush signed the Supplemental Appropriations Act of 2008 ( P.L. 110-252 ), which created a new temporary unemployment insurance program, the Emergency Unemployment Compensation (EUC08) program. This was the eighth time Congress had created a federal temporary program to extend unemployment compensation during an economic slowdown. State UC agencies administer the EUC08 benefit along with regular UC benefits. The authorization for this program has been extended multiple times and currently is authorized through the week ending on or before January 1, 2014. The EUC08 program has been amended eleven times, most recently by H.R. 8 . The EUC08 benefit amount is equal to the eligible individual's weekly regular UC benefits and includes any applicable dependents' allowances. The most recent modifications to the underlying structure of the EUC08 program were made by P.L. 112-96 . These modifications included changes to the number of weeks available in each EUC08 tier as well as the state unemployment rates required to have an active tier in that state. These requirements were implemented during 2012 in three separate phases. Currently the following weeks of benefits are available in the tiers listed below: Tier I is available in all states, with up to 14 weeks of EUC08 benefits provided to eligible individuals. Tier II is available if the state's total unemployment rate (TUR) is at least 6%, with up to 14 weeks provided to eligible individuals in those states. Tier III is available if the state's TUR is at least 7% (or an insured unemployment rate, IUR, of at least 4%), with up to 9 weeks of provided to eligible individuals in those states. Tier IV is if the state's TUR is at least 9% or the IUR is 5%, with up to 10 weeks provided to eligible individuals in those states. All tiers of EUC08 benefits are temporary and expire in the week ending on or before January 1, 2014. Thus, on December 28, 2013 (December 29, 2013, for New York), the EUC08 program ends. There is no grandfathering of any EUC08 benefit after that date. In response to similar state UC financial stress following prior recessions, states typically reduced the amount of UC benefits paid to individuals through reductions in the maximum benefit amount or through changes in the underlying benefit calculations. Under two temporary provisions in federal law, however, most states were prohibited from reducing UC benefit amounts through changes to benefit calculation from February 2009 through December 2013. The implementation of this "non-reduction" rule coincided with new state actions that reduced UC benefit duration as an alternative means to decrease total UC benefit payments. As a result, these changes in state UC benefit duration may be a state response to state UC financing shortfall. The durations for current federal unemployment benefits—each tier of the EUC08 program and any EB periods—are calculated based on state UC benefit duration. Thus, states that have enacted laws to reduce the duration of regular UC benefits have also reduced the duration of EUC08 and EB benefits. Seven states have acted to decrease their maximum UC benefit durations after the non-reduction rule was enacted: Arkansas decreased its state UC maximum duration from 26 weeks to 25 weeks, effective March 30, 2011. Florida decreased the maximum UC duration from 26 weeks to a variable maximum duration, depending on the state unemployment rate and ranging from 12 weeks up to 23 weeks. Up to 12 weeks will be available if the state unemployment rate is 5% or less. Each 0.5% increase in the state unemployment rate above 5% will add an additional week of UC benefit duration. Finally, up to 23 weeks of regular UC benefits will be available if the state unemployment rate is at least 10.5%. This benefit reduction was effective January 1, 2012. Georgia decreased its UC maximum duration from 26 weeks to a variable maximum duration that ranges between 14 weeks and 20 weeks, depending on the unemployment rate in the state. A maximum UC duration of 14 weeks will be available if the state unemployment rate is 6.5% or less. Each 0.5% increase in the state unemployment rate above 6.5% will add additional weeks of UC benefit duration up to a maximum of 20 weeks of UC benefits if the state unemployment rate is at least 9%. This benefit reduction was effective May 2, 2012. Illinois decreased its UC maximum duration from 26 weeks to 25 weeks, effective January 1, 2012. Michigan decreased its UC maximum duration from 26 weeks to 20 weeks. This change was effective for individuals filing an initial claim for UC benefits on or after January 15, 2012. Missouri decreased its UC maximum duration from 26 weeks to 20 weeks, effective April 13, 2011. S outh Carolina also decreased its UC maximum duration from 26 weeks to 20 weeks, effective June 14, 2011. The EB program was established by the Federal-State Extended Unemployment Compensation Act of 1970 (EUCA), P.L. 91-373 (26 U.S.C. 3304, note). EUCA may extend receipt of unemployment benefits (extended benefits) at the state level if certain economic situations exist within the state. The EB program is triggered when a state's insured unemployment rate (IUR) or total unemployment rate (TUR) reaches certain levels. All states must pay up to 13 weeks of EB if the IUR for the previous 13 weeks is at least 5% and is 120% of the average of the rates for the same 13-week period in each of the two previous years. There are two other optional thresholds that states may choose. (States may choose one, two, or none.) If the state has chosen a given option, they would provide the following: Option 1: an additional 13 weeks of benefits if the state's IUR is at least 6%, regardless of previous years' averages. Option 2: an additional 13 weeks of benefits if the state's TUR is at least 6.5% and is at least 110% of the state's average TUR for the same 13 weeks in either of the previous two years; an additional 20 weeks of benefits if the state's TUR is at least 8% and is at least 110% of the state's average TUR for the same 13 weeks in either of the previous two years. Each state's IUR and TUR are determined by the state of residence (agent state) of the unemployed worker rather than by the state of employment (liable state). EB benefits are not "grandfathered" when a state triggers "off" the program. When a state triggers "off" of an EB period, all EB benefit payments in the state cease immediately regardless of individual entitlement. P.L. 111-312 made some technical changes to certain triggers in the EB program. P.L. 111-312 , as amended (most recently by H.R. 8 ), allows states to temporarily use lookback calculations based on three years of unemployment rate data (rather than the current lookback of two years of data) as part of their mandatory IUR and optional TUR triggers if states would otherwise trigger off or not be on a period of EB benefits. Using a two-year versus a three-year EB trigger lookback is an important adjustment because some states are likely to trigger off of their EB periods in the near future despite high, sustained—but not increasing—unemployment rates. States implement the lookback changes individually by amending their state UC laws. These state law changes must be written in such a way that if the two-year lookback is working and the state would have an active EB program, no action would be taken. But if a two-year lookback is not working as part of an EB trigger and the state is not triggered on to an EB period, then the state would be able to use a three-year lookback. Most recently, H.R. 8 extended the authorization for the three-year EB trigger lookbacks. The authorization for the temporary EB trigger modifications now expires the week ending on or before December 31, 2013. The EB benefit amount is equal to the eligible individual's weekly regular UC benefits. Under permanent law, FUTA finances half (50%) of the EB payments and 100% of EB administrative costs. States fund the other half (50%) of EB benefit costs through their SUTA. ARRA ( P.L. 111-5 , most recently amended by H.R. 8 ) temporarily changed the federal-state funding arrangement for the EB program. Currently, the FUTA finances 100% of EB benefits through December 31, 2013. The one exception to the 100% federal financing is for those EB benefits based on work in state and local government employment; those "non-sharable" benefits continue to be 100% financed by the former employers. On August 2, 2011, President Obama signed into law the most recent measure adjusting the public debt limit, as part of the Budget Control Act of 2011 ( P.L. 112-25 ). The Budget Control Act of 2011 establishes special procedures for congressional increases to the debt limit authorized by the act. In certain situations these procedures may have an impact on unemployment insurance benefits. The law authorizes increases to the debt limit by at least $2.1 trillion (and up to $2.4 trillion) in three installments: (1) an initial increase of $400 billion; (2) an additional increase of $500 billion; and (3) an additional increase of an amount between $1.2 trillion and $1.5 trillion, depending on certain subsequent actions. On September 2, 2011, P.L. 112-40 , an act to extend the Generalized System of Preferences, and for other purposes, was introduced by Representative Camp. Title II subsection C of the act requires (1) states to charge employers' account when UC overpayments are the fault (through action or inaction) of the employer, (2) states to assess a minimum 15% penalty on overpayments due to claimant fraud, and (3) employers to report any "rehired employee" to the Directory of New Hires. P.L. 112-40 was signed into law on October 21, 2011. P.L. 112-78 , the Temporary Payroll Tax Cut Continuation Act of 2011, was introduced in the House (by Representative Camp), passed by the House and the Senate, and signed into law by President Obama on December 23, 2011. Among other provisions, P.L. 112-78 extended the expiring UI laws for two months. Under P.L. 112-78 , the authorization for the EUC08 program was extended through the week ending on or before March 6, 2012; the 100% federal financing of the EB program was extended until March 7, 2012; and the three-year lookback trigger option for the EB program was extended until the week ending on or before February 29, 2012. The Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 , signed on February 22, 2012) contained provisions that (1) made changes to the structure of the EUC08 program as well as maintained temporary EB provisions; (2) reformed the UC program; (3) provided additional reemployment services for EUC08 claimants; and (4) expanded the Short-Time Compensation and Self-Employment Assistance programs in states. Under P.L. 112-96 , the potential duration of EUC08 benefits available to eligible individuals was altered. These changes are described in detail in CRS Report R42444, Emergency Unemployment Compensation (EUC08): Current Status of Benefits , by [author name scrubbed] and [author name scrubbed]. Additionally, Figure 1 provides a graphical summary of the changes to EUC08 under P.L. 112-96 as well as the total potential maximum duration for UC and EUC08 benefits resulting from these changes. P.L. 112-96 extended EUC08 through the week ending on or before January 2, 2013. The phase-down of the EUC08 program that had been available in previous extensions in the authorization of EUC08 was eliminated by P.L. 112-96 . Thus, there is no grandfathering of any EUC08 benefit once the program's authorization has ended. P.L. 112-96 continued to allow individuals to be grandfathered into the available weeks of a particular EUC08 tier at the date of entrance into that new tier even if the number of weeks available in that tier increased or decreased after that calendar date. P.L. 112-96 extended the 100% federal financing of EB through December 31, 2012, as well as the option for states to use three-year lookbacks in their EB triggers until the week ending on or before December 31, 2012. P.L. 112-96 extended the temporary extended railroad unemployment benefits—authorized under the American Recovery and Reinvestment Act (ARRA; P.L. 111-5 ), as amended—through December 31, 2012, to be financed with funds still available under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). While all states had some type of requirements for the unemployed to be "able, available, and actively seeking work," federal law did not require states to have such laws. Under P.L. 112-96 , federal law now stipulates that states must require all workers receiving UC to be "able, available, and actively seeking" work. P.L. 112-96 authorized the U.S. Department of Labor to allow up to 10 states to conduct demonstration projects to improve and accelerate the reemployment of UC claimants—although these projects would have to operate for at least one year and would be prohibited from increasing the net costs to a state's account in the UTF. The demonstrations would only provide subsidies for employer-provided training, such as wage subsidies, or provide direct disbursements, not to exceed the weekly benefit amount of an individual, to employers who hire individuals receiving UC to pay part of the cost of wages that exceed the individual's prior benefit level. The U.S. Labor Secretary may waive the withdrawal standard if requested by the state (state UTF funds would be allowed to be used for purposes other than paying unemployment benefits). The U.S. Labor Secretary may also waive the merit employee requirement if requested by the state. No demonstration project may be approved for more than three years and all projects are required to end by December 31, 2015. As of the publication date of this report, no state demonstration project has been approved. P.L. 112-96 required that states recover 100% of any erroneous overpayment by reducing up to 100% of the UC benefit in each week until the overpayment is fully recovered. This requirement allows states to waive such deduction if it would be contrary to equity and good conscience. It authorizes for states to recover Federal Additional Compensation (FAC) overpayments through deductions to regular UC benefits. P.L. 112-96 required that the U.S. Labor Secretary designate standard data elements for any information required under title III or title IX of the Social Security Act (SSA). P.L. 112-96 clarified federal law to allow (but does not require) states to engage in drug testing certain UC claimants under certain circumstances. P.L. 112-96 required that all individuals receiving EUC08 be "able, available, and actively seeking" work. An active work search for EUC08 claimants requires individuals (1) to register with reemployment services, as required by the state; (2) to actively search for work that is appropriate for the individual's skill level and labor market availability; (3) to maintain a record of work search activities; and (4) to provide work search activities records to the state when requested. P.L. 112-96 required states to provide reemployment and eligibility assessments to certain EUC08 claimants. EUC08 claimants must participate in reemployment services if referred. P.L. 112-96 provides $85 in federal funding per EUC08 claimant who receives reemployment and eligibility assessments. Under P.L. 112-96 , if an individual received an EUC08 benefit overpayment, states must offset any unemployment benefit payable to that individual. Any offset must be made in the same manner (and subject to the same equity and good conscience criteria if applicable) as a regular UC overpayment offset under each state's law. P.L. 112-96 maintained the "nonreduction rule" for the calculation of the regular UC benefit amount, except in the case of state legislation that was enacted before March 1, 2012. The "nonreduction" rule prohibits states from decreasing average weekly benefit amounts without invalidating their EUC08 federal-state agreements. Under P.L. 112-96 , states that made changes to the regular UC benefit amount prior to March 1, 2012, however, would not invalidate their EUC08 federal-state agreements. P.L. 112-96 required that states pay EUC08 benefits before EB benefits. Before the enactment of P.L. 112-96 , states had the option to pay EB first. Alaska was the only state to pay EB first. P.L. 112-96 clarified requirements related to short-time compensation (STC or "worksharing") programs and provides temporary federal financing to support state worksharing programs. P.L. 112-96 temporarily federally finances 100% of STC benefits for up to three years and six months in states that meet the new definition of an STC program, with a transition period for states with existing STC programs that do not meet the new definition (currently 23 states and the District of Columbia have STC programs). States without existing STC programs may enter into an agreement with the U.S. Department of Labor (DOL) in order to receive federal reimbursement for administrative expenses, as well as temporary federal financing of 50% of STC payments to individuals for up to two years, with employers paying the other 50% of STC benefit costs. If a state enters into an agreement with the U.S. Secretary of Labor and then subsequently enacts a law providing for STC, that state would be eligible to receive 100% of federal financing. The Labor Secretary may award grants to eligible states, with one-third of each state's grant available for implementation and improved administration purposes and two-thirds of each state's grant available for program promotion and enrollment of employers. The maximum amount of all grants to states authorized under P.L. 112-96 was $100 million. An additional $1.5 million was provided for the U.S. DOL to submit a report to Congress and the President, within four years of enactment, on the implementation of this provision, including a description of states' best practices, analysis of significant challenges, and a survey of employers in all states to determine the level of interest in STC. Under P.L. 112-96 , states were authorized to set up Self-Employment Assistance (SEA) programs for individuals who (1) have at least 13 weeks of remaining benefit entitlement through the EUC08 and EB programs and (2) are participating in entrepreneurial training activities. SEA benefits under these programs are available to up to 1% of all EB and EUC08 claimants in each participating state. The combined SEA benefits available from EB and EUC08 for any particular individual may not exceed 26 total weeks. SEA benefits available to EUC08 and EB claimants, as authorized by P.L. 112-96 , are paid in the same amount as UC benefits and participants are exempt from any work availability and work search requirements. An individual receiving these SEA benefits is able to stop participation and receive any remaining EB or EUC08 benefits. P.L. 112-96 provided $35 billion in SEA grant funding for FY2012 and FY2013 to be distributed to states based on applications to the U.S. DOL. These funds may be used for the purposes of establishing or improving administration of SEA programs for regular UC, EB, or EUC08 claimants as well as promoting and enrolling eligible individuals. These grants funds will be distributed to states with approved applications based on the percentage of unemployed individuals in that state relative to the percentage of unemployed individuals in all states. Finally, P.L. 112-96 required the U.S. DOL to establish model language for states that participate in SEA programs as well as requiring U.S. DOL to provide technical assistance to states and establish reporting requirements. The American Taxpayer Relief Act of 2012 ( H.R. 8 , signed on January 2, 2013), among other provisions, retroactively extended the authorization of the EUC08 program through the week ending on before January 1, 2014. Thus, on December 28, 2013 (December 29, 2013, for New York), the EUC08 program ends. H.R. 8 did not alter the elimination of the phase-down of the EUC08 program that was enacted by P.L. 112-96 . Thus, there is no grandfathering of any EUC08 benefit after that date. H.R. 8 also extended the 100% federal financing of EB through December 31, 2013, as well as the option for states to use three-year lookbacks in their EB triggers until the week ending on or before December 31, 2013. H.R. 8 also extended the temporary extended railroad unemployment benefits—authorized under the American Recovery and Reinvestment Act (ARRA; P.L. 111-5 ), as amended—through December 31, 2013, to be financed with funds still available under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). In addition, H.R. 8 appropriated $250,000 in general funds from the Treasury for administrative expenses. On September 13, 2011, Senator Reid introduced S. 1549 , the American Jobs Act of 2011, by request, which contains the legislative language of the President's American Jobs Act of 2011 proposal. Also by request, Representative Larson introduced H.R. 12 , the House companion version of the American Jobs Act of 2011, on September 21, 2011. S. 1660 contains the same UI provisions found in the President's American Jobs Act of 2011, S. 1549 , and H.R. 12 . S. 1660 differs from the President's American Jobs Act of 2011, S. 1549 , and H.R. 12 in some non-UI provisions proposed to offset the legislation. The President's American Jobs Act of 2011 proposal would provide a year-long extension of the EUC08 authorization and the 100% federal financing of EB through calendar year 2012. In addition, it would extend authorization for states to use three-year lookbacks for state EB triggers during this period. It would not expand the number of weeks of unemployment benefits available to the unemployed beyond what is currently available. (The proposal does not include a "tier V" of EUC08 benefits.) The President's American Jobs Act of 2011 proposal would also impose new federal requirements and appropriate new federal funds for states to provide reemployment and eligibility assessments to certain EUC08 claimants. The proposal would require states to enter into agreements with the U.S. DOL and require new EUC08 claimants to report to or check in with their local One-Stop Career Centers. The President's plan would provide $200 per unemployed worker in federal funding for states to conduct Reemployment and Eligibility Assessments in order to review new EUC08 claimants' eligibility for benefits and provide an assessment of their work search efforts. The President's American Jobs Act of 2011 proposal would authorize states to enter into agreements with the U.S. DOL to pay Self-Employment Assistance (SEA) benefits for up to 26 weeks to eligible individuals who (1) have at least 26 weeks of remaining benefit entitlement through the EUC08 program and (2) are participating in entrepreneurial training activities. SEA benefits would be paid in the same amount as EUC08 benefits and participants would be exempt from the work availability and work search requirements under EUC08. SEA benefits would be available to up to 1% of all EUC08 claimants in each participating state. An individual receiving SEA benefits would be able to stop participation and receive any remaining EUC08 benefits. States with agreements to pay SEA benefits would be able to use Reemployment NOW funds (see description below) to finance SEA administrative, start-up costs, if specified in an approved state Reemployment NOW plan. The President's American Jobs Act of 2011 proposal would extend the temporary extended railroad unemployment benefits—authorized under the American Recovery and Reinvestment Act ( P.L. 111-5 ), as amended—for an additional year through June 30, 2012, to be financed with funds still available under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). The President's American Jobs Act of 2011 proposal would establish a "Reemployment NOW" program with $4 billion in appropriations from the general fund of the Treasury. These federal funds would be allotted to the states based on a two-part formula: (1) two-thirds would be distributed to the states based upon the state share of the U.S. total number of unemployed persons and (2) one-third would be distributed to the states based on the state share of the long-term unemployed (measured as unemployment spells of at least 27 weeks). Up to 1% of the funds would be available for program administration and evaluation. To receive a Reemployment NOW allotment, a state would have to submit a plan describing (1) activities to assist the reemployment of eligible individuals; (2) performance measures; (3) coordination of efforts with Title I of the Workforce Investment Act of 1998, the Wagner-Peyser Act, and other appropriate federal programs; (4) timelines for implementation; (5) estimates of quarterly enrollments; (6) assurances that the state will provide appropriate reemployment services to any participating EUC08 claimants; and (7) assurances that the state will provide information to the U.S. DOL relating to the fiscal, performance, and other matters, including employment outcomes and program impacts that the U.S. DOL determines are necessary to effectively monitor the activities. The U.S. DOL would be required to provide Congress and the public with both guidance and program evaluation for activities conducted with Reemployment NOW funds. Allowable program uses of Reemployment NOW funds would include the following: The "Bridge to Work" program would allow individuals to continue to receive EUC08 benefits as wages for work performed in a short-term work experience placement. The Bridge to Work placement would last up to eight weeks and would be required to compensate claimants at a rate equivalent to the minimum wage. The state would be permitted to augment the EUC08 benefit with Reemployment NOW funds to meet this criteria (the EUC08 benefit would count as wages for that calculation). For individuals participating at least 25 hours per week in a Bridge to Work program, work search requirements would be suspended during the participation and wages paid would not offset EUC08 benefit amounts. Any earnings acquired during program participation would not be considered earnings for the purposes of employment taxes, but would be treated as unemployment benefits for tax purposes. Wage insurance would authorize states to provide an income supplement to EUC08 claimants who secure reemployment at a lower wage than their separated employment. The benefit level would be determined by the states, although it could not be more than 50% of the difference between the worker's wage at the time of separation and the worker's reemployment wage. States would also establish a maximum benefit amount that an individual could collect. The duration of wage insurance payments would be limited to two years. Wage insurance under this proposal would also be limited to individuals who (1) are at least 50 years of age; (2) earn not more than $50,000 per year from reemployment; (3) are employed on a full-time basis as defined by the state; and (4) are not employed by the same employer from which the individual was separated. Enhanced reemployment services would allow states to use funds to provide EUC08 claimants and individuals who have exhausted all entitlements to EUC08 benefits with reemployment services that are more intensive than any reemployment services provided by the states previously (for instance, one-on-one assessments, counseling, or case management). Start-up of SEA state programs would authorize states to use funds for any administrative costs associated with the start-up of SEA agreements (as described above). Additional innovative programs would allow states to use funds for programs other than the programs described above. These programs would be required to facilitate the reemployment of EUC08 claimants, among other requirements. The President's American Jobs Act of 2011 proposal would clarify requirements related to short-time compensation (STC or "worksharing") programs and provide temporary federal financing to support state worksharing programs. This proposal would temporarily federally finance 100% of STC benefits for up to three years in states that meet the new definition of an STC program, with a transition period for states with existing STC programs that do not meet the new definition (currently 23 states and the District of Columbia have STC programs). States without existing STC programs would be allowed to enter into an agreement with the U.S. DOL for up to two years in order to receive federal reimbursement for administrative expenses, as well as temporary federal financing of 50% of STC payments to individuals, with employers paying the other 50% of STC costs. Under this proposal, if a state enters into an agreement with the U.S. Secretary of Labor and then subsequently enacts a law providing for STC, that state would be eligible to receive 100% of federal financing. The President's proposal would award U.S. DOL grants to eligible states, with one-third of each state's grant available for implementation and improved administration purposes and two-thirds of each state's grant available for program promotion and enrollment of employers. The maximum amount of all grants to states would be $700 million. Finally, this proposal would provide $1.5 million for the U.S. DOL to submit a report to Congress and the President, within four years of enactment, on the implementation of this provision, including a description of states' best practices, analysis of significant challenges, and a survey of employers in states without STC programs. The President's American Jobs Act of 2011 proposal would add a targeted group for purposes of the Work Opportunity Tax Credit (WOTC) for individuals who have been unemployed for six months or more during the one-year period prior to being hired. For those long-term unemployed who are hired and remain on a firm's payroll at least 400 hours, an employer would be able to claim a non-refundable income tax credit of 40% of the first $10,000 in wages paid during the worker's first year of employment. For eligible hires who remain employed for 120 hours to 399 hours, the credit rate would be 25%. Under certain circumstances, tax-exempt employers may take the credit for hiring long-term unemployed individuals. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ) extended the authorization of WOTC through December 31, 2011. H.R. 3346 and S. 1804 —both named the Emergency Unemployment Compensation Extension Act of 2011—propose to extend expiring UI provisions and make various changes, including to the financing of UI benefits. H.R. 3346 and S. 1804 would provide a year-long extension of the EUC08 program, the 100% federal financing of the EB program, and the authorization for states to use three-year lookbacks for state EB triggers through calendar year 2012. These bills also propose to allow states to temporarily suspend the lookback for the EB triggers, "by statute, regulation, or other issuance having the force and effect of law," through the end of calendar year 2012. H.R. 3346 and S. 1804 would also extend the temporary extended railroad unemployment benefits (authorized under P.L. 111-5 , as amended) for an additional year (i.e., through June 30, 2012) using existing funds from P.L. 111-312 . H.R. 3346 and S. 1804 would also allow states to enter into an agreement with the U.S. DOL to temporarily suspend the accrual of interest for loans to the states for FY2012. In addition, states that otherwise have employers facing a decreased state tax credit on federal unemployment taxes would be able to opt to suspend the reduction in credit for tax year 2012. To have these options available to the state, the state would be required to continue to calculate regular unemployment benefit entitlements (both in weekly amount and total weeks available) as required by state law on the date of enactment of this proposal. States with no outstanding unemployment loans within the Unemployment Trust Fund (UTF) would earn an additional two percentage points in interest on the (positive) average daily balance in the state's UTF account. In addition to the President's American Jobs Act of 2011 proposal, S. 1549 / H.R. 12 / S. 1660 , and H.R. 3346 / S. 1804 , there have been several other legislative proposals to address UI expirations. For instance, Subtitle F of H.R. 3638 proposes a one-year extension (i.e., through calendar year 2012) of the three expiring UI provisions: the authorization for the EUC08 program, the 100% federal financing of the EB program, and the three-year lookback option for EB triggers. Additionally, H.R. 3638 would add 14 weeks to the current duration of Tier I of the EUC08 program, amending Tier I of EUC08 to provide up to 34 weeks of unemployment benefits rather than the current up to 20 weeks of benefits. S. 1885 would extend the EUC08 authorization and the 100% federal financing of the EB program for another year (i.e., through calendar year 2012). S. 1885 would not, however, extend the authorization for states to use three-year lookbacks in their EB triggers. S. 1885 proposes to offset the UI extensions using $44 billion in unobligated, federal discretionary funds. H.R. 3743 would have extended the EB and EUC08 provisions until the week ending on or before March 6, 2012. Representative Camp introduced H.R. 1745 , the Jobs, Opportunity, Benefits, and Services Act of 2011 (the JOBS Act of 2011), on May 5, 2011. H.R. 1745 proposes a number of changes to (1) state UC eligibility requirements and (2) the funding of federal unemployment benefits (i.e., EUC08 and EB). For instance, it would create new federal requirements related to work availability and work search activities that would require changes in state UC laws. In order to satisfy the new "actively seeking work" federal requirement, H.R. 1745 would require individuals receiving regular state UC benefits to (1) register for employment services within 14 days of initial UC claim; (2) post a resume, record, or other employment application on a database as required by each state; and (3) apply for work that is similar to an individual's previous job and that pays comparable wages for similar work in the local labor market where an individual resides or is actively seeking work. H.R. 1745 would also impose new federal educational requirements (i.e., high school degree, GED or equivalent, or progress toward GED) for UC claimants in state programs. This bill would allow states to create and conduct demonstration projects to improve and accelerate the reemployment of UC claimants, although these projects would not be able to increase the net costs to a state's account in the UTF. H.R. 1745 would also transform the financing of federal unemployment benefits (including EUC08 benefits) from a mandatory, individual entitlement to a block grant to states for FY2011 and FY2012 ($31 billion over both years) in an amount proportional to federal benefit payments in each state during the previous 12 months. H.R. 1745 would allow states to use block grant funds to pay federal unemployment benefits (i.e., EUC08 and EB benefits) or, if states pass their own legislation to do so, to use the funds to pay any type of unemployment benefit (including regular UC), to repay outstanding federal loans (including interest payments on federal loans), or to provide additional reemployment services. H.R. 1745 would end the 100% federal financing of the EUC08 and EB programs, effective July 6, 2011. States would continue to pay EUC08 benefits with block grant funds. Under current law, a state has the option to terminate the federal-state EUC08 agreement with 30 days notice to the U.S. DOL, and this termination would not impact the state's share of the block grant. States would continue to pay EB if the program were still active (i.e., triggered "on"). The broader financial crisis facing the states is mirrored in the states' accounts within the UTF. On December 30, 2010, 31 states owed a cumulative $40.8 billion to the federal accounts within the UTF. ARRA temporarily stopped the accrual of interest charges on loans through December 31, 2010, but those charges are once again accruing. States currently are prohibited from actively legislating a decrease in regular benefits (restricted for the duration of the EUC08 program); as a result, state unemployment taxes on employers are likely to increase. At the same time, employers in 21 states face an increased net federal unemployment tax (FUTA) in 2011 because they have borrowed funds from the federal UTF loan account for two consecutive years. The President's Budget Proposal for FY2013 attempts to address some of these concerns. The proposal includes extending the suspension of interest accrual through 2014 and temporarily suspending net FUTA tax increases through 2015. Currently, the U.S. DOL projects that states accrued $1.22 billion in interest charges in FY2011 and $1.79 billion in FY2012 without these suspensions. The proposal would increase the FUTA taxable wage base from $7,000 to $15,000 in 2015 while increasing the FUTA tax rate to 0.8% for FY2013 and FY2014 and then decreasing the FUTA tax rate from 0.6% to 0.38%. Beginning in 2015, the FUTA tax base would be indexed to wage growth. Under federal law, the taxable wage base for SUTA taxes in states must be at least the taxable wage base for FUTA. Therefore, the proposed increase in the FUTA taxable wage in the President's Budget Proposal would have the effect of requiring states to have a SUTA taxable wage bas e of at least $15,000 in 2014 and indexed to wage growth beginning in 2015. Additionally, the proposal included up to $4 billion in funds for certain reemployment activities similar to what was described earlier in the " Reemployment NOW Program and Funding Opportunities " subsection under the description of the President's American Jobs Act of 2011 proposal. S. 386 would extend the suspension of interest accrual on federal loans to states through 2012; temporarily suspend net FUTA tax increases through 2012; increase the FUTA taxable wage base from $7,000 to $15,000 in 2014 while lowering the net FUTA tax rate to 0.38%; and index the FUTA taxable wage base to wage growth after 2014. Unlike the President's Budget Proposal for FY2013, S. 386 would forgive a certain percentage (20%, 40%, or 60%) of the outstanding federal loan to the state based upon a state-level need-based measure as of December 31, 2010. (This measure was originally constructed for temporarily increasing the Medicaid Federal Medical Assistance Percentages (FMAP) in P.L. 111-5 .) States without an outstanding federal loan would receive an additional 0.5% in interest compared with what they would otherwise receive on their state UTF account balances. Employers in states that maintain a programmatic measure of sufficient reserves would face a net FUTA tax rate that was 0.1 percentage point less than it would otherwise have been. In addition, S. 386 would require that any state taking advantage of the provisions in S. 386 submit a "reasonable" plan to the U.S. DOL explaining how the state would repay any outstanding federal loans and how the state would attain a programmatic measure of sufficient reserves within a "reasonable" time. H.R. 650 would extend the suspension of interest accrual on federal loans to states through 2012. Recent congressional hearings have raised the issue of how to aid long-term unemployed workers, especially those individuals who have exhausted all available unemployment benefits. As of July 2012, about 41% of unemployed individuals had been without a job for more than 26 weeks. These long-term unemployed workers are at risk of exhausting current benefits while remaining unemployed. One policy strategy to address the needs of unemployment insurance benefit exhaustees is to create additional federal benefits. H.R. 589 and H.R. 3638 would add up to 14 additional weeks of unemployment benefits to the existing tier I of the EUC08 program, amending tier I of EUC08 to provide up to 34 weeks of unemployment benefits to eligible individuals. H.R. 494 would create a Civilian Conservation Corps to employ unemployed or underemployed U.S. citizens in the construction, maintenance, and carrying on of works of a public nature, such as forestation of U.S. and state lands, prevention of forest fires, floods, and soil erosion, and construction and repair of National Park System paths and trails. The proposal would require placement preference to the employment of additional persons in the Corps in the following order: (1) unemployed Armed Forces veterans (including Reserve members); (2) unemployed U.S. citizens who have exhausted their unemployment compensation; (3) unemployed U.S. citizens who are eligible for unemployment compensation immediately before employment in the Corps, including any additional compensation or extended compensation; and (4) other unemployed or underemployed U.S. citizens. H.R. 3615 would create a new federal requirement for states to drug test all UC claimants as a condition of benefit eligibility. If an individual tests positive for certain controlled substances (in the absence of a valid prescription or as otherwise authorized under a state's laws), he or she would be required to retake a drug test after a 30-day period and test negative in order to be eligible for UC benefits. H.R. 3601 would add a new federal requirement that individuals undergo a substance abuse risk assessment for each benefit year as a condition of eligibility for UC in all states. This new federal requirement would also require individuals deemed to be at high risk for substance abuse—based on the assessment results—to test negatively for controlled substances within one week after the assessment to qualify for UC benefits. H.R. 2001 would create a new federal requirement that individuals be deemed ineligible for UC benefits based on previous employment from which they were separated due to an employment-related drug or alcohol offense. This proposal would require states to amend their state UC laws. H.R. 3598 would define any fee associated with Electronic Benefit Transfer (EBT) cards used by states to distribute unemployment benefits as administrative expenses under federal law. Such a federal definition would prohibit states from deducting EBT fees from unemployment benefit payments made with state unemployment tax (SUTA) funds. Under this proposal, any EBT fees would need to be financed through state administrative funds rather than an individual's unemployment benefit payment. Several bills have been introduced that have the intent to restrict or recover unemployment insurance benefits paid to high income individuals or households. S. 1944 would create a new income tax on unemployment benefit income for any taxpayer filing jointly with an adjusted gross income (AGI) of at least $1 million (and $500,000 in the case of an individual filing a single tax return). The tax rate for this unemployment benefit income would be 55% in tax years 2011 and 2012 and then 50% for tax years after 2012. (The UI income would continue to be used in the calculation of AGI and thus subject to "regular" federal income tax.) Among other provisions, S. 1931 would create a new tax on unemployment benefit income for certain high-income taxpayers. For individual taxpayers with more than $1 million in AGI ($2 million for joint filers), any income from unemployment benefits would be taxed at an additional 100% rate. (The UI income would continue to be used in the calculation of AGI and thus subject to "regular" federal income tax.) Under this proposal, individual filers with an AGI of at least $750,000 (and $1.5 million for joint filers) would also face the new tax on unemployment benefit income with the rate proportional to AGI over these limits and the maximum rate set at 100%. Any tax receipts collected from this new federal income tax on unemployment benefits from a particular state would be transferred into that state's account in the federal UTF. Among other provisions, H.R. 235 would prohibit the use of federal funds—from the EUC08 and EB programs—to pay unemployment benefits to anyone with resources of at least $1 million in the preceding year. An individual's resources would be determined in the same way as the resource test for the Medicare Part D drug benefit subsidy. This provision would be effective for any weeks of unemployment benefits beginning on or after January 1, 2011. S. 310 would prohibit any EUC08 or EB benefit payments to individuals with resources in the preceding year of at least $1 million, as determined through the resource test for the Medicare Part D drug benefit subsidy. For the purposes of the drug benefit subsidy, resources are defined by the individual states and include savings and investments but do not include the value of a primary residence or the value of a car. Unlike H.R. 235 , the prohibition provision in S. 310 would be effective on or after the date of enactment of this legislation. H.R. 569 is a House companion bill to S. 310 and contains the same legislative language. H.R. 3427 and S. 1826 are companion bills that, among other provisions, would authorize states to create Self-Employment Assistance (SEA) programs available to recipients of EUC08 and EB benefits. SEA allowances would be paid in lieu of (and in the same amount as) unemployment benefits under the EUC08 and EB programs for up to 26 total weeks to eligible individuals who (1) have at least 13 weeks of remaining benefit entitlement through the EUC08 and EB programs and (2) are participating in entrepreneurial training activities. SEA participants would be exempt from the work availability and work search requirements under EUC08 and EB. Under H.R. 3427 and S. 1826 , SEA benefits would be available to up to 1% of all EUC08 and EB claimants in each participating state. Participants would be able to discontinue SEA participation at any time and receive any remaining entitlement to EUC08 or EB benefits. Under current law, states are authorized to set up SEA programs for recipients of regular UC benefits, but not recipients of EUC08 or EB benefits, as proposed by H.R. 3427 and S. 1826 . H.R. 3427 and S. 1826 would also provide federal funds to states that submit approved applications to be used for (1) the creation, development, and administration of the proposed SEA programs and (2) the promotion and enrollment of EUC08 and EB recipients in SEA programs. Appropriated funds for these grants to states would total $35 billion for each FY2012 through FY2014. The SEA provisions in H.R. 3427 and S. 1826 are substantively similar to the SEA provisions that were included in P.L. 112-96 . S. 1743 would give states the option to create a "Learn to Earn" program, if approved by the U.S. DOL. All Learn to Earn state programs would be authorized for FY2013 and FY2014 only. A Learn to Earn program (which is similar to the "Bridge to Work" program proposed in the American Jobs Act [ S. 1549 , S. 1660 , H.R. 12 ]) would allow individuals to continue to receive EUC08 benefits as wages for work performed in a short-term work experience placement of up to 10 weeks for not more than 38 hours per week. Learn to Earn state programs would be required to compensate claimants at a rate equivalent to the minimum wage, with the EUC08 benefit payment counted as wages for that calculation. The state would be permitted to augment the EUC08 benefit. For individuals participating in a Learn to Earn program, work search requirements would be suspended during the participation and additional wages paid by the program would not offset EUC08 benefit amounts. Any earnings acquired during program participation would not be considered earnings for the purposes of employment taxes, but would be treated as unemployment benefits for tax purposes. Under S. 1743 , federal funding for states to establish Learn to Earn programs would come from savings determined by the Office of Management and Budget (OMB) through the termination and consolidation of existing job training programs deemed by OMB to be "duplicative or ineffective." These federal funds would be allotted to the states based on a two-part formula: (1) two-thirds would be distributed to the states based on the state share of the U.S. total number unemployed persons and (2) one-third would be distributed to the states based on the state share of the long-term unemployed (measured as unemployment spells of at least 27 weeks). Up to 1% of the funds would be available for program administration and evaluation. H.R. 2731 would allow states to enter into agreements with the U.S. DOL to set up reemployment demonstration projects. Reemployment demonstration projects in states would be approved for no more than three years and could be conducted no later than five years after enactment of the legislation. H.R. 2731 would prohibit these state reemployment demonstration projects from using any funds from the state's account in the federal UTF. This legislation would be effective for weeks beginning after September 30, 2011. H.R. 2137 would provide the authority, over the five years following enactment, for states to set up a particular type of demonstration project within their UC programs—an Employment Assistance Voucher Program. This Employment Assistance Voucher Program would allow states to use their state UC funds to provide subsidies to employers who hire individuals eligible for state UC benefits and likely to exhaust those unemployment benefits in lieu of paying unemployment benefits to such individuals. H.R. 2137 would provide no additional federal funding to states that participate in this UC demonstration project. H.R. 2868 would eliminate employer Social Security payroll taxes on the earnings of newly hired individuals employed for at least 30 hours a week if those individuals had been receiving any unemployment benefits (e.g., UC, EUC08, EB, UCX, and DUA) or had exhausted any of these unemployment benefits as of the day prior to the new employment start date. H.R. 2806 would repeal the federal income taxation of unemployment benefits and any trade adjustment assistance payments. It would also eliminate the penalty for early distributions from a qualified retirement plan to an individual after separation from employment if the individual had received at least 24 weeks of UC. The bill would apply to benefits received after December 31, 2010. H.R. 2120 proposes to expand the definition of a targeted group for purposes of the Work Opportunity Tax Credit to include individuals who have exhausted entitlement to EUC08. For those EUC08 exhaustees who are hired and remain on a firm's payroll at least 400 hours, an employer would be able to claim an income tax credit of 40% of the first $10,000 in wages paid during the worker's first year of employment. For eligible hires who remain employed from 120 hours to 399 hours, the subsidy rate would be 25%. In the second year of employment, an employer would be able to claim an additional income tax credit of up to 25% of the first $10,000 in wages paid to that eligible worker during the second year. The income tax credit would be refundable. H.R. 1663 proposes a temporary tax credit for certain small businesses that hire eligible, unemployed workers. This hiring credit would be calculated following Section 51 of the Internal Revenue Code of 1986. It would be available to businesses with gross receipts in the previous taxable year of no more than $20 million (among other requirements) that hire unemployed individuals who (1) have received unemployment benefits—either regular UC or other federal benefits, including EUC08 and EB—for at least four weeks during the year prior to the hiring date and (2) reside in a "high unemployment zone" (defined as any county with an unemployment rate that exceeds both the national unemployment rate and 4%). The hiring credit proposed in H.R. 1663 would be temporarily authorized for individuals starting work for an employer after December 31, 2011, and until December 31, 2013. S. 2095 would expand the types of training that may be considered approved training while an individual is receiving unemployment compensation to specifically include any coursework necessary to attain a recognized postsecondary credential if that individual is likely to exhaust his or her regular unemployment compensation, and the credential can be attained within a certain time period. The proposal defines "recognized postsecondary credential" as a credential consisting of an industry-recognized certificate, a certificate of completion of an apprenticeship, or an associate or baccalaureate degree. S. 2081 would require an individual receiving extended unemployment compensation to perform at least 20 hours of public service each week and engage in at least 20 hours of active job searching each week.

The 112th Congress considered a number of issues related to currently available unemployment insurance programs: Unemployment Compensation (UC), temporary Emergency Unemployment Compensation (EUC08), and Extended Benefits (EB). With the national unemployment rate decreasing but still high, the weekly demand for regular and extended unemployment benefits continued at high levels. Congress deliberated multiple times on whether to extend the authorization for several key temporary unemployment insurance provisions. The EUC08 program, along with temporary provisions surrounding EB, had been set to expire at the end of 2012. The signing of H.R. 8 on January 2, 2013, now means that the EUC08 program is scheduled to expire the week ending on or before January 1, 2014. The 100% federal financing of the EB program will expire on December 31, 2013. In addition, the option for states to use three-year EB trigger lookbacks expires the week ending on or before December 31, 2013. The 112th Congress faced these expirations as well as likely unemployment insurance policy issues, including unemployment insurance financing. In addition, a temporary 0.2% federal unemployment tax (FUTA) surtax expired at the end of June 2011. Among other items, policy discussions focused on the appropriate length and availability conditions of unemployment benefits. This report provides a brief overview of the three unemployment insurance programs—UC, EUC08, and EB—that may currently pay benefits to eligible unemployed workers. This report discusses relevant legislation introduced in the 112th Congress: specifically, H.R. 1745, S. 386, H.R. 650, H.R. 589, H.R. 1663, H.R. 235, S. 310, H.R. 569, H.R. 2001, H.R. 2120, H.R. 2137, H.R. 2731, H.R. 2806, H.R. 2868, S. 1743, H.R. 3346, S. 1804, S. 1826, H.R. 3427, S. 1885, S. 1931, S. 1944, H.R. 3598, H.R. 3601, H.R. 3630, H.R. 3615, H.R. 3638, H.R. 3743, H.R. 494, S. 2095, S. 2081, a proposal outlined in the President's Budget Proposal for FY2013, as well as the President's American Jobs Act of 2011 proposal (introduced in Congress as S. 1549, H.R. 12, and S. 1660). This report also discusses the implications for the UI programs with respect to provisions in H.R. 2693, S.Amdt. 581 to S. 1323, P.L. 112-25, P.L. 112-40, P.L. 112-78, P.L. 112-96, and H.R. 8. This report will not be updated.